Running Head: Group 2 - PG & E Project
Group 2 - PG & E Project
Ginger Elder, Cherreonda Carnell, Rebecca Cintron, Nicholas Harper
Liberty University
BMAL 504
Professor Quinn
March 3, 2019
Group 2 - PG & E Project
Case Study
Pacific Gas & Electric Company (PG & E Utility)
Part 1
Introduction
“By the crash of 1929, utilities directly sold stock to 20 percent of the total
number of stockholding Americans directly through customer stock ownership programs
and not through traditional brokerage firms” (Daniel (2017). However, PG & E we know
today is “one of the largest power and gas distributors in the United States with a service
area covering approximately 94,000 square miles - most of northern and central
California - including a population of around 13 million people” (A Reference for
Business (2019).
Additional information includes: A Publicly held Company which was
Incorporated 1905 as Pacific Gas and Electric Company. It has 26,200 employees and
had sales worth $15.4 billion dollars. However, in more recent history, they have filed for
bankruptcy in January 2019. “PG&E Corp. said Monday January 14, 2019 it plans to
seek bankruptcy protection because it faces potential liabilities of $30 billion or more
from the deadly California wildfires, a move that halved its already battered stock price
and prompted its chief executive to quit” (Peltz, (2019). With public safety at risk, what
is their corporate responsibility to the public that they serve? Additional, what changes
will be made throughout their organization as they restructure under bankruptcy
protection? We seek to answer these questions and many more as we explore the history
- past and present, as well as Prosci’s 3-phase change management process.
Group 2 - PG & E Project
“The Prosci change management methodology provides change management
practitioners with the processes and tools to build customized, targeted and research-
based change management strategies and plans to drive project results and outcomes”
(Prosci Change Management (2016); allowing us to explore the change management
process. The first phase is preparing for change, the second phase is managing change
and the last phase is reinforcing the change (Prosci Change Management (2016). Based
on this research, Prosci developed a methodology that is holistic and easy to utilize
(Prosci Change Management (2016). The resulting process, tools and assessments have
been developed with one goal in mind: that one can put them to use on any project, while
building internal change management skill set (Prosci Change Management, 2016).
PG & E Heritage, Vision and Values
PG & E was formed in 1905 by the merger of the San Francisco Gas and Electric
Company and the California Gas and Electric Company. Both the San Francisco
Company and the California Company were formed by mergers of rival energy pioneers
and competitors, making PG & E an organization that has absorbed hundreds of other
organizations (PG&E Company information: History (2019).
PG & E developed a mission, vision, and organizational culture that form the
foundation for their standards of both ethics and compliance. According to their Code of
Conduct, their mission is: “To safely and reliably deliver affordable clean energy to our
customers and communities every single day, while building the energy network of
tomorrow,” and their vision is: “With a sustainable energy future as our North Star, we
will meet the challenges of climate change while providing affordable energy for all
customers.”
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This mission and vision help PG & E to strive toward a corporate culture that
includes these items:
We put safety first
We are accountable. We act with integrity, transparency and humility
We are here to serve our customers
We embrace change, innovation and continuous improvement
We value diversity and inclusion. We speak up, listen up and follow up
We succeed through collaboration and partnership. We are one team.
Acquisitions and Diversities
PG & E provides natural gas, energy through electric transmission and
distribution systems, hydroelectric systems, clean, nuclear energy from the Diablo
Canyon Power Plant, and has recently introduced solar as a renewable energy option for
their customers (PG&E Company information (2019).
Innovation, Safety, & Corporate Responsibility
Technological advancements for change
In 2018, PG & E announced their interim findings regarding the use of smart
inverters, inverters that make autonomous decisions that can help maintain grid stability,
reliability and power quality, due to the high used of solar energy, energy storage, and
electric vehicles. (PG&E News Release, 2018) The company also began installing
electric vehicle chargers in residential areas, as well as worked on expanding use of fleet
electric vehicles, in order to help increase electric vehicle use and electric transportation
(PG&E News Release (2018).
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Safety to Public
PG & E uses a multifaceted approach to public safety. In 2017, the company
focused on emergency preparedness and response, to include being one of the first
organizations to implement an earthquake early warning technology; collaborated with
first responders by hosting over 400 training workshops; and educated the public with
safety awareness, emphasizing safety around downed power lines, and providing safety
tips for securing metallic balloons (PG&E Corporate responsibility and sustainability
report (2018).
Corporate Responsibility
In response to the recent California wildfires, PG & E began building a network
of weather stations that will help better predict where and when a wildfire could occur.
Real-time information collected from the more than 50 weather stations would be shared
through state and local agencies, as well as NOAA and MesoWest. (PG&E News
Release, 2018) In addition to the weather stations, PG & E opened a Wildfire Safety
Operations Center where a round-the-clock staff can monitor potential fire threats and
coordinate with first responders and public officials (PG&E News Release (2018).
Leadership Styles over the Decades
PG and E has been under the fire for very long for its safety standards. It is blamed for
more than a dozen fires across northern California. These fires result in dozens of houses
being destroyed along with valuable lives being taken away. Who is responsible for all
this? Well, the reason behind these fires is the safety standards that have been set and
implemented by the senior management of the company. They are clearly not doing
enough to prevent these fires that are caused by negligence (Zart (2019).
Group 2 - PG & E Project
The main problem is that Pacific Gas and Electric Company has various operation
lines within the corporation and the board of directors, or the senior management is
clearly unable to handle all these operation sections together. The senior management
decided everything, and it is being delegated to the middle management, hence the people
at fault here are the senior management.
It seems like the leaders are unable to show commitment to its Gas operations, and
this will have serious consequences for the entire corporation and all its other operations.
When serious charges were pressed against the PG & E m it claimed to have changed the
leaders, however it was not mentioned what roles did those leaders had, or their names
either.
Just a statement was given out that the company has taken corrective measures and
some of the leaders are no more with them. It clearly does not help much in determining
which type of leadership is being practiced in the company; however, it is evident that the
majority charge is in the hands of the senior level management as their Presidents and
CEO’s have resigned in the past as well after similar incidents (Morris (2018).
Moreover, Nick Stavropoulos, its president and chief operating officer, lead the
reform of the utility’s natural gas operations following the San Bruno gas pipeline
explosion in 2010 that killed eight people and destroyed 38 homes, which clearly implies
that the top-level leaders are responsible for the mishaps in the company every time
(Morris (2018).
Summary of Part 1 - 100 words
Group 2 - PG & E Project
Part 2
Analysis
After being charged with several allegations regarding their safety standards and
people hating the company for its practices for safety, the company decided to bring in
changes in the management on a large scale. It decided to use alternative marketing
techniques to get the maximum benefit it could and also improve its position on the
market.
Soon after the massive fire in California, the company asked for a rate hike of almost
$2 Billion from its customers. Well, some might argue this was suicide and how can it
improve the sales of the company? Well the company put out its proposal that this hike in
prices will be used as a mean of safety for the wildlife.
PG&E asked for $1.1 billion in new revenue in 2020, including $576 million for the
Community Wildfire Safety Program, $273 million toward liability insurance, and $209
million for core gas and electric operations. This would increase the bills by $10 every
month, even when California is paying the highest cost of electricity in the nation.
However, all this was proposed with a twist by gaining sympathy and ensuring this was
done for the betterment of the city (Maxouris (2018). The company positioned itself
saying the money would go into saving the wildlife and improving technology that will
respond faster to fallen power lines and increase camera coverage in high treat areas.
PG&E Senior Vice President of Energy Supply and Policy Steve Malnight said in a news
release
Group 2 - PG & E Project
We understand and embrace our responsibility to safely provide electricity and gas to the
communities we have the privilege to serve. As California experiences more frequent and
intense wildfires and other extreme weather events, we must take necessary, bold and
urgent steps to protect our customers. The prudent investments we are proposing will
help build a safer and more resilient energy system for the future.
This way the company tried showing how worried it was for the public safety and all
that happened was not in their hands in the past, but now they are trying to take measures
to improve the situation of California.
Recommendations (everyone give their recommendations and what you have learned
The company has faced lawsuits and allegations for their public safety and social
responsibility negligence. It not only cost them a fortune and pushed them towards
bankruptcy but trashed their reputation as well. The company could have avoided all
these only if it would have spent some of the amount on maintaining the safety and
improving its leadership styles and the members of the board (Sarkar (2018).
If the company trains its staff for one thing, that is take all the precautions as
possible and follow safety regulations, then I think it could have been saved from
bankruptcy. It just needs to utilize the resources in the right place and on right time. Even
if it focuses on social responsibility it can change its future. There might be some cost
attached but in the long run the company will benefit.
Rebecca – While there is potential PG&E filed bankruptcy in order to avoid any legal
issues regarding the wildfire, they appear to have the best interests of the community at
heart. Their improvements to wildfire monitoring could potentially save more
communities in the long run, and the earthquake early warning technology shows their
Group 2 - PG & E Project
focus on any potential disaster that could impact California. I would recommend the
company continue to invest in these and similar programs in order to maintain a good
relationship with the communities they service as well as be transparent about their
dealings regarding the recent bankruptcy filing. This will help ensure everything that is
done is out of necessity for the greater good, not just for the good of the organization.
Cherreonda - 100-200 words
As of today, March 3, 2019, PG & E admitted that their equipment was at fault.
Jeff Daniels with CNBC reports that
An electric safety incident report filed Nov. 8 by PG&E indicated that the utility's
transmission line experienced an outage that morning. Then in the afternoon PG&E
observed by aerial patrol damage to a transmission tower located about one mile north-
east of the town of Pulga, in the area of the Camp Fire.
How does a strong utility company recover from such damage? There is a saying “slow
and steady win the race”; should this be the path PG & E takes? A resounding “yes”
would be my recommendation. Public trust has been broken and this will be very
difficult to recover. However, PG &G has been a stable and solid company for many
years and it will only hurt the public more if the state does not come in and help bail them
out financially. Other utility companies such as Edison International cannot bare the full
weight of electricity supply to Northern California, as well as maintain their existing
customers in Southern California. Patience and forgiveness are other words not used or
not found in the business realm; however, I think it willfully applies in this case.
Group 2 - PG & E Project
S ummary
What have we learned from the past (Cherreonda Carnell) 100-150 words
What changes were successful (Cherreonda Carnell) 100-150 words
How does the bible and God fit into Corporate Responsibility
Corporate Responsibility goes hand in hand with ethics, especially in business.
“Business ethics is a set of moral rules that govern how businesses operate. Determining
what to do when an ethical dilemma arises can be tricky; business ethics are complex and
multifaceted” (www.yourdictionary.com). What about morals? How does that play out
in the world of PG & G and their responsibilities to the public and the shareholders? The
moral person has a reputation for integrity within both the personal and professional
spheres. In the case of PG & E leaders, they did the right thing when they took
ownership and responsibility for their equipment failing. Authors Mabey, Conroy,
Blakeley, & de Marco state that:
the leader uses the tools of the position of leadership to promote ethical conduct at work.
A moral person who lacks moral leadership is perceived as weak and lacking
commitment to ethics. A moral leader who lacks integrity in their personal life is seen as
hypocritical which reduces their ethical authority in the workplace.
The bible has a lot to say about morals and ethics which we can apply to our professional
and home life. Proverbs 19:1 says “Better is a poor man who walks in his integrity Than
he who is perverse in speech and is a fool. ... Integrity, honesty, solid work ethic, fairness,
Group 2 - PG & E Project
justice – you don't have to be a Christian to know that these virtues define sound business
ethics. PG & E will persevere if they continue with sound moral and business ethics.
Group 2 - PG & E Project
References
A Reference for Business (2019). History of PG & G Corporation. Retrieved from:
https://www.referenceforbusiness.com/history2/80/PG-E-Corporation.html
Daniels, J. (2019). https://www.cnbc.com/2018/11/14/overwhelming-evidence-against-
pge-in-deadly-fire-says-lawyer-suing.html
Daniel, R. (2017). Customer stock ownership as monopoly utility political strategy in the
1910s and 1920s. Enterprise & Society, 18(4), 893-920. doi:10.1017/eso.2016.93
Jick, T. D., & Peiperl, M. A. (2011). Managing change: Cases and concepts (3rd Ed.).
New York, NY: Irwin/McGraw-Hill. ISBN: 9780073102740
Mabey, C., Conroy, M., Blakeley, K., de Marco, S., (2017). Having Burned the Straw
Man of Christian Spiritual Leadership, what can We Learn from Jesus About
Leading Ethically? Bus Ethics, 145: 757. https://doi-
org.ezproxy.liberty.edu/10.1007/s10551-016-3054-5
Maxouris, C. (2018). After California fires, PG&E proposes raising electricity bills to
bolster precautions. Retrieved from CNN:
https://edition.cnn.com/2018/12/14/us/pge-increase-proposal-trnd/index.html
Morris, J. (2018). PG&E links executive departures to ‘corrective actions’ over safety
charges. Retrieved from San Francisco Chronicle:
https://www.sfchronicle.com/california-wildfires/article/PG-E-links-executive-
departures-to-corrective-13473274.php
Morris, J. (2018). Regulators mull massive changes to PG&E management, structure.
Retrieved from San Francisco Chronicle:
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https://www.sfchronicle.com/business/article/Regulators-mull-massive-changes-to-
PG-E-13485386.php
Pacific Gas and Electric Company. (2014). Critical Studies on Corporate Responsibility,
Governance and Sustainability. Corporate Social Responsibility and Sustainability:
Emerging Trends in Developing Economies, ii. Doi: 10.1108/s2043-
905920140000008025
Pacific Gas and Electric Company. (2019). Company Information. Retrieved from
https://www.pge.com/en_US/about-pge/company-information/company-
information.page
Pacific Gas and Electric Company. (2019). Company information: Company profile.
Retrieved from https://www.pge.com/en_US/about-pge/company-
information/profile/profile.page
Pacific Gas and Electric Company. (2019). Company information: History. Retrieved
from https://www.pge.com/en_US/about-pge/company-
information/history/history.page
Pacific Gas and Electric Company. (2019). Director Code of Conduct. Retrieved from
http://www.pgecorp.com/aboutus/pdfs/Directors-Code-of-Conduct.pdf
Pacific Gas and Electric Company. (2018). Corporate responsibility and sustainability
report. Retrieved from http://www.pgecorp.com/corp_responsibility/reports/2018/?
WT.mc_id=Vanity_crsr
PG&E News Releases. (2018). PG&E Demonstration Project Tests Smart Inverter
Benefits, Electric Grid Impacts. Retrieved from
https://www.pge.com/en/about/newsroom/newsdetails/index.page?
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title=20180718_pge_demonstration_project_tests_smart_inverter_benefits_electric_
grid_impacts
PG&E News Releases. (2018). New PG&E Pilot Projects Will Expand Electric
Transportation in California. Retrieved from
https://www.pge.com/en/about/newsroom/newsdetails/index.page?
title=20180125_new_pge_pilot_projects_will_expand_electric_transportation_in_ca
lifornia
PG&E News Releases. (2018). PG&E Launches New Program to Accelerate Electric
Vehicle Adoption in Northern and Central California. Retrieved from
https://www.pge.com/en/about/newsroom/newsdetails/index.page?
title=20180117_pge_launches_new_program_to_accelerate_electric_vehicle_adopti
on_in_northern_and_central_california
PG&E News Releases. (2018). PG&E Adds Over 50 New Weather Stations to Advance
Forecasting Abilities, Better Predict Extreme Weather and Wildfire Potential.
Retrieved from https://www.pge.com/en/about/newsroom/newsdetails/index.page?
title=20180716_pge_adds_over_50_new_weather_stations_to_advance_forecasting
_abilities_better_predict_extreme_weather_and_wildfire_potential
PG&E News Releases. (2018). PG&E Opens New Wildfire Safety Operations Center,
Marks California Wildfire Awareness Week with $2 Million for Fire Safe Councils.
Retrieved from https://www.pge.com/en/about/newsroom/newsdetails/index.page?
title=20180508_pge_opens_new_wildfire_safety_operations_center_marks_californ
ia_wildfire_awareness_week_with_2_million_for_fire_safe_councils
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Peltz, J.F., (2019). Los Angeles Times. PG & E Filing for Bankruptcy. Retrieved from
https://www.latimes.com/business/la-fi-pge-bankruptcy-filing-20190114-story.html
Prosci Change Management. (2016). Prosci Change Management Methodology.
Retrieved from https://www.prosci.com/resources/articles/change-management-
methodology
Sarkar, S. M. (2018). PG&E seeks to make changes to its board. Retrieved from (Reuters:
https://www.reuters.com/article/us-california-wildfire-pg-e-us/pge-seeks-to-make-
changes-to-its-board-idUSKCN1OY1WU
Zart, N. (2019). Years of shoddy safety policies leave Pacific Gas & Electric (PG&E)
facing bankruptcy. Retrieved from Clean @Technicia:
https://cleantechnica.com/2019/01/07/years-of-shoddy-safety-policies-leave-pacific-
gas-electric-pge-facing-bankruptcy/
