6 things to know about the PG&E bankruptcy filing and how it affects you
In what could be a significant new legal headache for PG&E, a lawyer representing wildfire victims said Tuesday that the utility is being investigated for possible criminal conduct in the start of the Camp Fire, which killed 85 people and destroyed much of the town of Paradise.
Addressing a bankruptcy court hearing on PG&E’s plans to pay an estimated $235 million in employee bonuses, wildfire victims’ attorney Dario de Ghetaldi said a Butte County grand jury is probing the Camp Fire, the most destructive wildfire in California history. Potential liabilities from the fire have already driven the utility into bankruptcy.
He offered no further details but told a reporter the probe is in its early stages. PG&E said in a statement that it’s been “open and transparent” about cooperating with multiple agencies, including the Butte County district attorney.
Deputy District Attorney Curt Worley declined to comment. Butte authorities declined to prosecute PG&E following a minor fire in 2017, instead cutting a deal that called for the utility to spend $1.5 million on fire safety programs.
The Camp Fire could pose more trouble than that 2017 fire in Butte County, which burned just 150 acres. PG&E has already said it believes its transmission equipment was responsible for November’s Camp Fire. Cal Fire is still investigating.
PG&E was convicted of six felony criminal counts by a federal jury in connection with the 2010 natural gas pipeline explosion in San Bruno, which killed eight people. Although it was fined only $3 million, the utility remains on probation in that case, and a federal judge overseeing the case last week ordered the utility to halt shareholder dividend payments to free up money for wildfire safety initiatives. PG&E stopped those payments anyway after the devastating wine country fires in October 2017.
In bankruptcy court Tuesday, Judge Dennis Montali deferred a decision on PG&E’s request to pay $235 million in incentive bonuses this year. De Ghetaldi and other plaintiffs’ lawyers had urged Montali to reject the plan, saying they suspect the bonuses would be based on easy-to-achieve standards.
“It’s a farce,” wildfire victims’ lawyer Robert Julian told the judge.
Montali said he didn’t want to see the employees “treated as hostages or punished,” but he needs to learn more details about the thresholds used in awarding the payouts. “The metrics and the scoring — how do they work?”
In February the company canceled the bonus plan for 2018, with interim CEO John Simon telling employees their plight was insignificant compared to “the hardships” inflicted on wildfire victims. The cancellation wiped out at least $130 million in payments.
A month later, though, PG&E proposed a new incentive plan based on 2019 employee performance, saying the bonuses would be based in large part on achieving safety goals. The cash payouts would go to 10,000 managers but no upper-tier executives.
At an expected payout of $235 million, PG&E nearly doubled the bonus program from the year before. The company argued that it needed to “enhance” the plan to make up for the elimination of a separate bonus program paid out in stock.
Refusing to refer to the program as a bonus plan, PG&E lawyers said the cash incentives are in everybody’s interests, including creditors, because they keep the company healthy.
Lawyers for wildfire victims said it was unconscionable for PG&E to propose additional payouts for employees when fire victims face the very real prospect of not getting paid in full because of the bankruptcy. They also argued that paying bonuses wouldn’t make PG&E any safer.
“The incentive plan has not worked in the past. The bonuses were paid, and yet PG&E’s safety record over the past few years is appalling,” the Singleton law firm of San Diego, which represents 3,500 wildfire survivors from around Northern California, said in a court filing.
The city of San Francisco, the company’s hometown, offered a limited objection to the plan, saying bonuses should only be paid to workers in charge of reliability and “demonstrable safety measures or improvements.”
PG&E filed for bankruptcy in January under the weight of an estimated $30 billion in potential wildfire liabilities. The figure includes losses from November’s Camp Fire, the deadliest and most destructive fire in California history. State officials are still investigating, but PG&E has said problems at a transmission tower were the likely cause.
Last week PG&E overhauled its board of directors and named a new CEO, Bill Johnson of the Tennessee Valley Authority, saying the shakeup reflected its commitment to safety. But the move received a cool reception from Gov. Gavin Newsom, who said the new PG&E board is still heavily weighted toward individuals with ties to Wall Street.