How PG&E Makes Money
The amount of profit the California Public Utilities Commission allows us to make is separated from the amount of gas and electricity we sell through a process called decoupling.
Even though decoupling separates our sales volumes from our profits, it still allows for some fluctuation in our revenues and rates based on actual sales. Sales can fluctuate from forecasts because of difficult-to-predict conditions such as weather, economic activity, and conservation. For example, electric sales may be higher than forecast during a period of unusually hot weather, or lower than forecast because of conservation efforts.
Since PG&E's profits generally do not depend on how much energy we sell, we have no reason to encourage customers to use more. On the contrary, we actually receive state-approved incentives to encourage customer energy efficiency, conservation, and use of renewable energy.
Energy Efficiency and Conservation
California has been a leading state for a long time for its utility-sector customer energy efficiency programs, which date back to the 1970s and have grown and evolved substantially over three decades. The state's programs and related energy efficiency policies have had a significant impact on per capita electricity use, which has remained essentially constant in California over the past 30 years—a period during which per capita electricity use has nearly doubled across the U.S. as a whole.
Investor-owned utilities administer energy efficiency programs with oversight by the California Public Utilities Commission, which establishes key policies and guidelines, sets program goals, and approves spending levels. California's 2010-2012 Energy Efficiency Plan sets targets for its four major electric and gas utilities. The plan calls for 7 billion kilowatt-hours to be saved over the three year period, or 0.9% of statewide electric usage during these three years.
Using energy more efficiently is more than simply the right thing to do—it saves our customers money on their energy bills. It is also the fastest, most cost-effective way to reduce greenhouse gas emissions and combat global climate change. In fact, since 1976, PG&E and our customers have kept more than 160 million tons of carbon dioxide (CO2) out of the atmosphere, based on cumulative lifecycle savings.
A process wherein the amount of profit the California Public Utilities Commission allows PG&E to make is separated from the amount of gas and electricity sold.
Investor-owned utility (IOU):
A privately-owned electric utility whose stock is publicly traded. It is rate regulated and authorized to achieve an allowed rate of return.
California Public Utilities
A state regulatory body created to regulate investor-owned utilities, including PG&E. In addition to electricity and natural gas utilities, the CPUC also regulates telecommunications and water companies.