Our Business


Executing on Our Vision to Become the Nation’s Leading Utility

In 2007, we continued to pursue our vision to become the nation's leading utility in the eyes of our customers, employees and shareholders.

At the center of our strategy is a multiyear effort to transform our operations. Specifically, PG&E is revamping many of its core business processes to be more efficient, cost-effective and better for our employees and customers. In a number of areas, new information systems and technologies have been the cornerstone of this effort. We also realigned many of our internal resources to take fuller advantage of opportunities for efficiencies.

Our Vision and Values

PG&E's vision is to be the leading utility in the United States. The company's senior leaders introduced this vision, along with a set of values, in 2005, through an extensive outreach program with employees that continues today. Given the significant challenges facing our industry, becoming the nation's leading utility requires extensive teamwork and partnerships—working with others to lead the industry toward change.

Our vision and goals are driven by a series of strategic imperatives that inform both our day-to-day operations and strategic planning for the future:

  • Creating a satisfying customer experience at all times at every touch point
  • Investing in our employees and rewarding them for results
  • Securing a sufficient and affordable energy supply
  • Aggressively managing our cost structure
  • Shaping the markets in which we operate
  • Reducing our carbon footprint
  • Creating regulatory and legislative alignment
  • Supporting our communities
  • Growing the enterprise

In parallel with these changes, we are working to reshape PG&E's culture in ways that will enable us to better serve customers and meet the challenges of the evolving energy business. To that end, we are focused on becoming a more customer-centric organization. One area of emphasis is improving collaboration and eliminating organizational barriers that are an impediment to delivering service in the most seamless, customer-friendly ways. Another is introducing new management tools and systems, holding ourselves more accountable for performing with the discipline and results-orientation of a competitive company that has to win the customer's business on an ongoing basis.

A number of accomplishments in 2007 reflected continuing progress toward these objectives. However, we also encountered a number of challenges. During the year, we began reporting our progress to employees monthly through an Operational Update from the Utility's CEO. The update tracks performance in five areas: ease of doing business with PG&E, reliable energy delivery, value for customers and stakeholders, sustaining our environment and strengthening our ability and ways to execute on task.

Below is a recap of highlights in each area from 2007. For additional details, please see PG&E's 2007 Annual Report to Shareholders.

Ease of Doing Business with PG&E

Smart Energy Usage Decisions

PG&E SmartMeter

In 2007, PG&E expanded implementation of our SmartMeter™ program—the nation's largest deployment of advanced metering infrastructure technology to date. By the end of 2011, we expect to deploy more than 10 million high-tech gas and electric meters for our customers.

SmartMeter™ technology will serve as the foundation for moving to a "smart grid." By harnessing advanced communication capabilities such as those in the SmartMeter™ program, PG&E is working to transform the electric grid from a passive transmission and distribution system to an active, intelligent grid capable of supporting new utility and customer energy services.

Benefits will include:

  • Quicker restoration of power after an outage;
  • Innovative programs based on specific customer usage patterns, including new pricing programs that encourage customers to conserve and shift their energy usage to off-peak times;
  • More informed and strategic planning for capacity needs; and
  • Enhanced, more personalized customer service.

PG&E installed more than 270,000 SmartMeter™ gas and electric meters in 2007. We also proposed plans to upgrade the meter technology, which continues to evolve rapidly. The proposed upgrade will give customers greater control over their energy usage and provide regulators improved capability to manage aggregate energy demand.

PG&E undertook extensive testing and quality assurance to ensure bills prepared with SmartMeter™ data are timely and accurate. We are also taking care to notify those customers who have made monthly arrangements for us to read their meters that this will no longer be necessary.

We continue to take a disciplined approach to understanding and meeting the needs of our customers, and are demonstrating significant progress. As a measure of our overall performance, our J.D. Power and Associates scores continued to rise among business customers in 2007, placing PG&E in the top 10 percent for electric and fourth out of 38 for natural gas service. We finished fifth in the nation in residential gas customer satisfaction and made notable progress, but were slightly below the median, in residential electric service.

Among our specific accomplishments were speeding-up customer issue resolution times and increasing our success rate for resolving customer issues on the first service visit. Among our most significant challenges was improving the timeliness of connecting new customers to the grid, where we fell well short of expectations and are redoubling efforts to improve performance.

Reliable Energy Delivery

For the year, we exceeded our overall reliability index target, with far fewer outages per customer than projected. However, the time it took to restore service was 11 minutes longer on average than expected. We also reduced the number of work errors compared with the prior year.

We also continued making substantial capital investments to improve the reliability and capacity of the Utility's infrastructure. In 2007, these investments totaled approximately $2.8 billion and we expect to invest an additional $13.6 billion from 2008 through 2011, one of the largest capital programs in the country.

Value for Customers and Stakeholders

In 2007, PG&E Corporation delivered financial results in line with commitments to Wall Street. However, the value of PG&E's common stock declined over the year, reflecting a number of challenges. We worked throughout the year to drive savings through efficiencies and were successful in a number of areas. For example, we achieved significant savings through more strategic relationships and improved processes with our suppliers. However, in other significant areas, we did not reap all of the expected benefits.

Sustaining Our Environment

Among many other accomplishments—including those discussed elsewhere in this report—we continued last year to successfully advance energy efficiency and expand supplies of renewable energy that will be available for our customers in the future. This included signing new contracts for more than 1,000 MW of additional renewable energy supplies. We also continued our leadership in supporting policy action on climate change. Challenges last year included an increase in the number of notices of violation we received for being out of compliance with certain environmental requirements.

Strengthening Our Ability and Ways to Execute on Task

We continued working last year to improve our execution, including efforts to further align and engage our employees in line with our vision and strategy. Examples of significant milestones in execution included the successful upgrade of a major IT system to improve our customer care and billing capabilities.

We also underwent a major transformation that introduced a host of new tools and processes governing how work is designed, scheduled and performed at PG&E. While we fell short on our implementation, we will continue to measure our progress and make the necessary improvements to be successful.