PG&E named a new chief executive officer and overhauled its board of directors Wednesday. But the move, brokered by three major hedge funds, left Gov. Gavin Newsom saying the utility could still be too beholden to Wall Street.
Bill Johnson, the retiring head of the Tennessee Valley Authority, was named CEO of the embattled utility, which filed for Chapter 11 bankruptcy under the weight of $30 billion in wildfire liabilities. The company also named 10 new directors to its board.
“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,” the company said in a press release.
But Newsom – who previously ripped PG&E over its planned changes to the board of directors – said he isn’t convinced the company has gone far enough.
“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,” his chief spokesman Nathan Click said in an emailed statement.
PG&E’s bankruptcy has become a major headache for regulators and elected officials who are trying to keep utility rates in check while making sure wildfire survivors get paid. PG&E is potentially liable for damages in more than a dozen of the October 2017 fires plus the November 2018 Camp Fire, the deadliest and most destructive in California’s history.
Johnson will replace John Simon, a PG&E executive who became interim CEO when his predecessor Geisha Williams resigned from the company just before it filed for bankruptcy in late January.
PG&E acknowledged that the shakeup was conducted in consultation with three hedge funds that own a combined 9.8 percent of PG&E Corp.’s stock: Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management. The three funds disclosed in Securities and Exchange filings last month that they had banded together and were proposing leadership changes to PG&E.
The new board members announced Wednesday include Nora Mead Brownell, a former commissioner on the Federal Energy Regulatory Commission. But it also includes people with ties to Wall Street. Among them is Richard Barrera, who formerly was a partner at Redwood Capital.
A week ago Newsom, based on reports circulating about PG&E’s plans to remake its board, accused the company of “prioritizing quick profits” over fire safety and other issues.
PG&E’s announcement came a day after a federal judge declared that he would oversee PG&E’s efforts to eliminate wildfire. The judge, William Alsup, who is in charge of PG&E’s criminal probation, also ordered the utility not to pay shareholder dividends “until it is in compliance with all applicable vegetation management requirements.” PG&E halted dividend payments after the 2017 fires.
PG&E is on probation after being convicted in connection with the deadly 2010 natural gas pipeline explosion in San Bruno.