PG&E’s New CEO and Board Draw Criticism From Governor, State Leaders

Late Wednesday, after weeks of delays and critiques from
California lawmakers, PG&E
officially named
 its pick for new CEO — Bill Johnson, former
head of the Tennessee Valley Authority — and a plan to replace 10
of its 13 directors with a slate that includes former energy
executives and regulators, corporate restructuring experts, and at
least four residents of the state. 

But PG&E’s plan faces opposition from Gov. Gavin Newsom,
who believes the new board still favors “Wall Street
interests,” and is more focused on getting the utility out of
bankruptcy with minimal damage to shareholders than on reforming
the utility’s troubled safety record. California’s largest
utility filed for
Chapter 11 bankruptcy
protection in late January, driven by an
estimated $30 billion in legal liability to cover the costs of
wildfires from 2017 and 2018.

PG&E’s new board slate includes several high-profile names
from the energy industry, including Nora Mead Brownell, former
member of the Federal Energy Regulatory Commission (FERC), Cheryl
Campbell, a senior vice president at Xcel Energy, Fred Fowler,
former CEO of natural gas pipeline company Spectra Energy, and
current board member Richard Kelly, former CEO of Xcel Energy. It
also includes several California residents, such as Jeffrey
Bleich, a partner at the law firm Dentons, and Dominique Mielle,
a partner and Senior Portfolio Manager at Canyon Capital Advisors
who has “played key roles in complicated bankruptcies.” 

“We have heard the calls for change and have taken action
today to ensure that PG&E has the right leadership to bring
about real and dynamic change that reinforces our commitment to
safety, continuous improvement and operational excellence,” the
board said in a news release. “We believe our new CEO and the
newly constituted board will help PG&E address California’s
evolving energy challenges and deliver what our customers expect
from their energy company.”

PG&E’s slate also includes several members representing
the three investors — Abrams Capital Management, Knighthead
Capital Management and Redwood Capital Management — that now own
about 10 percent of the utility, and which worked with the utility
to put Wednesday’s picks forward. Members include Richard
Barerra, a former partner at Redwood Capital, and Michael Leffell,
founder of Portage Partners, “a privately held company focused on
sourcing, analyzing and monitoring non-traditional investment
opportunities.”

Newsom spokesman Nathan Click stated: “Time and again,
PG&E has broken the public trust and its responsibilities to
ratepayers, wildfire victims and employees. While changes were made
in the last few days to augment the safety and government expertise
on the board, this proposed board still raises concerns —
particularly the large representation of Wall Street interests and
most board nominees’ lack of relevant California
experience.”

California Assemblyman Chris Holden, a Democrat who chairs the
Assembly’s Utilities and Energy Committee, said in a statement
that he didn’t “see much in this collection that indicates that
they are going to watch out for anything but their bottom line, but
we’ll see.” And state Sen. Jerry Hill, who represents the
district including San Bruno, the site of PG&E’s deadly 2010
gas pipeline explosion, told the San Francisco Chronicle he was
concerned that the Wall Street representatives on the board would
prioritize “financial return and profits rather than a cultural
shift to safety.”

This significant opposition from state government has been
echoed by minority investor BlueMountain Capital Management, which
owns about 2 percent of PG&E, and has nominated its own 13
candidates for PG&E’s board. BlueMountain’s slate includes
former California Treasurer and U.S. Financial Crisis Inquiry
Commission Chairman Phil Angelides, and Kenneth Feinberg, the
attorney who oversaw the Sept. 11 victim compensation fund and the
Deepwater Horizon oil spill fund. 

The decision to pick Bill Johnson, 65, to replace outgoing
PG&E CEO Geisha Williams, came under criticism for decisions
made during his tenure at South Carolina utility Progress Energy,
where he oversaw a failed renovation of its Crystal River nuclear
power plant. Johnson has also been criticized for his one-day
tenure as CEO of Duke Energy after it merged with Progress Energy,
before he was ousted and given a $44 million severance
package. 

The fallout from PG&E’s
bankruptcy
 has become California’s most pressing policy
crisis. The utility is under intense pressure to improve its
wildfire safety efforts. State lawmakers, utility regulators and
other key energy stakeholders are
considering radical alternatives
 for the state’s largest
utility, including breaking up its electric and gas businesses,
shifting it to a “wires-only” electricity provider, and
converting it into separate publicly owned and operated
entities.

Source: FS – GreenTech Media
PG&E’s New CEO and Board Draw Criticism From Governor, State Leaders