SAN FRANCISCO (CN) – Facing tough questions from a wildfire victim at a state regulatory proceeding Tuesday, Pacific Gas and Electric’s chief executive made an emotional plea to fight perceptions that he and his company care more about profits than people.
After being grilled about an increasingly unpopular $13.5 billion settlement for fire victims and how the company will be held accountable for improving safety, PG&E CEO William “Bill” Johnson described five psychologically jarring trips he made to the town of Paradise, which was obliterated in the 2018 Camp Fire caused by PG&E equipment.
“We listened to 911 tapes and watched video and looked at remains so if you think I’m unaffected by this, you’re wrong,” Johnson said. “This has affected me deeply.”
Johnson was the first to testify in a series of evidentiary hearings on PG&E’s bankruptcy plan before the California Public Utilities Commission (CPUC). The CEO was answering questions posed by Will Abrams, a 2017 Tubbs Fire survivor from Santa Rosa who has branded himself representative for all absent fire victims in complex proceedings over PG&E’s bankruptcy plan at the CPUC and in federal bankruptcy court.
Asked about the fairness of making fire victims accept a deal in which half of a $13.5 billion trust will be funded by stock in a restructured PG&E while insurers get $11 billion in cash and bondholders get asset liens to secure their investments, Johnson replied that he has no role in deciding how such settlements are approved.
“I do not get to make the rules in the bankruptcy court of the United States nor did I have a hand in fashioning the settlements or [restructuring support agreements] or any of those things,” Johnson said. “That is the work of a series of legal and financial professionals who know that work and I don’t.”
Johnson said one reason he accepted the role as CEO of a bankrupt and beleaguered corporation in May last year was because he wanted to make sure everyone affected by PG&E-caused fires gets fully compensated.
“I want to do everything I can to make that stock go up in value so that when the trust sells it, people like you get the compensation you deserve,” Johnson said.
When asked what “fully compensated” means, Johnson said it means whatever is agreed upon by the parties and okayed by the bankruptcy court. Pressing for more clarification, Abrams asked if a man gets one dollar to rebuild a $1 million home under a deal approved by the court, would that be considered full and fair compensation?
Johnson refused to acquiesce, repeating that the bankruptcy court decides what “fully compensated” means.
“That’s fully by definition of the court,” he said.
Johnson also rejected Abrams’ suggestion that PG&E’s guaranteed 10.25% profit and rate increases, both of which must be approved by the CPUC, should be conditioned on its safety performance. Johnson said customer service and financial health are also important factors that should be considered.
“In my own experience and my own view, the safest companies are usually the most financially healthy, have the greatest customer satisfaction and are the best run,” Johnson said.
Johnson previously served as president and CEO of the Tennessee Valley Authority, which provides electricity to 10 million customers in and around Tennessee, from 2012 to 2019.
Abrams also on Tuesday confronted Johnson about PG&E’s tendency to blame climate change for destructive wildfires sparked by its equipment, despite substantial evidence that the company failed to maintain equipment and clear vegetation from around power lines in the years leading up to the fires.
Johnson insisted that both infrastructure and climate share blame. The same equipment that was in use 10 years ago is more dangerous today because of hotter and drier conditions, he said.
“A lot of the equipment that was okay a decade ago isn’t okay anymore,” Johnson said.
The chief executive noted that PG&E remains committed to meeting California’s clean energy goals and is working with California Governor Gavin Newsom’s office to meet his demands for corporate governance reforms and a greater emphasis on safety and accountability of its bankruptcy reorganization plan.
After Abrams read Johnson excerpts of letters written by fire victims sharing heartbreaking stories about losing homes and loved ones, Johnson replied that he also receives letters from people angry about the company’s role in causing deadly wildfires.
Johnson said he understands the anger and that his visits to Paradise, including one visit that was required by a federal judge overseeing PG&E’s criminal probation, have moved him deeply.
“My point is I’m going to do everything I can to make this right,” Johnson said. “There are some constraints. I don’t control the courts of the United States, but I’m going to do everything I can to make this right.”
The CPUC hearings on PG&E’s bankruptcy plan are expected to continue through at least March 2. The hearings will include discussions on topics such as executive compensation plans and requirements for new board members. Last week, CPUC President Marybel Batjer issued a proposal that would allow the commission to appoint a receiver to take control of PG&E or revoke the company’s operating license if it fails to correct safety problems or causes a fire that destroys at least 1,000 buildings.
Also on Tuesday, U.S. Bankruptcy Judge Dennis Montali lifted the stay on a former PG&E lineman’s state court lawsuit claiming PG&E fired him in January 2019 for blowing the whistle on the company’s use of dangerous equipment that could spark wildfires.