PG&E's Electric Unit Chief To Leave -- WSJ

01/09/19 02:47 AM EST
By Katherine Blunt 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 9, 2019).

PG&E Corp.'s top executive overseeing the utility's electric division is leaving the company amid rising concerns about its financial health and safety practices following the recent California wildfires.

Patrick Hogan, senior vice president of the electric operations unit for Pacific Gas and Electric Co., will be replaced immediately by Michael Lewis, another executive within the electric division, the company said in a regulatory filing Tuesday. Mr. Hogan, who has held that role since 2016, will retire from the company by the end of the month.

The disclosure came hours after S&P Global Ratings revoked PG&E's investment-grade rating late Monday, saying it would keep the company on watch for further downgrade. The credit-ratings agency cited PG&E's challenges in regaining stakeholders' trust amid political and regulatory scrutiny.

"These conditions may significantly limit the company's options, including its ability to consistently finance or safely operate its businesses," S&P said in a statement.

PG&E shares closed 7% lower Tuesday on concerns that the company could be forced to seek bankruptcy protection because of billions of dollars in wildfire-related liabilities.

"We are fortunate to have an industry leader like Michael to help direct our electric work as our energy landscape continues to experience unprecedented change," Geisha Williams, PG&E's chief executive and president, said in a statement.

Two other executives in the electric division, Kevin Dasso and Gregg Lemler, will also retire by the end of the month, a PG&E spokesman said Tuesday. Mr. Dasso serves as vice president of electric asset management, while Mr. Lemler serves as vice president of electric transmission operations.

California's largest utility -- already stressed due to potential liabilities from 2017 wildfires linked to its equipment -- is being pressed further by potential exposure to November's Camp Fire, the deadliest in California history. State investigators haven't determined whether PG&E played a role in the fire, but the company has disclosed that some of its equipment malfunctioned in the area around the time the fire started.

Analysts estimate that the utility could face tens of billions of dollars in liability costs if its equipment is found to have contributed to the Camp Fire. Investigators have already linked PG&E's equipment to 17 wildfires during 2017.

The 2017 and 2018 fires have triggered dozens of lawsuits from homeowners, insurers and others alleging that PG&E was responsible for damages and should pay plaintiffs as a result.

Mr. Hogan oversaw the expansion of PG&E's wildfire-preparation efforts as a protracted drought killed millions of trees in Northern California, increasing the risk of fire within the company's 70,000-mile service territory.

Mr. Lewis left Duke Energy Corp. to become vice president of PG&E's electric distribution operations in August. In his new role, he will receive a $450,000 annual salary, plus a $125,000 bonus, according to the filing.

PG&E said Friday that it plans to either replace or add to its 12 existing directors. The company also said it would review "structural options" for making changes to its business but didn't specify what that might entail.

Morgan Stanley analyst Stephen Byrd said it is relatively unlikely PG&E will file for bankruptcy, but added that the likelihood could depend on whether investors are confident in the company's ability to access capital. Many are waiting to see whether California regulators move to cap the liabilities PG&E could be forced to bear following the Camp Fire, he said.

"The core question is whether investors will feel comfortable enough putting new capital to work," Mr. Byrd said.

--Chris Wack contributed to this article.

Write to Katherine Blunt at Katherine.Blunt@wsj.com

 

(END) Dow Jones Newswires

January 09, 2019 02:47 ET (07:47 GMT)

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