PG&E Corp. and its beleaguered combination utility, Pacific Gas and Electric Co. (PG&E), were rocked by a sudden setback when its CEO for the past six years, Peter Darbee, announced on Thursday that he was retiring early and the PG&E board accepted his resignation. Lead outside Director Lee Cox, a former telecommunications CEO, will assume Darbee’s chairman/CEO/President role on an interim basis effective April 30.

Darbee and the San Francisco-based utility have been under increasing regulatory and consumer heat, first with unrelenting customer backlash to the state-mandated shift to advanced “smart” meters, and more recently by the San Bruno natural gas transmission pipeline rupture and explosion that left eight people dead and a suburban neighborhood destroyed (see Daily GPI, March 29; March 25; March 14).

PG&E utility President Christopher Johns has taken the lead on both issues which are continuing to unfold in various regulatory and political forums, but Darbee, a long-time financial services industry and telecommunications executive before coming to the energy utility as CFO a decade ago, has been the focus of customer and regulator ire on occasions when he has made public appearances.

The Utility Reform Network (TURN), a San Francisco-based utility watchdog group, called Darbee’s departure “long overdue” as it has criticized the utility CEO for what it called “a series of dramatic and troubling mistakes.” TURN Executive Director Mark Toney said PG&E “has a long way to go to restore public trust.”

While TURN has been calling for Darbee’s resignation for some time, a spokesperson for the consumer group told NGI last Friday that TURN did not actively “lobby” for his departure, and it will not be offering any suggestions for a replacement to the combination utility’s board of directors.

In the past year Darbee led the utility holding company in sponsoring a statewide ballot initiative that was soundly defeated. Proposition 16, for which PG&E shareholders provided more than $44 million, would have required a two-thirds vote of local residents for municipalities to establish public-sector electricity buying or utility operations. Both regulators and legislators reacted against the big utility power play (see Daily GPI, June 2, 2010).

PG&E officials continued to push Prop 16 as a good government measure while acknowledging that it was designed to save its shareholders millions of dollars in future municipalization fights. State political contribution reports at the end of May last year said the spending on Prop 16 was the largest by far of five statewide referendums on the ballot.

Cox said Darbee concluded recently that “a change in leadership would create the best opportunity for PG&E to move ahead after a challenging year. The board supported his decision.” A PG&E director since 1996, Cox said an announcement on a permanent replacement was “expected soon.”

At the California Public Utilities Commission, President Michael Peevey, a former president and director of Southern California Edison Co., urged PG&E directors to recruit someone “technically competent” and with “a long-standing history of performance in the energy industry.” In a further slap at the departing utility leader, Peevey said it was obvious that Darbee’s leadership “has been responsible for several poor and consequential decisions.” Nevertheless, he did not question Darbee’s “commitment” to the utility and its constituents.

In contrast, Cox was effusive in his praise of Darbee for his “exceptional vision and leadership,” which he characterized as moving both the industry and PG&E forward. Darbee called his time at the $10 billion natural gas and electric utility, one of the nation’s largest, an “extraordinary privilege” and he praised the company’s employees as a “dedicated team.”

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