Climate:

PG&E's Darbee explains company's decision to leave U.S. Chamber of Commerce

Last week, PG&E Corp. announced it would leave the U.S. Chamber of Commerce, citing concerns over the Chamber's "extreme" views on climate change legislation. Just days later, another utility, PNM Resources, announced it would leave the chamber. During today's OnPoint, Peter Darbee, president and CEO of PG&E Corp., explains his company's decision. He discusses the chamber's stance on climate policy and explains how other member companies have reacted to PG&E's move. Darbee also gives his views on the congressional climate debate.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Peter Darbee, chairman, president, and CEO of PG&E Corporation. Peter, thanks for coming in the show.

Peter Darbee: Happy to be here, Monica.

Monica Trauzzi: Peter, PG&E recently made news when it pulled out of the U.S. Chamber of Commerce due to concerns over the chamber's position on climate change. In a letter to chamber president Tom Donahue you characterized the chamber's position as extreme. What evidence do you have of extreme views on climate? Why did PG&E decide to pull out of the chamber?

Peter Darbee: Well, in the different positions that the chamber has taken we felt that the way they positioned things was extreme, and let me give you an example. There was a characterization by a senior vice president in charge of environmental regulatory and other matters, public affairs matters, that what the chamber wanted to do was establish the monkey trials of the 21st century and really put climate change on trial, at least the endangerment provision. And we thought that that was extreme language, certainly not language that we at PG&E were comfortable with. The reason for our departure from the chamber is that we had repeated discussions with the chamber about how the direction they were on was not consistent with our position, in fact very much at odds, and their response was we'll take care of it. Really, our position and yours PG&E are much closer than you believe them to be and don't be concerned about that. And we went down a road over several years and there was fact after fact, development after development that caused us to believe that fundamentally we had entirely different positions.

Monica Trauzzi: In the letter you said many of the chamber's members are looking for policy solutions on climate, but that the chamber is not adequately representing those views. With so many different companies to represent, what do you believe the chamber's motivation is in the climate debate?

Peter Darbee: Well, we have seen a survey done by NRDC which looks at the public views of the members of the board as articulated in their companies and I believe that that shows 23 have come out and said climate change is a problem and it's an issue that needs to be dealt with. There are three or four that have come out very vigorously on a company basis and said climate change is not real, shouldn't be dealt with, etc. And then there's what I would call a silent majority of 80 or 90 companies that haven't stated a point of view on that. So, given those data that are available to us, it would seem that they would be neutral or more likely positive for action on climate change than as opposed to it in fact. As we've looked at their actual behavior around legislation we came to the conclusion that they were doing all that they could to really stop Waxman-Markey rather than make positive contributions to advance the bill.

Monica Trauzzi: How have other members of the chamber reacted to you guys stepping out?

Peter Darbee: With one exception, it's been quiet. In the one exception what happened was so you've resigned from the chamber, but why did you have to put it on the blog? And shouldn't you have given the chamber more opportunity to respond?

Monica Trauzzi: And your response is?

Peter Darbee: This had been ongoing communication with the chamber and so they knew that we were at odds or should have known and, secondly, we wanted to make public that we were withdrawing and the reasons behind it. We didn't do a big press release, but we did put it out on a blog and just say we have left and here are the reasons.

Monica Trauzzi: How much of an impact do you think the chamber's lobbying efforts are having in the climate debate in Congress?

Peter Darbee: They're a big, powerful and one of the best funded, if not the best funded, lobbying organizations in Washington, so I have to conclude that they have a very important influence on climate legislation.

Monica Trauzzi: Let's speak more broadly about the legislation. Your organization along with 11 other companies recently sent a letter to the Senate urging for passage of the legislation this year. It's looking less likely that things will move before the end of the year. What are the risks to waiting?

Peter Darbee: Well, earlier in the year we had good momentum behind legislation. I think the House bill really moved ahead very quickly and my concern would be that we might lose some momentum in this process. Clearly, healthcare has become center stage these days in Washington and has with the consumed the oxygen in the room and not left enough to be available for energy and the climate. What that means is I think the president will have less to commit to in Copenhagen, which was a real objective of many in Washington and, secondly, it means that we're deferred into next year most probably with the result that there's an opportunity for further loss of momentum or, in the alternative, major new exogenous events that could distract us from this important work.

Monica Trauzzi: One of the key issues up for debate in the Senate is of course the allowance allocations. What changes do you believe should be made in the distribution of allowances as the Senate starts to look at this?

Peter Darbee: Well, we support the view of EEI, which is that we emit 40 percent of the carbon and we think that's fair that we should get 40 percent of the allowances. Also the electric utility industry will be delivering a very substantial portion, more than their fair share of the CO2 reductions as we go forward. And our intent, of course in our industry, is to pass through the value of the allowances to our customers completely, which is very important. That's not true with other industries. And so I think moving from 35 percent which was in Waxman-Markey to 40 percent is very reasonable, so that's important. And I think cost containment is something we've worked on as we go forward and that's an important element that EE I is pushing and argues is important as well as a number of other factors.

Monica Trauzzi: Do you think enough is being done to protect consumers against rising energy prices in the legislation?

Peter Darbee: Well, certainly as it relates to the electric utility industry what's happening is the benefit of those is being flowed through either entirely to consumers or there may be some that goes to new technologies that will help ease the transition. And I think a substantial number of the other allowances also go to ease the impact on consumers. So I think it's a reasonable solution, yes.

Monica Trauzzi: We'll end it right there. Thank you for coming on the show.

Peter Darbee: Thank you, Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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