Judge: PG&E must use dividends to pay for fire prevention work

By Nicholas Sakelaris
The sun glows through smoky skies behind high power electric lines in Butte County, Calif., during the Camp Fire in 2018. File Photo by Terry Schmitt/UPI
The sun glows through smoky skies behind high power electric lines in Butte County, Calif., during the Camp Fire in 2018. File Photo by Terry Schmitt/UPI | License Photo

April 3 (UPI) -- A federal judge has ordered California utility Pacific Gas & Electric Co. to stop paying dividends to shareholders and instead use the money to pay for wildfire prevention efforts, over the company's role in a fire last year that killed dozens.

U.S. District Judge William Alsup issued the new restrictions in a ruling Tuesday


In February, PG&E said its equipment was likely an ignition point that started the Camp Fire last year that killed 86 people. The utility declared bankruptcy in January as a result.

In his decision, Alsup said PG&E spent billions on shareholder dividends while not keeping up tree trimming efforts, "so that a lot of trees that should have been taken down were not."

"PG&E is the single most culpable entity in the mix," he said. "Not the only one -- there's blame to go around for others, too. But PG&E has started way more than its share of these fires."

Alsup had previously threatened more serious punishment for PG&E, like requiring a full inspection of its infrastructure and rating its safety before the summer fire season begins. Utility officials said those efforts would cost $150 billion and require 650,000 full-time employees.


"The truth is, I want to see you succeed," Alsup told interim PG&E CEO John Simon Tuesday. "I want to see the people of California safe in their homes. I know that's probably what you want. But we got to get there."

Alsup said "we will know how many fires your company has started" by the end of 2019.

"I'm hoping the answer is zero."

PG&E is already on probation for a pipeline explosion in San Bruno, Calif., in 2010, and Alsup ruled that compliance with his tree trimming order become a condition of that probation.

PG&E said after Tuesday's ruling it's committed to playing a "leading role in reducing the risk of wildfire throughout Northern and Central California." A fire prevention plan will be the centerpiece of that effort.

"As we informed the court, we remain committed to complying with all rules and regulations and working hard to keep our customers and communities safe," utility spokesman James Noonan said in a statement.

Alsup's ruling emphasizes the safety of California residents ahead of utility shareholders, which judges can do when a company is in bankruptcy court, said Charles Elson, a corporate governance professor at the University of Delaware.


"The bankruptcy judge has the authority to do basically anything they wish with the company," Elson said. "Effectively, he or she is running the business."

Alsup can also extend PG&E's probation for another year because of its role in last year's fires. He gave attorneys from both sides two weeks to respond with written briefings on that matter.

Latest Headlines