It’s not every day that an environmental group presents an award to the CEO of a utility company, so I went down to the National Press Club yesterday to hear the Natural Resources Defense Council sing the praises of Peter Darbee, who runs PG&E, the big utility company that provides electricity and gas to about 40% of Californians and one in 20 Americans.
Darbee and PG&E are pushing energy efficiency and alternative energy sources including wind power, cow power (electricity from manure) and plug-in hybrid cars. The company also supports dramatic regulatory changes, including a federal cap on carbon emissions. Not to slight Al Gore, but CEOs like Darbee–and he’s not alone–are a big reason why the debate over global warming has shifted so dramatically in the last 12 months.
Here, for example, is what Darbee has been saying about global warming since last spring: “The link between greenhouse gas emissions and the earth’s warming climate is convincing, the potential consequences are serious and the need for action is urgent.”
This kind of straight talk doesn’t make him Mr. Popularity in the utility industry but it leads enviros like Ralph Cavanaugh, a senior attorney with NRDC, to describe PG&E as the most green-friendly electric utility in the U.S. NRDC and PG&E were allies in last spring’s successful effort to get the state of California to regulate greenhouse gas emissions.
“The federal government should embrace real and mandatory caps on greenhouse gas emissions,” Darbee told his D.C. audience. More broadly, he said: “Within the span of a generation, we need to transform the ways we provide for our energy needs.”
To be sure, PG&E burns almost no coal. So carbon regulation would give the San Francisco-based firm a competitive edge. The company’s retail electricity sales come from natural gas (42%), nuclear (24%), large hydroelectric (20%) and other renewables (12%).
PG&E also has the advantage of operating under California regulations that for several decades have “decoupled” the link between selling more electricity and making more money; instead, the state sets the company’s revenues at a fixed level and rewards PG&E when it helps customers use less energy.
The results have been impressive. “Per capita energy usage in California has remained flat over the past 30 years, while the rest of the nation has increased its usage by 50%,” Darbee says.
It’s become increasingly clear that energy efficiency is the cheapest and least painful way for the U.S. to cut its carbon emissions. One step in the right direction would be for other states to adopt regulations so that utilities no longer make more money when they sell more electricity. Another would be to develop strong national efficiency standards for buildings and appliances. Darbee supports both.
This CEO’s background helps explain why he’s ready to drive dramatic changes in the utility business. Darbee worked for AT&T when the monopoly phone company was split up, then did telecom deals at Goldman before joining PG&E in 1999. He’s seen one industry go through a transformation, from a regulated, bureaucratic industry to an enterpreneurial, adaptable, consumer-focused business. If we’re lucky, the utility industry will head down that same path. And remember–those consumers don’t just want to turn on their lights, they want clean air and water as well.