SACRAMENTO — California Gov. Gavin Newsom said Thursday that Pacific Gas & Electric Corp. plans to remake its board of directors with hedge fund financiers and people who have little experience in utility operations and safety, and he urged the utility’s leader to change course.
“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, a Democrat, said in a public letter to John Simon, the utility’s interim chief executive.
The San Francisco-based utility is in the midst of Chapter 11 bankruptcy proceedings after it said it could not afford billions of dollars in liability related to deadly California wildfires in 2017 and 2018. It had previously announced plans to replace most of its board by its annual shareholder meeting in May.
But the company has not announced its slate of candidates for the new board. Newsom’s office was briefed by PG&E executives on their proposed slate in recent days, spokesman Nathan Click said. The governor’s office is not releasing the names either.
Starting Deadly Blazes Across California
A spokeswoman for the utility did not directly address who the utility is planning to name for the board or when it will make an announcement. Lynsey Paulo said the utility understands “the serious concerns expressed by the governor” and his urgency.
“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,” she said in an emailed statement.
PG&E, the nation’s largest utility, has faced intense scrutiny over its equipment’s role in starting deadly blazes across California. A federal judge is overseeing a separate criminal conviction PG&E received for its role in a 2010 gas line explosion that killed eight people.
Newsom said PG&E should remake its board with a majority of Californians with backgrounds as regulators, safety experts and in clean energy.
“Any new board member should be resolved to change the culture of the company, understand the concerns of ratepayers and demonstrate a commitment to the fair treatment of wildfire victims and employees,” his letter said.
Criticizing the Bankruptcy Declaration
BlueMountain Capital Management, a PG&E shareholder that has criticized the bankruptcy declaration, has put forward its own slate of 13 new board members.
“PG&E needs a board with proven experience in safety, claims resolution, utility operations, finance and turnarounds, and California business and public policy,” the shareholder group said in an emailed statement.
Shareholders will elect a new board at the May 21 annual meeting, either voting for or against nominees put forward by a nominating and governance committee. Board members on average serve for more than seven years, according to information prepared ahead of the 2018 annual meeting. Board members for the corporation also serve on the board of the utility.
The Utility Reform Network, a consumer advocacy group, praised Newsom’s public comments.
“It was a very good thing for the governor to serve notice that replacing the board with the same kind of Wall Street interests that have put profits in front of safety for so many years is not going to solve the problem,” executive director Mark Toney said.