Pacific Gas and Electric Company facts for kids
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Headquarters at Kaiser Center in Oakland
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| Founded | 1905 |
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Key people
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| Revenue |  US$24.43 billion (2023) |
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Operating income
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US$2.67 billion (2023) |
| US$2.24 billion (2023) |
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| Total assets | US$125.7 billion (2023) |
| Total equity | US$25.04 billion (2023) |
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Number of employees
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c. 28,000 (2023) |
The Pacific Gas and Electric Company (PG&E) is a large company in California that provides natural gas and electricity to millions of homes. Its main office is in Oakland, California. PG&E serves customers in the northern two-thirds of California, from Bakersfield almost to the borders of Oregon and Nevada.
PG&E is overseen by the California Public Utilities Commission. It was started on October 10, 1905, when several smaller utility companies joined together. By 1984, it was the biggest electric utility company in the United States.
In recent years, PG&E has faced challenges. In 2018 and 2019, investigations found that the company's equipment was responsible for two major wildfires in California. This led PG&E to file for bankruptcy in January 2019. The company successfully exited bankruptcy on June 20, 2020.
Contents
History of PG&E
How PG&E Started
Gas Lights in San Francisco
In the 1850s, cities in the United States started using manufactured gas for lighting. San Francisco, a growing city, only had oil lamps for street lights. Three brothers, Peter, James, and Michael Donahue, wanted to bring gas lighting to the city.
In 1852, they received permission to build a gasworks and install street lamps. On August 31, 1852, they created the San Francisco Gas Company. This was the first gas utility company in the Western United States.
On February 11, 1854, San Francisco's streets were lit by gas for the first time. Gas lighting quickly became popular. By the end of 1855, the company had laid over six miles of pipe and operated 154 street lamps.
Other gas companies tried to compete, but San Francisco Gas Company bought most of them. In 1870, a new company, City Gas Company, started a price war. In 1873, these companies merged to form the San Francisco Gas Light Company.
Electricity Comes to California
Electric lighting began to compete with gas. In 1879, San Francisco was one of the first U.S. cities to have a central power station for electric customers. To keep up, San Francisco Gas Light Company tried to improve its gas lamps, but it was too expensive.
Demand for electric light grew in downtown San Francisco. More power stations were built, and electric street lights appeared.
In 1896, the Edison Light and Power Company joined with the San Francisco Gas Light Company. They formed the new San Francisco Gas and Electric Company. This merger helped both companies by reducing competition and saving money.
Forming Pacific Gas and Electric Company
John Martin and Eugene J. de Sabla were gold miners who started using water power to create electricity in the 1890s. They built power plants in Northern California.
In 1900, they formed the Bay Counties Power Company. They built a long power line to bring electricity to Oakland. In 1903, they started the California Gas & Electric Company to buy and combine gas and electric businesses.
In 1905, the San Francisco Gas and Electric Company and the California Gas and Electric Corporation merged. This created the Pacific Gas and Electric Company (PG&E) on October 10, 1905. This merger gave California Gas and Electric access to the big San Francisco market. It also helped San Francisco Gas and Electric get cheaper hydroelectric power, which was better than their steam-powered plants.
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PG&E started delivering natural gas to San Francisco and northern California in 1930. A very long pipeline connected gas fields in Texas to California. This meant PG&E could stop using its older, more polluting gas-making factories. Today, PG&E uses a huge network of pipelines to serve millions of customers.
The 1906 San Francisco Earthquake
The 1906 San Francisco earthquake greatly affected PG&E. The company's offices and many gas and electric lines were destroyed by the quake and fires. Only a few power plants outside the city survived.
These working plants were very important for rebuilding San Francisco. Many of PG&E's competitors went out of business after the earthquake. But PG&E had enough money to survive, rebuild, and grow even bigger.
Growth and Expansion
In 1906, PG&E bought the Sacramento Electric, Gas and Railway Company. This gave them control of the streetcar system in Sacramento. By 1931, PG&E operated 75 streetcars. The streetcars were powered by PG&E's hydroelectric plant. In 1943, PG&E sold the rail service.
Within a few years of its start, PG&E grew by buying many water storage and power facilities. By 1914, PG&E was the largest combined utility system on the Pacific Coast. It handled 26% of California's electric and gas business.
The company continued to grow in the 1920s by buying other utility companies. By the end of 1927, PG&E had almost one million customers. It provided electricity to 300 communities in Northern California.
In 1930, PG&E bought major parts of two other large utility systems. This helped PG&E serve almost all of Northern and Central California through one big system.
Natural Gas Expansion
The discovery of huge natural gas fields in the American Southwest changed the gas industry. Natural gas was cleaner and cheaper to produce than manufactured gas.
In 1929, PG&E built a 300-mile pipeline to bring natural gas to San Francisco. San Francisco was the first major city to switch from manufactured gas to natural gas. This meant adjusting 1.75 million appliances to use the new fuel.
After World War II, California needed more natural gas. PG&E made agreements to buy natural gas from Texas and New Mexico. In 1951, PG&E completed a 502-mile pipeline to connect to this new supply.
Nuclear Power and Pipelines
In 1957, PG&E opened the Vallecitos Nuclear Center in Pleasanton, California. This was the first privately owned nuclear reactor in the U.S. It produced enough power for a town of 12,000 people.
PG&E also continued to develop natural gas supplies. In 1959, the company worked to get approval to import natural gas from Alberta, Canada. A 1,400-mile pipeline was built and started operating in 1962.
PG&E began building another nuclear power plant, the Diablo Canyon Power Plant, in 1968. Its opening was delayed by environmental protests. The plant started producing full power in 1985.
In the 1970s, PG&E explored building a 3,000-mile pipeline from Alaska. However, this project was put on hold in 1977 due to concerns from local groups and environmental impacts.
1990s and Changes in Rules
By 1992, PG&E operated many electric generating units and thousands of miles of power lines.
In 1997, PG&E changed its structure to become a holding company, PG&E Corporation. It had two main parts: PG&E, the regulated utility, and a separate energy business.
In the late 1990s, new rules allowed for more competition in the electricity market. PG&E sold most of its natural gas power plants. This meant PG&E had to buy a lot of its power from other companies at changing prices. But it had to sell power to customers at a fixed price. This led to problems, especially during the California electricity crisis in 2000.
During this crisis, there was a power shortage, and parts of California experienced planned power outages (rolling blackouts) starting in January 2001.
PG&E's Bankruptcies
2001 Bankruptcy
In 1998, new rules for California's utility companies began. The California Public Utility Commission (CPUC) set the prices PG&E could charge customers. PG&E had to provide power at these set rates, even if it cost them more to buy it.
In 2001, a drought reduced the amount of cheap hydroelectric power available. Also, some power suppliers took advantage of the situation. They created artificial shortages and charged very high prices for electricity. Since PG&E couldn't raise its prices to match, it started losing a lot of money.
On April 6, 2001, PG&E Company filed for bankruptcy. The state of California tried to help, but it also lost a lot of money. The crisis cost PG&E and the state between $40 billion and $45 billion.
PG&E came out of bankruptcy in April 2004. It paid $10.2 billion to its creditors (those it owed money to). As part of the plan, customers had to pay slightly higher prices for several years to help cover the debt.
2019 Bankruptcy
PG&E faced huge costs from wildfires that happened between 2015 and 2018. On January 14, 2019, PG&E announced it would file for bankruptcy again. This was because of the financial challenges from the major wildfires in 2017 and 2018.
The company needed to exit bankruptcy by June 30, 2020, to be part of a new state wildfire insurance fund. On June 20, 2020, a judge approved PG&E's plan to exit bankruptcy.
PG&E reached agreements to pay money to state and local governments, insurance companies, and wildfire victims. For wildfire victims, PG&E offered a $13.5 billion fund. Victims received some cash and some company stock.
In June 2020, PG&E accepted responsibility for the deaths caused by the Camp Fire. The company paid a large fine and ended other criminal charges. This did not stop civil lawsuits from victims.
This bankruptcy was the largest utility bankruptcy in U.S. history. In November 2020, Patti Poppe was announced as the new CEO of PG&E Corporation, starting in January 2021.
In June 2020, PG&E also announced plans to move its main office to Oakland, California, starting in 2022.
How PG&E Makes Power
PG&E owns different types of power plants. These include a large system of hydroelectric dams, one nuclear power plant, and natural gas power plants.
Hydroelectric Power
PG&E is the largest private owner of hydroelectric facilities in the United States. It has 110 generating units at 68 powerhouses. This system includes 99 reservoirs and 174 dams.
The biggest part of this system is the Helms Pumped Storage Plant. It uses water from two reservoirs, Courtright and Wishon. It makes electricity by letting water flow from Courtright to Wishon when power is needed. Then, when demand is low, it pumps the water back up to Courtright.
Nuclear Power
The Diablo Canyon Power Plant in Avila Beach, California, is PG&E's only working nuclear power plant. It can produce 2,240 megawatts of electricity.
In June 2016, PG&E announced plans to close Diablo Canyon in 2025. This would mean California would no longer have operating commercial nuclear power plants.
PG&E also operated the Humboldt Bay Nuclear Power Plant, Unit 3 in Eureka, California. This was the oldest commercial nuclear plant in California. It closed in 1976 for safety upgrades and never reopened.
Combustion Power
PG&E has natural gas power plants. For example, the Humboldt Bay Generating Station uses natural gas to produce 163 megawatts of power. This new plant is more efficient and creates less pollution than older plants.
PG&E also owns the Gateway Generating Station in Antioch, California. This 530-megawatt plant started operating in 2009.
In 2006, PG&E closed its 48-year-old Hunters Point Power Plant in San Francisco. In 2008, PG&E started building a new natural gas power plant in Colusa County. It began operating in 2010 and uses modern technology to reduce water use and pollution.
Solar Power
PG&E is also investing in solar power. In 2008, PG&E announced plans to buy power from three new solar power plants in the Mojave Desert. These plants could power over 375,000 homes.
In 2009, PG&E explored a project to get 200 megawatts of power from space using a company called Solaren. This method would allow for electricity from the sun even at night.
PG&E and the Environment
Since the mid-1970s, new rules have pushed utility companies in California to be more environmentally friendly. In 1976, a law was passed that stopped the building of new nuclear power plants.
Environmental groups also pushed PG&E to focus on energy efficiency. They argued that saving energy was cheaper than building more power plants.
In the early 2000s, PG&E leaders publicly supported California's Assembly Bill 32. This law aimed to reduce greenhouse gas emissions by 25% by 2020.
By 2017, PG&E announced that 80% of its electricity came from sources that don't produce greenhouse gases. This includes renewable energy, nuclear power, and hydropower. About 33% came from renewable sources, meeting California's goal early.
In June 2020, PG&E announced a project to turn raw biogas (from landfills, sewage, and farms) into carbon-neutral methane. This technology could use energy from wind and solar to create fuel.
Major Incidents
Groundwater Contamination in Hinkley
From 1952 to 1966, PG&E released large amounts of water containing hexavalent chromium (chromium 6) into ponds near Hinkley, California. Chromium 6 was used to prevent rust in cooling towers at their natural gas compressor stations.
PG&E did not tell the local water board about the pollution until 1987. The residents of Hinkley filed a successful lawsuit against PG&E. The company paid $333 million, which was a very large settlement at the time. This legal case was shown in the 2000 movie Erin Brockovich.
In 2014, California became the first state to say that ingested chromium-6 is linked to cancer. It set a new maximum safe level for chromium-6 in drinking water.
By 2013, PG&E had cleaned up some of the area, but the cleanup process is expected to take many more years. In 2015, authorities ordered PG&E to continue cleaning up the pollution, which had spread. By 2016, Hinkley was described as becoming a ghost town because of the contamination.
Metcalf Sniper Attack
On April 16, 2013, gunmen attacked the Metcalf transmission substation in Coyote, California. They damaged 17 large transformers, causing over $15 million in damage. They also cut a fiber-optic cable. The attackers were never found.
Wildfires Caused by PG&E Equipment
PG&E equipment has often been found responsible for starting wildfires in California. The company has been found responsible for causing fires in many cases.
About 40 of the 315 wildfires in PG&E's service area in 2017 and 2018 were linked to PG&E equipment.
California law states that utility companies are responsible for damages from any fire caused by their equipment. This is true even if they followed all maintenance rules. This rule led to PG&E facing billions of dollars in costs from the 2017 and 2018 fires, which led to their bankruptcy.
Undergrounding Power Lines
California has many miles of power lines, with about two-thirds of them above ground. Burying power lines underground can help prevent wildfires. However, it is very expensive.
In 2019, it was estimated that burying all of PG&E's overhead distribution lines would cost about $240 billion. This would be about $15,000 per customer.
In July 2021, PG&E announced plans to bury an additional 10,000 miles of its power lines over the next 10 years. This project is estimated to cost about $40 billion. PG&E hopes to lower the cost, but these expenses will likely be passed on to customers.
San Bruno Pipeline Explosion
On September 9, 2010, a natural gas pipeline owned by PG&E exploded in San Bruno, California. The pipeline was over 54 years old. The explosion created a large crater and caused a huge fire.
The blast killed eight people and injured almost 60 others. It also destroyed about 100 homes. Investigations found that PG&E was responsible for the explosion. The report stated that the pipeline did not meet safety standards even when it was installed in 1956.
PG&E was later fined $300 million by the California Public Utilities Commission. The company also paid $400 million to gas customers and agreed to spend $850 million on gas-system safety improvements. It also settled over $500 million in claims with victims and their families.
Butte Fire
In September 2015, the deadly Butte Fire started in Amador and Calaveras counties. It killed two people and destroyed hundreds of buildings. An investigation found PG&E responsible for the fire. A tree touched one of their power lines, causing the fire.
October 2017 Northern California Wildfires
In October 2017, PG&E's equipment was responsible for starting 13 separate fires out of 250 that caused widespread damage in Northern California. These fires were caused by power lines, conductors, and failing power poles.
Ghost Ship Fire
On December 2, 2016, a fire broke out in a warehouse in Oakland, California, known as the Ghost Ship. This building was illegally converted into an artist space. Thirty-six people died in the fire.
Lawsuits claimed the fire was caused by an electrical problem. In August 2020, PG&E settled a civil lawsuit for 32 of the victims. The amount was not made public, but it was limited to PG&E's insurance coverage for that year.
Tubbs Fire
The Tubbs Fire was a major wildfire in Northern California in October 2017. It caused significant damage in Napa, Sonoma, and Lake counties, especially in Santa Rosa. At the time, it was the most destructive wildfire in California's history.
Initially, it was unclear if PG&E was responsible. However, as part of its bankruptcy plan in December 2019, PG&E accepted responsibility for the Tubbs Fire.
Camp Fire
In November 2018, the Camp Fire became the deadliest and most destructive wildfire in California history. It destroyed over 18,000 buildings, including 14,000 homes. Most of the town of Paradise, California, was destroyed.
Lawsuits accused PG&E of not properly maintaining its equipment. An investigation showed that a power failure on a PG&E transmission line happened just before the fire was reported nearby. A broken hook may have caused equipment to spark and start the blaze.
PG&E accepted responsibility for the deaths caused by the Camp Fire. On July 1, 2020, PG&E put $5.4 billion in cash and company stock into a fund for the wildfire victims.
Kincade Fire
The Kincade Fire started in Sonoma County, California, on October 23, 2019. It burned over 77,000 acres and caused many evacuations. It was the largest wildfire of the 2019 California wildfire season.
In July 2020, Cal Fire reported that the fire was caused by PG&E transmission lines. Damages from this fire were not covered by the earlier bankruptcy settlement for wildfire victims.
Public Safety Power Shutoffs
To prevent wildfires, the California Public Utilities Commission (CPUC) approved the use of Public Safety Power Shutoffs (PSPS). This means PG&E can turn off power in certain areas during high fire risk conditions, like strong winds.
The first major PSPS by PG&E happened in October 2018. In October 2019, PG&E began to shut off power to many regions as a way to avoid wildfires caused by power lines. These shutoffs affected millions of people. Power can remain off for several days until lines are inspected for damage. Power shutoffs have continued in 2020 and 2021.
Dixie Fire
On January 4, 2022, CalFire determined that the Dixie Fire was caused by a tree touching PG&E electrical lines. The Dixie Fire was a very large and destructive wildfire.
South San Joaquin Irrigation District
In 2009, the California Public Utilities Commission approved a plan for the South San Joaquin Irrigation District to buy PG&E's electric facilities in Manteca, Ripon, and Escalon. In 2016, a judge ruled that the District had enough money to provide electricity to these cities and surrounding farms. The District claimed its customer rates would be 15% lower than PG&E's.
See also
- Diablo Canyon Power Plant
- Erin Brockovich
- Erin Brockovich
- Hinkley groundwater contamination
- Grid-tied electrical system
- List of articles associated with nuclear issues in California
- Raker Act
- San Diego Gas & Electric
- Southern California Edison
Images for kids
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PG&E General Office Building in San Francisco
