2008 Corporate Responsibility Report

How we are creating a smarter foundation for a sustainable future

Taking Responsibility for Our Historic Impacts

PG&E’s expanded environmental leadership goals continue to influence all facets of company operations, including our commitment to thoroughly evaluating sites throughout our service area that may have been impacted by our historical utility operations.

In 2008, PG&E had a portfolio of 117 environmental remediation projects in various phases of completion, from decommissioning and demolition of a power plant in San Francisco to much smaller projects in the long-term monitoring phase. This total includes seven former manufactured gas plant (MGP) sites added last year. Working closely with state and local regulatory and environmental health agencies, a project management team is leading an effort to investigate and clean up old MGP sites that were either owned or operated by PG&E or, in some cases, a predecessor company.

From the early 1800s to the mid-1900s, utility companies nationwide operated MGPs to convert coal and oil into gas for lighting, heating and cooking before natural gas became available. Though MGPs elevated the standard of living for their time, they were not without drawbacks. The gas-making process produced by-products and, consistent with standard practices of the time, some of these byproducts were buried onsite.

Decades after operations ceased, PG&E is working to investigate these sites and determine whether it is best for people and the environment to remove these byproducts if they can be removed safely and responsibly. If they cannot be removed, other remedies may be employed to ensure materials are kept safely away from people, air and water.

Our ongoing effort to address historic MGP sites has a potential to disrupt the day-to-day activities of our customers where these sites are located, some of which are in low-income and minority communities. In 2008, the company developed a set of communications resources to share project details with the community and respond to questions and concerns. The project management team also reviews investigation and construction plans with a focus to mitigate potential inconveniences to residents and businesses in the vicinity of MGP project sites.

One example is PG&E’s Watsonville Service Center, where, in the fall of 2008, crews removed approximately 23,000 tons of soil impacted from historical utility operations, including a steam generation facility and an MGP. Prior to starting the work, PG&E spent many months working with state environmental authorities, city and county staff and the surrounding community to reduce impacts to the community, including leasing a three-acre lot to reroute trucks to avoid the residential neighborhood, varying work hours to meet the needs of nearby residents and businesses, daily street sweeping and maintaining the highest standard of housekeeping practices on- and off-site. These measures went above and beyond the full health and safety plan developed for the project under the oversight of the state, which included extensive air monitoring and dust-control measures.

PG&E project representatives also worked with state officials to hold public meetings and went door to door before, during and after construction activities to maintain an open dialogue with those community members who had the greatest potential for inconvenience or health and safety concerns related to our construction work.

In 2009, the project management team is focused on refining its site review process and formalizing the opportunity for customers to report back on our efforts to minimize construction impacts, as well as the ease of communicating with us and our responsiveness to their concerns. This commitment to taking responsibility for our operations, and in so doing, working collaboratively with our neighbors and surrounding communities, demonstrates our commitment to PG&E’s environmental justice policy.

PG&E’s Topock Compressor Station

PG&E’s Topock Compressor Station is located in San Bernardino County, about a half mile from the Colorado River. Consistent with industry practice at the time, hexavalent chromium was used at Topock in the cooling towers in the 1950s and 1960s to prevent corrosion. Beginning in 1951 until 1964, untreated wastewater from the cooling towers was discharged into a nearby dry wash. Over time, the discharged hexavalent chromium reached and contaminated the groundwater aquifer. PG&E is characterizing the magnitude and extent of contamination through an extensive groundwater monitoring network. Additionally, PG&E’s monitoring program continues to show no presence of hexavalent chromium in the Colorado River.

PG&E has been monitoring the groundwater plume for several years and has been working cooperatively with state and federal regulators and other interested parties to evaluate and remedy this groundwater contamination. In early March 2004, state regulators required PG&E to begin operating a groundwater extraction system as an interim protective measure to ensure that the chromium plume is hydraulically controlled so it does not reach the Colorado River. In July 2004, PG&E initiated treatment of the hazardous groundwater prior to off-site disposal, and, subsequently, expanded the groundwater extraction and treatment system. That expansion was completed in July 2005 and includes a treatment plant, which cleans the extracted groundwater so it can be reinjected into the groundwater aquifer.

PG&E also continues to work with state and federal regulators to complete the characterization of groundwater and soils at the site. In 2008, a major study of site soils was undertaken, focusing on sites of historic industrial activity. In addition, both the federal and state regulatory agencies have approved PG&E’s comprehensive groundwater characterization report. This report provides the results of years of extensive groundwater investigations at the site, and it serves as the basis for identifying which constituents will need to be addressed as final cleanup plans are proposed for this site.

PG&E has submitted a draft Corrective Measures Study/Feasibility Study for a final remedy to clean up chromium in groundwater at Topock. This study evaluated several technologies, arranged in a series of alternative remedies, to address chromium. Each of the alternatives was evaluated using federal and California criteria for remedy selection, and PG&E proposed a preferred alternative based on that evaluation. A formal comment period is under way, during which interested project stakeholders will provide their views on the alternative evaluation and PG&E’s selection of a preferred alternative. A final decision on selection of the groundwater remedy is scheduled to occur in the first quarter of 2010.

We continue to work closely with the local Fort Mojave Indian Tribe. In addition, PG&E has entered into agreements with the Colorado River Indian Tribes and the Hualapai Tribe that provide for reimbursement of certain costs incurred by the tribes in connection with the Topock cleanup. Consistent with our environmental justice policy, these agreements will help ensure that these tribes have the ability to meaningfully participate in the remedy-development process.