SAN FRANCISCO — The Pacific Gas and Electric Company (PG&E) lost the right to perform one of the most basic functions of a publicly-traded company on Tuesday: Pay out profits to its shareholders.
Federal district court Judge William Alsup banned PG&E from paying out any shareholder dividends until it complies fully with his order to improve wildfire safety on its electric grid.
Alsup noted that the company paid out $4.5 billion to shareholders in the years leading up to the devastating wildfires in 2017 and 2018, which killed more than a hundred people in Northern California.
"A lot of money went out in dividends that should have gone to the tree budget," Alsup told PG&E interim CEO John Simon and the company's team of lawyers. "This is a problem of your own making."
The judge added new terms to PG&E's probation at the Tuesday hearing, including a requirement that PG&E fully comply with California state laws that require trees to be cut back away to specific distances from power lines for fire prevention.
The company has argued that 100 percent compliance with the law isn't possible because trees are growing. Alsup countered by saying that trees don't grow that fast.
He also made it a requirement of probation that the company live up to the promises it's making to state regulators in its new wildfire mitigation plan. Those plans were ordered by state lawmakers in response to the 2017 fires.
PG&E has admitted that its equipment likely started the 2018 Camp Fire as well, killing 85 people and reducing the community of Paradise, California almost entirely to ash and rubble.
"This is a crisis that California faces on these wildfires and PG&E is the single most culpable entity in the mix," Judge Alsup said.
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The judge did not order PG&E to shut off power to portions of its grid when the wind is high but said he's still mulling over his options on that subject. He invited PG&E to ask him to order the company to shut the power off so that he could shield the company from blame when customers get upset about outages imposed for fire prevention.
"You can blame me," Alsup said. "I'll take the heat."
PG&E's lawyers said the company would consider it.
As a practical matter, shutoffs are an expensive and deeply inconvenient solution. Power companies have to re-inspect the power lines that were shut off for damage before turning them back on, which can take days in some cases.
The judge made it clear that PG&E will be back in his courtroom for more punishment. He still plans to sentence PG&E for its violation of probation, which involved settling a case with Butte County to avoid criminal prosecution for starting the Honey Fire in 2017 and failing to disclose the settlement to the probation officer.
Alsup said he's thinking about extending the company's probation from five years to six, among other possible penalties.
He also said that the company will see the inside of his courtroom again if it starts any more fires and that he wants to the company to succeed in turning this around.
"Me too, judge," said CEO John Simon.
The judge expressed skepticism about his own plan at several points in the hearing, saying that he doesn't "really believe" the objections PG&E expressed to his original plan to order the company to immediately cut millions of trees to face court-mandated shutoffs during high wind.
He says he "acquiesced" when PG&E said it would take nearly two decades to comply.
While holding the threat of more punishment of the company's head, Judge Alsup seemed resigned to ordering the more moderate conditions he imposed on Tuesday.
"We'll be holding our breath for the next fire season."
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