PG&E chief leaves as util­ity teeters at edge of bank­ruptcy

CEO steps down from firm that could have to pay bil­lions over li­a­bil­ity for wild­fires.

Los Angeles Times - - FRONT PAGE - Times staff and wire re­ports

The largest wild­fire in state his­tory claimed an­other vic­tim Sun­day: one of the most pow­er­ful women in cor­po­rate Amer­ica.

Geisha Wil­liams, chief ex­ec­u­tive of PG&E Corp., stepped down from the trou­bled San Fran­cisco com­pany, which is on the brink of bank­ruptcy be­cause of tens of bil­lions of dol­lars of dam­ages it could be forced to pay.

Wil­liams, 57, has run the com­pany since March 2017, dur­ing which time PG&E has faced a string of both nat­u­ral and self-in­flicted blows that have marred the util­ity’s rep­u­ta­tion and fi­nan­cial health.

Wil­liams also stepped down from the boards of the hold­ing com­pany and the util­ity, PG&E said in its state­ment Sun­day. While a search for her re­place­ment is con­ducted, the po­si­tion will be filled in the in­terim by John Si­mon, a 12-year vet­eran of the com­pany who has served as ex­ec­u­tive vice pres­i­dent and gen­eral coun­sel since 2017.

“While we are mak­ing

progress as a com­pany in safety and other ar­eas, the board rec­og­nizes the tremen­dous chal­lenges PG&E con­tin­ues to face,” board Chair­man Richard C. Kelly said in the state­ment. “We be­lieve John is the right in­terim leader for the com­pany while we work to iden­tify a new CEO. Our search is fo­cused on ex­ten­sive op­er­a­tional and safety ex­per­tise, and the board is com­mit­ted to fur­ther change at PG&E.”

Wil­liams could not be reached for com­ment but in an email to Bloomberg she said, “I value the op­por­tu­nity I’ve had to lead PG&E and wish all of my col­leagues well,” with­out de­tail­ing the rea­sons for her de­par­ture.

PG&E has seen twothirds of its mar­ket value wiped out since Novem­ber’s Camp fire — which killed 86 peo­ple and is the dead­li­est wild­fire in Cal­i­for­nia’s his­tory. In­ves­ti­ga­tors have been look­ing into whether the power gi­ant’s equip­ment ig­nited the fire. And the com­pany faces po­ten­tial li­a­bil­ity for blazes that dev­as­tated North­ern Cal­i­for­nia’s wine coun­try in 2017 — costs that may tally as much as $30 bil­lion. Its debt has been down­graded to junk sta­tus, and state reg­u­la­tors have called for a man­age­ment shakeup.

The com­pany’s deep­en­ing fi­nan­cial cri­sis has forced Cal­i­for­nia reg­u­la­tors and pol­i­cy­mak­ers to con­sider a bailout pack­age, and PG&E is weigh­ing whether to file for bank­ruptcy. The util­ity is plan­ning to no­tify em­ploy­ees as soon as Mon­day that it may make a Chap­ter 11 fil­ing within 15 days, peo­ple fa­mil­iar with the plan said Satur­day. Such a no­tice would be re­quired un­der state law. The no­tice wouldn’t nec­es­sar­ily make a bank­ruptcy fil­ing cer­tain and the com­pany could still de­cide not to if its sit­u­a­tion changes, one of those fa­mil­iar with the mat­ter said.

The util­ity has faced tremen­dous scru­tiny over the last decade, start­ing with a 2010 gas ex­plo­sion that killed eight peo­ple in the Bay Area city of San Bruno. Some PG&E crit­ics have called for a gov­ern­ment takeover or for the mas­sive com­pany to be re­placed by smaller, mu­nic­i­pal util­i­ties.

But it’s far from clear that lo­cal gov­ern­ments across North­ern and Cen­tral Cal­i­for­nia have the abil­ity or the de­sire to take con­trol of PG&E’s in­fra­struc­ture and to as­sume the huge li­a­bil­i­ties that run­ning the power grid en­tails. And state of­fi­cials aren’t likely to sup­port a takeover be­cause then the util­ity’s prob­lems would be­come Sacra­mento’s prob­lems in­stead.

The con­se­quences of bank­ruptcy or an as­set sale could rip­ple far be­yond the util­ity’s share­hold­ers, some ex­perts say, af­fect­ing 16 mil­lion Cal­i­for­ni­ans who de­pend on PG&E for en­ergy and po­ten­tially threat­en­ing the state’s abil­ity to meet its cli­mate-change goals.

The Pub­lic Util­i­ties Com­mis­sion is ea­ger to avoid a Bank­ruptcy Court pro­ceed­ing, in which a fed­eral judge would con­trol the com­pany’s fate and the in­ter­ests of cred­i­tors would be placed above those of ratepay­ers, who could face higher rates.

The com­pany filed for bank­ruptcy once be­fore, in the midst of the early-2000s en­ergy cri­sis that stemmed from a failed dereg­u­la­tion scheme and led to rolling power out­ages in much of the state.

Un­der Wil­liams, PG&E spent mil­lions of dol­lars try­ing to con­vince state law­mak­ers to change a le­gal doc­trine known as in­verse con­dem­na­tion, un­der which util­i­ties are li­able for dam­ages if their equip­ment is found to have sparked a wild­fire, even if they weren’t neg­li­gent.

Wil­liams called the doc­trine bad pub­lic pol­icy that made util­i­ties the de­fault in­surer in the state. She said the wild­fires were a symp­tom of cli­mate change, as hot­ter and drier con­di­tions spark more fre­quent and more in­tense blazes.

Al­though state law­mak­ers re­jected PG&E’s re­quest to change wild­fire li­a­bil­ity law, they did pass leg­is­la­tion in Au­gust that will help PG&E pay for law­suits aris­ing from the wine coun­try fires. In Novem­ber, how­ever, the util­ity’s equip­ment again was be­ing looked at as a pos­si­ble source of the Camp fire, which de­stroyed the town of Par­adise.

Sup­port for PG&E’s man­age­ment eroded even fur­ther in De­cem­ber when state reg­u­la­tors ac­cused the util­ity of fal­si­fy­ing records re­lated to lo­cat­ing and mark­ing un­der­ground gas lines from 2012 through 2017 — years in which the com­pany was try­ing to con­vince the pub­lic that it had cleaned up its act after the 2010 pipe­line blast.

Wil­liams was one of only about two dozen women run­ning S&P 500 com­pa­nies, in­clud­ing Duke En­ergy Corp.’s Lynn Good, El Paso Elec­tric Co.’s Mary Kipp, PNM Re­sources Inc.’s Pat Vin­cent-Collawn and Sun­run Inc.’s Lynn Jurich.

The daugh­ter of Cuban po­lit­i­cal refugees, Wil­liams be­came the na­tion’s first Latina CEO of a For­tune 500 com­pany when she took over PG&E. Her de­par­ture fol­lows the exit of three PG&E ex­ec­u­tives this month: Patrick Ho­gan, se­nior vice pres­i­dent of elec­tric op­er­a­tions at PG&E’s util­ity unit; Kevin Dasso, vice pres­i­dent of elec­tric as­set man­age­ment; and Gregg Lem­ler, vice pres­i­dent of elec­tric trans­mis­sion.

Tony Avelar As­so­ci­ated Press

GEISHA WIL­LIAMS, pic­tured in 2010, be­came CEO of PG&E in March 2017. The firm has since faced re­peated blows to its rep­u­ta­tion and fi­nan­cial health.

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