PG&E has had a new CEO since January 2021. The San Francisco-based utility tapped Patricia Poppe, who held top jobs at energy companies in Michigan.
Poppe faces multiple challenges in her role. PG&E has been responsible for sparking multiple catastrophic and deadly wildfires, and a pipeline explosion in 2010 killed eight people. The utility declared bankruptcy in 2019.
She said she’s focused on transforming the company to gain back the public’s trust. This includes preparing for disasters, rather than reacting to them.
“I call this climate resilient infrastructure," Poppe told CapRadio Insight host Vicki Gonzalez. "So that’s one of the best practices that we’re deploying that you actually have to engineer your infrastructure, not for today’s climate, but for future climate.”
Poppe said she knows PG&E’s intentional power shut offs to minimize wildfire risk significantly disrupt people’s lives. She said the company is using technology to more accurately target these outages and the ultimate solution is the undergrounding of 10,000 miles of electrical transmission lines, which will take time.
Poppe spoke with Gonzalez about those challenges, how the utility is attempting to stop its equipment from starting catastrophic wildfires and more. Click play above to hear the entire conversation.
This interview has been edited for clarity and brevity.
Interview Highlights
I want to set up some key challenges you were set to inherit just months prior to becoming CEO. PG&E emerged from bankruptcy. A fire victim trust was created for 70,000 wildfire victims as far back as 2015, including the Tubbs fire, which killed 22 people, and the Camp Fire which claimed at least 84 lives. Not to mention still under federal probation for the 2010 San Bruno natural gas explosion, which killed eight people. What interested you about the job?
Well, I will tell you, as I watched from afar, the wildfire coverage and I had known about the San Bruno coverage — in fact, the San Bruno incident transformed the entire industry in our gas safety practices — I knew that the people of California needed better, and I knew that we could be better. I was running a very successful utility that was very customer-centric and focused on quality delivery. I'm very close with people running other utilities who really do a great job for customers, and I knew that it was possible. In fact, one time the recruiter said to me, 'Patty, now you just know it's a utility, you know how to run a utility.' And so though the challenges have been, I'd say, long standing, and I think the fundamentals of staying close to our customers, being customer driven, have an operations mindset was going to work at PG&E. And we can already see some of the small signs of progress that we're already experiencing.
When you first arrived as CEO and started doing a forensic analysis of what to improve upon, what stood out to you?
You know, some fundamental building blocks of great operations comes from transparency of performance on a daily basis, what I call the heartbeat of improvement, that every day we're committed to doing better than we did yesterday. But there are some basic operating tools that we could deploy. So we've implemented our lean operating system. And so we've got some fundamentals that we're teaching the organization about how great operations are run. That's a big piece. And the other piece was making PG&E more local.
You know, a utility like ours is at its best when we are closest to our customers who happen to be our friends, our families and our neighbors. You know, we're not shipping stuff over to, I don't know, Massachusetts. We're delivering products to our neighbors. And so we took the company and broke it into five regions with the intent of creating a more local feel. We call that a regional service model. It allows us to get closer to the unique needs — California is diverse. You know, we serve from basically Oregon down to Bakersfield, I like to say, Burney to Bakersfield. We have the opportunity to show up in a local way. The Bay Area has different needs than the Central Valley than the south coast than Northern Sierras. It's just a different service need and we should show up relevant to those local communities. So our regional service model is already underway and we can feel it making a real difference in those local communities.
Did the challenges that you were prepared for, did it exceed your expectations? Because within the first year, the Dixie Fire was sparked by PG&E equipment. Months later, a winter storm blew out power to tens of thousands across the Sierra foothills for weeks. What did those disasters teach you?
I would say that what I know about running a great utility is that challenges do happen. And in fact, there are times when a utility is at its best in a crisis. My goal is to get us out of sort of disaster response and get us into the disaster prevention business. And it's a different orientation for the team.
And so I can't say that it was surprising per se, but it was definitely daunting, like the seriousness of what we do. It's one thing when you have an outage, you know, across the country and at my previous utility, when we had an outage, yes, that was all hands on deck. Everybody worked to restore. And it was very important. But we didn't have to worry that a wildfire was going to start every time the wind blew. And so the seriousness of our challenge is borne by all of us. We definitely feel that every day. When I lay my head on the pillow at night and I can hear the wind blowing outside, I have a different feeling than I used to about the seriousness of it.
You're talking about a footprint that extends from the Oregon border. You know, Burney Falls down through Bakersfield. That's 70,000 square miles. You have 16 million people that you serve. That's roughly 40% of the state's population. What do you say to the argument that there is such a thing as too big, that time and time again we see that one company isn't suitable for 16 million people and perhaps breaking up the utility company?
In fact, I might have been someone before I came who said PG&E was too big, that it's hard to be close to your local communities. And which is why as soon as I got here, we broke the company into five regions. So our regional service model is specifically designed to address that question. It is important for us to be connected to our local communities, and I'm just happy to say that I can feel the fruits of those regional relationships already. I get calls from my regional vice presidents, who are my representative in each of our regions, daily. I know what's happening in those regions and we have a much closer relationship to our local hometowns. And so we've designed a purpose here at the new leadership team that I've been able to recruit and hire from across the country, experienced utility executives who are all here making it right and making it safe. We've taken a stand and defined our purpose as delivering for our hometowns, serving our planet, and leading with love. Now, that may sound like a different kind of PG&E, but I think we need a different kind of PG&E.
What's it going to take to say goodbye to intentional power shutoffs?
Undergrounding 10,000 miles of line.
Well, let's get to that. I actually toured one of those projects in the footprint of the Caldor Fire in El Dorado County, in the Grizzly Flats community. And that will be a total of nine miles completed by the end of the year. But that's really just a sliver of the overall 10,000 mile commitment that you made across PG&E's high fire-threat areas in the years to come. Can you explain the benefits of undergrounding?
It's multifold, but first it makes the system safer. Number one, full stop, is the best risk mitigation that there is is to get the lines out of the hazard zones. You know, so that's thing one. Thing two, it is actually more cost effective. And people often ask me about the price and I have to admit that for many years the company defended the undergrounding was too expensive, though people were begging them to underground the lines. When you look at the map through the lens of a risk cost per dollar, if you will, or something in that framework, you can see that the ongoing maintenance that we would have to do to maintain the vegetation and rebuild the power lines above the ground actually ends up costing the same as the investment to be made in undergrounding. And we can spread the cost of undergrounding out over many years. So an annual cost to a customer can actually be beneficial with the trade, at a minimum, flat, and in some cases, beneficial, lowering the cost. And certainly when you factor in the cost of outages, whether it's [Public Safety Power Shutoffs] or just a weather event or the cost of fire, there is no comparison. That is too expensive not to underground.
We had to sort of step back and see. And in fact, I did have a picture on my phone that I took myself. And when I went out and I was with one of my vegetation management crews and I use it as a wallpaper on my phone, and it's a picture of these 150 foot tall trees, hundreds of them walking down a little dirt road. And all of those trees were marked for removal. We've become so enamored with vegetation management as the only way to stop the risk that we're taking out trees that need to be taken out. If that's the only solution, if you're going to leave the lines in the air in that picture, in that photograph on my phone, there's a little teeny, tiny power pole way down the road, and it serves four cottages in that at the end of that street. And we're going to take out 100 or more trees. And I it was just like a lightning bolt. I got home that night and I showed my husband, I'm just like, this is madness. We have to, it's time for a new approach. This is not sustainable. It doesn't keep California beautiful. It doesn't keep California safe. So when you do the math through that lens, it's pretty easy to show that there's an economic case, you can do math and it actually is economically more viable to underground the lines than to continue to use that risk mitigation year after year after year after year.
I do want to give you an opportunity to talk about the settlements that were reached this year, $55 million for both the Dixie Fire and the 2019 Kincade Fire in Sonoma County, sparked by PG&E equipment. The settlements don't admit fault, but what do you want these civil settlements to represent?
Well, first and foremost, we've learned a lot about what it means to make it right. And in making it right, these settlements, for me, stood as an example of not just throwing money at it and hoping for the best, but rather, number one, getting restoration dollars to victims fast. So today, claimants are receiving an offer within 20 days of submitting their claim and receiving a payment within 47 days. That is a marked improvement over previous incidents, and we feel good about that because that allows people to get back on their feet. [Editor's note: PG&E has been criticized for not quickly paying claims through a 2019 settlement for victims of the Camp Fire.]
But also that settlement includes things like ongoing monitoring from an outside monitor. In fact, in those six counties that we are doing what we said we're going to do, and I welcome that kind of transparency. I am not afraid to have people watch what we do because we're implementing this lean operating system. We have visual management that tells us on a daily basis we have an operating review cadence and our heartbeat of improvement is alive and well. We know how we're doing. And so I'm not afraid for anyone to watch over our shoulder. I welcome that transparency. And then finally, part of that agreement was to assist in the development of our Fire Technology Program and Public Safety Training Center and the Wildfire Resilience Program at Santa Rosa Junior College. We want to make our communities safer and prepare for the workforce of the future that can help prevent forest fire.
We stand as a management team that catastrophic wildfire shall stop. That's a stand that this management team at PG&E has taken. And a settlement like this enables us to take additional steps beyond just our equipment and what we're going to do to prevent ignitions, but to help make our communities fire safe. Understanding that lots of things can cause wildfire spread is a big part of the problem. Forest management and vegetation management having nothing to do with power lines is an area where we can be a big enabler. We know a lot. We've become very much experts in this area and we feel very good about making our communities, our hometowns, safer through settlements like this. So I consider these settlements a real litmus test and maybe a signpost to the way that we can show up for our hometowns. Taking accountability from the perspective of knowing that we have a role to make our communities safer in a variety of ways. And we're going to take the opportunity to do that.
I want to give you an opportunity to respond to a report in Mercury News that a CEO you took in more than $50 million last year, a combination of salary, bonus and stock value. That was more than double your predecessor, Bill Johnson.
Yeah, it's a little misleading, the headline, Vicki. So thank you for actually asking the question. I'd love to straighten out the facts here a little bit. There was a one-time payment for me taking the job that is reflected there, that was money I had already earned because my previous company was very successful in delivering for customers, in finding this way of delivering for both shareholders and customers, those moms and pops who own the shares plus the customers. Our success was real. That's why they wanted me to come to PG&E. And so that was a straight, direct, one for one, I had already earned those dollars, but would forfeit if I left the company. The board of PG&E felt it was important to have an experienced operating minded executive, and so they had to make whole that payment that I had already received from my previous employer. So that was the math. That was the majority, more than the majority of that one year payment. My annual salary going forward is very much in line with my peers across the industry.
Finally, we're in wildfire season. What is your confidence level PG&E equipment won't be connected to a massive wildfire?
That's our stand, to end the catastrophic wildfire. We've seen great progress so far this year. Our ignitions are down 73% and the acres per ignition are also down about 65%. In fact, I was just talking this morning to a couple of my emergency response crews, former firefighters that now work for PG&E. And we've got a whole crew of them. About 80-plus former firefighters work with PG&E and their PG&E employees to make sure that we can respond when fires are happening, not to fight the fires, but to protect our assets and do all the preventative work that they learned in their previous years and help us identify risks on our system.
But I was just talking to those guys this morning and they were sharing with me that, you know, the response has been great. I couldn't be more thankful for Cal Fire and their local fire departments, U.S. Forest Service, for their incredible work. But that combined with ignitions down is making a big difference here in California and some of the worst drought conditions that have been seen. We've had more what we call R3 days that are precursors to red flag warning days this year than any other year before. The performance has been dramatically better.
So we feel more and more optimistic every day. But as you saw in the command center yesterday, we still are finding more areas of improvements every day. Our engineers are scouring our system and utilizing our inspection data and our vegetation management data to make the next and best repair to the system. And so we know to date we've reduced about 90% of the risk on our system. We're very proud of that progress. The layers of protection that yield that 90% are a big deal for people, but that leaves 10% risk remaining. And so we're not going to rest until we're at 100%. And that's certainly top of mind for us and what we're working on every single day.
