PG&E SPENDING BIG TO KEEP MONOPOLY

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MAY 4, 2010, OR THEREAFTER

BY THOMAS D. ELIAS
“PG&E SPENDING BIG TO KEEP MONOPOLY”

Pacific Gas & Electric Co., the giant Northern California utility company, is about to test one of the central axioms of initiative politics. It goes like this: You can defeat almost any ballot proposition by spending really big money against it, because people are generally inclined to vote “no” when they are confused, but it’s much harder to pass a proposition no matter how much you spend.

Make no mistake, PG&E will spend whatever it thinks it will take to pass the innocuous-looking Proposition 16, a June ballot initiative that would require a two-thirds majority of local voters before any local government could set up a publicly-run utility to sell electricity.

For PG&E feels threatened these days, even under siege. There’s a move for San Francisco, the company’s home town, to declare itself electrically independent. There’s a similar possibility in Marin County, just north of San Francisco. The South San Joaquin Irrigation District would like to provide power for Manteca and other cities. Altogether, such moves are afoot in more than 40 locales around California.

Essentially, these areas appear en route to setting up arrangements called community choice aggregations (CCAs), where cities and districts buy power from generators and sell it to local residents at prices of their choosing, transmitting the energy they obtain over the power grid owned and operated by big utilities like PG&E, Southern California Edison and San Diego Gas & Electric.

Plainly, PG&E does not want to become something akin to a common carrier that mainly supplies transportation, but if that gradually happens, it would largely be the big utility’s own doing.

For PG&E was a prime backer of the disastrous state deregulation plan adopted in the late 1990s with approval from then-Gov. Pete Wilson. That plan saw PG&E and other utilities sell off many of their most significant power plants to the generating companies that now can sell to CCAs at negotiated prices.

CCAs also are a means of encouraging more “green” power than traditional utilities now provide, with some cities wanting to set up new solar arrays, biofuel facilities, wind farms and more.

All it takes now for a CCA to go forward is a few votes by city councils and district boards. That’s not enough of a barrier to suit PG&E. So it spent $3.5 million to qualify Proposition 16 for the ballot, put another $18.5 million into its effort in the three months after the measure was certified and will spend more than $35 million before primary Election Day in June. Giving some idea of how little appeal this measure has to others: PG&E as of April 15 was the sole funder of Proposition 16.

Presenting itself as a benevolent giant, PG&E has already used a spate of colorful mailers to call the proposition a matter of fairness. “We believe our customers should have a say in determining whether or not their local government spends public money to take on the risks of the power business,” says company spokesman Andrew Souvall. “We want to give people more control over how their tax dollars are spent.”

But the initiative worries even well-established public utilities. Palo Alto, for one, worries it might not be able to seek new power sources without laborious public votes that would require two-thirds majorities that are always difficult to obtain. In Lodi, where the publicly-owned utility is a century old, city officials worry they won’t be able to serve newly annexed areas.

Council members from more than a dozen cities label the measure “an attempt by PG&E to create a monopoly.”

As for giving taxpayers more say, they warn that if this passes, a simple majority of voters would set perpetual two-thirds-vote requirements for all future attempts to establish public power agencies.

City officials may be vocal in opposing the measure, but they can’t spend any taxpayer dollars against it, while PG&E has no limits on its spending under both federal and state law.

It’s one of two self-serving propositions this spring, each placed on the ballot by companies that stand to benefit most from them. The other is Proposition 17, sponsored by Mercury Insurance, allowing insurance companies to charge more for auto insurance bought by drivers who have not had continuous coverage up until the time they buy a new policy.

In both cases, the companies are testing that old axiom about yes votes being hard to come by, trying to pass propositions while outspending their opponents by factors of 1,000-1 or more.

If they succeed, they will surely provide fodder for the many critics of the initiative process who say it should be altered to reduce or eliminate the influence of big money on public policy.

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net