Pacific Gas and Electric Company: A Report on a west coast client;

              Energy.
Where will it come from? How much will it cost? Will
new resources be available for our use in the years
ahead? These are questions of vital concern to the public
utilities industry, since the answers will determine how
we all live and work in the future. Pacific Gas and
Electric Company, a client of our San Francisco office, is
attempting to find solutions today to the potential energy
problems of tomorrow. In an age in which it has be­come
necessary to develop as many alternative energy-producing
technologies as possible, this is the only
company in the country that generates electricity from
geothermal steam as well as from water, oil, natural gas
and nuclear sources. PG&E also is engaged in numerous
research ventures to explore the potential of other power-producing
methods.
By most standards of measurement, Pacific Gas and
Electric is the largest investor-owned gas and electric
public utility in the United States, providing gas and
electricity to more than five million customers in forty-eight
counties of northern and central California. Operat­ing
revenues for 1975 were approximately $2.2 billion,
roughly 29 percent higher than the previous year. The
gain was largely due to higher rates granted to offset
the rising prices of natural gas and fuel oil. There was
an increase of nearly 70,000 customers last year as well.
San Francisco partner Benton Coit heads the engage­ment.
When he retires next year, partner Gary West will
take charge of the three managers and fifteen staff
accountants on the audit team. According to Gary, the
structure of the utilities industry results in interesting
accounting situations. He cites as an example the
recent use of PG&E subsidiaries like Natural Gas Corpo­ration
of California, Alberta and Southern Gas Co., Ltd.
and Pacific Gas Transmission Company to support gas-exploration
efforts on the North Slope of Alaska, in
Canada and in a number of northern and central Rocky
Mountain states.
In 1970 the company launched a seven-year project
to integrate completely its electronic data-processing
system. With EO partner Gordon Murray providing con­sulting
assistance, four H&S people worked closely with
a ten-member team from PG&E to create an inclusive
definition of the system intended to replace the earlier,
more-segmented version. Today PG&E's computer sys­tem
is capable of a variety of functions. The largest sin­gle
application involves customer service, but the
computer also is used for property taxes, payroll and
inventories. It also provides, as one example, analysis
of the optimum point of efficiency for using hydroelectric
power by rapidly evaluating factors such as storage-water
evaporation and peak power demand in summer.
The history of Pacific Gas and Electric is tied in with
the frontier past of northern California. PG&E is a direct
descendant of the San Francisco Gas Company, which
in 1852 pioneered gas service in the western United
States by manufacturing gas from coal, and the California
Electric Light Company of San Francisco. The latter in
1879 began the country's first central-station commercial
electric service. By late 1905, only a few months before
the disastrous earthquake, PG&E had evolved through
the merger of the two San Francisco-based utilities and
many other systems. Later mergers in the 1930s—with
Great Western Power Company and the San Joaquin
Light and Power Corporation—expanded PG&E's serv­ice
area to its present boundaries. PG&E today is the
result of the merger of more than five hundred companies
into a single, efficient operation.
The company now employs more than 25,000 people
and has seventy-seven generating plants, 94,000 miles
of electric transmission and distribution lines and 31,000
miles of gas pipelines. Its total system generating capa­bility
at annual peak is fourteen million kilowatts from a
combination of its own plants and contracts with other
producers.
The quality of its management has been responsible
in great measure for the company's success. Shermer L.
Sibley, chairman and chief executive officer, holds a
degree in electrical engineering and has been with the
utility since 1936. Richard H. Peterson, vice chairman
of the board and a graduate of the University of Cali-
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