Industry-Wide Challenges

As an emitter of greenhouse gases and a provider of energy to millions of Californians, we have a responsibility to both manage our carbon footprint and also to work constructively to advance policies that put our country and our world on a sustainable path toward a low-carbon economy.

Taking such a constructive and proactive approach will not only help to reduce the potential risks and consequences climate change poses for our company and the broader economy and environment, but it will also lead to unprecedented opportunities to create quality jobs, spur innovation and manufacture new technologies.

Yet, we know that the investments necessary to ultimately achieve these goals must be made with the costs to our customers firmly in mind. As a major supporter of comprehensive federal climate change legislation, we are working to ensure that legislation includes sensible measures that protect consumers and the economy against sudden price impacts, while still ensuring that we are effective at achieving the long term environmental goals.

Nearly 30 state governments across the country, plus the District of Columbia, have enacted laws to promote the development of more clean, renewable energy supplies.

The most aggressive of these, California’s Renewable Portfolio Standard (RPS), requires PG&E and the state’s other investor-owned utilities to meet 20 percent of electricity sales with qualified renewable resources in the 2010 to 2013 time frame. Raising the bar, all of the state’s utilities are likely to be required to meet a much tougher standard of 33 percent renewables by 2020, as part of statewide efforts to meet the goals of AB32, a law that requires a rollback of greenhouse gas emissions to 1990 levels by 2020.

Like many other utilities, however, PG&E continues to face great challenges in trying to bring more sources of renewable energy online. In California especially, these projects must navigate strict environmental regulations, among other issues. PG&E is working collaboratively to find the right balance—pursuing important new renewable resources while protecting sensitive habitat and species and considering other environmental factors.

The National Academy of Engineering singled out the electric grid as the single greatest engineering achievement of the 20th century. But like any great bridge or roadway, it must be maintained and improved to meet society’s evolving needs.

Like every other utility, we must continuously maintain, upgrade and replace our extensive infrastructure to meet the needs of customers. In today’s economy—with just-in-time precision manufacturing, high-tech emergency medical services and ubiquitous use of computers in homes and offices—reliable service becomes more critical every day.

To meet these challenges, PG&E is requesting authorization from the CPUC for $2.7 billion in capital spending in 2011 and comparable amounts over the next two years—primarily to replace natural gas and electric systems that have reached the end of their useful life.

Some of those resources would also begin to address the growing national consensus on the need for a “smarter” electrical grid—one that is self-monitoring and self-healing in the case of outages, accommodates challenging new forms of customer demand such as distributed generation and electric vehicles and integrates variable renewable energy by sophisticated, real-time balancing of supply and demand. In fact, according to Pike Research, global spending on smart grid infrastructure will total some $200 billion from 2008 to 2015.

PG&E’s deployment of SmartMeter™ infrastructure is a prime example of what will be a multiyear investment in building a more reliable, flexible and efficient electric grid for the 21st century. By 2012, PG&E will have installed more than 10 million digital gas and electric meters. These two-way meters will open the door to a host of new services, including new pricing options, automated energy management systems in homes and businesses, much quicker detection of service outages and the ability to charge plug-in vehicles without jeopardizing the reliability of the distribution system.

In 2009, the National Commission on Energy Policy’s Task Force on America’s Future Energy Jobs issued a bleak assessment of the industry’s future workforce issues.

The report noted that as many as a third of all jobs in the electric power industry may come open within three years due to retirements. Instead of providing an opportunity for today’s unemployed, the specialized skill sets required may prove to be an obstacle both to aspiring workers and the energy industry.

PG&E is working in many ways to address this industry-wide challenge and contribute to the communities we serve. For example, through the PowerPathway™ program, PG&E is partnering with California’s community colleges, government, labor, foundations and other community-based organizations to provide preliminary skills training to entry-level workers who will build, operate and maintain the next generation of energy infrastructure.

PG&E serves a region of the country that is among the hardest hit by the deep economic recession that struck the entire nation in 2008. Our customers continue to face high unemployment, housing foreclosures and a severe state budget crisis.

To help customers in this difficult economic climate, PG&E offers many ways for customers to save money by saving energy, including a robust suite of energy efficiency programs, online tools to analyze energy use and rebates for energy-efficient products. We work to reach vulnerable customers to connect them with our assistance programs before they find themselves unable to make their utility payments. We also offer financial assistance programs such as California Alternate Rates for Energy (CARE), Relief for Energy Assistance through Community Help (REACH) and Energy Partners to provide income-qualified customers with a variety of services to help them meet their energy needs.

We are also contributing in a variety of ways to California’s economic recovery and job growth. PG&E’s proposed capital spending program for 2011 to 2013, subject to CPUC approval, will create or preserve an estimated 16,000 high-value jobs each year, according to an economic analysis by IHS Global Insight.