By Hudson Sangree
Embattled PG&E Corp. named the outgoing head of the Tennessee Valley Authority as its CEO and assembled a “refreshed” board of 13 directors that includes a former FERC commissioner and a member of the Western Energy Imbalance Market’s Governing Body, the company announced Wednesday.
PG&E called the moves a response to safety concerns in the wake of catastrophic wildfires.
“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,” PG&E said in a news release.
Critics said the changes didn’t go far enough.
“I’m not impressed,” said Assemblyman Chris Holden, chairman of the California State Assembly’s Utilities and Energy Committee. “I don’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. It appears the priority in this selection was protecting shareholders over ratepayers.”
PG&E and its utility subsidiary Pacific Gas and Electric are undergoing a Chapter 11 bankruptcy reorganization after two years of massive wildfires left the companies facing billions of dollars in liability. The utility remains on criminal probation for its role in the San Bruno pipeline explosion of 2010. (See PG&E Wants to Undo Contracts, Revamp Biz in Bankruptcy.)
Critics have called for major changes in the company’s safety culture, and some expressed concern Wednesday that PG&E’s new leadership might not be up to the task. The latest changes were backed by three hedge funds that hold large stakes in PG&E, The New York Times reported.
“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,” Nathan Click, a spokesman for California Gov. Gavin Newsom, said in a statement.
The changes announced Wednesday include the appointment of Bill Johnson as president and CEO. Johnson replaces former CEO Geisha Williams, who resigned before PG&E filed for bankruptcy protection in January. (See PG&E Says It Will File Bankruptcy, as CEO Steps Down.)
Johnson served for six years as head of TVA, the federally owned electricity supplier in the southeastern U.S. He was previously president of Progress Energy, which merged with Duke Energy in 2012. Johnson served as CEO of Duke for less than a day before leaving with a $44 million severance package, news outlets reported at the time.
“During Mr. Johnson’s time at TVA, the organization achieved the best safety records in its 85-year history and has been a perennial top decile safety performer in the utility industry,” PG&E said in its news release.
The newly named slate of directors, which must be approved at PG&E’s next board meeting, is likely to face opposition from unhappy investors at the company’s annual shareholder meeting on May 21. BlueMountain Capital, a large PG&E shareholder, has assembled its own slate of directors led by former California State Treasurer and gubernatorial candidate Phil Angelides.
“People need to be clear about what this board is,” Angelides said. “After meetings in secret between PG&E and hedge fund investors, [PG&E announced this slate]. I don’t think anyone should be under an illusion that this represents a change from the current board or a change in the company.”
Nearly half the 13 named members are from hedge funds, Angelides said, and three are incumbents of a board that he said has “objectively failed.” PG&E “is in parole. It’s in bankruptcy. … This board does not bode well for the company or the people of California,” he said.
The utility needs directors with safety experience and green energy credentials, Angelides said. BlueMountain’s slate of candidates has such members — including Christopher Hart, a former chairman of the National Transportation Safety Board — though it will be an “an uphill battle to dislodge a company-nominated slate,” he said.
Angelides served as chairman of the federal Financial Crisis Inquiry Commission, which was charged with investigating the causes of last decade’s financial collapse.
PG&E’s newly named directors include former FERC Commissioner Nora Mead Brownell, who helped oversee the transition of NERC to FERC oversight during her term (2001-2006). Brownell, who later co-founded energy consulting firm ESPY Energy Solutions, also has served on the boards of directors of National Grid and Spectra Energy Partners and the advisory board of Morgan Stanley Infrastructure Partners.
Brownell did not respond to requests for comment Thursday.
Kristine Schmidt, a member of the EIM Governing Body, was also named as a new PG&E board member. Schmidt worked as a technical adviser to Brownell at FERC. She is president of Swan Consulting Services.
Schmidt could not be reached for comment Thursday. The EIM referred an interview request to PG&E, which said “we’ll consider these sorts of requests once our new directors are onboarded.”
Cheryl Campbell, former senior vice president of Xcel Energy, was also named as a director Wednesday.
Other members of the updated 13-member board include three holdovers from the current leadership: Richard Kelly, the retired chairman and CEO of Xcel Energy and current chairman of PG&E’s board; Fred Fowler, retired chairman of Spectra; and Eric Mullins, co-CEO of Lime Rock Resources, a private equity oil and gas investment firm.
Investment and asset managers make up the remainder of the board, along with a diplomat and an attorney. PG&E said it hopes to confirm the new directors at its next in-person board meeting, “which will be held as soon as practicable,” the utility said.