Jason Well Still Unable to Explain Why PG&E Stiffed Butte Fire Victims

PG&E Chief Financial Officer Jason Wells appeared in Bankruptcy Court to answer questions under oath.  It was his second time.  The first time, I asked him about the bonus PG&E paid to CEO Geisha Williams as she was shown the door.   I couldn’t understand why, in the days leading to the bankruptcy, PG&E found $2.5 million in cash to stuff into her pocket, but couldn’t come up with the money PG&E agreed to pay to certain of the Butte fire survivors.  It was especially hard to understand why PG&E would pay Williams rather than the Butte fire victims given that Williams was in charge of PG&E’s electrical system when it burned down the victims’ homes.

During his first appearance in court Wells could only bob and weave before finally tell me that he would have to “get back to me” with his answer at the next round of questioning.  But after two months, Wells still had no answer.

Question to PG&E CFO Jason Well (By Mr. Danko): . . .[W]hy did PG&E decide to pay Geisha Williams [PG&E’s former CEO] her 2.5 million dollar bonus in the days leading up to the bankruptcy, but not pay the Butte fire victims the agreed up settlements?

Answer: (By Mr. Wells): Sir, during the previous hearing we discussed how we had to make a decision [to] preserve the ongoing service of our Gas and Electric business and we were put in an untenable situation given the unusual notice requirement of Senate Bill 901 which required us to disclose that we intended to file for bankruptcy without having the protection of the bankruptcy court itself and so, unfortunately we were in a position of having to make prioritization on payments so we didn’t run out of cash.

Question: I understand that you said last time that you were going to preserve cash and that is why you didn’t pay the Butte fire victims or honor the agreements that you made with the Butte fire victims. My question, however, is why did you pay Geisha Williams her bonus in the days leading to the bankruptcy and not honor your other agreements? Why did you prioritize [Geisha Williams’] deal over the deal you had reached with the Butte fire victims?

Answer: Sir, you asked this question and we answered it extensively as part of the 341 hearing two months ago.

Question: You looked at the transcript of that hearing, I’m sure?

Answer: No.

Question: Oh, you didn’t? Well let me refresh you. I asked you “why did PG&E decide to pay Geisha Williams her severance and not pay the Butte fire victims their settlements?” Your answer was, “I don’t have an answer for your question.” I asked you then, “where would I get that answer? If not from you, then from who?” And then you promised me, “I’ll be prepared to discuss that at the next meeting.”

That is why I am here now. You have had two months to think about it. I am looking for your answer as to why you paid Geisha Williams her 2.5 million dollar bonus while you . . you couldn’t pay, you couldn’t honor the agreements that you had made with the Butte fire victims to pay them. So why did you prioritize payment to Geisha Williams, who was in charge of the whole operation when those people were burnt out of house and lost all of their belongings? Why did you prioritize paying her bonus over paying the money that you agreed to pay the victims who needed that because they were homeless? That is my question for you. And I thought you had two months to think about that answer and you were going to give it to me when I came here today.

Answer: No, I appreciate your question. We had to take in to consideration all of the obligations the company was facing and we collectively came to the conclusion that we needed to make that severance payment.

Question: Why? Why did you need to make that severance payment? Was Geisha Williams homeless?

Answer: She was not homeless.

Question: Had she lost her home in a fire?

Answer: She had not lost her home in a fire.

Question: Ok, so why [did you decide] to pay Geisha Williams her bonus but not honor the agreement to pay the Butte fire victims what they were owed.

Answer: It was part of her employment agreement or arrangement with the company.

Question: So that is why you gave that some sort of a priority, because she had an employment agreement?

Answer: Ultimately.

Question: Why did you prioritize the employment agreement over people who basically had nothing?

Answer: Sir, we are committed to resolving these claims that the company faces.

Question: Yes, but my question is not whether you are committed to resolving the claims the company faces. My question is why did you prioritize Geisha Williams’s claim over the claims of the fire victims?

Answer: Sir, you have made your point.

Question: I’m looking for an answer. You told me you would be prepared to discuss it today. I have waited two months on behalf of my clients for an answer. They want to know is why you paid Geisha Williams.

Answer: You have made your point sir.

Question: Is your answer you have no idea?

Answer: Sir, we as a company collect and disperse more than 80 million dollars a day. We were making hundreds and thousands of decisions on prioritization. You have my answer. You have made your point many times.

So there you have it.  PG&E paid Geisha Williams her agreed upon $2.5 million bonus, but renegged on paying the Butte Fire victims their agreed upon settlements because, well, they were shelling out $80 million a day and just felt it more important to honor its agreement to the one in charge when the fire started than her victims.

When PG&E says it cares about the fire victims, it’s just not true.

Scott Deveau and Mark Chediak of Bloomberg report that PG&E is likely to sign Bill Johnson as its new CEO. Bill Johnson was most recently CEO of the Tennessee Valley Authority, the large southeastern public utility. Critics are glad Johnson is now gone from the TVA because, they say, he consistently favored corporate interests over the public interest. They see Johnson’s departure as an opportunity to replace him with  someone who will put the “public” back “public utility.

For the last six years, Bill Johnson has steered TVA in the direction of serving corporate interests over public interests, evident in preferential rates and rate restructuring for corporate customers which have caused residential and small businesses’ energy bills to rise. . . And TVA has been consistently opaque, hiding details about policy decisions from public scrutiny and being less transparent, as we saw with this week’s so-called listening session which was neither web-streamed nor held the same day as the board meeting itself.

And safety doesn’t exactly stand out on Johnson’s list of accomplishments. Just this past November, a federal jury slammed his utility for a contractor’s actions that killed more than 40 workers and sickened hundreds more.

But during his tenure at TVA, Johnson did indeed do wonders for the utility’s bottom line.

TVA earned more than $1.1 billion in net income in the fiscal year ended Sept. 30, up by more than 63 percent from the previous year . . . Net income was the second highest ever for TVA in its 85-year history during 2018, behind only the record high of $1.2 billion earned in 2016.

 

Make no mistake about it.  PG&E chose Johnson as its new leader hoping that he will be able to return it to profitability; not to make the utility safe.  Once again, PG&E is placing corporate profits over the safety of the public.

This week PG&E appeared in bankruptcy court to answer questions under oath put to it by wildfire survivors and other creditors. PG&E and its lawyers resisted answering some questions and, in one instance, outright refused to do so even after being directed to answer by the United States Bankruptcy Trustee. (So much for PG&E’s commitment to “transparency” during the bankruptcy process.)

One of the first questions put to PG&E was why it filed bankruptcy. Usually a company does so because it is insolvent. PG&E admitted, however, that it is not insolvent any sense. Its assets exceed its liabilities by many billions of dollars. Further, it was and is able to pay its obligations as they come due. Then why bankruptcy, if not to keep for PG&E’s shareholders money that should rightfully go to PG&E’s victims?

According to PG&E, there was no single event that forced a bankruptcy. Rather, the best PG&E could offer up as an explanation was a January 10 meeting it had with the CPUC. During that meeting, PG&E asked about the process for getting the CPUC’s approval to pass costs of North Bay wildfire settlements on to ratepayers, rather than paying settlements out of corporate profits. According to PG&E, the CPUC said it would not approve PG&E passing on to ratepayers the costs of settlements until after PG&E actually paid them, PG&E, apparently, didn’t like that answer. If PG&E paid the wildfire victims what they were due, and the CPUC thereafter decided not to allow PG&E to pass the costs on to ratepayers, PG&E felt that it might put the company in a difficult financial position.

Of course, PG&E has neither paid nor agreed to pay any North Bay fire victim a single penny. When it filed bankruptcy, such payments were months if not years off. So, the meeting with the CPUC does not explain PG&E’s big rush to file bankruptcy. It left many observers to conclude PG&E’s real purpose in filing bankruptcy was to try and use the bankruptcy process to stick it to victims.

We also asked PG&E about the Butte Wildfire it caused in 2015. PG&E had agreed to pay settlements to certain of the victims of that fire, with payments coming due in the days leading up to the bankruptcy filing. PG&E ultimately stiffed those victims, citing the need to “conserve cash.” But we now know that PG&E is not and was not insolvent.  It could have easily made those payments. In fact, while it was stiffing victims with its left hand, PG&E’s right hand had no problem coming up with $2.5 million to pay disgraced CEO Geisha Williams a severance bonus. We asked PG&E why and how it decided not to pay victims what they were due but to instead pay a bonus to the CEO at the helm when PG&E burned out so many of its customers. PG&E had no answer, promising to “get back to us” on that.

Because PG&E has not yet filed with the court all the financial information it is supposed to file, the questioning could not be completed and will resume on April 29.

PG&E asked the bankruptcy judge to approve bonuses to its employees totaling $130 million.  We objected, arguing that “every dollar PG&E pays out to its executives in bonuses is a dollar the victims who were burned out by those executives don’t get.”

While sympathetic to our argument, the bankruptcy judge ruled that, under the controlling bankruptcy law, he had no alternative but to approve PG&E’s request.

Now, buckling to pressure from the Northern California Fire Lawyers as well as from the victims themselves, PG&E has decided not to pay those bonuses after all.  As reported in the Sacramento Bee, PG&E’s interim CEO acknowledges that not paying the bonuses may cause a hardship on PG&E employees, “But we believe as a whole that the hardships on others are in many cases significantly greater.”

Ya think?

 

 

 

When it filed bankruptcy, PG&E committed to pay its army of bankruptcy lawyers on a monthly basis many millions of dollars in fees.  Some of that money might better be directed to PG&E victims who have been homeless for years now, especially since PG&E swears in court that it filed it bankruptcy to serve the best interests of its victims.

Just how much will the bankruptcy lawyers take from the pot?  Hard to say exactly, but certainly more than $1 million per day.  Before all is said and done, fees are likely to total more than $750 million, perhaps a billion dollars.  Nice haul.

The last large utility to file bankruptcy was the Texas utility called Energy Future Holdings in 2104.  That bankruptcy yielded professional fees of more than $600 million.

But the Texas utility hadn’t hired PG&E’s New York lawyers, Weil Gotshal, who are among the world’s priciest.  Weil Gotshal’s partners — and there is an army of them — charge bankrupt companies over $1500 per hour. Weil Gotshal’s paralegals bill out at more than $400 per hour – more than the partners in many San Francisco law firms.  Heck, one of Weil Gotshal’s paralegals billed the Sears bankruptcy estate more than $170,000.  In one month.

Seems that PG&E has plenty of money for its lawyers.  If PG&E really cared about its victims, its hard to see why it couldn’t see its way clear to honor its promise a few weeks ago to throw a few dollars towards the victims of the 2015 Butte fire. After all, they lost everything and have been waiting more than three years to be paid.

PG&E told he bankruptcy judge today that its goal in bankruptcy is to establish a fund against which wildfire victims can make a claim.  Our Northern California Wildfire Lawyers explained why PG&E is not to be trusted.

Dario DeGhetaldi, Amanda Riddle, and Mike Danko explain why PG&E should be viewed with skepticism

 

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