Having paid to shareholders money it was supposed to use on wildfire remediation and prevention, PG&E now says it can’t get the work done unless it raises rates. The CPUC is going to let them.
PG&E argued it couldn’t comply with the laws because there were just too many trees, too close to its wires. The judge replied, “That’s a problem of your own making.”
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.
New documents show that PG&E knew in 2016 that Caribou-Palermo equipment was close to failure, but decided not to fix it, hoping that the rain would put out any resulting fire. Two years later the equipment caused the Camp Fire.
PG&E has asked the bankruptcy judge to approve an employee bonus program that rewards employees more for boosting PG&E’s bottom line that for making the electrical safe. We object.
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.”
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.
Judge Alsup ruled that PG&E violated the felony probation imposed upon it after the San Bruno explosion. While PG&E says safety is its number one priority, the judge said that is untrue. Rather, PG&E’s number one priority seems to be profits.
In 2017 alone, PG&E was responsible for starting 17 wildfires that destroyed thousands of homes and burned alive 22 people. The judge believes it is his job to protect the public from future crimes this convicted felon may commit. The question is exactly how to accomplish that objective.