Business & Real Estate

Judge OKs $235 million in bonuses for PG&E employees, as company struggles with bankruptcy

“It’s part of the state’s DNA,” Gov. Gavin Newsom talks climate change and wildfire risk

Gov. Gavin Newsom announced April 12, 2019 a panel's findings that California should change its laws on wildfire liabilities, giving PG&E and other utilities more protection against billion-dollar claims.
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Gov. Gavin Newsom announced April 12, 2019 a panel's findings that California should change its laws on wildfire liabilities, giving PG&E and other utilities more protection against billion-dollar claims.

A federal bankruptcy judge Tuesday approved PG&E’s plans to pay an estimated $235 million in employee bonuses this year, despite objections from lawyers for victims of the 2017 and 2018 California wildfires.

U.S. Bankruptcy Judge Dennis Montali approved the plan at a hearing in San Francisco. His ruling came two weeks after he delayed making a decision, saying he needed more information from the bankrupt utility about the thresholds employees would have to meet in order to qualify for the incentive payments.

Pacific Gas and Electric Co. said the payments will be heavily weighted towards achieving safety goals and are necessary to promote stability in the workforce amid the chaos surrounding the company. The payments will go to about 10,000 rank-and-file employees and won’t go to senior management.

Lawyers for the wildfire victims had complained repeatedly that PG&E had created an incentive plan that was “a layup” — meaning it would be easy to achieve.

Utility officials denied that. In a prepared statement, PG&E said the program is designed “with a focus on achieving ambitious safety goals.”

PG&E canceled the bonuses for 2018, saying it couldn’t justify the payments amid the suffering of the wildfire victims. PG&E has been blamed by Cal Fire for at least a dozen of the 2017 fires and has said it expects to be held responsible for the November Camp Fire, the deadliest and most destructive in California history.

The decision came a day after PG&E told the Public Utilities Commission it needed a significant increase in rates and profits in order to attract investment capital. PG&E’s proposal, coupled with a rate proposal unveiled in December, would raise average household bills by $22.67 a month starting next January.

California’s other two investor-owned utilities, Southern California Edison and San Diego Gas & Electric, made similar requests. They all argued that the uncertainties surrounding wildfire liabilities mean they need much higher profit margins to bring in investors. Gov. Gavin Newsom has said he’s open to a plan that would limit future wildfire liabilities for utility companies, but he ripped PG&E’s request.

“The governor strongly believes ratepayers shouldn’t be on the hook for unneccessary increases as the state’s process plays out,” his office said.

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