PG&E Defends Spending on Investors, Politicians as Fires Sparked

SAN FRANCISCO (CN) – Embattled utility Pacific Gas and Electric on Wednesday defended paying billions of dollars to shareholders and millions more on political campaigns while it failed to correct problems that sparked deadly wildfires over the last two years.

"The revenue PG&E receives from customer rates is not by itself sufficient to support all of PG&E’s operations and investments in infrastructure," the company said in one of two court filings responding to a federal judge's demand for information.

This month, U.S. District Judge William Alsup ordered PG&E to explain why it spent money on dividends for shareholders and campaign contributions instead of investing in wildfire-prevention work, including trimming trees and limbs near power lines, replacing old equipment and burying or insulating lines.

In an 8-page filing, the company acknowledged that it spent $5.3 million on political campaigns and candidates, including more than $200,000 on Gov. Gavin Newsom's campaign and a PAC supporting him, in 2017 and 2018.

The company defended that spending as necessary to "ensure that the concerns of customers, shareholders, and employees are adequately represented before lawmakers and regulators."

PG&E further argued that issuing $5.1 billion in dividends to shareholders between 2012 and 2017 is the only way it can attract investors to help pay for critical infrastructure needs, including wildfire prevention and safety work.

"Traditional income-oriented investors will invest only if they can anticipate payment of a dividend, and certain institutional investors cannot or will not invest in equity without a dividend," the company stated in the filing, adding that "the expectation of stable dividends" is a major reason investors choose to buy stock in PG&E and other regulated utility providers.

While PG&E shareholders received $5.1 billion in dividends from 2012 to 2017, investors contributed $6.5 billion during that same period, a net contribution of $1.4 billion that, according to PG&E, helps fund critical safety programs.

Also on Wednesday, PG&E submitted a 37-page filing responding to a July 10 Wall Street Journal article that claims the company knew for years that its equipment could spark wildfires but failed to perform necessary upgrades. Alsup demanded the company submit a "paragraph-by-paragraph" response stating whether or not the reporting in that article is accurate.

PG&E acknowledged that its power transmission system was built in the early 1900s and some equipment had reached the "end of their useful lives." However, the company denied that it knew of specific problems that would later cause the Camp Fire and that it refused to fix those problems.

PG&E said it planned to replace certain equipment on the Caribou-Palermo Transmission Line, where the Camp Fire was started, in response to an October 2010 recommendation. PG&E insists that the purpose of that work was to address the distance between transmission line conductors and the height of conductors from the ground.

"The purpose of that work was not to identify and fix worn or broken parts, such as the hook on the transmission tower that failed and caused the Camp Fire to ignite," PG&E stated in its response.

PG&E acknowledged that a steel suspension hook, known as a C-hook, on a nearly 100-year-old transmission tower was the component that failed and caused the Camp Fire.

The company added that the Wall Street Journal failed to mention in its article that the nearly century-old tower identified as the origin of the Camp Fire "was not one of the towers slated for replacement" in its work plan.

Recorded as the deadliest wildfire in California history, the Camp Fire that ignited on Nov. 8, 2018, killed 85 people, burned over 150,000 acres and destroyed the town of Paradise.

Since the Camp Fire, PG&E said it has "fundamentally changed its approach" to fire safety by launching an enhanced program to inspect and trim vegetation near power lines,  real-time monitoring of fire risks with weather stations and video cameras, and plans to de-energize lines when high wind speeds increase the risk of fire.

Follow @NicholasIovino

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit