Can PG&E change?
Conceding that customers are justified in not trusting PG&E, the utility’s new boss marked his first 90 days at the helm Monday by vowing major changes in the coming year to upgrade its safety and reliability in the wake of the 2010 gas explosion in San Bruno.
“The public has good reason not to trust PG&E,” CEO Tony Earley said during a news conference at the company’s San Francisco headquarters. “I understand that.”
The utility is attempting to recover from a September 2010 natural gas explosion in San Bruno that killed eight and destroyed 38 homes. The disaster forced PG&E to undertake a $400 million upgrade to its natural gas and electricity system, on top of a $2.2 billion revamp of its natural gas transmission system and leak-prone network of plastic pipes that PG&E proposed to state regulators.
Earley made it clear that he wants measurable change in how the company operates.
“What we need to do by the end of 2012 is to be making progress in providing safe and reliable electric and gas service,” he said.
To that end, he has asked every organization within PG&E to determine what it means to be the best-operating utility — to define “best-in-class” power service. PG&E also intends to take a back-to-basics approach as it attempts to burnish its image.
“Right now we need to be humble,” Earley said. “We have a lot to be humble about. We are not where we need to be and where our customers need us to be.”
To refocus on its core mission, PG&E a few weeks ago eliminated a corporate strategy group. That unit’s primary duties were to find new opportunities for the company that were outside of the core electricity and gas operations.
“I have totally closed that down,” Earley said. “Our focus has to be totally on our utility business.”
The utility concedes it faces an uphill public relations battle, even when it comes to the upgrades. An estimated 90 percent of its proposed $2.2 billion in improvements to the natural gas transmission system would be born by ratepayers under the plan PG&E has submitted to the state’s Public Utilities Commission.
The company argues that the per-customer impact won’t be huge, translating to an average monthly increase of $1.93 for a typical residential customer and $14.95 for a typical small-business customer, according to PG&E spokesman David Eisenhauer.
“We have to convince people that these are important enhancements to safety,” Earley said. “This system will be state of the art. We will be far ahead of everyone else when the repairs are complete.”
The company’s attempt to improve its standing with consumers won’t be easy, said Mindy Spatt, communications director with The Utility Reform Network, or TURN.
“PG&E obviously has a long way to go to restore trust,” Spatt said. “PG&E has become synonymous with a lot of things that customers don’t like — exploding pipelines, burning houses, smart meters that are unpopular, rate hikes. From the customer’s perspective, things couldn’t be much worse.”
The company hopes that initiatives such as settling the lawsuits associated with the San Bruno explosion could be one way to help improve the company’s image. Earley said he would like to see the litigation settled well before a proposed trial date of July 2012.
“These people suffered a terrible tragedy,” Earley said. “We want to try and resolve these cases.”
Earley believes rank-and-file workers, along with management, recognize that sweeping improvements are needed.
“There is a clear understanding that the confidence our constituencies have in the company is at an unacceptably low level,” Earley said. “I am personally committed to making this the best-operating utility in the country.”