2008 Corporate Responsibility Report
How we are creating a smarter foundation for a sustainable future
Creating a Smarter, More Sustainable Foundation for the Future
At PG&E, our strategy revolves around operational excellence and customer focus. These are the keys to achieving our vision of becoming the nation's leading utility.
We have a clear and bold vision, but we also recognize the need to refocus our efforts on fundamentals—redoubling our efforts last year with respect to reliability and safety, responsibly managing our costs and meeting the needs of the many diverse customers we serve.
Our work in 2008 was guided by five key business priorities to improve our performance in the eyes of our customers, employees, shareholders and other stakeholders. Every month, we track and report internally our performance in five areas: improve reliability; improve safety and human performance; deliver on budget, on plan and on purpose; champion effective regulatory and legislative policies; and drive customer satisfaction.
We use a similar approach here to highlight important accomplishments and challenges from last year.
Improve Reliability
We intensified our efforts to improve electric reliability and met our annual targets for system-average outage frequency and duration, but not for the time it took to restore power to our customers. Overall, the 2008 performance results were noteworthy when considering the substantial impact of major winter storms and summer wildfires. We also took significant steps to revamp and improve processes and training on the natural gas side of our business, with a goal to dramatically improve the quality of field surveys to verify the integrity of PG&E's natural gas system.
We continued to make substantial capital investments in our system. In 2008, our investments totaled approximately $3.7 billion and we forecast that capital expenditures will average approximately $3.5 billion to $4.0 billion per year, over the next three years, from 2009 through 2011, one of the largest capital programs in the industry.
PG&E crews responded when approximately 2,000 wildfires hit California in June, affecting more than 10,000 of our customers. PG&E earned the Edison Electric Institute’s Emergency Recovery Award for its successful power restoration work with these fires and heavy storms earlier in the year.
Improve Safety and Human Performance
Excellence in safety is a leading indicator of overall operational excellence. We set aggressive targets for safety last year, with the intent of accelerating our march toward zero incidents. We reduced our OSHA Recordable Rate by nearly 21 percent, lowered our Motor Vehicle Incident Rate by nearly 24 percent and brought down our Lost Workday Case Rate by more than 13 percent. For the first two measures, we beat our goals for the year and nearly met our stretch goals.
We also experienced some very serious incidents, including the loss of two employees and a contractor on the job. These served as a somber reminder of exactly why safety always has to be the number-one accountability of all of us at PG&E. Additionally, compared with 2007, we received fewer notices of violation for being out of compliance with environmental requirements.
Deliver on Budget, on Plan and on Purpose
In a difficult economic climate, PG&E delivered solid shareholder performance, outperforming the majority of our comparable peers. This success was a result of our continued focus on increasing efficiency and executing our operating plan. The well-managed replacement of steam generators at our Diablo Canyon plant and smooth construction of our new Gateway Generating Station exemplified both excellence in teamwork and on-time discipline. Challenges last year included the continued need to simplify and improve work processes, procedures and training.
Champion Effective Regulatory and Legislative Policies
We continued to demonstrate leadership in many areas last year, including working with our customers to achieve record energy efficiency results and actively promoting a national, economy-wide cap-and-trade program to address climate change. We also earned a spot on the Dow Jones Sustainability North America Index, a recognized benchmark for corporate responsibility. However, while we signed new contracts for almost 1,800 MW of additional renewable supplies, we continued to face significant obstacles to developing and deploying an advanced renewables infrastructure, including getting projects successfully permitted, built and connected to the grid.
Our Vision and Values
In 2005, PG&E’s senior leaders introduced the company’s vision of becoming the leading utility in the United States, along with a set of values and guiding behaviors, through an extensive employee outreach program that continues today.
Reflecting the evolutionary path of our vision, our senior leaders revisited and made subtle changes to PG&E’s goals and strategies in 2009. But we remain steadfast in our commitment to living and leading our values, and how they guide the behaviors and actions that will allow us to achieve our goals, strategies and vision.
We made an important enhancement by adding “environmental leadership” as a fourth goal for the company. We did so because we view it as essential to our broader leadership vision of being the nation’s leading utility. In a future where clean and sustainable energy solutions will be increasingly vital drivers for value, environmental leadership must be a top strategic priority.
We also added “customer focus” and “operational excellence” as our overarching strategies, reinforcing our customer-centric approach and aim to consistently maintain excellence in how we do business. These updates highlight our drive to deliver core services to customers faster and more cost-effectively—with a focus on sound execution.
Becoming a leading utility means reshaping the way energy impacts people’s lives, and PG&E is committed to not only transforming ourselves, but also to working collaboratively to advance our entire industry.
Drive Customer Satisfaction
Everything we do at PG&E starts with the customer, and we remain firmly committed to meeting our customers' needs with innovative and valued products and services. We achieved high scores for customer satisfaction again in 2008. For the first time, PG&E ranked in the top 25 percent in the industry in all four annual customer satisfaction surveys conducted by J.D. Power and Associates, covering gas and electric service for business and residential customers.
One key area of success was strong progress installing SmartMeter™ technology, with more than 1.7 million high-tech gas and electric meters installed by the end of 2008 to help customers better manage energy costs. One ongoing challenge is providing the more personalized service that many business customers demand.