Pacific Gas and Electric is the classic, longtime "clean" utility -- almost no pollutant emissions. It just this week pulled out of the US Chamber of Commerce because of the chamber's tough skepticism about the need to regulate carbon emissions. But clearly, CEO Peter Darbee doesn't see company cleanness as any guarantee of future viability of a power utility.
Speaking at the Bank of America/Merrill Lynch utility conference in New York Tuesday, Darbee said climate change and renewable energy mandates are not the big challenges for the power industry. Instead, our correspondent Ethan Howland reports, he said distributed energy and smart meters present the much bigger threat to a business's way of life.
Easy for him to say, some coal-intensive utilities might shoot back. But for Darbee, PG&E's California location means he is seeing it sooner than the rest of the industry is, which is both an opportunity ("to figure it out first") and a threat ("in that they're at our doorstep earlier.")
Shades of transformation in the telecommunications industry 20 years ago, Darbee said: Distributed generation and smart grids could open the door to competition, and companies like Google are interested. The web giant could develop software to work with smart meters to run air conditioners and appliances, meshed with power prices, and from there Google could start offering generating options, Darbee said.
And as solar panels are added to rooftops around PG&E's territory, the utility has a smaller base over which to spread its costs, which puts pressure on rates. And then, in the great circle of things that are connected, higher rates make distributed generation more appealing.
But at least to some extent, the telecom transformation was supposed to be the model for the power industry, back when visionaries were talking about making it competitive, efficient and innovative. The fact that it most definitely hasn't happened yet may be a matter of the daunting physics of electricity, but it's much more than that, too. Darbee is identifying the start of something that may or may not take off; whether it is a threat or an opportunity is in the eye of the beholder.
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