‘We are not in an energy crisis,’ Newsom says of PG&E bankruptcy
Gov. Gavin Newsom accused PG&E Corp.’s top executive Thursday of paying lip service to public safety, saying the troubled utility is planning to stock its board of directors with hedge-fund managers and others interested only in “prioritizing quick profits.”
In a blistering letter to interim Chief Executive Officer John Simon, the governor belittled PG&E’s plan to overhaul its board of directors and said the company is ignoring candidates with experience in wildfire safety.
“I am troubled to learn that PG&E is primed to reconstitute its board with hedge fund financiers, out-of-state executives and others with little or no experience in California and inadequate expertise in utility operations, regulation and safety,” Newsom wrote.
“With this move, PG&E would send a clear message that it is prioritizing quick profits for Wall Street over public safety and reliable and affordable energy service,” Newsom added. “Time and again, PG&E has broken the public trust and its responsibilities to ratepayers, wildfire victims, and employees. This board appears to be more of the same.”
The new board would be elected at the company’s annual shareholder meeting in May.
The letter was extraordinary in part because PG&E has yet to actually release its new board of directors slate. Previously, the company has promised to replace at least five of 10 current board members to restore “trust and credibility” and improve its safety culture.
Pacific Gas and Electric Co., responding to Newsom’s letter, said: “We understand and recognize the serious concerns expressed by the Governor and share the Governor’s urgency for action. We recognize the importance of adding perspectives to the Board that will bring about the right changes in safety, as well as help address the serious operational and financial challenges the business faces now and in the future.”
PG&E filed for Chapter 11 bankruptcy in late January after saying its liabilities from the 2017 and 2018 wildfires could hit $30 billion. The bankruptcy filing has prompted speculation that Pacific Gas and Electric Co. could be forced to sell off major parts of its business to repay its creditors. At the same time, the Public Utilities Commission and state legislators are wrestling with how to ensure that wildfire survivors are made whole but utility rates are kept in check.
Until now, Newsom has said relatively little about PG&E’s future other than to say he and his advisers are meeting frequently about the utility. In his letter, he said the company should stock its board of directors with “Californians who have experience as regulators, safety experts and clean energy leaders.”
Separately, a dissident shareholder named BlueMountain Capital Management is running its own slate of candidates for the PG&E board. The slate includes Sacramento developer and former State Treasurer Phil Angelides and a former top official with the National Transportation Safety Board, Christopher Hart. Hart oversaw the agency’s probe of the 2010 natural gas pipeline explosion that killed eight people in San Bruno. The explosion cost PG&E $1 billion and resulted in a criminal conviction of the company.
BlueMountain issued a statement applauding Newsom’s letter: “We are encouraged to see the Governor take an active role here.”
PG&E stock fell 43 cents a share Thursday to close at $17.25 on the New York Stock Exchange.