Calif. Governor, Senator Criticize Plans For New PG&E Board

SAN MATEO, CA -- The banter over how Pacific Gas & Electric is managed has continued to electrify the utility company's critics.

California Sen. Jerry Hill, (D-San Mateo) threw out his opinion of Gov Gavin Newsom’s letter to the PG&E Chief Executive Officer John Simon that was recently released regarding its plans over how the beleaguered utility giant will stack its board of directors. Both Hill and Newsom took issue with what appears to be the board's outsider, hedge-fund types who have little stake in the Golden State's history and current leanings.

"Gov. Newsom is right on target in his assessment of PG&E and the critical need for leadership that best serves the needs of California. It appears that PG&E intends merely to restock its board with different faces, rather than assemble a team with the experience and the expertise to guide the transformation of a utility company that has lost the public’s trust," Hill said.

The senator, who serves San Mateo and Santa Clara counties, is still reeling over his perception of PG&E's lackluster response to safety operations since the 2010 San Bruno pipeline explosion. The criticism was heightened through the last devastating fire years in Northern California in which the utility company's power lines - some tied to broken connections - had a role in sparking wildfires. The most destructive and deadly was Butte County's last November, which leveled the town of Paradise, destroyed almost 20,000 structures and killed 86 people.

Hill advocates starting a government-run system, as PG&E contends with bankruptcy.

"If PG&E persists in these hollow efforts to reconstitute its board, control of PG&E should be placed in other hands as the bankruptcy proceeds. In the nearly 10 years since the explosion of a PG&E gas pipeline that killed eight people and leveled a neighborhood in San Bruno, PG&E has yet to truly demonstrate that its priority is to provide safe, efficient and reliable service to its 16 million customers in California," Hill said. "Instead, over and over, PG&E has perverted the public’s perception of a public utility. It’s high time for new leadership on PG&E’s board, but it does not appear that the company is capable of making sound selections."

Newsom, new to the governor seat, expressed his concern to PG&E's Interim Chief Executive Officer John Simon in a letter.

"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. 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 wrote. "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. It raises serious doubts about the company’s commitment to make changes needed to deliver safe, reliable and affordable power to Californians."

At one point, Newsom declared "California deserves better."

He continued with a recommendation to reconsider the makeup of its board. The governor would like to see more board members "who have experience as regulators, safety experts and clean energy leaders."

PG&E responded Monday to the governor's concern.

"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 spokesman Paul Doherty said.

As PG&E conducts a board refreshment, the majority of the directors of the company will consist of "independent directors" by the time of the annual meeting set for May 21 in which new candidates will be considered.

At this time, names of the incoming board will be released.

"The company appreciates the constructive dialogue that it has had with shareholders and other stakeholders throughout this process," Doherty added.

The new PG&E board is listed as follows:

Jeffrey Bleich: partner in Dentons law firm
Nora Mead Brownell: Former commissioner of Federal Energy Regulatory Commission
Richard Barrara: Founder of Roystone Capital Management
Cheryl Campbell: Former executive of Xcel Energy
William Johnson: Outgoing CEO of Tennessee Valley Authority
Michael Leffell: Founder of Portage Partners investment firm
Kenneth Liang: Former head of restructurings of Oaktree Capital Management
Dominique Mielle: Former partner of Canyon Capital Advisors and Stanford MBA
Meridee Moore: CEO of Watershed Asset Management
Kristine Schmidt: Consultant and former adviser of the Federal Energy Regulatory Commission
Alejandro Wolffe: Former U.S. ambassador of ChileThe current PG&E board includes:

• Lewis Chew, Dolby Laboratories
• Fred Fowler, retired from Spectra Energy (also with new board)
• Richard Kelly, PG&E (also with new board)
• Richard Meserve, Carnegie Institution
• Forrest Miller, PG&E
• Benito Minicucci, Alaska Airlines
• Eric Mullins, Lime Rock Resources (also with new board)
• Rosendo Parra, retired from Dell Inc.
• Barbara Rambo, Taconic Management Services
• Anne Smith, retired from Southern California Gas Co.