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The California Report

Judge: PG&E Paid Out Stock Dividends Instead of Trimming Trees

Raquel Maria Dillon
01:16
A federal judge in San Francisco ruled Tuesday that if PG&E doesn't meet aggressive goals aimed at preventing future wildfires, the utility won't be able to pay dividends to shareholders after it emerges from bankruptcy proceedings.
A PG&E worker cuts damaged power lines on Nov. 13, 2018. (Anne Wernikoff/KQED)

This report contains a correction.

A federal judge in San Francisco ruled Tuesday that if PG&E doesn't meet aggressive goals aimed at preventing future wildfires, the utility won't be able to pay dividends to shareholders after it emerges from bankruptcy proceedings.

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At a probation hearing related to the utility’s deadly 2010 gas pipeline explosion in San Bruno, Judge William Alsup said the embattled utility hasn't done enough to prevent wildfires through tree trimming and other maintenance work — even while its shareholders made millions.

“PG&E pumped out $4.5 billion in dividends and let the tree budget wither,” Alsup said.

But the judge declined to impose more sweeping changes that he’d earlier floated, including requiring PG&E to inspect its entire electrical grid. Lawyers for PG&E said that would take years to complete and be prohibitively expensive.

PG&E remains on probation for the 2010 pipeline explosion, which killed eight people and leveled a neighborhood. State fire investigators also blamed PG&E for 18 of the more than 170 wildfires that swept Northern California in October 2017. And the utility has acknowledged that its equipment likely started the 2018 Camp Fire in Butte County, which destroyed nearly 14,000 homes in the town of Paradise and killed 85 people.

While the probation is related to PG&E’s gas infrastructure, Alsup intervened following those fires.

On Tuesday, the judge also directed a federal monitor to conduct random inspections of the tree-trimming program.

“I’m not cutting you any slack,” Alsup said. “If PG&E hasn’t cut the right trees, we’re going to have a hearing to get to the bottom of that.”

PG&E’s lawyers said that might be unrealistic.

“There’s a lot of trees out there, and we don’t have eyes on all of them,” said PG&E attorney Reid Schar.

“That’s a problem of your own making,” Alsup said, cutting him off. “A lot of money went to dividends that should’ve gone to your trees. Get square with the people of California, who depend on you to do the job safely.”

The judge postponed any decision on a plan to require the utility to de-energize power lines during high winds, explaining that he wants to see what the California Public Utilities Commission — which regulates PG&E — decides on the issue.

“The prudent thing to do when you’re uncertain is to turn the power off,” he said. “When the public complains that everything in the refrigerator is bad and the ice cream melted, then you could blame the judge. I’m willing to take the heat.”

Steve Campora, an attorney who represented victims of the pipeline blast, said he was pleased that Alsup confirmed that he was the one who would decide if PG&E violated the terms of its probation, not the CPUC, as PG&E had wanted.

“He kept the violation of probation in his ballpark and didn't transfer it over to the CPUC,” Campora said. “And he said no, no, no, this judge will decide whether you're in violation of the law, which is a good thing.”

This story incorrectly stated the amount in dividends that Judge William Alsup said PG&E has paid shareholders in recent years. The amount Judge Alsup cited was $4.5 billion.

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