PG&E boss out as wildfire costs burn hole in Californian utility’s bottom line
The chief of California’s largest utility has stepped down as liability costs from bushfires push it towards collapse.
PG&E has announced that its chief executive Geisha Williams is stepping down as the company grapples with the growing political and financial fallout of its role in helping spark California wildfires.
California’s largest utility said John Simon, the company’s general counsel since 2017, will serve as interim CEO as PG&E’s board of directors conducts a search for a new chief.
PG&E faces billions of dollars in potential liability costs stemming from wildfires, many started by the company’s equipment, that have led state regulators, lawmakers and others to question the safety of the company’s electric distribution system.
Investigators have already found PG&E’s equipment responsible in at least 17 major wildfires in 2017. State investigators haven’t determined whether the company played a role in November’s Camp Fire, the deadliest in California history, but the company disclosed that some of its equipment malfunctioned in the area shortly before the fire started.
The California Public Utilities Commission has stepped up a continuing probe into the company’s safety practices and is considering whether the company should be broken up, among other things.
“While we are making progress as a company in safety and other areas, the board recognises the tremendous challenges PG&E continues to face,” PG&E Chairman Richard Kelly said in a statement announcing Ms. Williams’ departure Sunday evening. “Our search is focused on extensive operational and safety expertise, and the Board is committed to further change at PG&E.”
Ms. Williams couldn’t immediately be reached for comment Sunday evening. Her 2017 total compensation was $US8.6 million.
The company said earlier this month that it plans to shake up its board of directors and institute other changes, though it didn’t specify what those might be.
Ms Williams joined PG&E in 2007 and rose through the ranks as the company was put on the defensive from criticism by federal pipeline-safety officials. The officials said PG&E’s gas pipeline system was a public threat after a 2010 pipeline explosion in San Bruno incinerated a neighbourhood and killed eight people.
Ms Williams, who once worked on hurricane response at Florida Power & Light, now owned by NextEra Energy Inc., represented PG&E at a town hall as officials were still finding bodies in San Bruno, answering questions from angry residents. PG&E later promoted her to senior vice president of electric operations. She became CEO in 2017.
Mr Simon, PG&E’s interim CEO, became the executive vice president and general counsel in March 2017. He joined the utility a decade earlier and had previously been the head of human resources. He earned total compensation of $3.76 million in 2017.
Numerous top executives have left the company in recent days. Patrick Hogan, senior vice president of the electric operations unit for Pacific Gas and Electric Co., was last week replaced by Michael Lewis, another executive within the electric division. Two other executives in the electric division, Kevin Dasso and Gregg Lemler, will retire by the end of the month.
Michael Wara, head of the climate and energy policy program at Stanford University’s Woods Institute, said the decision to appoint a new chief executive is a step PG&E needed to take to begin re-establishing trust with its regulators and the state.
“That is not to say that Geisha Williams is to blame, but the reality is she has been the person in charge during this time and made executive decisions regarding how to manage this risk,” he said. “She is accountable.”
Paul Patterson, an analyst who follows PG&E at Glenrock Associates LLC, said Ms Williams’ exit appears designed to appease California political leaders more than Wall Street.
“Making management changes is something the state is looking for, and handing the head of the CEO might placate the state,” he said.
The long-term health of the company depends on what actions the state takes to help it pay for fire-related liabilities. Credit agencies recently downgraded PG&E and raised the possibility of bankruptcy, given the enormous liability costs it could face.
California law makes utilities responsible for any fire started by their equipment, even if they weren’t negligent. PG&E faces dozens of lawsuits from residents and insurers seeking compensation for fire damages. Analysts have estimated that PG&E could face as much as $US30bn in wildfire liability costs.
State lawmakers are considering whether to let PG&E turn much of its liabilities into securitised debt, which customers would pay off through their electricity prices. But public criticism of PG&E is mounting, complicating the prospect of a move that could be viewed as a bailout for the company.
State Sen. Jerry Hill, a longtime critic of the company, called the move to replace Ms. Williams long overdue. But he added that the management shake-up won’t affect the key question facing the utility and its ratepayers: whether California would provide PG&E with the financial aid it needs to survive.
“I don’t believe the state is willing to make that decision, nor should it,” he said.
The company said the board will look for a new CEO with operational and safety experience.
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