PG&E’s management change is a missed opportunity. It must embrace radical reform

By Dean Florez, Special to CALmatters

In the effort to fend off radical restructuring, Pacific Gas & Electric Co. put in place a chief executive officer who was the highest paid federal employee in the nation, and new members of its board of directors who will put profits over the interests of the people.

PG&E cannot take half measures. It must fundamentally reform and put the health and safety of Californians first.

Where to begin?

First, PG&E’s leadership needs to rebuild trust with taxpayers, ratepayers and shareholders.

As U.S. District Judge William Alsup, overseeing the criminal case over the San Bruno gas line explosion, recently said: “PG&E pumped out $4.5 billion in dividends and let the tree budget wither.”  

This is nothing short of a scandal, and the dynamic needs to be reversed immediately. There needs to be a moratorium on corporate dividends and executive bonuses until the utility gets a clean bill of health from independent health and safety experts.

PG&E needs to welcome radical–and sometimes ugly–transparency. Californians deserve the truth.

The utility must commit to making public all that went wrong under the previous leadership. If it takes a truth and reconciliation commission, then so be it. The company must surface all the critical memos, all the unpleasantness. We need to know how deep the mismanagement, corruption and incompetence goes.

PG&E’s leadership must do everything in its power to prevent the next fire and the loss of life and property associated with it.

Business as usual must end. Trees and vegetation need to come down now. Gov. Gavin Newsom may need to declare a state of emergency that will allow PG&E and local governments to access state resources to get the job done before the next Camp Fire breaks out.

This could include bringing to bear the national guard, the conservation corps, and perhaps prisoner-workers. The state could carry the initial costs with PG&E shareholders reimbursing later.

The fundamental point is this: the work cannot be delayed.

California bears some responsibility. A weak-kneed California Public Utilities Commission allowed PG&E to operate as it did. There are no innocents here.

New management must commit to changing the culture of the organization. PG&E today is a lumbering bureaucracy, where change is difficult and new ideas are often punished. I know that first hand from holding more than few oversight hearings when I was in the Legislature.

Changing the culture can begin with simple steps:

  • Get rid of the corporate jet.
  • No more luxury hotels stays and lavish expense accounts.
  • Slap a moratorium on campaign donations.

Longer-term, PG&E must commit to a full-fledged modernization effort. The company is headquartered in San Francisco, near the heart of Silicon Valley, and yet it appears to be immune to innovation.  

The utility must look to the best practices of its peers, and embrace transformative technologies, a commitment to renewable power, and addressing global warming. It must commit to a process of transformation that will change it into the most innovate utility in the world, from being the poster child for what not to do.

PG&E’s management change represents a missed opportunity that should make us all concerned. The company has yet to realize the lessons of its past.

Without a radical change to the corporate culture, a hard to swallow dose of transparency and all-hands-on-deck fire prevention effort, the next PG&E-sparked wildfire will mean a Titanic ending to the company.

Dean Florez is a California Air Resources Board member, and a former state senator from Shafter, [email protected]. He wrote this commentary for CALmatters.

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