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PG&E asks court not to bar it from issuing dividends

Pacific Gas and Electric Co. has asked a federal court judge not to keep it from being able to issue dividends to its stockholders.

The court case at issue stems from the 2010 explosion of a gas pipeline in San Bruno, Calif. On Jan. 30, Judge William Alsup with the U.S. District Court of Northern California in San Francisco found that Pacific Gas and Electric, or PG&E, violated its probation attached to a 2016 conviction on six felony counts related to that explosion. In particular, the court faulted PG&E for failing to properly maintain its transmission equipment and clear vegetation near its power lines, thereby causing the worst wildfire in the state's history.

The judge proposed to modify the probation conditions, including by adding a new one forbidding PG&E from paying dividends.

In response, PG&E in a March 22 court filing argued against the change, explaining that it cannot assure the court of perfect compliance with state vegetation clearance and other requirements.

PG&E has not issued any dividends since 2017 and said it does not plan to do so until it completes reorganization under federal bankruptcy protection, for which it filed in late January. However, the utility told Alsup that it must eventually be able to pay dividends.

"Payment of a dividend is a key way to induce equity investment," PG&E said in its filing. "If PG&E were prohibited from paying a dividend its ability to raise equity capital would be substantially constrained."

That inability would impair the utility's capacity to make improvements it needs to carry out its duty to provide safe and reliable service and reorganize to benefit all Californians, the utility continued.

The PG&E Corp. subsidiary filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of California early on Jan. 29, citing billions of dollars in potential liabilities from recent California wildfires that started due to its electrical equipment igniting the blazes. One of those fires, known as the Camp Fire, destroyed the town of Paradise, Calif., in late 2018 and is considered the deadliest and most devastating blaze in California's history.