On Tuesday, August 31, I was in the audience at the Haas School of Business at UC Berkeley as Peter Darbee, CEO of Pacific Gas & Electric Co., responded to moderator questions about the energy industry and the company’s stance on climate change.

The post below consists of Part 2 of my record of the conversation – all portions are included in chronological order. Read Part 1 here.

An ellipsis (…) indicates that I was not able to capture the words or thoughts skipped. Moderator questions are paraphrased. Responses are included as accurately as possible – punctuation choices are mine. The moderators were Bev Alexander (BA) and Joey, a student.

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Joey

I want to go back to a shareholder value article in the Wall Street Journal – a professor from Michigan says we should focus exclusively on profit. Why worry about corporate responsibility?

Peter Darbee

I used to have that view – I lived and breathed Milton Friedman… It’s tragic that more people haven’t continued the journey of being realistic… What [the professor] is saying is that if you maximize profit each quarter…line up the quarters…then that will maximize profit forever… But you cut back on expenditures that are needed… There’s such a time between when policies are set and it comes home to roost…

I want to make sure PG&E is here 100 years from now and I’m setting up good people and good culture…

I couldn’t disagree with that teacher more…it’s rubbish.

Bev Alexander

The direction the industry is headed will call for a lot of innovation. How are you shifting the culture? How will the utilities integrate new technology?

Peter Darbee

Utilities have been very conservatively run and prone to not changing…but the environment is of new technology and changing regulation… You could say the risk is that utilities won’t change quickly enough… … Utilities react to their commissions…can be punished for change… … Our commission has been open to change and promoted change…

How do we create innovation? An organization is the shadow of its leader…and of the leaders that have come before… The people who have the best ideas are the people closest to the work…want to create an environment for trial and looking into things.

We had an opportunity to invest in solar in space…structure the risk…so that we only pay for the power if it’s delivered…ensure that they are abiding  by the rules of government. The two principle objections went away.

Bev Alexander

Other technology you’re working with – robust energy efficiency, electric cars, renewables – what are the most important? What are choke points on the grid that need to be addressed?

Peter Darbee

… If we’re going to deal with the carbon problem, we’re going to need all the tools in the arsenal…nuclear, renewables, the first fuel should always be energy efficiency, demand management, carbon capture and sequestration… We’re going to need chips on all the squares… What’s scary is we need a lot from each…from energy efficiency to renewables.

… We’re going to need nuclear… I know a lot of people aren’t keen on nuclear… The storage issue is far less than the challenge of climate change.

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Part 1 was posted yesterday. Part 3 will be posted on Monday.

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