Capitol Alert

PG&E’s new leader is nation’s highest-paid federal employee

PG&E’s newly-appointed chief executive officer leaves his old job with a mixed record on renewable energy, a potentially costly entanglement from an environmental spill in Tennessee, and a singular distinction: He’s been the highest-paid federal government employee in the country.

As the head of the government-owned Tennessee Valley Authority, PG&E’s new leader Bill Johnson made $8.1 million in total compensation last year, according to public documents. The Knoxville News Sentinel in Tennessee said that’s more than any other federal employee, anywhere.

Johnson was named CEO late Wednesday as the utility, struggling in Chapter 11 bankruptcy, faces enormous pressure from California regulators and elected officials to improve its safety record. PG&E estimates that it could have to pay $30 billion to cover liabilities from the October 2017 wildfires and last November’s Camp Fire, the worst fire in California’s history. He is wrapping up his tenure in Tennessee this week and takes over at PG&E in late April.

In a prepared statement accompanying PG&E’s announcement, Johnson, 65, pledged a “steadfast commitment to providing safe and reliable power.” PG&E said the Tennessee Valley Authority “achieved the best safety records in its 85-year history” during Johnson’s six years as CEO of the TVA, which was founded during the New Deal to deliver electricity to parts of the Southeast. He was unavailable for comment.

PG&E wouldn’t disclose Thursday how much Johnson will earn, other than to say it will be made public later and will be subject to approval of the bankruptcy judge. The utility added that it sets executive pay in line with other companies in its industry, and that more than half of Johnson’s incentive pay “will be directly tied to safety performances and metrics.” Executives receive a combination of base salary and incentive pay.

Former CEO Geisha Williams, who resigned just before PG&E filed for bankruptcy in January, made $8.6 million in 2017, the last year for which compensation records are available. She also was eligible for a $2.6 million severance package. PG&E has been led by an interim CEO, John Simon, since Williams left.

Johnson and the reformulated PG&E board of directors — appointed under a deal brokered by three hedge funds that own a combined 10 percent PG&E stock — have already received a lukewarm welcome from some California officials.

Gov. Gavin Newsom said the new board has too many “Wall Street interests.”

Johnson’s $8.1 million in compensation last year represented a 22 percent increase from the year before, according to filings with the Securities and Exchange Commission. Other top TVA executives also got significant increases, including a 22 percent hike for the agency’s chief operating officer and a 24 percent raise for its general counsel.

Johnson has worked in the utility industry for decades, and has career has taken some odd but lucrative turns. In 2012 he was set to run North Carolina-based Duke Energy after Duke merged with his old company. His tenure at Duke lasted exactly one day but he walked away with an exit package widely reported at $44 million. His abrupt departure from Duke hasn’t been explained.

The TVA has been dogged by serious problems stemming from the cleanup of a major coal-ash spill in Kingston, Tenn., in 2008. Jacobs Engineering Group, the contractor TVA hired to clean the mess, is being sued by workers over serious health problems that reportedly killed at least 40 employees.

The TVA isn’t being sued, but disclosed to the Securities and Exchange Commission in January that it “could be contractually obligated to reimburse Jacobs for some amounts” of the financial damages. Meanwhile, the Knoxville newspaper reported this week that employees at two other TVA plants are being exposed to a form of coal ash and another dangerous substance, flue gas.

Maggie Shober of the Southern Alliance for Clean Energy, an advocacy group based in Tennessee, said the TVA isn’t blameless for the cleanup problems in Kingston. “The buck stops there; they have to be held responsible for who they hire,” she said.

In a statement released a month ago, the TVA said it “put the safety of its workers and contractors first” in the coal spill cleanup. Jim Hopson, a spokesman for the TVA, said the cleanup was mostly completed before Johnson joined the TVA in early 2013.

PG&E declined to comment on the coal cleanup.

Shober also faulted Johnson’s commitment to solar power and other forms of renewable energy — a potentially delicate issue in light of California’s pledge to wean itself off fossil fuels in the coming years. According to Shober, the TVA during Johnson’s tenure has lagged other utilities in the Southeast in shifting to renewables.

The TVA generated 13 percent of its power last year from hydro and solar energy, plus another 40 percent from nuclear. One third of PG&E’s power is 33 percent renewable, but clean-energy advocates are worried that the utility will use the bankruptcy case to opt out of some of its purchase contracts with solar providers. PG&E has filed a court action demanding the authority to sever some of those contracts, noting that much of its solar power is being delivered at “above-market rates.”

With California law requiring utilities to be 60 percent renewable by 2030, “that’s going to really require procuring unprecedented amounts of renewable energy, solar and wind,” said Adam Browning at Vote Solar, an Oakland advocacy group.

“We deserve leadership that is both enthusiastic about the goal and has a track record of being able to deliver on it,” Browning said. “(Johnson’s) resume is heavy on coal and gas.”

However, Jan Smutny-Jones of the Independent Energy Producers Association in Sacramento, which represents renewable energy companies, said Johnson’s ability to straighten out PG&E is the most pressing issue. Without a healthy PG&E, the state can’t achieve its clean-energy goals, he said.

“The No. 1 priority ... is we need to get PG&E stable and the fire situation under control,” he said.

The TVA gets 26 percent of its electricity from coal, although that’s down from 58 percent in 2007. And the agency made waves in February by agreeing to close a coal plant in Kentucky in 2020, rejecting pleas from President Donald Trump and Senate Majority Leader Mitch McConnell, R-Kentucky.

Shober, however, the TVA is closing the coal plant because it doesn’t make economic sense to keep it going. “It wasn’t a decision Bill Johnson was making because he wants to reduce emissions,” she said.

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