PG&E CEO Peter Darbee To Step Down At Month’s End

PG&E to reward CEO’s failures with $35 million golden parachute.

Under siege since last year’s deadly pipeline blast in San Bruno, PG&E Corp. CEO Peter Darbee announced Thursday that he will retire at the end of the month in a bid to give his embattled business a fresh start.

Darbee, 58, who has led PG&E for six years, told employees that stepping down would help the San Francisco company regain the public’s trust.

PG&E Corp. and its subsidiary, Pacific Gas and Electric Co., have been rocked by a series of public controversies in the past year, including a failed $46 million ballot measure campaign and a customer revolt against wireless SmartMeters. The Sept. 9 pipeline explosion, which killed eight people, prompted calls for Darbee’s ouster.

Darbee will leave on April 30, taking with him a $34.8 million retirement package, according to the company’s annual proxy statement to shareholders.

"Over the past year, our company has faced difficult challenges that have diminished confidence in PG&E among some of our customers, regulators and others," Darbee wrote in an e-mail to PG&E employees on Thursday afternoon. "By creating the opportunity for a new CEO to address these challenges from a fresh starting point, my decision to retire is aimed at helping PG&E turn the page and carry on with the work we are doing to become a safer, stronger company."

Lee Cox, a member of PG&E’s board of directors and former chief executive of AirTouch Cellular, will step in as the company’s interim chairman, chief executive officer and president. The board has already begun a search for Darbee’s successor and expects to make a decision in the coming weeks, according to a company news release Thursday.

Darbee was not available for comment on Thursday. But a PG&E spokesman said the CEO made the choice to step down on his own, without pressure from the board.

Some Critics Surprised

"It was Peter’s decision," said spokesman Brian Hertzog. "He came to it on his own. He approached the board with it, and they supported his decision."

News of Darbee’s retirement surprised and pleased some of the company’s critics. Earlier this month, PG&E announced that its chief operations officer would leave as part of a reorganization effort, but that didn’t satisfy many critics.

"This will provide an opportunity for PG&E that they haven’t had in a while to begin rebuilding their reputation as a corporation that cares as much about its safety and its reliability as it does about its profits," said state Assemblyman Jerry Hill, who represents San Bruno. "I’m a firm believer that the company’s culture comes from the top. That’s where the buck stops."

Darbee will leave at a time of unprecedented difficulty for PG&E. Even before the San Bruno blast, the company’s reputation had been badly bruised by a series of public controversies.

Last spring, PG&E spent $46 million on an unsuccessful California ballot measure that would have limited the ability of local governments to provide electricity service to their residents and compete with PG&E. The ballot measure strained the company’s relations with politicians and state energy regulators. So did PG&E’s efforts to block a new public power project in Marin County. Meanwhile, PG&E customers questioned the accuracy and safety of the company’s new wireless SmartMeters.

Tipping The Scales

The San Bruno explosion, however, brought criticism of the company and its leadership to a fever pitch. PG&E records about the pipeline segment that ruptured turned out to be faulty, showing a seamless pipe when in fact the segment had substandard welds. The company’s maintenance and operational procedures came under scrutiny and attack. Calls mounted for the resignations of Darbee and Chris Johns, president of the Pacific Gas and Electric Co. utility.

"It’s not just the San Bruno explosion; it’s all the revelations that have come out about shoddy record keeping, shoddy welds," said Mark Toney, executive director of The Utility Reform Network. "PG&E has a long way to go to restore public trust, to restore their reputation of integrity, which they had for a long time."

Johns will remain as the utility’s president, the company reported Thursday.

For all the criticism that Darbee faced, he also won praise for his stance on environmental issues.

Darbee was one of the first utility executives to fight for legislation on global warming, arguing that the threat was real and needed an immediate response. He became a powerful advocate for that position within the industry, said Ralph Cavanagh, head of the energy program at the Natural Resources Defense Council.

"He was one of the leaders of the industry on issues of climate change, energy efficiency and renewable power," Cavanagh said. "And all who believe in those issues, I think, owe a debt of gratitude to Peter Darbee."