PG&E’s CEO Comes Up Against the One Thing He Can’t Fix
PG&E’s CEO Comes Up Against the One Thing He Can’t Fix
(Bloomberg) -- Five months ago, PG&E Corp. Chief Executive Bill Johnson walked into a room full of California lawmakers and told them he was the man who would fix the state’s largest utility.
Johnson was 15 days on the job, and PG&E had just been found to have caused California’s Camp Fire, which killed 86 people, leveled an entire town and landed the company in the biggest utility bankruptcy in U.S. history. “Let’s not do it again,” he said.
This week, PG&E proved its problems are far from fixed. The company’s equipment is being probed as the potential cause of at least three fires that have erupted in the past week. One still rages across wine country. To keep its power lines from igniting more, the company has plunged millions of people into darkness four times this month. And the 65-year-old CEO, a 27-year veteran of utilities, has found himself defending decisions that, he says, are the result of extreme weather “beyond anybody’s control.”
“I don’t think any executive in the utilities industry has faced a situation like this,” said Travis Miller, a utilities analyst for Morningstar. “He faces almost a day-to-day risk of losing his job.”
Climate change has brought about increasingly severe weather in California, dragging it through cycles from heavy rains to multi-year drought. That has turned the state into a tinderbox every summer and fall, primed to be lit by fallen wires. PG&E has no choice, it says, but to carry out mass blackouts. It’s a last-ditch attempt at keeping high winds from knocking over live power lines and setting dry brush ablaze.
This past weekend, during PG&E’s largest outage yet, Johnson stayed behind the scenes. He holed up in the utility’s emergency operations center, where by his estimate he’s spent at least part of each day for the last month. Johnson says he’s averaging four hours of sleep a night.
On Tuesday, he emerged once again at the company’s headquarters to field questions on the latest round of blackouts -- and to implore the public not to take its anger out on his employees.
“I’d be lying if I told you it doesn’t affect me,” Johnson said of the growing ire he’s also facing. “Everybody who says it doesn’t affect you isn’t telling the truth -- because we’re all human. But you cannot let that affect your decision making. You cannot make decisions based on public sentiment or that angry letter you got.”
Luxury Helicopter
In an interview late Tuesday, he said he’ll remain in the job for as long as he’s helpful. “I really am here on a mission,” said Johnson, a soft-spoken Southerner with a subtle drawl. “I know that sounds old-fashioned, maybe, but that’s why I’m here. And the mission is to help rectify this situation.”
Johnson didn’t have to take the job with PG&E. He could have easily retired, he told lawmakers in May.
Before accepting the gig, he enjoyed a long run as chief of the sleepy, federally owned utility Tennessee Valley Authority, where he made $6.5 million a year -- more than any other federal employee. In a style that’s atypical for even some of his corporate peers, he traveled with his own security detail and flew around in an $11 million Cessna jet, according to a critical 2018 government audit.
His job wasn’t without controversy: In February, he defied President Donald Trump with TVA’s decision to retire a coal-fired power plant in Kentucky.
‘Fix-It Guy’
Before PG&E, however, Johnson was best known as the victim of a strange moment of boardroom drama. In 2012, he was fired as CEO of Duke Energy Corp. less than an hour after the energy giant finalized its takeover of his prior company, Progress Energy. Delays at a troubled nuclear reactor contributed to his demise. At a hearing, a teary eyed Johnson said he didn’t even get a chance to say goodbye to his staff.
Johnson didn’t seek out the PG&E job -- it “called me,” he said back in May. He described himself as a “fix-it guy,” someone who cared enough about the industry to take the job nobody else wanted.
“I have the luxury at this point in my life and career of really doing what you want to do, and this is something I want to do,” Johnson said Tuesday.
The pay probably didn’t hurt. Johnson scored a $2.5 million salary, more than double that of his predecessor, Geisha Williams, who was ousted before the company filed for bankruptcy. He also got $3.5 million in annual stock awards, a $3 million one-time transition bonus and stock options, according to an April company filing. Altogether, his target compensation totals $6 million.
He’s entitled to a $2.5 million cash severance if he’s let go before his three-year contract is up.
Wildfire Season
Until this month, California had been enjoying a relatively quiet wildfire season. The amount of acreage burned was a fraction of the scorched land from a year ago and well below the five-year average. After a wind storm last week, all that changed. Blazes began breaking out at both ends of the state.
The Kincade fire in Sonoma County started minutes after a PG&E transmission line nearby went down. Workers later found a broken electrical cable on a transmission tower. The cause of the fire remains under investigation.
More than 1 million Californians are now in the throes of yet another PG&E blackout, and lawmakers are reaching a breaking point. Governor Gavin Newsom is calling on the utility to limit the scope of the shutoffs. That has left Johnson trying to strike a seemingly impossible balance: keeping the scope of blackouts as narrow as possible while trying to prevent fires that can destroy homes and lives -- and upend PG&E’s efforts to escape bankruptcy.
“None of us wants to be living without power,” Johnson said during a press conference last week.
Since arriving, Johnson has sped up inspections of PG&E’s equipment, instituted blackout drills, oversaw a reorganization of its power operations and hired a new utility chief.
Even Newsom, who has criticized PG&E daily for the recent shutoffs, hasn’t completely faulted Johnson, noting the company’s problems developed long before he arrived.
“A lot of it, in fact 90% of it, predates Bill Johnson,” Newsom said on Saturday. “He wasn’t around. He wasn’t even living in the state.”
That said, the governor has roundly rejected Johnson’s claims that it will take 10 years for PG&E to fire-proof its vast system and ratchet down blackouts. “With respect to the CEO of PG&E,” Newsom said, “this is not a 10-year process -- let me reject that outright.”
Johnson is going to have to find a better fix soon, Bloomberg Intelligence utilities analyst Kit Konolige said.
“He’ll have to diagnose it, figure out a plan for fixing it, and tell people what the plan is,” he said. “I don’t think he’ll have 10 years.”
--With assistance from Anders Melin and Mark Chediak.
To contact the reporter on this story: David R. Baker in San Francisco at dbaker116@bloomberg.net
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Steven Frank
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