Chapter 11 bankruptcy-bound PG&E Corp. and utility Pacific Gas and Electric Co. (PG&E) late Wednesday named former public power executive Bill Johnson as CEO along with 10 directors, which it said would create reconstructed oversight at California’s multi-billion dollar combination utility.
Johnson, who recently finished a six-year stint leading the Tennessee Valley Authority (TVA), the nation’s largest public power entity, is to join PG&E later this month. He previously was CEO at Progress Energy, now a Duke Energy subsidiary.
The PG&E board said that during Johnson’s tenure at TVA half of its coal-fired generation capacity was closed and more than 1,000 MW of solar was added, resulting in a steep reduction of carbon emissions.
“Throughout his career, Johnson has collaborated closely with elected officials and other community leaders to deliver safe, reliable electricity to millions of customers,” the board said.
California Gov. Gavin Newsom in March urged the rejection of new oversight board members. Last Thursday, his chief spokesperson Nathan Click said the board “still raises concerns, particularly the large representation of Wall Street interest and most board nominees’ lack of relevant California experience.”
Noting that PG&E has “broken the public trust,” Click said “safe, reliable and affordable energy service should be the driving focus — not short-term financial gains.” Similarly, a state lawmaker involved in crafting wildfire mitigation legislation for the state’s utilities was critical of the PG&E leadership changes.
“I’m not impressed, and 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 [longer term],” said Assemblymember Chris Holden, who chairs the lower house Energy and Utilities Committee. “The legislature will be keeping an eye on what immediate action PG&E’s new board will take to make sure wildfire victims, ratepayers and our clean energy goals are not left out of the picture.”
PG&E’s major leadership change comes at a time when many stakeholders and the financial community are calling for bold action. The California legislature and Wall Street continue to search for solutions to the multi-billion dollar cloud hanging over the San Francisco-based utility following two years of costly wildfires and the bankruptcy process.
PG&E’s board said it “has heard the call for change,” and its latest actions are designed “to ensure that PG&E has the right leadership to bring about real and dynamic change reinforcing a commitment to safety, continuous improvement and operational excellence.”
The board members, who would join three continuing directors, include: Jeffrey Bleich, former U.S. ambassador to Australia; Alejandro Wolff, former U.S. ambassador to Chile; and Nora Mead Brownell, who formerly served on the Federal Energy Regulatory Commission.
In addition, PG&E nominated Richard Barrera, private equity (PE) investor; Cheryl Campbell, a former Xcel Energy Inc. executive.; Michael Leffell, founder of a PE firm; and Kenneth Liang, former senior managing director at Oaktree Capital Management. Investment sector executives Dominique Mielle and Meridee Moore were also nominated to the board, along with Kristine Schmidt, a veteran electric industry executive.
The board appointments were to take effect at the next in-person meeting.
California’s legislature and governor are considering various scenarios, including breaking up PG&E, and recommendations are expected this spring.
Moody’s Investors Service this month looked inside the bankruptcy process to assess options for PG&E to shed at least part of 387 purchased power agreements (PPA) for more than 13,000 MW of renewable-based generation valued at $42 billion. Moody’s said the utility could save $1.4 billion annually by rejecting its PPAs above market costs, but noted abandoning the deals could put California’s climate change-driven goals in jeopardy.
Some estimates put PG&E’s overall liabilities at $30 billion.
“Contract rejection begins to make sense if the total liabilities facing PG&E are so high that a share-the-pain strategy is unavoidable given uncertainty around future wildfires,” said Moody’s Vice President Clifford Kim. However, Moody’s analyst Gayle Podurgiel said honoring the PPAs is ultimately “a quicker, more straightforward path through bankruptcy.”
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