Governor Blasts PG&E, Says Utility Is Focused on 'Quick Profits' Over Safety

Gov. Gavin Newsom issued a public rebuke to PG&E management on Thursday, charging that the embattled company is about to stack its board of directors with "hedge fund financiers, out-of-state executives" and others who have little knowledge of California and lack expertise in how to run a utility safely.

"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 said in a letter to John Simon, the utility's interim CEO.

"Time and again, PG&E has broken the public trust and its responsibilities to ratepayers, wildfire victims, and employees," Newsom wrote. "This board appears to be more of the same. It raises serious doubts about the company’s commitment to make changes needed to deliver safe, reliable and affordable power to Californians."

Newsom's comments came after a Bloomberg report that said several large firms that hold the PG&E now-shaky bonds were crafting a plan that would take the utility out of bankruptcy, set up a $14 billion fund to pay victims of fires the utility's equipment started in 2017 and 2018, provide operating capital and repay creditors.

A legislative aide to state Sen. Bill Dodd, D-Napa, said the governor had received a list of board nominees but has not shared it. Newsom's office didn't respond immediately to questions about which specific individuals the governor is concerned.

The governor's letter said new PG&E board members must "understand the imperative for change and the need to prioritize the interests of the people of California."

The board should include "a majority of Californians who have experience as regulators, safety experts and clean energy leaders. 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," the letter said.

In a statement, PG&E said it understands the governor's concerns and shares his sense of 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," the company said.

PG&E shareholders are scheduled to elect a new board of directors at the company's annual meeting on May 21. The period for nominations has been extended several times and is currently scheduled to end Friday evening.

The future direction and management of the company have been the subject of intense speculation since the day after the Camp Fire erupted in early November. That's when the company acknowledged in a report to the California Public Utilities Commission that the Butte County blaze broke out adjacent to one of its transmission towers along the Feather River.

The company has since conceded that it expects investigators to conclude that its equipment started the blaze, which killed 85 people and destroyed nearly 14,000 homes in and around the town of Paradise.

PG&E had already faced huge potential liabilities from the 2015 Butte Fire, in Amador and Calaveras counties, and the October 2017 Northern California fire siege. Facing the possibility of having to pay for losses in the Camp Fire as well -- a bill the company said could come to at least $30 billion -- PG&E filed for Chapter 11 bankruptcy protection on Jan. 29.

The company already faces one call to replace its entire board and install directors with more specific experience in utility operations, safety culture, financial turnarounds and California regulatory affairs.

BlueMountain Capital Management, a hedge fund that fought the current board's decision to seek bankruptcy protection, said in a statement Thursday that it agrees with Gov. Newsom.

"As we have said previously, PG&E needs a board with proven experience in safety, claims resolution, utility operations, finance and turnarounds, and California business and public policy," BlueMountain said. "These are all qualifications the BlueMountain slate has and we are encouraged to see the governor take an active role here. The current board of PG&E should seat our nominees immediately."