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PG&E can’t pay out more in dividends by shortchanging operations and maintenance. Not legally. But they have been charged with illegally doing this. The judge

PG&E can’t pay out more in dividends by shortchanging operations and maintenance. Not legally. But they have been charged with illegally doing this. The judge at their bankruptcy hearing described them as doing exactly that. Does PG&E have to take your wallet at gunpoint before the idea they're thieves makes sense? I mean, PG&E was aware of necessary expenditures, suppressed knowledge of those needed expenditures and instead continued to pay standard dividends[1]. Saying this isn't taking money from mainteninance and giving it to shareholder is the worst kind of newspeak. And sure, PG&E get the profits the PUC thinks they should get for whatever needed expenditures they might make. BUT this has two wrinkles. A) It's hard to argue you deserve a lot of money for doing what you should have done earlier. B) This is just ordinary profits, a percentage of the expenditures you make but just taking money that's lying around and giving it to share holders is much more profitable, you don't need any more "upfront" here - there's long terms consequences but in today's environment, management seldom faces these consequences, just all the entities a given company deals with. Of course, any company that says capital investment be damned, I'm giving the whole flow to the stockholder will look more profitable tomorrow and even the possibility of good future investment doesn't look as good as this tomorrow. Unfortunately, we are now living in the "next week" of such decisions. [1] Non-paywalled version of WSJ article: https://www.marketscreener.com/PG-E-CORPORATION-13946/news/PG-E-Knew-for-Years-Its-Lines-Could-Spark-Wildfires-And-Didn-t-Fix-Them-28878640/ https://www.marketscreener.com/PG-E-CORPORATION-13946/news/P...

pcwalton 7y ago
> The judge at their bankruptcy hearing described them as doing exactly that. I went looking for a source here. You're right; Judge Alsup, overseeing the bankruptcy hearings, had some pretty damning words for PG&E: https://www.kqed.org/news/11737336/judge-pge-paid-out-stock-dividends-instead-of-trimming-trees https://www.kqed.org/news/11737336/judge-pge-paid-out-stock-... The arguments upthread pointing the finger at CPUC were somewhat persuasive to me before seeing this, but after reading these words from Alsup—a reasonable judge from what I've seen of him—what the California politicians are saying make a lot more sense to me. Sounds like PG&E does need to shoulder a good deal of the blame here.
- dragonwriter 7y ago
  > You're right; Judge Alsup, overseeing the bankruptcy hearings, As described in the article you cite, Alsup is overseeing their criminal probation resulting from their multiple felony convictions for the San Bruno gas explosion in 2010, not the bankruptcy case. Dennis Montali is the judge in the bankruptcy case, see, e.g., https://www.nytimes.com/2019/10/09/business/energy-environment/pge-bankruptcy.html https://www.nytimes.com/2019/10/09/business/energy-environme...
  - pcwalton 7y ago
    You're right. Thanks for the correction.
dragonwriter 7y ago
> The judge at their bankruptcy hearing described them as doing exactly that. I know that William Alsup, the judge in their criminal probation hearing did so (and this was relevant to why their fire responsibility was held to be a violation of their criminal probation.) I'm not aware that the same thing came up in their bankruptcy hearing (which has a different judge), but then again it wouldn't be surprising.
SilasX 7y ago
Thank you! I'm surprised your comment even needed to be made, but some people really do walk around with the mentality that, "The law/textbooks say things are supposed to happen this way, therefore, that is definitely how they are being carried out, and in good faith. These commenters must simply be uninformed and in need of some citations."
rayiner 7y ago
That article doesn’t prove your point. It faults PG&E (and other utilities by the way) for delaying replacing steel towers and instead upgrading substations. Why is it picking? Both are capital investments, and doing both at the same time would result in a larger base of invested capital and thus a larger profit. Why didn’t it do the thing that would make it more money? There is a real irony to denouncing a company as being profit motivated, but then articulating a theory of what they did wrong that is premised in them leaving money on the table.

pcwalton 7y ago

> The judge at their bankruptcy hearing described them as doing exactly that. I went looking for a source here. You're right; Judge Alsup, overseeing the bankruptcy hearings, had some pretty damning words for PG&E: https://www.kqed.org/news/11737336/judge-pge-paid-out-stock-dividends-instead-of-trimming-trees https://www.kqed.org/news/11737336/judge-pge-paid-out-stock-... The arguments upthread pointing the finger at CPUC were somewhat persuasive to me before seeing this, but after reading these words from Alsup—a reasonable judge from what I've seen of him—what the California politicians are saying make a lot more sense to me. Sounds like PG&E does need to shoulder a good deal of the blame here.

dragonwriter 7y ago
> You're right; Judge Alsup, overseeing the bankruptcy hearings, As described in the article you cite, Alsup is overseeing their criminal probation resulting from their multiple felony convictions for the San Bruno gas explosion in 2010, not the bankruptcy case. Dennis Montali is the judge in the bankruptcy case, see, e.g., https://www.nytimes.com/2019/10/09/business/energy-environment/pge-bankruptcy.html https://www.nytimes.com/2019/10/09/business/energy-environme...
- pcwalton 7y ago
  You're right. Thanks for the correction.

dragonwriter 7y ago

> The judge at their bankruptcy hearing described them as doing exactly that. I know that William Alsup, the judge in their criminal probation hearing did so (and this was relevant to why their fire responsibility was held to be a violation of their criminal probation.) I'm not aware that the same thing came up in their bankruptcy hearing (which has a different judge), but then again it wouldn't be surprising.

SilasX 7y ago

Thank you! I'm surprised your comment even needed to be made, but some people really do walk around with the mentality that, "The law/textbooks say things are supposed to happen this way, therefore, that is definitely how they are being carried out, and in good faith. These commenters must simply be uninformed and in need of some citations."

rayiner 7y ago

That article doesn’t prove your point. It faults PG&E (and other utilities by the way) for delaying replacing steel towers and instead upgrading substations. Why is it picking? Both are capital investments, and doing both at the same time would result in a larger base of invested capital and thus a larger profit. Why didn’t it do the thing that would make it more money? There is a real irony to denouncing a company as being profit motivated, but then articulating a theory of what they did wrong that is premised in them leaving money on the table.