Welcome to Peter Darbee’s world

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Peter Darbee: fearless leader, or delusional power monger?
Guardian illustration by Devon Doss

“The only thing worse than a thug is an ineffective thug,” a source, who has closely tracked Pacific Gas & Electric Co.’s activities for years, told us yesterday. “And that’s what [PG&E CEO] Peter Darbee is revealing himself to be.”

That’s pretty harsh, and isn’t just some hot air blown off by a disgruntled employee or a customer angry about a power shutoff. PG&E’s problem now is that since Darbee set out on the political adventure known as Proposition 16, this kind of characterization isn’t so far off from the sentiments publicly expressed by a number of powerful figures that the company must continue to work with.

California Public Utilities Commission President Michael Peevey wrote in an op-ed in the San Jose Mercury News that, "Pure and simple, Proposition 16 is a clever, brazen, buzzword-driven effort by one company to manipulate the California Constitution to protect its current monopoly.” Peevey isn’t exactly known as a PG&E hater –- green-power advocates have complained to the Guardian in the past that they think he’s too willing to honor the company’s requests. But Prop 16 clearly irked Peevey, who presides over the commission that decides whether PG&E will be allowed to raise rates.

Half a dozen state senators, including Senate pro tem Darrell Steinberg, rebuked PG&E over Prop 16, writing in a formal letter in December that it “calls into question your company’s integrity.”

On June 9, the day after voters shot down Prop 16, PG&E shares dropped 2.2 percent -- the greatest decline of electricity utilities in the S&P 500 -- possibly signaling a fluctuation in shareholder confidence. The Los Angeles Times ran a story pointing out (as the Guardian did) that the majority of counties that voted “no” on Prop 16 overlap with PG&E's service territory, suggesting that the initiative dubbed by opponents as "PG&E’s power grab" was roundly rejected by its own customers.

Yet amid all the signs that PG&E had gone too far, despite all the indications that the utility had alienated regulators and political allies and royally pissed off its customers to boot, CEO Peter Darbee was patting himself on the back. While others were beginning to see Darbee as an unaccountable power-monger, Darbee evidently regarded himself as a fearless, courageous leader.

In a memo obtained by the Guardian that the CEO sent out to PG&E employees the day after Prop 16 was defeated, Darbee compares PG&E’s $46 million, failed quest to alter the state constitution through Prop 16 to the company’s decision to withdraw from the U.S. Chamber of Commerce. The utility won the respect of environmentalists when it dumped the national business organization last fall, denouncing its do-nothing approach to climate change.

Darbee suggests that PG&E's willingness to take a stand in both instances is evidence of strong corporate leadership, but it's an odd comparison to make. As Steinberg and other senators pointed out in their December letter, Prop 16 would’ve served to limit renewable energy development, not facilitate it. “It is unacceptable for a company that is falling behind in meeting state adopted goals for clean energy to impede the efforts of others who would attain those goals through innovative means,” Steinberg wrote.

Without further ado, here’s what Darbee had to say after Prop 16 went down. The essay, which was submitted as an opinion piece to the San Francisco Chronicle, is prefaced with a note to employees.

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From: A Message From Peter Darbee
Sent: Wednesday, June 09, 2010 2:18 PM
To: All PG&E Mail Recipients; All PGE Corp Employees
Subject: After Election Day, A Reflection On Leadership

To All Employees:

As we look forward after the culmination of a hard campaign on Proposition 16, I wanted to share with you a short opinion essay that we submitted today to the San Francisco Chronicle. It addresses head on some of the questions we have all seen about PG&E's stance on tough issues-from Proposition 16 to climate change, or any number of other examples many of us can no doubt recall. It makes clear that, in each case, our focus is on leadership, even-or maybe especially-when it requires tremendous courage.

I believe passionately that this is one of the aspects of our character that sets PG&E apart from many other companies. That's been true throughout our history, and it's even more true today.

As is always the case, the paper may or may not choose to print this piece. We hope they will. It's an important and timely message for our customers. But it's just as important and timely for all of us as employees. And, whether it appears in print or not, it's a message we can all take heart in and carry forward proudly to others.

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The Price of Leadership

By Peter Darbee, Chairman, CEO and President, PG&E Corporation

Prime Minister Tony Blair said a few years ago, "I do not seek unpopularity as a badge of honour, but sometimes it is the price of leadership. And the cost of conviction."

I was reminded of that observation this spring, as Pacific Gas and Electric Company came under widespread criticism for its support of Proposition 16, a statewide initiative to give people the right to vote on proposals to create risky new public agencies to provide electric power.

Many of those who criticized our support of Proposition 16 have long applauded our leadership at the state and national level on environmental issues and as a clean-energy provider. At the state level, PG&E helped champion passage of AB32, the Global Warming Solutions Act of 2006.

PG&E also supported California's aggressive vehicle emissions standards, opposing efforts by a national business organization to overturn them.

At the national level, we were instrumental in forging an historic alliance of major utilities, other large businesses, national environmental groups and labor unions to support comprehensive and effective clean-energy and climate change legislation in Congress. The work of the U.S. Climate Action Partnership, of which PG&E has been a major contributor, is widely credited with inspiring major congressional initiatives on this vital issue.

While PG&E has been frequently honored for its environmental performance and commitment, including Newsweek magazine's ranking as the country's greenest utility in 2009, our environmental leadership has aroused controversy as well.

Last year, in a widely discussed move, PG&E withdrew its membership in a national business organization over fundamental differences on the need for climate change legislation. While a number of other major businesses followed our lead, others questioned why we broke ranks to support actions that could increase energy costs. We have explained, without apology, the science behind our stand and our careful choice of policies to utilize market forces to minimize costs.

Some of our longtime supporters, who decried Proposition 16, believe the PG&E they once admired lost its way somewhere along the line. I would tell them that their disagreement with us-which we respect-is the price of our leadership on important issues of the day. By staking out bold positions, we of course invite controversy. But the alternative is to be cowed by fear of criticism into ducking our leadership opportunities and responsibilities. Surely our society needs more leadership, not less.

After a lively debate, the voters have now spoken on Proposition 16 and we respect the outcome. We hope our critics will equally respect our willingness to participate in the system and engage on the important issues of the day. Through mutual engagement and mutual dialog, we can improve our company, our communities and our country.