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PG&E Names Cox Interim CEO as Darbee to Depart After San Bruno

PG&E Corp. (PCG), owner of California’s largest utility, named a board member, Lee Cox, interim chairman and chief executive officer to replace Peter A. Darbee, who is stepping down after the fatal San Bruno pipeline blast last year and criticism of initiatives such as advanced metering.

Darbee, 58, also serves as president and will retire effective April 30, San Francisco-based PG&E said yesterday in a statement. Cox has been a member of the company’s board since 1996 and is a former vice chairman of AirTouch Communications Inc. and a former CEO of AirTouch Cellular.

Eight people died and more than 30 homes were destroyed after a pipeline owned by PG&E exploded in San Bruno, California, on Sept. 9. PG&E, which is facing scrutiny from state regulators, has said it strengthened its natural-gas operations and revised instructions for responding to emergencies after the explosion.

“Peter concluded that a change in leadership would create the best opportunity for PG&E to move ahead after a challenging year,” Cox said in yesterday’s statement. “The board supported his decision.”

Cox, 70, said the search for Darbee’s successor is under way, with an announcement expected soon. Darbee joined PG&E in 1999 as chief financial officer and became CEO in 2005. He took on the role of chairman in 2006.

PG&E earlier this year increased to as much as $763 million its estimated costs for the San Bruno explosion, including $400 million in liability claims, PG&E Chief Financial Officer Kent Harvey said on Feb. 17 during an investor conference call.

Smart-Meter Problem

Darbee also oversaw a rollout of a smart-meter program aimed at tracking electricity use. Some customers and consumer groups complained the devices weren’t measuring power use reliably, and raised concerns about health effects. PG&E was ordered by the California Public Utilities Commission to allow customers to opt out of the program.

The Utility Reform Network, a San Francisco-based consumer advocacy group, had called for Darbee’s resignation after the pipeline blast, complaints about smart meters and a failed ballot initiative that would make it harder for local governments to enter the power business, Mindy Spatt, a spokeswoman for the group, said in a telephone interview.

“PG&E has a long way to go to restore public trust,” Mark Toney, executive director of the group, which is known as TURN, said yesterday in a statement. “A change not only in leadership but also in direction is long overdue.”

Darbee Decided

Brian Hertzog, a company spokesman, said “Darbee made this decision himself because he believed it was the right thing for the company.” PG&E said in a regulatory filing that Darbee won’t be entitled to any severance payment. He will be able to receive retirement and pension benefits, the company said.

Michael Peevey, president of the state’s utilities commission, said in a statement yesterday that PG&E should “return to its roots by hiring the most technically competent person” and someone who has a long history in the energy business.

“While obviously the company under his leadership has been responsible for several poor and consequential decisions, Mr. Darbee’s commitment to PG&E and its constituents is unquestioned,” Peevey said.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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