listen the best-selling nonfiction authors and of financial interviewers on the "after words" podcast. on q&a here wide-ranging conversations with nonfiction authors and others who were making things happen. booknotes+ episodes are weekly hour-long conversations that feature fascinating authors of nonfiction books on a wide variety of topics. and the about books podcast takes you behind the scenes of the nonfiction book publishing industry with insider interviews, industry updates and best-sellers list. like all of our podcast by downloading the free c-span now out, however you get your podcast, and on a website c-span.org/podcasts. >> next discussion on safety and resiliency in the energy sector with pacific during remarks she discusses pge deal deeply to 84 felony counts of involuntary

manslaughter due to a deadly wildfire ignited by their electric grid. she also talks about electric grid capacity and building climate resilient infrastructure. this is hosted by the stanford graduate school of business. business.applaud. >> thank thank you so it cae my pleasure to introduce the person you're actually here too see, who is patricia poppe whose last get speak the entire event. so patty is ceo of pacific gas and electric company who is a largest utility companies in the united states. they have about 20,000 employees. employees. they supply natural gas and electricity to about 16 million people in northern and central california. that those of you who are familiar with pge hear a lot of pge in the news. those of you who are listening with pg&e should know that it's a publicly traded company that assays a lot of challenges in recent years. in 2010 thatrs was a a gas line

explosion in san bruno california. 2017 and 2018 were major fires including the campfire that basically sparked by my dissent is a power line that killed about 84 people in paradise, california, destroyed the town. the company actually pled guilty to criminal charges of involuntary manslaughter. there were lawsuits, billions of dollars in settlement and the company went bankrupt. and patty poppe came in as ceo of the company right after that. she came in, what a be very clear about that, so she came in in 2021 and the company had a challenging past but also has a lot of chungking things going forward. facing questions not just about great satan things like that but also capacity, use of renewables, how to handle structure building and pricing of things like that. before she was at pg&e, patty

poppe was president ceo cms energy and its subsidiary consumers energy in michigan. she read power plant in michigan and also ran a plan for general motors. she r p earned her naturalist de and her masters degree in industrial engineering from purdue university, and i just confirmed backstage she a fan of the boilermakers. so they're in the final four for those of you who follow men's basketball. and she earned her message great and is a sloan fellow at the gse in 2005. i would like you to join me in welcoming patty poppe. [applause] in 2005. please join me in welcoming patty poppe. >> i was going to thank you for the kind introduction, but -- [laughter] >> thank you for coming on for

your willingness to engage in the conversation about some challenges that pg&e has faced. patty said she was happy to take questions from the audience and we will have time for that at the end of the session. but first i want to have a conversation where we acknowledge the elephant in the room. that is why i decided upfront to just get that on the table. patty: the first -- the first question ayatollah -- i have for you -- this is a challenging job. a really challenging situation. what motivated you to take that on? patty: yeah, it goes to when i was originally being recruited for the job and there were multiple times when i said no, thank you. [laughter] i have a good gig, everything is

fine. but the board chair made a compelling point. he said, first i asked him if this was a financial turnaround or operational cultural turnaround. if it is a financial turnaround, i am not interested, truly. that is not my jam. if it is an operational, culture changing, safety orientation turnaround of what should be an extraordinary utility, then i am in. that was one thing. he assured me it was operational and cultural, no doubt the financials will follow performance. the second thing was he suggested that i should consider this as my professional final exam. everything i have learned done done needed to be put to bear and that the people of california deserved a

high-performing pg&e. after all, it is just a utility, right? i ran one and know what a good one can look and feel like and the opportunity to make this what california desperately wants and deserves is my challenge. >> was this final exam more or less difficult than the final exams when you were a sloan below? patty: this was the real deal. those were just theoretical. this is way harder. >> i taught some executives at pg&e after the san bruno

incident and before the campfire in paradise. i was struck in that setting that it seemed that there was an attempt to imbue a culture of safety because like literally every morning there was the discussion of here's our safety procedures for the day and i never seen any other company do that and then when the campfire happened i looked back on that and i thought, was this just bad luck? how do you build a culture of safety? patty: a couple of things. we still start every day with safety. we start every meeting with safety. but that is insufficient and i think your point is that proved to be true. a safety culture takes a mindset that every moment is a moment to reinforce safety. the leadership team took a stand at everyone and everything is always safe. and we say it like that because we will cause that to be our

truth every day but it takes every job, every action has to consider what do i do if something goes wrong. we have a real gem in our nuclear power plant diablo canyon and our nuclear industry nationwide has a tremendous safety culture embedded in the operations of those plants, born out of crises. the follow-through and development of a safety culture, we have to look to that blueprint to see that there is a failsafe mindset that says you cannot actually, i have heard operators say you have to trust the instruments. no, actually you have to assume that the instruments will be wrong, the wind will come from a direction you did not expect, then you have to build in the offer of safety so it is a technical issue but also cultural issue of making it safe to say, stop the job, something

has changed. when i came to pg&e one of the early things we did was establish our purpose, which is delivering for our hometowns, serving the planet, leading with love. a lot of people question the whole leading with love business. they are like, are you running a utility, or? but it relates to safety. i have had the unfortunate duty and experience to attend funerals of people who have died on the job. and the expression of love in those circumstances is overwhelming. and my observation is that it's too late. you missed the moment to demonstrate your love for another human being by stopping that job where that happened, by having the courage to say to

someone more senior than you, wait, i don't understand. or, are you sure that is safe? that culture takes decades to create. i think pg&e learned a lot through those early instances and learned that a nuclear power plant what it means. we just had to deploy those lessons to the whole enterprise and have an expectation that we would have a pg&e way based on that purpose and not leading with love is something we do every day. my union president said to me one day early, patty, you have got to drop the lead with love business, you are losing credibility. i said, bob, buckle up. there is more where that came from. i am gonna love you right through this. [laughter] fast forward a year or two and

he pulled me aside and he said, i think there is something to it. we attended too many serious incident reviews and we know that to keep our communities safe, we have to keep each other safe and that the safety culture is a journey, we are on a commitment that everyone and everything is always safe and it will never end and we are always working to make that so. we have tremendous statistics to back that up but we are not done. >> as i think about what people want out of their utility, probably people want it to be cheap and reliable and then people care more about safety, and recently some care about it being green. how do you think about planning and investing for the future, thinking about things like baseload capacity, which is if

you are going to have more electric vehicles drawing on the grid, die canyon and just shut down, how do you think about planning that strategically going forward in the company? patty: think about this all the time. i am a climate optimist and i am here to assure you that the grid is not only ready for the electric vehicles, but we need them and i will ask when that in a second. there is a hierarchy of needs. it absolutely begins with safety as the foundation. we have to have safe infrastructure. the fact is, given climate change and changing extreme weather conditions, it creates a different standard required for the infrastructure. so i think it is going to be the biggest era of change in the way we define safe infrastructure is

happening before our eyes and here in california we have the opportunity to lead the world in building infrastructure that is resilient to climate, extreme climate conditions. not just wildfire. wildfire caused by droughts is certainly a hazard. we have reduced 94% of the wildfire risk on our system to date but that is just the beginning. we had a blizzard warning in the sierras for the first time this year. we need infrastructure that is resilient for wildfires, blizzards, winds, tornadoes. we need infrastructure resilient to that, particularly given the demand that decarbonizing the economy will be borne by electrification, it is absolutely possible to have climate resilient infrastructure that is affordable and reliable . we just have to engineer it to a new standard and build it to

that standard where necessary, so i certainly could talk more about that but what i can tell you is there's lots of reasons to believe that the infrastructure transformation that will occur in the next decade and then maybe another decade after that will lower cost for customers and increase the safety and resilience and decarbonize the economy. >> i had a question about costs actually that sort of relates to this. one of the big infrastructure improvements that pg&e wants to do is under grounding. probably really good for people who are at risk of wildfires probably really good for the , workers who do the work because that's a lot of employment. but i understand it is really expensive. this is an investment that costs

a substantial amount and if pg&e gets essentially something that's like a guaranteed rate of return on investment that gives a big incentive to do large capital projects. i am curious about your thoughts about the criticism that it is good for the company but overly expensive compared to other ways of reducing the risk of wildfire. what are your thoughts? patty: i have so many thoughts about this. a couple of things. the investor utility model, which i think is at the heart of the question, like does it work , does the investor own model where you are incentivized to invest in infrastructure, does that in fact create a a disincentive for affordability for customers?

there is a winning model where everyone wins. let me explain. call it our simple affordable model and it's one i am employed at at a different utility to great success and we're in the early days here in california . this will be very beneficial. it starts with the idea that we have to invest in infrastructure. originally the model was designed to reward infrastructure investment so that you could spread out the cost for customers over a longer time. when we invest in capital, we get that finance through debt and equity and we spread out the cost then for a customer instead of paying it all the minute we spend it, so it's beneficial because it spreads out the cost and then it's beneficial because the maintenance of that equipment is less. you have to spend less on maintenance on a new system.

by sharing the cost broadly across the state you could then , invest in infrastructure that actually lowered prices year after year after year so the unit price went down. we are about to enter that era, and i know it it feels hard to imagine but let me explain how that works specifically with under grounding. by the way our undergrounding , plan is for 8% of our lines, not 100%. we have 8% of our lines that are in the highest fire risk areas and they are high fire risk areas because they have enormous tree density. the sieras or up into shasta county, some of the most beautiful places in our state . part of what makes them beautiful as all of the trees. part of what makes them

dangerous is all the trees. so we need to bury those specific lines those specific miles are actually also the place where you have heavy snow cover. we expect the lights to turn on even when it is snowing and we expect to be safe in our homes even when the wind is blowing and there has been a drought. in those specific miles we can invest in that infrastructure and deferred them and reduce the cost of maintaining those overhead lines and trimming all the trees. it might shock you to know that we spend $1.8 billion a year trimming and removing trees in california. the u.s. forest service spends about $600 million trimming trees in oregon, california, and hawaii combined. that is what pg&e customers are

paying for today. that is why your bills went up. we have to change the way we expect infrastructure. the good news is we can attract capital from the capital markets to invest in an infrastructure and reduce the operating expense, spread out the cost and your bills will go down. the trade is in your favor. it is an economic and a policy choice that the commission had a lot of questions. you do not get a blank check. you have the obligation and a very transparent public proceeding where you have all sorts of opinions, there is a whole adjudicated process to come to a conclusion. what we have all learned, what

the professionals have learned, is it is too expensive to do what we are doing and all of our x customers are experiencing that in the bills right now. we can reduce the cost of delivering energy if we can transition to real infrastructure investments in the right place, 8% of the system, then reduce the vegetation management expense. we can trade one dollar of expense for seven dollars of capital and keep the bill the same. so you trade $1.8 billion a year , now you're talking about 14 billion of available spend for capital which keeps cost the imagine if you spent less than same. imagine if you spent less than $14 billion? so that is what we are doing. the return on investment is an attraction to the low-cost capital that we need from the capital market, who by the way, the shell rulers -- shareholders

of pg&e stop are the kind of people you would want to own and they are retirees, pension funds, teachers, firefighters, police officers. of those we want to promise a return when they put their nest egg in our hands, we use that wisely, we provide a small return, then a predictable return, predictable financial performance. why wouldn't we want those people to have a return on their investment in our infrastructure here in california? so when we can show with our model capital investment, offset by operating expense reductions. our most recent rate case in four years [inaudible] -- a 3% increase over this time

and overtime showing prices going down because we are doing more infrastructure investment and less annual maintenance band-aids that get passed along to customers annually. that is how bills go down when infrastructure investment goes up. i do not see a trade-off or choice. the model serves customers and investors and there is no loser in the equation, it is a win-win. >> >> but the condition what you're doing, is that in the interest of investors if the rates, holding fixed the behavior pge, isn't it in the interest of the investors have higher rates rather than lower rates to dispel whatever investment is being done? >> no. no, that's not true. that's a great question. it is easily misunderstood.

first of all, my investors the first question i get and every investor meeting is how are your prices? because in a regulator can't say yes to prices going up and going up and going up. that puts at risk their investment. investors very much care about that reasonable rate for the service that you deliver. i can assure you conversely that's number one question i'm getting in meetings. moreat importantly, is when you can take, and use great news about california specifically and decarbonized the economy, it will be a great error for california and the world. as we invest in the capital necessary and we all set with operating expenses, and then we later in load growth, we have it load growth in decades. when we can upload growth in electrification of transportation and electrification of buildings and the decarbonizing of our heating water and building heating and

then add in data centers, i know that was a top up-to-date and energy load for the ai computing power especially in this area, that load growth can then provide t a platform to reduce costs. our forecast show this. we can decarbonized the economy by 70%, and household energy spend will goy down by 30% at te same time. because electricity is more efficient than gasoline as a fuel, andra as we transition ton electrified economy, households spend on energy will go down. therefore, wene can both decarbonized and safe household spend, an increase in the economy out of the energy and into growing our economy and other ways. ixt personally and extremely excited about this area. we have been in the spare in such a long time. people don't know to recognize for what it is. i'm so glad you are all here today.

this is a time to be optimistic. we can both decarbonized the economy and lower household spend on any simultaneous it. it's a great time to be in this. >> one more question before it opened thegr floor for a couple obvious questions, so many of the decisions pg&e makes is partially in concert with working with a regular, with cpuc, but they'll most elect public policy decisions, right? if you change to a rate structure that makes some of the rate to bundle peoples income, some people like that. some people will hate that. if there's net energy readers concerned people like that energy come some people it. some people including environmentalist who would love to have stay open as long as possible. there's other stakeholders that would like to shut it down as soon as possible. how do you think about all those different stakeholder groups when you are interacting with society as a whole? >> well, , i always start with r

customers. i know that sounds trite, but it's s true. we sayay on the whole, how do we best serveve all people? we're both the privilege to serve but an obligation to serve as well i construct. there are multiple stakeholders so there are a lot of voices in these decisions and not one of us has the authority to make these decisions and backing. i don't get to make decision and backing. the cpc you doesn't. the legislature doesn't. we have a representative government that allows her people to become experts and we have a regular industry that has expertise regulating the actions and the choices we make. we definite look at the pros and cons of all of these kinds of decisions. when i think about the safety and well-being of the people that we serve and the ability to thwart the effect of climate change, the ability to set the pace for the world on decarbonizing our economy and proving there's a way to do it

at a lower cost i think there's no place better than california to lead that way. and ie think we have the system. they can be messy. democracy is messy. when we have, right? it's hard to have all these voices, but the voices make us better. we listen to one another, we learn from one another and then we have expertise that we put to bear. when i thought about taking this job, i reflected back early in my career. i remember wondering, how did those ceos know what to do? how did they know? and then i was one. and i wondered, how did -- no,, i'm kidding. i'm just kidding. [laughing] they went to stanford business school. but no, what i realized is experience is a very good teacher. and i knew from all of my

experiences, find i've been in operations mai tai career, i am much happier in a pair of boots than aam pair of heels, hardhats much better than hairdo. i have learn that it takes people, purpose, and the performance playbook, that's so weird to point at pge. and as we perform we then have the power to influence the outcomes of those decisions. we prove ourselves. in fact, our theme is inside the cup before 2024 is trustworthy, whatever virtues. to be. trustworthy takes people fulfilling a promise is bit image doing what we said we're going to do and doing it well. so when we made a commitment to bury 350 miles of line last year, even when we were faced with a lost first-quarter figure one remembers, the atmospheric rivers, all 15 of them that happen simultaneous, or in sequence, for us that meant 90 of 108 an emergency foster posture restoring power to people across the state, we lost a quarter of construction time,

and yet we still delivered 350 miles at the end of the year. why? because we've a performance playbook. playbook. we are using lean operating tools, and something color safety management system. we have trained our leaders to deploy the system. today i attended the graduation of our first-line supervisors. i had about 70 first-line supervisors who completed a year of training and development. some of them have 20 years with the company and never had a course. and development we are investing and our people, we are leveraging our purpose, and then we are training skills to othering eileen opem conversation mentioned system, and breakthrough thinking to transform how energy is delivered by pg&e to the people of california who have got darned high expectations we're going to meet them. >> and in your topic of the vs sound like to offer for a e of the voices to join the conversation and ask questions. over here.

could someone get -- we have someone with a microphone. it will work much better with aa microphone that if you shut. >> thank you so much. i love your energy and your optimism. >> cubit of energy if you run a power plant. [laughing] >> that's why i mentioned it. i'm with the human planet and health initiative over at the woods institute. question is rent community solar. it was a recent decision by the cpc you come out of the whether it will stick in a way that it is, but basically the three largest utilities came against the community solar folks with value billing tariff, and other states have gone forward with this approach. i think would be helpful for us to meet our goals in the state h and a probe helpful for low-income communities who really need this service. i would love your perspective.

>> so both rooftop and community solar are very challenging subject here inin california. let me just start by saying, solo has incredibly important role in the clean energy transition period i will start with that. the important thing is getting the price right. and when you asked about how we take competing demands and desires, how do we think about that, this is a very good example of how we have to think of serving all. i can tell you today that a customer who does not have solar has a $30 a month higher higher bill than someone who does. not because of energy usage but because partly because their energy usage but mainly because they are not paying for the full cost of the grid. even on a community scale the price has to be set properly. our terrace today -- tariff --

was is important when it was initiated. there was a time when it was necessary to have a net energy metering costs allocation to incentivize the investments in a new technology and i love california for that. that supported wins, the cost of wind has come down. the initial subsidies on solar,, the cost of solar has come down. same thing happening on storage but it can't be forever. fast to be a point where we graduate from the subsidy. so when this case today when affordability so top of mind for so many people we need to look at all of the policies that perpetuate an unnecessary cost shift. $30. a month is very meaningful to the customers of california. when we think about the policy changes, it is the genesis account what is being recommended and there's d decision on a fixed charge, and the fixed charge which at one point someone should've checked

in with the marketing and brand team here at stanford before they called at this, but somebody called it the income graduate fixed charge. it was a very bad name and it was very distracting. let me explain to make things about the fixed charge. a fixed charge for customers, for all customers, is important because it equalizes out then the utilization and the use of distributed resources. for example, at my house i have solar. i bought the house. itit had 14 kw solar system. in fact, the guy who sold me now said to me patty, i did a real good job for you. putting in the sources and come right? for pg&e. i don't know, i don't know. but as a customer -- i'm new here but i'm not sure. [laughing] as a customer i will tell you yeah, it's awesome. he made that infrastructure investment, but i get paid too much for that. i actually make a donation to an

environmental equity fund to offset that because i have remorse about them. i can't talk out of both sides of my mouth. the idea of a fixed charge saysp patty poppy lives that a premise who has a wire to my house because about 45 days of the i still neede. the grid, and the pole at the into my drive are not cheaper because i only use them 45 days. they cost the same to install, maintain, confirm, make fireproof, all those things. so the fixed charge it's a sign to reflect the cost of just the main is, the ongoing maintenance and fixed costs of operating the grid, , then the usage, the benefits of usage from solar can be leveraged by the people able to invest. .. sable to invest. i will say this about the fixed charge recommendation. i think they did a good job

listening to a wide spectrum of people. they matched the fixed charge. the income graduated part is confusing because our current rates are already income graduated. it would actually not change. we currently have three tiers of rate. a >> we have a rate for our most vulnerable customers, call the care rate. we have a fair rate for middle income customers and then a higher rate for everybody else, which is about 60% of the population. so there's there are three tiers that are, by the way, income graduated. the fixed charge, also, not surprisingly, that is three tiers that match those, so the fixed charge for the most people is $24, but it's $12 for the middle tier and $6 for-- and i think the fixed charge is

regulated to implement that policy. it was not our original idea, but i think it's a good idea. solar for a point of access for maybe who doesn't have a rooftop or wants to participate. i think there will be ways for utilities to work with investing in community solar programs that our customers can participate in that provides the lowest cost halfway to clean energy access and that's what we'll continue to work towards. >> we started a few minutes late so i'm going to let us go a few minutes long as well and then i'll be mindful to wrap up with your time and i know there's been a reception and a long day and people want to get out to the reception. i'm going to ask one more question, sir. >> go boilers. >> as you know, we still produce a lot and use a lot of coal, but in the last decade, we've discovered that we also

have sun and wind. and immediately north of your old haunt at purdue on i-65 is one of the largest wind installations in the nation now. but we don't talk about nuclear. what should we be thinking about in the future of nuclear both in california and outside? >> yeah, one, i'm very gratified to our governor and the legislature has taken actions to at least a temporary extension of the canyon, that was smart to do. when we look at the facts and we can see that base loads, carbon-free energy at a very low unit cost of existing infrastructure, we should utilize those assets and so we're proud to operate the canyon power plant and we're proud that we will be filing for-- we have filed and have been given interim approval from the nuclear regulatory commission for a 20-year license.

the legislature here in california has only authorized us to extend five years beyond 2025, but i am sure that conditions will not change that much that i think, i'm not sure, but i suspect that there will be a conversation in the five year window comes nearer and nearer that maybe we should extend that further. i think that would be good policy to utilize a safe, high performing asset for the state. i'll tell you one quick story. i was at impo, international-- or the institute of nuclear power operators and they manage and assess-- they don't manage, but they assess, ceo's can get fired off over a bad score, i'm in tune with the score, but how to operate a safe nuclear plant. that's why our nuclear is so

safe. i attended the awards ceremony and naming the units that received the highest exemplary performance and the sequence who had the most. they started with those over the life of the assets, who had the least amount of exemplary ratings and who had the most. let me say this, i got through the hors d'oeuvres, the salad, the dinner, the coffee. come on now, we were the second to the last plant recognized and that means that we had the second to highest performance over decades at our nuclear plant here in california. we have great people in san luisabispo. and it's unlikely that pg&e can take on that challenge, but the technology is proven and there

are companies that are taking on the challenge and i'm rooting for them and hope we can find additional source of baseload generation, our carbon-free generation to support the growth of our nation. >> thank you, patty, for coming and engaging in this conversation and taking questions and i appreciate you doing this. thank you so much. >> thank you. [applause] >> may i add one last thing? thank you. >> you know, i just want to add one, you know, closing comment. first of all, it's a privilege and an honor to be here at stanford and proud to call it my alma mater and wonderful to be here, but i just want you to know that the people of pg&e are getting up every day to serve you. i wear this pin, a little lady bug and i want you to know what we're up to. there was a fire in 2020, you

know, before i came, but it was a family and there was a little girl who would be turning 12 on the 14th of this month and she died when she was eight years old in a car with her mother trying to get out after fire caused by a green tree landing on one of our power lines. our team will make it safe. we are making it safe. it's dramatically safer. the posture in california is dramatically different, but i just want you to know when we're-- you know, debating issues and thinking about that, i never stop thinking about that that we'll be safe and we'll make it right. thank you. >> thank you. [applause] >> and i'm sorry, i should have asked if you had a few last words you wanted to say. that was bad moderator behavior because i was like--

i have some last words i want to say. >> and you can, back to you. >> i do want to say a few words because a few years ago asked to task force society on many things going on around the school. this is separate from our conversation and i wanted to share a few concluding thoughts on today's event. what i see and what i hope is out of this. getting more engagement by our student, by our faculty, by our alumni, with business leaders and with politicians and regulators and civil society leaders who are grappling with really tough questions about the role of business and society. and i think it's useful to recognize simultaneously that business can have just tremendously positive impact on society. and also, that not everything

is a win-win. or a win-win-win. there are things that are not win-win-win and then we're in a world of tradeoffs, much the world we live in. then there need to be decisions made and that's true for business leaders making principled decisions as leaders of the organizations, what are the priorities, what is the focus be, what can we not focus on because we need to focus only on certain things and not everything that people care about, but it's also really important for citizens and for policy makers because, you know, the things that really make possible this entire enterprise of business and capitalism is society, actually, and government, actually, setting the structure that makes this possible and it's really the thing in those sorts of structures in society are what can channel the really positive productive innovative energies of business and capitalism in ways that are beneficial for a lot of people in society and i think it's really important to support that endeavor as well, the

civil society and government angle as well as companies doing the right thing and making good decisions. what should those decisions be? what should those policies be both within a company and society as a whole? that's a hard question and i think amongst people in this room, there's a lot of disagreement about that and amongst people outside of this room, there's a lot of disagreement about that as well. so, those are the conversations that we need to be continually having and having those sorts of respectful disagreements about how things should function, in business and governmental society and that's what i wanted to say beforehanding things over to john levin. [applause] >> and now to capitol hill for a hearing on president biden's 2025 budget request for missile defense programs. witnesses include military and defense department officials. live coverage here on c-span2.

[inaudible conversations] [inaudible conversations] >> mr. speaker, yesterday, announcing the house coming in at 8:00 today for another effort to reform the section of fisa. foreign intelligence