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Questions…on PG&E as a Green Business Leader for Jennifer Zerwer
Providing natural gas and electricity for most of central and
northern California, Pacific Gas & Electric is one of the largest
utilities in the country. Its size and the inherent governing
oversight as a utility would suggest it would be far from a leader
in expanding societal norms, yet PG&E is considered one of a handful
of organizations pushing the nation’s environmental envelope. Here,
Jennifer Zerwer of the utility’s environmental team details some of
groundbreaking efforts they are making, how the utility’s uncommon
business model allows them to be so committed to going green, and
whether their strides might rub off on the private sector.
As a utility, I would assume
PG&E would not have much motivation to help people save energy and
to invest in renewable sources of energy. If you make money off
energy, why do you want people to conserve it and find alternative
sources? Actually, our profits are not tied to the amount of energy our consumers use. It’s called, “decoupling.” It’s how we are regulated under the California Public Utilities Commission (CPUC). It’s pretty complicated, but the central idea is that it takes away the incentive for us to get people to use more energy. Is it common for utilities to be decoupled? It’s not common yet. There are a few other states that are doing it, but everyone does it and defines it a little differently. I know Oregon and Washington have some sort of similar programs. If you don’t profit from the amount of energy consumed by your customers, how does PG&E make money? We make profits through various methods within that decoupling system set up by CPUC. For example, there are incentives for us to improve reliability and the grid infrastructure. We are also given incentives to help people consume less energy. Are those incentives why PG&E has devoted so much time and effort to going green? They help, but what it boils down to is that Peter Darbee, our CEO, and other leaders in management took a really hard look at climate change and PG&E’s role in that a few years ago. They determined there was an unequivocal connection between the release of carbon dioxide through energy consumption and climate change, and more specifically, in 2004, electricity generation accounted for 33 percent of all greenhouse gas emissions. So there was an internal decision that because our business as energy suppliers can contribute so negatively, that it’s our responsibility to do as much as possible to minimize our carbon footprint. What are PG&E’s green priorities? First and foremost is energy efficiency since the most effective energy conservation is energy that is not used. We have a variety of programs to inform people and businesses how they can minimize their energy consumption. The next priority is supporting and using as much clean energy as possible. In terms of clean energy, are most of the renewable projects focused on solar and wind? Solar and wind are in the mix, but we also have a lot of other projects in the works. We have a program called “Cow Power,” where we’re partnering with farms to turn cow manure into biogas. It’s clean renewable energy and it also removes dangerous methane from the farms, which then becomes a new source of revenue for the farmers. We’re also researching wave energy projects off the coast of Humboldt and Mendocino counties, and we’re looking into harnessing tidal energy in San Francisco Bay. I have the stereotype of a utility as a huge organization with lots of red tape, which makes getting anything approved a years-long process. So the idea of PG&E as a leader on any societal front seems counterintuitive. Am I alone? No, you’re not. I grew up in Chicago, and I definitely didn’t think of the local utility as forward-thinking. Yet, PG&E’s environmental initiatives are the reason why I came to work for them. But there still are those regulations and the oversight you mentioned, so it’s not like PG&E is able to do all of this on its own. California offers a pretty unique situation right now. What do you mean that California offers a utility like PG&E a “unique situation”? It’s not just us having these green goals. The CPUC shares them, we have customers who embrace them, and the public policy environment on the local and state level are also very welcoming for these types of initiatives. Without all of that help and understanding, it would be impossible to get these kinds of things done within a utility’s model. I think the general consciousness and environment for embracing green efforts within the state is why California’s energy consumption has been flat for the past 50 years while the rest of the nation has seen a rise of around 50 percent over the same time. What we’re doing here can be achieved elsewhere, but there needs to be that universal commitment to pull it off. Still, are there challenges PG&E faces as a utility trying to do these things that a private business would not? We do have to have everything reviewed and approved by the CPUC. They’ve been great, but it is another phase in getting these things going. And I’m not sure it’s unique to a utility, but what we’re finding with some of our renewable energy projects is that it’s such a nascent market that we’re often waiting for the technology to catch up to the point where it can be used effectively. Are there ways that PG&E is using its position as a green leader to influence the private sector to follow? Some of the incentive programs we have are focused on fostering environmental initiatives within companies. One example is this virtual data center program we are working on with Sun Microsystems. If you think of sites that need to store huge amounts of information such as YouTube with its videos and photo album sites, they demand huge data centers full of servers that use lots of energy. We’re working with them to create virtual data centers that can drastically reduce the number of servers from like 200 to 13. The end result is less energy used. Right now, we’re also in the middle of a three-year program that is the largest energy efficiency program in the country, where we’re providing $1 billion in incentives for consumers, manufacturers, and retailers – for example, providing incentives to make compact fluorescent lightbulbs cheaper for the consumer and giving the retailer and/or manufacturer money so that these consumer savings are immediate instead of having to mail in a rebate to see the discount. |
