Heat. Heat.
Hallelujah.
Hallelujah.
Heat. Heat. This
What is it? Oh, heat.
To reach a future with temperatures below 2 degrees centigrade, we will not be able to burn the $20 trillion worth of oil recorded in the oil companies' books. This is a very difficult task, but we will have to do it. It is easy to point fingers at many different groups and call them enemies. For me, the enemy is time. The faster we act, and the more we do, the more courageous we will be, the better off we will be.
If we do not move forward now and do not engage our communities about climate change, we will not be able to take the big steps we need to take to change this situation. There are so many creative ways in which people can raise their voices, which we firmly believe in, about what the uncertain potential outcomes are for our climate system, and if we do nothing about this problem, we can talk about whatever we hold dear.
Now, more than ever, it is very important to have respectful civic discussion on the challenging issues of our time.
Our destiny is still in our own hands, and Climate One means saying no, our destiny is under our control. So this is our chance to honestly tell where we stand on climate.
And in the strangest way, this can be the time when people are actually ready to listen. Good evening. Good evening and welcome. Thank you for joining us for tonight's program. My name is Jenny Park, and I am the executive director of Climate One.
We are in the San Francisco Bay Area, and I want to acknowledge that we are on the unceded ancestral lands of the Ohlone people. They are the original inhabitants of the San Francisco Peninsula, and they and other Indigenous people are still here today doing important work to heal historical trauma and restore their lands. I am committed to honoring their stories and walking on their land with deep respect.
Climate One is a weekly podcast and radio show that is heard on more than 90 public radio stations across the United States, including KQED in the San Francisco Bay Area. We release new episodes every Friday, and you can subscribe wherever you get your podcasts, including now on YouTube. I rarely say this, but you can actually take out your phones now, scan the QR code behind me, and subscribe to the podcast right now. And once you do that, please put the phone away and please put it on silent. Okay.
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Please write your name and a brief question, and please write it very clearly. We have difficulty reading in the dark here. And look for the question cards on your seats.
We will collect your questions during the program and then Greg will call your names and invite you to ask your questions, you can come to the microphone on this side and ask your questions. I understand that many of you have lots of questions and comments. So, I ask everyone to hold your comments until we reach the Q&A portion of the program, so that people can hear the conversation they came for. Do we agree on this?
Okay. Thank you. Okay. One more thing before we welcome our speakers to the stage. I know some of you may have noticed that Senator Scott Wiener is not in tonight's program. Due to a change in schedule, he could not join us tonight. I apologize and I thank you for your patience because we have rescheduled this program a few times and I am glad you are here. And with that, let's get started.
Please join me in welcoming Climate One's host, co-host, and founder Greg Dalton and tonight's guest, PG&E's CEO, Patty Poppe.
So glad to see you here. Thank you everyone. Okay. Patty, welcome back.
Hello, Greg. It's great to be here.
It's been a while since we did this.
People are angry about energy prices. You may have heard.
PG&E customers in Northern California have seen their bills increase by more than 60% from January 2020 to 2025. That was double the national average. Since then, I believe PG&E has lowered rates five times.
Oh, so bills, you're saying bills have come down about $25 per month. According to one report, prices are still 40% above 2020 levels. So they went up, maybe now they've come down. What do you say to those who are angry about prices?
We haven't finished the job. Look, we're hearing people's complaints. We know that affordability is a legitimate concern for people. And our bills are one of them. We had to make a lot of restitution to get out of bankruptcy. It was a very difficult time for the company and our customers. And I'm happy to tell you that, as you said, we've lowered our rates five times in the last two years. Our most vulnerable customers' bills are 23% lower, but you're right that they had gone up more than that. And so we're continuing to work on this. The team is fully focused.
We have an internal initiative where we are working to make our energy more efficient for our customers.
Because I've seen that the company has applied for potential rate increases in the future. Are you planning to raise rates in the future?
Yes, actually, we filed a rate case last year that may take effect in '26. We may have filed it in '25. It will take effect in January '27 and it keeps rates stable. It was the first rate process that would keep bills stable if we got everything we asked for. And we did it deliberately. We managed our future costs to make sure we could keep energy affordable for our customers. Greg, this might surprise you.
For California customers, and especially our customers, the average household spending on electricity and natural gas is about 3%. That's the US average. For our customers, the average household spending is about 1.7. Now, this isn't true for all customers, for example, some of our customers in the Central Valley have a very heavy burden of air conditioning.
That's not true for them. They're above the US average and we're working hard to make sure we have programs for them, but we use less energy.
I think California should be proud of energy efficiency. And certainly, our weather is more moderate. And so even though rates are higher, our energy bills are coming close to and close to the US average. So our goal is to bring those bills back to the US average where they used to be.
Okay? And this is one of California's great stories, the Rosenfeld curve for energy experts. They grew the economy, but energy demand stayed flat. And but a lot of that has changed. We'll talk soon about data centers and other things, but you know that the criticisms people are raising about the investor-owned utility model, they say you don't have to compete for customers, you have to compete for capital from Wall Street that can invest in other companies, right? And that you work more for Wall Street than Main Street because they drive your stock price or access to capital and other things.
Well, first of all, I can assure you that our first priority is our customers. And actually, Wall Street wants the same thing. They care a lot about whether we have the ability to serve our customers well. And that's why they track all the utilities. This is one of the main investment theses they will look at. Do you serve your customers well? So I think the investor-owned utility model actually aligns the interests of customers and investors. There are no winners and losers in that model. And especially now, as we are increasing demand, this model works best because you can reduce the denominator, the number of kilowatts used. And if you can manage that cost, which we are developing and implementing our lean operating system to manage that cost, if we can increase the denominator, then everyone's rates can come down. And so the investor-owned model really needs to increase demand because you have to build the infrastructure to meet that demand. And so if you're going to increase that denominator, you need access to capital. And that's why the IOU model can actually work when a utility like ours is investment grade and the cost of borrowing is lower. We have a challenge because of our wildfire liability, which we can talk about, that is costing our customers more and we are working hard to solve it.
Okay. I mean, it's a little hard to say there's no loser when the company went bankrupt twice and a lot of people were hurt, I mean some bondholders, you know, bankruptcy hurts people, fire hurts people.
Well, that's the IOU model not working. And there were definitely external factors that caused the IOU model not to work in those situations.
And you know, as electricity bills have gone up, so has executive compensation. Nationally, CEOs of top utility companies have seen an average increase of 18.16% in compensation since 2024, which is more than the increase in inflation and wages. And this is not limited to utility companies. It's true for other executives too. Before coming to your company, PG&E had diverted more than $100 million collected from customers for gas safety and operations to other purposes, including profits and executive bonuses. And judge, you know, that came out in the San Bruno case. So, what do you say to those critics who say that investor-owned utility companies are more interested in profits than safety?
Well, it's hard to judge people's values, but I can share my values with you and safety comes first. And we make decisions every day to make sure we are operating safely and I can assure you that my investors want the same thing. They were also clearly affected by the bankruptcy. So, they want to make sure we are running a safe system. And I can assure you that our safety culture, the safety of our communities, the safety of our customers, and the safety of our wildfire has improved significantly in the last six years. I am very proud of the progress made by our team, knowing that they have the right to stop work for their safety, that they are so valuable that they can ensure that every time they work in the right and safe way, and our communities are safe. Our wildfire protection layers have significantly reduced the risk for Californians across our entire service area.
Last time we talked, you talked a lot about undergrounding power lines to make them safe, but your estimate from four years ago has not been met. You have undergrounded less. Why is that? And does that mean we are less safe because you are not putting those lines underground?
I would definitely underground more lines if I were allowed to. The interesting thing is that in a regulated investor-owned utility model, we are not free to do what we want with our customers' money. We have to get approval. We have a very transparent process where our regulator and interested parties give their opinion and decide whether they agree with our plan. And if they don't agree with our plan, we have to change our plan. And so we definitely had a plan to underground more lines faster. I am proud to say that by the end of next year we will have undergrounded about 2,000 miles of lines. We have just filed a request for 5,000 more miles. We want to reach 8,000 to 10,000, but actually, what we are learning is that there are ways to achieve the same safety at a lower cost by using technology in some areas. If we can make it cheaper, we will definitely do it, and so we are making those compromises. But we have filed a plan that we think is strong, which balances the needs to stay safe and is more cost-effective.
The net benefits of our underground plan are billions of dollars in savings for customers because the cost of vegetation management and inspection year after year is far greater than the cost of burying those lines and spreading the cost of that infrastructure investment over the life of the assets.
I've seen around San Francisco that all the crews are cutting all the vegetation and it will grow back and landowners are angry because you cut that tree and you know I can see the effect.
Save the trees, underground the lines.
Another topic of discussion is data centers. People on the left and right of the ideology have come together in this country. Such a strong, fast, and deep reaction has probably never been seen before. They are blamed for increasing customers' electricity bills. Yes, I also hear that you are saying that it will actually spread costs over a huge base. Explain to us how it will be that these large energy consumers will not increase prices for everyone.
Absolutely right. So let's make sure this has a very simple answer. It's called cost pricing. You have to charge the right price from large data center owner-operators, and when you charge the right price, they pay their fair share more and everyone's rates go down.
Can you make sure that people say that load is increasing, we had stable electricity demand for decades, but now it is increasing because of data centers. Can this be an increase for renewable energy or does it mean that because they want to move forward very fast, they cannot afford grid interconnection and will use fossil fuel gas?
Oh no. We are connecting renewable energy here in California. I am very proud of the direction of the California Grid and CEC, California Energy Commission, California Independent System Operator and CPUC. They estimate the load and give directions. They give directions on what we need to connect and they also tell us which types of fuel sources to include. As a result, California has added 33 gigawatts of solar and storage in the last 5 years. And let me give you a reference. What is 33 gigawatts? Well, the peak of our entire system is 50. We have added 33 gigawatts of solar and storage. And in the next four years, we are going to add 22 more gigawatts of solar and storage. And when you combine it with our excellent hydro system, nuclear energy sources, and our limited gas in California, we have one of the strongest grids in the world. We have already crossed the limit where people were saying, "Oh, you cannot keep so many renewable sources." And then again, we just had a little hot weather, was it not? Does anyone remember the flex alert,
which just means turn down your air conditioner?
Yes. I don't remember. It didn't happen. It used to happen before, but we have connected all this capacity of clean energy sources. It is fast, cost-effective, and easy to build and interconnect. So, we are now happily supporting this growing load with excess supply, which happens when the model works best. So, when you have this excess supply and we will connect the investment in transmission infrastructure to serve the large load, and that large load pays its right price and, by the way, manages its environmental impact, using either water-free or closed-loop water systems so that they do not use precious water resources. All of this should be very transparent and strictly regulated so that we can ensure that we are not putting a burden on our natural resources or overusing them. But this could be the thing that actually rebuilds our grid.
Our grid is old and existing customers have to pay to rebuild all that infrastructure in anticipation of new customers coming, which is happening. We are paying to invest in infrastructure and rebuild. In our case, here especially in our high fire risk areas, paying to strengthen the system for fire risk with decreasing usage. This is the real reason why rates have gone up as they have. We need to stop this trend by increasing the denominator, powering our tech industry and the great jobs and entire ecosystem here in the Bay Area. Power it well. Price it right. Lower rates for everyone and make sure the environment is taken care of while doing so.
So batteries are very good. We had not seen the scale that they will adopt a few years ago. They have done a lot so that you can connect these peak
So you're saying we don't need to build plants that are dirty and expensive, and you're saying we can manage this big load increase from data centers and if done right, they won't raise costs. Google and Meta won't raise our bills.
Right. You're saying that? I'm definitely saying that. And the thing about California is, first of all, we have over 300 data centers in California. And they've been there for a long time because a data center is a warehouse full of racks of computer servers. We have all the tech companies in California, as we all know, and they need a lot of compute. And so they've had them for years. We're adding more and we can connect them well into what I call the Goldilocks load. It's not so much that it's a problem, but it's enough to do the work we want.
But the scale seems like hyperscalers want to invest half a trillion dollars this year. So I think the scale we're expecting is different from the past few years. Right.
Well, and I think when you hear national headlines, we need to compare. I'm, you know, talking about California. I know you have national viewers, but national data center infrastructure investments look different from California's investments. Our projects are small. We have about 12 gigawatts of applications, which is a lot. They won't all be built, but we have 12 gigawatts of applications coming into our system. That's over 50 projects.
In some parts of the country, 12 gigawatts could be one project, one huge project, or it could be six huge projects. We're building the right-sized compute for our local companies so that world-class solutions can be delivered for big problems, biotech solutions, answers needed for humanity that technology can enable.
We're doing it here in the Bay Area. And we can do it in a way that's absolutely beneficial for all customers.
So I understand you run a company in California, but outside the state, some of these data centers, the guy from Shark Tank in Utah wants to build one that's 50,000 acres, something like that. It's pretty amazing. It's hard to get it on the grid without someone paying.
I think it's a very special kind of infrastructure project and we don't have those big projects in our pipeline.
So you spent 15 years working for General Motors and you're in the Automotive Hall of Fame. Great. EV demand is expected to double by 2040, even though, you know, sales have recently declined because of tax credits. But I'm seeing ads for Toyota, which is actually behind in the EV space. When Toyota is advertising EVs, you know something weird is happening. Yeah, so that, you know, will increase demand. Is the grid ready to handle data centers and electric stoves, electric cars, electric heaters?
It could be the best thing for the grid, increasing demand will fund rebuilding our old infrastructure and EVs are the best load because they can act as a battery on the grid.
A lot of automakers now have bidirectional charging vehicles. It's in its very early stages, but they can provide capability based on the size of your vehicle. If you have a GMC pickup truck, we're talking about 10 Tesla Powerwalls. If you have a Chevy Bolt, maybe it's five. But it's five Tesla Powerwalls in your car that you were going to buy anyway. I call it 'annuity economics'. You get a value stack. You buy a car to get around. Oh, by the way, it saves you fuel costs because electricity is cheaper than gasoline. And you have a flexible solution in that situation so you don't need backup in your home for any reason. But I can't drive the car away and run the fridge at the same time.
Right. Right. I mean, you're going to have to rely on grid reliability. I don't think anyone is going to be off the grid. But it can definitely work as a significant backup and you can go to the store and come back and your ice cream will still be fine.
So, you're very enthusiastic about EVs. The grid can handle it and people should think about using their car two-way as a battery and energy source as well as transportation. So let's talk about fire safety. You know that rates are a national issue. But before talking about fire safety, we have politicians running for office right now who say they'll solve the affordability issue. They'll lower prices for milk and electricity and whatever else.
What tools do politicians actually have to lower our bills?
Well, one tool they have is to pass wildfire reform and make PG&E investment grade in the end. It's our policy that's forcing us to be sub-investment grade and for the debt we've issued since 2017. Today, until those bonds mature, paying off the debt taken to build infrastructure will cost my customers $4 billion more.
And they can pass a law in one day that will change that. So that law, you know, died in the Assembly this year. California lawmakers killed a bill that would have shielded PG&E and others from liability if a fire started because of your equipment, which... it doesn't shield me from liability. It makes us accountable. There's an exemption limit if we don't operate the grid properly.
Well, that news that California didn't act on its liability cap took $20 billion off the market value of your company and Edison in Southern California. So shareholders are saying, 'Uh-oh, we're in trouble.'
Yeah. I think those are investors who are pension funds and retirement funds. A lifetime of hard-earned savings says this is very risky. California is very risky. And that's the challenge here for California. If capital, safe and reliable capital, the capital of retirees, doesn't invest in our infrastructure, that's a much bigger problem than data centers. I can tell you that now.
Conversely, cities and counties are saying we don't want to be victims of another fire. You just name the fire. I can't remember all the fires in California after Tubbs in 2017. The insurance industry, a lot of people on the other side, are saying when your line starts a fire, they don't want to pay the bill.
Yeah. I think the strict liability rule in California creates way too much risk for investors and it's very expensive for customers. So the two go together. Investor and customer go together. They win together and they lose together. And today our customers are losing because it's very expensive to borrow money to build infrastructure to keep them safe. It's heading toward that destructive cycle we talked about years ago — our ability to attract capital is essential.
No matter what kind of utility you are, you have to attract capital from markets to invest in infrastructure. We need more infrastructure than ever now. And the infrastructure we can build will lower rates. The model is working exactly the way it should. But the model is still in limbo, waiting for legislative action.
Look, this can get very serious because we have homeowners saying they can't buy fire insurance. We have the CEO of a big company saying we can't take the risk in the system. We have flood insurers who have actually left the market. We have all this risk going back and forth that we can't put anywhere because we can't bear it. And this, this makes me think, I mean, you're talking about love and hope here, but help me out, you know? You know, our market has a lot of risk that isn't priced, okay? We can't pick up all these things. What are we going to do, dump it all on Sacramento and put it on the state's balance sheet?
I don't think we need to do that and the proposal that was being considered for this wildland fire liability, I think it did a good job. A case could be made that would create a good balance and ensure that we're still accountable and I'm 100% for it and we're in our fourth year without a major wildland fire. We continue to make our system safer every day at lower cost. All these things can be true and we can have a system that can attract low-cost capital so that everyone's bills can be even lower. So, I see a win there and we can still keep our insurance market open and more accessible for homeowners.
Now, what I would say, and the report published in April as part of the legislative session, it actually showed that we need to strengthen our communities and homes. So a lot of things can happen because of fire.
And insurance companies are already telling people to keep five feet of distance.
That's part of it. We need more building codes. Like for earthquakes, you need mandatory earthquake permits and to strengthen your buildings. It's exactly the same situation for wildland fire. Our communities are not prepared for the natural disasters in the environment we live in.
And we need to give homeowners and property owners the right price signal so they can see, oh, my risk is higher here. If I invest X, my insurance premium can go down by Y. We need to make this insurance market work. In hurricane states, they had a problem with expensive insurance because of hurricanes. Now, no one is to blame for the hurricane. So, there's not a big fuss here about who will sue whom and which lawyers will make money and who will try.
Making the hurricane stronger.
Okay, that's fair. Okay. That's fine. We'll put that aside. In Florida, and I agree with you on this point, to be clear.
But on the issue of insurability of coastal homes because of storms, they temporarily had to raise the cost of insurance so homeowners would get the signal that I need to invest to make this home safe from storms. Now many of those homes have been strengthened and they suffer very little damage during the event. They buried all the power lines. In Florida's storm-affected areas, the entire distribution system is underground. They didn't have to face the opposition that I'm getting for that infrastructure work. Those systems are safer. They're more reliable. And now insurance costs are coming down because when a storm hits, there's much less damage. We need this in California. We need to protect our communities from these disasters.
Fire starts with falling power lines. It starts with a chain dragged behind a truck. It starts with all kinds of accidents. And yes, electrical appliances that cause defects, even if we're operating them completely, fires can start. We need to invest in fire resistance and keep our communities safe even when a defect occurs. This is an important choice the state can make collectively with good building codes. And this legislative package included some things about strengthening and incentives to do that. And there was a lot of opposition from wealthy communities in Oakland and Mill Valley or Woodside. A lot of people don't want to hear or do this. So, if another major fire starts because of PG&E's line, what happens? Who pays?
Well, we have two funds that were established to pay claims in the event of a wildland fire. And so those funds were funded 50% by shareholders and 50% by our customers and as the law will actually collect 100% from customers but our investors have funded those two funds 50/50. Our investors' concern is that they don't want to keep doing that, and they have the option of where to invest their capital. And they have, as you mentioned, left California when the law didn't pass this year, and that's a problem for California. And I will do everything possible to say there is a way to fix this. We need to fix it and we need to take steps to do that.
The widespread power outages last winter upset customers here in San Francisco, who are paying high prices for reliable service, and just two weeks ago our power went out in this building, actually it was before your time, I was interviewing Robert Gibbs, President Obama's White House Press Secretary in this room, and the power went out, so soon I was back in the closet with the person I used to see in the White House press briefing and we were doing the interview knee-to-knee because the power went out.
So, you know, this has increased calls to break up PG&E. You know, a bill was moving in the Assembly. It seems to be stuck in committee. So, what do you think about a divorce with San Francisco?
