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PG&E Names Earley as new chief executive

August 09, 2011|Bloomberg

PG&E Corp., owner of California's largest utility, named Anthony Earley as chief executive officer, turning to an outsider for the first time in its 106- year history after a fatal pipeline blast last year.

Earley, the 62-year-old executive chairman at DTE Energy Co., will take over at PG&E on Sept. 13, the San Francisco-based company said in a statement yesterday. The start date is about a year after a PG&E natural-gas pipeline exploded in San Bruno, California, killing eight people and destroying 38 homes in the San Francisco suburb.

Earley, who's been an executive at Detroit-based DTE for more than 17 years, takes the top job at PG&E as it confronts regulatory scrutiny for its pipeline safety, a criminal probe related to the San Bruno blast and customer backlash from new "smart meter" initiatives to track electricity usage. The company also may have to pay more than $1 billion to upgrade its network and perform safety tests, one of the reasons PG&E reduced its profit forecast this year by about 5 percent.

"He brings experience, he brings credibility, he brings a track record and he's well-liked by investors," said Andrew Levi, an analyst for Caris & Co. in New York who rates PG&E "buy" and doesn't own the shares. "PG&E is really looking for somebody to restore credibility, restore investor confidence, restore consumer confidence and restore regulator confidence."

Earley will be paid $4.26 million for the balance of this year, including a one-time bonus of $1.5 million subject to repayment if he doesn't stay in the job three years, PG&E said today in a filing. His 2010 pay at DTE totaled $8.5 million, according to data compiled by Bloomberg.

Earley, who will also be chairman and president at PG&E, will succeed Peter A. Darbee, 58, who resigned in April, telling the board the company needed new leadership after a "challenging year." It's the first time PG&E has chosen a leader from outside the organization, the company said in the statement.

PG&E rose 28 cents to $39.92 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have 12 buy and eight hold ratings from analysts. PG&E has fallen 17 percent this year, making it the second-worst performer of the 33 companies on the Standard and Poor's Utilities Index.

Earley joined DTE as president of its electric utility in 1994. He was named CEO of DTE in 1998, leading the owner of Michigan's largest utility until September 2010. He serves on the board of Ford Motor Co., Masco Corp. and the Nuclear Energy Institute, a Washington-based industry lobbying group.

A former U.S. naval officer, Earley has experience guiding a company in crisis, PG&E said. He steered DTE through the largest blackout in U.S. history in 2003, when a power outage at an Ohio utility triggered cascading blackouts in Michigan and six more states.

His experience also includes operating a utility in a recession. Michigan's unemployment rate has exceeded 10 percent since 2008 and touched 14 percent a year ago. Detroit's metropolitan area population fell by 156,307, or 3.5 percent, in the decade ending last year, according to the U.S. Census Bureau.

DTE gained 14 percent while Earley was CEO, according to data compiled by Bloomberg. Earley ran both DTE's electric utility, which serves about 2.1 million customers in the Detroit metro area, and the gas utility, which serves 1.2 million customers.

"You've got somebody who is an engineer by training and has experience running the operations of a gas delivery company," Hugh Wynne, an analyst at Sanford Bernstein & Co. in New York, said in a telephone interview. "They've gone for a safe bet in terms of engineering background and years of experience in the industry, in contrast to Darbee, who came from a finance and telecom background."

DTE President and CEO Gerard Anderson will become chairman of the company after Earley's Sept. 12 departure, according to a separate statement yesterday.

PG&E board member Lee Cox has served as interim chairman and CEO since Darbee resigned and will continue in that role until Earley arrives.

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