Transforming A Mega-utility II

Why PG&E Chose Collaboration Over Confrontation

One of the articles in We Can Do It! (IC#33)
Originally published in Fall 1992 on page 52
Copyright (c)1992, 1996 by Context Institute

John Fox manages Pacific Gas & Electric’s energy efficiency programs. He’s been with the utility for 11 years and has degrees in engineering and marketing. John spoke to us by phone from Washington, DC, where he is on temporary assignment with the President’s Commission on Environmental Affairs.

Sarah: What made PG&E decide to participate in the California Collaborative?

John: Ralph came in suggesting that what had been a fairly adversarial relationship between us and the NRDC could be lessened or avoided if we were all willing to sit down behind closed doors and see what we could do to strike a deal.

We were aware that increasing energy efficiency would be a good strategic move for us. And after we thought about the litigation risks if we proceeded with the traditional hearings route, we decided that this could give us a potentially better outcome than we were likely to get through hearings.

Sarah: Did you have an ongoing relationship with Ralph Cavanagh and others that led you to believe a collaborative process was likely to be successful?

John: No. We had not had a lot of one-on-one dealings with Ralph, and what contact there had been was fairly adversarial – in the hearing room or courtroom. So there wasn’t really a background that suggested this was the obvious way to go.

Certainly as we got into it, personal relationships developed that have served both parties, not just NRDC and PG&E, but the other people who participated in the collaborative. I think far more dialogue, discussion, and negotiating goes on now between these people than beforehand.


Sarah: I’m curious about what it was like to sit down at a table with people you were used to seeing as adversaries.

John: It went through predictable cycles. There was a lot of suspicion and posturing, and in the first couple of meetings everybody was kind of feeling the ground under them. There was a lot of getting familiar with other people’s negotiating styles, for want of a better term.

As we went on, there were more opportunities not only to explain our positions more fully, but to hear other people explain their positions more fully, and to understand why the other parties values things the way they do. It turned out to be a fairly constructive negotiating process of putting together agreements on policy issues that largely met everybody’s needs.

Sarah: Why did you opt to use consensus to make decisions during your meetings?

John: Well, if we didn’t we wouldn’t be avoiding any downstream litigation. Setting consensus as a goal forces everybody to stick with it that much more and maybe hang with it a little longer than you would if you really expected that you would have to litigate later anyway.

Sarah: What do you think was the key to making this approach work?

John: Among other things, you need people who are flexible. It was really interesting how we worked on 15 different policy areas, and how the various groups would coalesce around different positions, and then an intermediary, or several intermediaries, would emerge to try to bridge between positions. And it wasn’t always the same people. Different people worked on different issues, and I think what that bespoke was the overall concern of the group to get resolution.


Sarah: You mentioned earlier that the relationship with the other groups that participated in the collaborative has served you well since then. Can you give me some examples of that?

John: We’ve undertaken a number of things with NRDC and with some others. We’ve been involved with the California Compact – which the NRDC chairs – which is an effort to increase the acceptance of compact fluorescent lights. We started a project called ACT2 along with the NRDC, Amory Lovins [of the Rocky Mountain Institute], and the Lawrence Berkeley Labs; it involves field tests of how much energy can be saved in real-life situations.

Then there’s the "golden carrot" refrigerator program, which I think David Goldstein at NRDC dreamed up and PG&E took the lead on developing. We’ve got 23 utilities and other groups putting up about $30 million for manufacturers of super efficient refrigerators. And NRDC and PG&E co-authored comments on the national energy strategy, which I think was hitherto unheard of – to have a large utility and a large environmental group saying the same thing on national energy policy.

Sarah: How broadly do you think this kind of approach can be applied, say, outside of the energy realm?

John: I think it has very broad applications. To the extent there are process problems and policy problems, this is, in general, a much better approach than litigating.

The problem with litigating is that you go in and make a best case, and it doesn’t give you the latitude to take the other person’s position or strong points into consideration. You ultimately end up having a judge divide the baby. I am always more comfortable being the author of my own compromises. Everybody, I think, gets a better deal if they’re involved in the decision.

Sarah: Now you’re in Washington, DC, promoting energy conservation?

John: Well, I’m on loan to the President’s Commission on Environmental Quality, which is a private sector initiative working with various corporations and organizations, encouraging them to undertake various energy efficiency initiatives.

Sarah: Are there lessons from the California Collaborative that you’re applying in your role there?

John: There are some similarities. In the process of pulling together the energy efficiency recommendations, we brought in a lot of people from all sectors: renewables people, conservation people, utility industry people, other energy suppliers to look at what’s in the best interest of the country, what projects would corporations be likely to respond to.

We have a number of corporations now that have signed up to do various initiatives, including upgrading their own facilities, educating their employees, reforming the way they do commercial leasing, some regulatory reform support. And I’m looking for substantial action in all those areas.


  • Saving energy should be treated as an alternative to generating energy in utility resource planning.

  • Shareholders and ratepayers should share the savings that result from energy efficiency efforts.

  • Utilities should strengthen their own conservation efforts and work to strengthen the energy components of building codes.

PG&E in 1991:

  • Saved enough energy to power more than 100,000 homes for one year.

  • Reduced emissions of nitrogen oxides by 5,703 tons, sulfur oxides by 1,553 tons, and carbon dioxide by 3.9 million tons.

  • Installed efficiency measures that will save $89 million annually.

  • Provided efficiency services to more than 500,000 residential, 20,000 commercial, 10,500 agricultural, and 1,200 industrial customers.
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