PG&E President to Retire as Utility Faces Mounting Scrutiny

(Tim Hohm/flickr)

(Tim Hohm/flickr)

By Alex Emslie
KQED

The timing of Pacific Gas and Electric’s Tuesday announcement that company President Christopher Johns will retire by the end of the year is generating some speculation from observers and critics of the California utility giant.

Johns joined the company in 1996 as vice president and controller and took his current post about a year before a PG&E gas transmission line exploded in San Bruno in September 2010, killing eight people, injuring dozens more and destroying 38 homes. The retirement announcement comes about a week after the San Francisco Chronicle reported that federal prosecutors had brought to a grand jury an investigation into potentially illegal ties between PG&E executives and regulators at the California Public Utilities Commission.

That investigation is in addition to an ongoing federal criminal trial charging PG&E — the company, but not the people running it — with violations of pipeline safety laws. The state attorney general is also investigating PG&E communications with CPUC regulators, but has yet to file any charges.

Ann Skeet is a corporate ethics expert and director of a leadership ethics program at Santa Clara University. She said it’s noteworthy that Johns kept his position following the San Bruno explosion, even as people above and below him were replaced.

“In the initial assessment about who was responsible both for culture creation and execution following the San Bruno blast, Mr. Johns got a bye,” she said. “Other people were held responsible for that, and probably appropriately so.”

But, Skeet said, the fact that Johns kept his post through the deadliest pipeline disaster in state history could be seen as an endorsement of his ability, or at least an internal exoneration for any wrongdoing.

“He’s clearly got a long history with the company,” she said. “Even with everything that’s happened at the company, his contributions as an individual have been valued and continue to be valued.”

CPUC President Michael Picker questioned Johns’ maintaining the post last month after the commission voted to fine PG&E $1.6 billion for the San Bruno explosion. He wrote a document, excerpted below, as he questioned the commission’s ability to regulate PG&E:

“Do PG&E board directors or executive officers feel CPUC sanctions directly? Is there anyone with authority within the company who is accountable for our fines and penalties? What mechanism holds them accountable? The CEO who held that position [Peter Darbee] at the time of the San Bruno incident, and during cuts in funding pipeline replacement and inspection programs, retired with a reported $38 million bonus. The president of PG&E at the time of the San Bruno incident [Chris Johns] is still the president.”

“Where is the accountability for the people that led PG&E into the San Bruno explosion?” asked Mindy Spatt, spokeswoman for The Utility Reform Network (TURN). “Too often, we feel executives have been rewarded for boosting profits rather than safety.”

Spatt said there have been numerous PG&E pipeline safety incidents since San Bruno. The federal Pipeline and Hazardous Materials Safety Administration (PHMSA) recorded 27 incidents on PG&E’s gas transmission network since Sept. 9, 2010. Many involve excavation damage. Property damage from the 12 with other causes — like material, weld or equipment failures — totals $6,800,940. By contrast, property damage from the San Bruno incident alone was $375,363,000, according to PHMSA records.

Andrew Campbell heads the Energy Institute at UC Berkeley’s Haas School of Business. He said running the “sprawling” utility isn’t an easy job.

“Chris Johns was there for some very significant changes at PG&E and in the California energy industry,” he said. “It’s been an amazing period of change in terms of new renewable energy coming online in the state.” He said PG&E leads the country in “distributed generation,” like solar panels.

PG&E CEO Tony Earley thanked Johns for “his exemplary commitment and service,” in a written statement. The statement said the company’s board of directors will seek to find Johns’ replacement before he retires on Dec. 31.

“We are fortunate to have developed a deep bench,” Earley said. “Chris and I are both incredibly proud of the caliber of talented people who have joined our leadership team as we have worked to make PG&E the safest and most reliable utility in the country.”

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