Pacific Gas and Electric halts preferred stock dividend after fires

New York, Dec. 21 – Pacific Gas and Electric Co. is suspending the dividend on its preferred stock beginning with the three-month period ending Jan. 31, according to a news release.

The board of directors took the decision because of uncertainty related to potential liabilities associated with the wildfires in northern California during October.

Parent PG&E Corp. is suspending the quarterly cash dividend on its common stock beginning with the fourth quarter of this year for the same reason.

PG&E said that the cause of the fires has not yet been identified but it noted that California courts have applied inverse condemnation to events caused by utility equipment.

“This means that if a utility’s equipment is found to have been a substantial cause of the damage in an event such as a wildfire – even if the utility has followed established inspection and safety rules – the utility may still be liable for property damages and attorneys’ fees associated with that event,” the company said in the news release.

“After extensive consideration and in light of the uncertainty associated with the causes and potential liabilities associated with these wildfires as well as state policy uncertainties, the PG&E boards determined that suspending the common and preferred stock dividends is prudent with respect to cash conservation and is in the best long-term interests of the companies, our customers and our shareholders,” said PG&E board chairman Richard C. Kelly in the release.

“We fully recognize the importance of dividends and intend to revisit the issue as we get more clarity. In the meantime, PG&E is committed to working with state policymakers to address the negative investment environment that strict liability under inverse condemnation is creating for California’s utilities. This ultimately hurts our customers and the state. The company also remains committed to supporting recovery and rebuilding efforts by those communities that were impacted by these devastating fires.”

Pacific Gas is a utility subsidiary of PG&E, a San Francisco-based energy holding company.

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