Late Wednesday, after weeks of delays and critiques from California lawmakers, PG&E officially named its new pick for 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.
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.
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; 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 former 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.”
The governor begs to differ
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 Barrera, a former partner at Redwood Capital, and Michael Leffell, founder of Portage Partners, “a privately held company focused on sourcing, analyzing and monitoring nontraditional investment opportunities.”
Newsom spokesperson 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 Assemblymember 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 9/11 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 due to 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.
Source: Greentech Media