(Bloomberg) -- PG&E Corp. tapped Bill Johnson, the outgoing head of the Tennessee Valley Authority, to become chief executive officer and lead the California energy giant out of the biggest utility bankruptcy in U.S. history.
Johnson, 65, is joining the company after more than six years at the helm of TVA, the company said in a statement late Wednesday. PG&E also named 10 new directors to its board -- including former energy executives, restructuring experts, a former federal energy regulator and at least four California residents -- as part of a management shakeup it promised in January. Shares climbed 1.5 percent to $18.75 in after-hours trading.
As CEO, Johnson will be responsible for steering PG&E through what’s expected to be a contentious bankruptcy as activist investors, creditors, wildfire victims and California officials wrestle over restructuring a utility serving 16 million people in one of the world’s largest economies. He replaces Geisha Williams (NYSE:WMB), who resigned in January before the company filed for bankruptcy facing $30 billion in liabilities from wildfires its equipment has been suspected of igniting.
“I am humbled to take on this new challenge and am dedicated to meeting the high expectations that our customers, regulators and legislators have for PG&E,” Johnson said in the statement. “While the challenges facing PG&E and California are significant, by working together, we will overcome them to serve the best interests of our customers.”
The appointments follow an intense, weeks-long battle over the future management of PG&E. Even California Governor Gavin Newsom joined the fight, urging the company to resist hedge fund picks and appoint directors who live in California.
Deal Struck
On Tuesday, PG&E was said to strike a deal with a group of investors -- Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management -- that own about 10 percent of the company’s shares. The deal called for Johnson to be hired as CEO, along with the nomination of the 10 new board members, people familiar with the situation said. That group squared off against activist investor BlueMountain Capital Management, which had put forth its own slate.
Among the new directors being appointed are:
- Jeffrey Bleich, a partner at the law firm Dentons and a California resident.
- Nora Mead Brownell, a former member of the Federal Energy Regulatory Commission.
- Fred Fowler, former chief executive officer of the natural gas pipeline company Spectra Energy Corp (F:SEP).
- Meridee Moore, founder and CEO of San Francisco-based alternative asset manager Watershed Asset Management.
- Richard Kelly, former CEO of power utility Xcel Energy Inc (NASDAQ:XEL).
Newsom didn’t immediately respond to a request for comment, and it remains to be seen how the appointments will be received in Sacramento.
State Senator Bill Dodd, who helped shepherd utility legislation last year, said he shared the governor’s reservations ahead of PG&E’s announcement. Newsom voiced concerns about a slate of directors PG&E was proposing to appoint last week, and the utility had made only three changes in the list it issued Wednesday, Dodd said, citing a person with direct knowledge of the matter.
“When you look at a slate of 13 candidates, from my vantage point, with the heavy lifting that PG&E has to do going forward, that raises some real concerns,” Dodd said.
Less Than a Day
Johnson, who announced his retirement from the TVA in November, may be best known as the man who served as CEO of Duke Energy Corp (NYSE:DUK). for less than a day. He had been appointed as part of the company’s $17.8 billion takeover of Progress Energy in 2012 but was replaced eight hour later with James Rogers, the former Duke CEO who was supposed to become executive chairman. Johnson received an exit package estimated to be worth more than $40 million.
He was appointed that same year to his post at TVA, a corporate agency of the U.S. government that supplies electricity to power companies serving 10 million people in the Southeast.
Before the appointments, Newsom publicly criticized PG&E’s plans to revamp its board with what he described as “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.” He urged the company to consider a board made up primarily of Californians.
BlueMountain had meanwhile nominated 13 directors including former California treasurer Phil Angelides, National Transportation Safety Board ex-chairman Christopher Hart and Jeff Ubben, chief executive officer of activist investor ValueAct Capital Management. The firm said in a statement Wednesday that it’ll “carefully evaluate the nominees put forward” before commenting.
A Worthy CEO
Johnson has already drawn some opposition.
Clean energy advocacy group Vote Solar said in a statement that his track record falls short of what “PG&E’s customers deserve.” The group pointed to the lack of solar and wind power on TVA’s coal-dependent system. Coal made up more than a quarter of TVA’s portfolio last year, with solar and wind accounting for just 3 percent, according to the company’s website.
PG&E noted in its statement that, under Johnson’s leadership, TVA retired more than half of coal generation, cutting the utility’s carbon emissions by about 50 percent over the last decade.
(Updates with details on board appointees in eighth paragraph.)