PG&E defends new board at public hearing

SAN FRANCISCO (KGO) -- Pacific Gas and Electric is defending the new picks for its board of directors. The utility's former board chairman appeared before the California Public Utilities Commission late Monday afternoon.

Governor Gavin Newsom and others had criticized the new slate for the board of directors, saying many lacked experience in the field and mostly have no ties to California. PG&E's outgoing board chair answered those concerns.

RELATED: Questions mount about PG&E's choices for CEO and board directors

At the end of a day-long CPUC forum on "governance, management and safety culture" at the utility, former PG&E board chair Dick Kelly asked the public to, in effect, give them a second chance.

"Judge us by our actions going forward," said Kelly. "Judge us by how well we reform our safety culture."

And judge us by how well we treat wildfire victims fairly, Kelly told the panel. As the utility goes through the bankruptcy process with a forecast $30 billion in wildfire losses, Kelly defended a new slate of directors with half of 10 nominees coming from East Coast investment firms.

CPUC President Michael Picker said "it's safe to say there's still anxiety" about the new board.

"All these folks might make a lot more sense in a company that's working well and where you're monitoring new risks and developing new programs," said Picker.

RELATED: VIDEO: PG&E CEO responds after getting singled out in court by federal judge over wildfire prevention

Kelly answered, "I personally feel confident that we have the right people, I understand your skepticism, I understand where we are in the trust factor of everybody in the state of California, I do understand that, and we're just going to have to prove that we can do it."

Kelly said a third of the new slate of directors are current or former California residents, and that he thinks term limits should be applied to the board.

"It's a work in progress," said Kelly. "It's something that we'll keep working on, re-evaluate and what the needs are of the corporation, will be in the position to make changes as we need changes. This won't be a board that's going to be the same ten years from now."

There are challenges ahead. Earlier in the day, Northstar Consulting updated its assessment of the utility's "safety culture" to say, "PG&E does not have a single, comprehensive safety strategy addressing all aspects of safety." And that, "PG&E as an organization continues to have a reactive rather than proactive approach to potential issues..."

One other issue -- half of incoming PG&E President and CEO Bill Johnson's incentive pay will be tied to safety performance. But an expert witness from Harvard Business School cautioned that connecting executive pay to a single issue such as safety can pose problems.

RELATED: Newsom weighs wildfire liability law changes, but no commitment

Lynne Paine told the commission, "People then engage in various kinds of perverse behavior to make sure that information doesn't flow, to falsify documents, to do whatever needs to be done to meet the goals that underlie these high-powered incentives."

PG&E stock has jumped, after Governor Newsom floated a plan on Friday to protect the company from wildfire losses, using state funds. Shareholders must approve the new board at the annual meeting May 21st.

Get the latest updates on the PG&E bankruptcy.

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