L OCAL UTILITIES’ predictable businesses and steady dividends have earned them the moniker “widow-and-orphan shares”. Not in California. Pacific Gas & Electric Company ( PG & E ), its biggest electric utility, declared bankruptcy in January, citing $30bn of potential liabilities arising from its role in causing deadly wildfires. Its share price is down by nearly 90% since 2017. It recently shut off power to millions of Californians to prevent its installations from sparking new blazes. Customers and politicians fumed. Meanwhile, a battle for control of the firm rages on.

PG & E ’s management is backed by big funds (notably Abrams, Redwood and Knighthead) that hold just over half its shares. Its restructuring plan favours current shareholders. It proposes raising both new debt and equity. A rival bid by bondholders (among them big asset managers such as Elliott, Apollo and PIMCO ) would virtually wipe out current equity. This scheme appeals to fire victims, for it offers them more compensation than the management’s plan.

Bondholders appeared to have the upper hand. Then the politicians waded in. On November 4th the mayors of Oakland, San Jose and other municipalities said they want to buy PG & E and turn it into a co-operative. They are pushing Gavin Newsom, California’s governor, and state regulators to back their proposal. If approved, it would enable PG & E to take advantage of rules which exempt Californian municipal utilities, such as those in Los Angeles and Sacramento, from federal tax, allow them to set their own tariffs and also let them tap cheaper capital than is available to private utilities. If PG & E is not restructured by a deadline of June 30th, Mr Newsom, who is critical of the management, has threatened a state takeover.