Federal Judge Weighing Stepped-Up Oversight of PG&E Safety
Today 5:16 PM ET (Dow Jones)Print
By Peg Brickley
A federal judge is clamping down on PG&E Corp.'s safety practices and expanding oversight of the bankrupt utility, which is facing an estimated $30 billion in damages from wildfires sparked by its electrical lines.
Judge William Alsup didn't put a dollar figure on what he's requiring of PG&E if it wants to get back in compliance with the terms of probation for a criminal conviction growing out of an explosion in 2010. In an order filed in federal court in San Francisco, he indicated he would not require safety practices the company had warned could cost upward of $75 billion.
Instead, Judge Alsup is requiring PG&E to make good on its own 2019 wildfire safety plan, a set of programs the company estimated will cost between $1.7 billion and $2.3 billion.
He did, however, tell PG&E to expect surprise inspections from Mark Filip, a court-appointed monitor charged with reporting on its safety practices. Mr. Filip has been watching over PG&E's natural gas lines. If Judge Alsup's proposed probation modifications take effect, PG&E's electrical lines and vegetation management also will be part of his oversight mandate.
PG&E filed for chapter 11 bankruptcy protection in January, earning an immediate reprieve from lawsuits over wildfires that swept California in 2017 and 2018. There was no reprieve, however, from Judge Alsup, who is overseeing PG&E's probation for a felony conviction stemming from a 2010 natural gas pipeline explosion.
He found PG&E had violated terms of its probation and, on Tuesday, signaled the remedy he is proposing, which requires PG&E to make good on the commitments in its own 2019 wildfire mitigation plan.
A PG&E spokeswoman declined to comment Wednesday on Judge Alsup's proposed modifications to the terms of the company's probation.
In January, when the judge was considering more stringent safety measures, PG&E's lawyers warned those measures could cost from $75 billion to $100 billion.
Cost estimates in PG&E's own 2019 plan aren't that high. For example, stepped-up efforts to manage vegetation will cost PG&E about $433 million annually, according to a copy of the plan filed with the federal court in San Francisco.
Tuesday's order from the judge, however, indicated he has little sympathy with PG&E's arguments that it would be impossible and prohibitively expensive to prevent wildfires. The company paid out hundreds of millions of dollars in dividends in 2016 and 2017, he noted.
"Yet, during this same period, PG&E knowingly failed to trim or remove thousands of trees it had already identified as posing a hazard," the judge wrote. "Put differently, some of these dividends could and should have been kept and used to bring PG&E into compliance with state and federal law with respect to what has become the number one cause of PG&E-induced wildfires."
Write to Peg Brickley at peg.brickley@wsj.com
