It's the PLA, what did I win?
The real takeaway: Do not ever use CBM's C64 PSU. Get a modern one; they're all safe.
A thousand times this! The C64's PSU is a pretty awful voltage regulator that badly creates two voltages (5V DC and 9V AC, so even two different types), and only gets worse with age, to the point that it overshoots the 5V DC by so much that it fries the chips.
My Christmas 1982 model died with a faulty PLA well within the warranty period.