PG&E Can Pay Employees $350M to Meet Safety Goals After California Wildfires

PG&E Corp. can pay employees up to $350 million in bonuses this year to spur them to help meet the bankrupt California power provider’s safety goals to prevent wildfires, a judge said on Tuesday.

PG&E’s management has said the company needs to implement the bonus plan to carry out tasks such as clearing trees and branches around power lines to avert contact that triggers wildfires.

While the maximum cost of the plan is $350 million, PG&E has said it expects the likely cost will be around $235 million.

Judge Dennis Montali of the U.S. Bankruptcy Court in San Francisco at Tuesday’s hearing said he was persuaded to approve the bonus plan, which provides for quarterly payments, after hearing testimony from John Lowe, who is responsible for PG&E’s compensation programs.

Lowe said performance targets would be challenging to achieve and that targets for clearing trees and branches could be raised if PG&E’s state regulator requires it.

“It was helpful for me to hear from him,” Montali said. “Bottom line is I will defer to judgment of management.”

More than half of the plan’s formula for calculating bonuses is pegged to how well employees help PG&E meet safety goals. PG&E has said it aims to remove 375,000 trees around power lines this year to avert the potential for its equipment sparking blazes during California’s next wildfire season.

The plan covers 2019 and takes the place of a previously proposed 2018 bonus program that PG&E scuttled after criticism from wildfire victims and their lawyers.

Investor-owned PG&E sought Chapter 11 bankruptcy protection in January facing the prospect of, potentially, billions of dollars in liabilities in the aftermath of devastating wildfires in Northern California in 2017 and 2018 linked or suspected to be linked to its equipment.

PG&E has said it expects its equipment will be found to have caused November’s Camp Fire. The blaze was California’s deadliest and most destructive wildfire of modern times, killing 86 people and destroying the town of Paradise.

PG&E in a statement said bonuses will paid only if the company meets its safety goals.

“During a Chapter 11 proceeding taking place in a competitive labor market such as California, it is important to offer appropriate employee compensation and incentives to meet the company’s objectives,” PG&E added.

On Monday, PG&E Corp said it submitted a proposal with the California Public Utilities Commission, which if approved would increase monthly bills for some electricity customers by 7 percent to help fund about $28 billion in energy infrastructure investments over the next four years, including $21 billion for electric and gas safety and reliability projects.

Also on Monday, PG&E Corp said it had agreed with BlueMountain Capital Management LLC to appoint a new independent director and a safety adviser, resolving a months-long battle with the activist shareholder.

(Reporting by Christie; Editing by Rosalba O’Brien and Lisa Shumaker)