PG&E 2007 Annual Report Download - page 4

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Building the Leading Utility
 is ambition continued to inspire and
motivate us last year — even as a number of
challenges reminded us just how high we
have chosen to set the bar for ourselves.
Make no mistake. We continue to think
and act boldly in response to the changes we
see around us. New environmental, economic,
and social dynamics are reshaping customers’
sensibilities around energy and, thus, their
basic expectations of energy companies.
No other trend has more profound future
implications for our
business. We believe
that the strategies
that guaranteed
results for utilities
in the 20th century
will not necessarily
yield the best returns
in the 21st. And it
is our readiness to
embrace change and
begin cultivating new
opportunities amid
these emerging trends
that will determine
our ability to harvest new value for customers
and shareholders in the long run.
We are passionate about leading this
transition in the industry. Indeed, we have
been among the  rst-movers in a number of
areas with the potential to change the way
energy is produced, delivered, and consumed.
But as we look ahead, we always remember
that for our vision to have legs, we will
have to remain consistently sure-footed in
our daily execution on the fundamentals.
Operational excellence — safety, quality
control, on-time and on-budget performance,
getting the job done right the  rst time — will
always be the prerequisite for reaching higher.
 is is why our strategy over the past few
years has revolved so much around revamping
PG&E’s core systems and processes to be
better, faster, and more cost-e ective.
We made strides in this e ort again last
year.  e seamless execution of a complex
IT upgrade to improve our customer care and
billing capabilities was one example. Record
operating results at the Diablo Canyon
Power Plant was another. Exceeding our
savings goals from supply chain improve-
ments was yet another. Combined with
progress on safety and reducing the number
of outages and work errors, these and
other accomplishments make the case for a
solid year in operations.
However, these positives were clouded by
the fact that in some other important areas,
we  nished the year behind our goals.
Most signi cant, we did not reap all of the
expected operational and  nancial bene ts
from the recon gurations to our service
delivery model. Taking this into account,
these and other process and systems improve-
ments will still yield about $1 billion of
future savings, but this is less than anticipated.
Also, the switch to new systems tem-
porarily slowed down our work ow and
frustrated employees and customers. A top
priority in 2008 is resolving these issues and
identifying and pursuing new opportunities.
Our mantra compels us to continuously
improve. We are at work on this now. We
know that one key is doing more to engage
our union  eld teams, together with
cross-functional management teams, in the
brainstorming and piloting of new ideas.
I’m con dent that together we will succeed.
Adding to last year’s headwinds were
surging costs for certain materials and equip-
ment. As a result of global demand, prices
have continued to rise quickly.
“We believe that
PG&E Corporation
continues to offer
investors a highly
attractive balance
of solid earnings
growth and risk.”