A Law to Cut Emissions? Deal With It
by: Jane L. Levere 24 October 2006
In August, Peter A. Darbee, chairman, chief executive and president of PG&E, owner of Pacific Gas and Electric, broke rank with his peers by supporting a measure in California that would reduce greenhouse gas emissions, which are widely blamed for global warming. Mr. Darbee discussed his decision and other initiatives in an interview on a recent visit to New York. Following are excerpts:
Q. Why do you support California's Global Warming Solutions Act, which will require utilities and other companies to make their operations even more energy efficient?
A. I dove into the issue with our senior team more deeply than other executives. We engaged in a process of scientific inquiry. Out of that we developed a conviction that the earth is warming, that mankind's responsible and the need to take action is now. I've always been one who's been driven by my conscience as to what is the right thing to do. And we came to the conclusion that that was the right thing to do.
Secondly, the thought was, as a leader, what you want to do is anticipate trends in the business environment and then position a company optimally within that context.
Rather than sitting there and denying that global warming is a problem and climate change is a problem, my reaction was to accept it and to go with the flow to understand the trend, and then say, how can I position PG&E to deal with that challenge, and then how can I turn a challenge into an opportunity.
Q. What do you say to critics who contend that this bill will make California's economy less competitive? A. In the past, California has stepped out and been a leader on environmental legislation, and its economy has continued to grow probably faster than the average state economy in the United States. California will find a way to continue to grow, notwithstanding this piece of legislation.
Q. How can California and companies based there achieve the goals mandated by the bill?
A. Take a look at Fetzer winery as an example. Ninety-five percent of their waste they can keep on-premise and reuse, 5 percent they ship off, and that is a dramatic reduction. When I went there, their whole building was constructed with energy-efficiency in mind. The walls are pretty thick, and if you look up at the skylights, they have windows that open up at night and let the cool air in, cool down the place. The cool air goes into the walls, and then they close those skylights in the morning, and then they put reflector material up to reflect the heat. They have essentially very little need for air-conditioning at all, because the energy that was lost from the walls is then reabsorbed during the course of the day.
Q. Your "SmartMeter" program will allow customers to take advantage of electricity prices that will vary by season and time of day. What percentage of your customers do you estimate will use it?
A. We anticipate 15 percent to 20 percent of our customers will sign up for the program voluntarily, but this could go as high as 30 percent to 40 percent, depending on the level of customer satisfaction and the impact of the marketing strategy that will highlight customer benefits.
Q. How prevalent are such programs in the United States?
A. There are some, but they're limited programs; this would be the first really large-scale deployment, ours will be 10 million meters. We've done a trial with about 5,000 meters, and then beginning in 2007, we'll deploy on a large-scale basis and it will take four years to get 10 million meters in. We've taken the leadership role in California; assuming that it is successful, I believe it will spread across the U.S.
Q. You have completed the nuclear reactor technology program at M.I.T. What is this program and what has it prepared you for?
A. It is a monthlong course, which is designed for utility executives that have involvement with nuclear reactors. The idea is not to teach you to run one; what it does is give you a pretty good understanding of how a nuclear reactor works, the extreme importance of safety to your employees and the public, it gives you an idea of the things that can go wrong in a nuclear reactor, and it gives you the capability that as you're interacting with the people that operate the nuclear reactor, that you can be more effective in managing them, understanding of the facility. We have two nuclear reactors in San Luis Obispo.