The California utility, which is facing billions of dollars in wildfire liabilities, is in discussions with large banks about debtor-in-possession financing that could reach as much as $5 billion, Reuters said.
A bankruptcy also would allow PG&E to raise cash by selling assets - such as its gas business and hydropower plants - more easily, he said.
This comes one day after the chief executive of the company stepped down.
Assure the company has access to the capital and resources necessary to support ongoing operations and enable PG&E to continue investing in its systems, infrastructure and critical safety efforts, including investing in its Community Wildfire Safety Program, an additional precautionary safety measure implemented following the 2017 Northern California wildfires to further reduce wildfire risk.
If PG&E is found legally responsible for some or all of the costs connected to the 2017 and 2018 Northern California wildfires, its liability could exceed $30 billion, according to the company's filing with the Securities and Exchange Commission on Monday.
PG&E works on power lines to fix damage caused by the Camp Fire in Paradise, California, US Nov. 21, 2018.
PG&E, which is the nation's largest utility by revenue and is based in San Francisco, said it is giving the required 15 days' notice that it plans to file for bankruptcy protection.
It would allow PG&E to hold off creditors and continue providing electricity and natural gas without interruption to its 16 million customers in Northern and central California while it tries to put its finances in order.
If all the parties involved can't negotiate, PG&E will have to come up with a reorganization plan for how much each party that is owed will receive.
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As a regulated utility, PG&E has appealed to the California Public Utilities Commission for higher gas and electric rates to recover costs.
California law compels utilities to pay for damages from wildfires if their equipment caused the blazes - even if the utilities weren't negligent through, say, inadequate maintenance.
PG&E's decision to replace its chief executive is likely meant to satisfy state regulators rather than investors, said Paul Patterson, an analyst who follows PG&E at Glenrock Associates LLC.
Moody's investor rating service warned November 15 that the potential liability of 21 major wildfires in 2017 was roughly $10 billion and that the destructive 2018 Camp Fire, which devastated the town of Paradise and killed 86 people, would add further costs. Her actions coincided with the news that the company would be filing for bankruptcy on January 29. Governor Newsom and the legislature should not give into bankruptcy blackmail and bail out this company at the expense or ratepayers. A number of the fires have been attributed to energy traces' coming into contact with bushes, which critics have mentioned is a result of the utility's failure to trim the bushes.
"California's existing liabilities laws weren't made for the new normal that we face going forward with these climate driven wildfires", Steve Malnight, a senior vice president at PG&E, told NPR member station KQED in August.
PG&E faces a lawsuit brought by more than three dozen plaintiffs alleging the fire was started by faulty steel rings atop a transmission tower, which brought risky live wires crashing down.
It remains to be seen how PG&E's bankruptcy will affect California's PV sector.
Cavanagh said that another casualty of bankruptcy could be billions of dollars of funding for clean energy initiatives created to fight the effects of climate change. "Other threatened initiatives involve grid upgrades, small-scale "distributed" resources and technology innovation".