Judge Could Tie Bonuses for PG&E Execs to Utility's Wildfire Safety Performance

The federal judge overseeing PG&E's criminal probation for a 2016 pipeline safety conviction is suggesting he may restrict the bonuses the company awards its managers and allow incentives only when the utility meets its state-mandated wildfire safety goals.

In a brief order issued Friday, U.S. District Judge William Alsup challenged PG&E to show him why future pay incentives for executives should not be contingent on meeting the safety goals.

Alsup is overseeing PG&E's probation for a conviction arising from the 2010 San Bruno gas pipeline disaster. He has focused his attention for the past year on the company's electrical system and its role in starting a string of catastrophic wildfires.

Last year, the judge set full compliance with state laws on the clearance between trees and power lines as a new condition of PG&E's probation. He also directed the company to meet all the goals set out in a wildfire mitigation plan it filed with the California Public Utilities Commission.

In a reply earlier this month to queries from the judge, the utility argued it was not possible to certify it's in "perfect" compliance with the laws on keeping power lines clear of trees. The company also conceded it had fallen short of goals set in a state-ordered wildfire mitigation plan.

That prompted Alsup to issue an order directing the company to show why he should not require it to hire new tree-trimming crews as an added condition of its probation. PG&E is due to file a reply on Feb. 12, with a hearing date on the issue set for Feb. 19.

In the new order, which also requires the company to respond by Feb. 12, Alsup said PG&E "has fallen behind on its promise (and probation condition) to remove hazard trees and limbs that risk blowing onto distribution lines and thereby sparking wildfires during windstorms."

He noted that U.S. Bankruptcy Judge Dennis Montali, who is handling the utility's bankruptcy case, last August refused to allow the company to award as much as $16 million in incentive payments to a dozen of the company's top executives.

PG&E had sought to convince Montali that the "key employees' incentive plan" would reward the executives for achieving a set of performance metrics, including some connected to safety. But the judge found the goals were vague and that the company's situation — under pressure from legislators, regulators, the courts and the public — should have already given the executives plenty of motivation to improve PG&E's safety performance.

"There is simply no justification for diverting additional estate funds to incentivize them to do what they should already be doing," Montali wrote of the PG&E executives. But he added the court might be receptive to an incentive plan that focused solely on safety goals.

Taking a cue from that ruling, and observing that PG&E had not taken up Montali's suggestion of a safety-based incentive plan, Alsup's new order directs PG&E to tell him why future executive bonuses should not be conditioned solely upon meeting its wildfire safety goals.

In a statement PG&E said it “shares the court’s commitment to safety and recognizes that we must take a leading role in keeping our customers and communities safe from the ever-growing threat of wildfire. This focus on public and workforce safety is our most important responsibility at PG&E."