Remarks by Edwin A. Guiles
CalChamber Chair
Executive Vice President, Corporate Development, Sempra Energy
Sacramento Host Breakfast
May 21, 2008
Good morning. It was important for me to be here today because not only do I care about California, but I care about the way policies are developed and implemented, and the way they impact business.
In fact, that’s why I became involved with the California Chamber of Commerce.
As a broad-based organization with more than 16,000 members from a wide range of industries and all parts of the state, the CalChamber is actively engaged in issues that affect jobs and the California economy.
As I see it, the pressing issues for our state today include:
Water — We need to boost our water storage capacity while protecting the fragile Delta.
Budget — We need a sound budget that provides taxpayer certainty for existing businesses and those that may want to relocate or expand here.
Education — We need a system that utilizes our budget dollars effectively to produce a quality workforce for our 21st century job market, including technical skills.
And of course, energy, which is what I’ve spent my career focused on — We need an adequate, affordable and reliable supply of energy to keep California’s economy strong and growing.
I think we would all agree that no modern nation has ever achieved economic prosperity and a high quality of life without an adequate, affordable and reliable energy supply.
Energy supply is where my career started, and continues today.
In 1972, I graduated from college and became a junior engineer at San Diego Gas & Electric. Over the last 36 years, I’ve worked in all aspects of the energy industry, from power plant management to serving as chairman and CEO of both Sempra Energy’s California utilities — San Diego Gas & Electric and Southern California Gas Company.
I was in the eye of the storm during the energy crisis and have lived through — some might say “survived” — the way the energy industry has evolved.
The energy industry has faced daunting challenges — from oil embargoes to nuclear concerns to wars in the Middle East. Don’t forget deregulation and then re-regulation. The challenges of the industry remain enormous and have never been more relevant and important than they are today.
As Nobel Prize-winning physicist Dr. Rick Smalley said: “Even though our civilization has many problems, energy is central to all of them.”
History has shown that emerging nations develop their energy infrastructure and develop their economies before they begin paying attention to the environmental consequences of their growth. And it is the resources of that economic development that help fund environmental improvements.
Here in California, we are fortunate to have reached that advanced stage long ago. It’s no accident that California leads the nation with the lowest per capita energy consumption. Californians benefit from a progressive regulatory agenda and previous investments in energy efficiency and cleaner burning fuels.
And now, under the leadership of Governor Schwarzenegger, the California Public Utilities Commission, the California Energy Commission and the California Air Resources Board, California is poised to lead the way into a new area — tackling global warming by reducing carbon emissions. The goal is to cut back to 1990 levels by the year 2020. That’s a 30 percent reduction in emissions from business as usual.
Protecting our environment and protecting our economy can go hand-in-hand. However, the solution must take into account four key areas together: electric transmission infrastructure; energy efficiency; natural gas; and renewable resources.
I list transmission first because transmission is the highway that connects urban centers to their energy supply. In any business, it’s all about supply and demand. But in the electricity business, that demand is instantaneous, while supply comes from long-lived assets, often in remote locations. Without that transmission highway, electricity can’t get from point A, where it is generated, to point B, where it’s consumed.
For example, one of Sempra utilities’ major projects, SDG&E’s Sunrise Powerlink, is a 150-mile transmission line that would carry renewable power from the sun, wind and geothermal in the ground in our Imperial Valley area to San Diego.
Unfortunately, environmental opposition continues to frustrate this project and others like it. The Governor has said recently: “I don’t know whether this is ironic or absurd…if we cannot put solar power plants in the Mojave Desert, I don’t know where the heck we can put them.”
Energy efficiency continues to be important because the more efficient we are in how we generate and use energy, the more compact our carbon footprint can be.
And while we diligently pursue realistic policy creation and the development of new sources of energy, let’s remember that we, individually, can make a difference at home with small changes. For example, let’s turn off that plasma TV and light switch when we leave the room. Or in your business, turn off that computer before you leave the office. Small but common-sense changes can make a difference.
Efficiency is also tied to natural gas. Because many renewable resources generally are not available around the clock (when the sun doesn’t shine or the wind doesn’t blow) natural gas will be an increasingly important part of the long-term solution. It’s the cleanest and most environmentally friendly of the fossil fuels.
Using another example from close to home: Sempra is a major player in the import, transportation, marketing, storage and distribution of natural gas. Our carbon dioxide emissions are roughly half the national average among the nation’s power generators. You can see why we plan to continue major investments in that area. Our goal is to be part of the solution — not part of the problem.
We also continue to invest in renewable energy, a key to turning the vision of a green future into a reality. I use the word “investment” because we all must recognize that there is a price tag to making the transition to cleaner energy. Currently, many renewable energy technologies are more expensive than conventional fuel sources and building the new infrastructure that’s necessary to support a different energy-supply system will require new investment.
Even so, expanding the use of renewable energy resources is an important piece of what should be a national policy agenda. A federal renewable portfolio standard can help support the development of new renewable energy markets and apply consistent incentives and goals nationwide.
Having a sound national energy policy is critical. Although California is a leader in energy and environmental policy, emissions do not recognize state or national boundaries. National policies are needed to integrate energy and environmental concerns in the form of sustainable, comprehensive solutions.
For the past 30 years, the United States hasn’t had a coherent national energy policy. We need one now.
Federal policy should support programs that encourage energy conservation — it’s the fastest and easiest way to make progress toward reducing reliance on fossil fuels.
Other states should follow California and revisit their utility rate structure and decouple or separate profitability from energy consumption. Many utilities still earn more money when their customers use more energy. In California this is not true… Utilities’ profit incentives are based upon efficiency, operational performance and invested capital.
In terms of emission regulations, any federal formula for reducing emissions must be fair and equitable and not shift costs to customers in states like California, which has invested heavily over the years in energy efficiency, renewable resources and new and efficient electric generating fleets.
Capturing vehicle emissions should also be a part of any national climate change policy. Electric, hybrid, natural gas and liquefied natural gas vehicles can all reduce emissions and lessen our reliance on oil. The utility industry can play a key role in helping reduce transportation sector emissions.
At the California Chamber of Commerce, we are honored to be working with Governor Schwarzenegger to keep California a leader in protecting our environment and our economy.
California can channel its energy know-how to effectively address climate change concerns. What you do in your communities, in your businesses and even at home is important because it does make a difference. The challenge before us is not easy and not everyone will be happy.
The citizens of California understand that it is our destiny to lead the way and provide a shining example to the rest of the nation — if not the world — to follow us in the quest for securing reliable energy while respecting the environment. We will prove once again California embraces the challenges of our times and brings solutions to the world. In California, we clearly understand that business and the environment are natural allies.