By Hudson Sangree

PG&E Corp. on Friday offered the most detailed versions yet of its plans to emerge from bankruptcy in filings with the California Public Utilities Commission and the U.S. Bankruptcy Court in San Francisco.

The company said its updated Chapter 11 reorganization plans address the concerns of Gov. Gavin Newsom, whose opposition may be the last major obstacle to it emerging from bankruptcy mostly on its own terms. The CPUC, whose members are appointed by the governor, must find the plan complies with the safety dictates of Assembly Bill 1054, passed last July.

“PG&E has taken to heart the governor’s concerns, and the PG&E plan and accompanying testimony commitments embody the governor’s principles and more than satisfy the requirements of AB 1054,” the company told the CPUC.

The bill sets up a $21 billion wildfire recovery fund to insure the state’s investor-owned utilities against future wildfires. PG&E must comply with its requirements, including safety improvements, to take part in the insurance fund.

Whether the company’s revised plans go far enough to mollify Newsom remains uncertain.

Newsom has asked for major concessions from PG&E including a new board of directors made up mostly of Californians. He also wants PG&E’s Chapter 11 plan to incorporate a mechanism allowing for a quick state takeover if warranted.

PG&E’s updated plan does not provide the takeover mechanism, nor does it agree to Newsom’s demand for a new board with a majority of directors from California.

Instead, Nora Mead Brownell, a former FERC commissioner and chair of PG&E’s corporate board, noted in prepared testimony to the CPUC that the company initiated a “board refreshment” last year that replaced almost all its directors and those of its utility subsidiary, Pacific Gas and Electric.

That process brought in Brownell and Johnson, the former head of the Tennessee Valley Authority, among a dozen others.

“The board refreshment brought to PG&E fresh perspectives, and a range of diverse backgrounds, experiences, skills and expertise,” Brownell told the commission.

The company said it is reviewing its “director skills matrix” to make sure board members have experience in fields such as wildfire safety, utility operation and risk management. It also plans to incorporate independent safety oversight and to tie executive compensation to safety performance, among other measures.

Brownell said Californians already make up about 40% of the current board, but “PG&E will use best efforts to achieve a target of at least 50% California resident directors upon emergence” from bankruptcy.

The plan also complies with the state requirement that the plan not impose higher rates on PG&E’s 5.4 million electric customers.

Newsom’s office offered no comment on the changes over the weekend but told The Wall Street Journal he was reviewing them. Quoting an unnamed source, The Sacramento Bee reported that the updates were the product of back-channel negotiations between PG&E and the governor’s staff.

PG&E indicated in a statement that it could participate in additional negotiations.

“PG&E appreciates the governor’s input and is open to further discussions with the governor’s office and other stakeholders should they have additional input as the process unfolds,” it said. “PG&E looks forward to participating fully in the CPUC’s proceeding to review its updated plan.”

Newsom’s comments toward PG&E have become increasingly harsh in recent months, with the governor issuing repeated threats that the state could take over the utility if it doesn’t adopt wholesale changes including all-new leadership and a new corporate safety culture. (See PG&E Chapter 11 Plan Won’t Do, Governor Tells Judge.)

The utility has been blamed for safety lapses that resulted in catastrophic wildfires in 2015, 2017 and 2018, and a deadly gas pipeline explosion in 2010.

“We’re sick of the excuses, the delays,” Newsom said last week in a forum on energy with the Public Policy Institute of California.

Newsom said he’s been working with legislative leaders to have a structure in place to seize control of the utility if it doesn’t meet his expectations for change before it exits bankruptcy. “What is PG&E? It’s a corpus. It’s an entity,” the governor said, describing frequent changes in recent years to the company’s executives and directors. “The entity exists on paper only. But there’s a culture there that transcends. And until that mindset radically reforms itself, then the state of California is poised to take it over.”