SAN FRANCISCO (CN) – California utility giant Pacific Gas and Electric asked a federal judge Friday to nix a proposed order barring the company from paying out dividends to shareholders until it clears all wildfire risks from around its power lines.
The embattled utility, currently in the heat of Chapter 11 bankruptcy proceedings, hasn’t issued dividends since 2017 and won’t be doing so at least until it emerges from bankruptcy. But in a brief filed Friday, PG&E’s lawyers said the condition will prevent it from raising capital in the future.
“PG&E consistently spends more cash than it generates through its operations and cannot fund all its infrastructure investments without external financing from the debt and equity markets. Payment of a dividend is a key way to induce equity investment,” wrote PG&E attorney Jennifer Block. “If PG&E were prohibited from paying a dividend, its ability to raise equity capital would be substantially constrained, which in turn would impair its ability to make the investments and improvements needed to carry out its duty to provide safe and reliable service and reorganize in a way that benefits all Californians.”
The prohibition is part of a larger block of probation conditions proposed by U.S. District Judge William Alsup as part of the company’s criminal case stemming from the fatal 2010 San Bruno pipeline explosion.
PG&E also objected to Alsup’s proposed “wildfire mitigation plan,” which includes trimming millions of trees that could come in contact with its power lines.
“If, for example, a tree was trimmed in accordance with clearance requirements, but shortly thereafter became damaged to the extent that it then presents a hazard and should be removed, PG&E would be in violation of its probation until that tree is removed,” the company said in its filing. “PG&E obviously does not and cannot have eyes on every tree and limb in its service territory at all times.”
The utility offered some examples: “For example, if, the day after it had been inspected, a tree near a line was struck by lightning, hit by a car, weakened due to a disturbance on the ground as a result of construction, irrigation, farming or a mudslide (to name just a few possibilities), PG&E would then be out of technical compliance – and, in accordance with the court’s proposed probation conditions, in violation of its probation – until the next patrol of that area allows for identification and removal.”
PG&E said Alsup’s plan supplants the authority vested in the California Public Utilities Commission to oversee PG&E’s wildfire safety plan.
“We share the court’s commitment to safety and understand that we must play a leading role in reducing the risk of wildfire throughout Northern and Central California. PG&E, in consultation with various experts, designed the Wildfire Safety Plan that it has submitted to the court and the CPUC to achieve precisely that goal,” PG&E spokesman James Noonan said in an emailed statement. “While today’s response raises some concerns about the court’s order – particularly as it relates to the monitoring of the dynamic, living environment in which our customers reside, and adapting to changing conditions – we remain committed to complying with all rules and regulations and working hard to keep our customers and communities safe.”
He added, “We will continue working with regulators, lawmakers and our community partners, and across all sectors and disciplines to develop comprehensive, long-term safety solutions for the future.”
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