PG&E's Lonely Fight
Why hasn't any other major utility endorsed Prop 16?
By: Katharine Mieszkowski
Pacific Gas and Electric is on a $46-million plus political adventure known as Proposition 16. But it's been a lonely one.
While supporters of the ballot measure include the likes of the San Bernardino County Tea Party, neither of the other large investor-owned utilities in the state -- Southern California Edison and San Diego Gas & Electric -- have deigned to take a position on Proposition 16, much less give a cent to the cause. Together, these three companies account for 68 percent of all the retail electricity service in the state.
Officials for the other utilities point out that they haven't faced as many efforts to expand public power as PG&E. But critics of Proposition 16 charge that's hardly the only reason the other big utilities are staying out of this fight.
"PG&E is in a fraternity of one. Their behavior is so shocking and so over-the-top arrogant on the standard of any corporate predator that they are literally by themselves," said San Francisco Supervisor Ross Mirkarimi, who supports CleanPowerSF, San Francisco's fledgling community-choice aggregation program, which is like a public buyers' club for electricity.
PG&E officials contend that ratepayers should have a right to vote on whether they want municipal power.
The other major commercial utilities' silence speaks volumes because the measure, which is on the June 8 ballot, directly concerns their business. Proposition 16 would require local governments to win the approval of two-thirds of voters before providing electricity service to new customers or expanding it into new territories. It would require the same two-thirds majority for efforts like CleanPowerSF and the recently launched Marin Clean Energy to get off the ground.
Right now, when a publicly owned utility wants to annex new territory a simple majority public vote is required. When a new community-choice aggregation program starts only the local governing board must vote to approve it.
Why haven't Edison and SDG&E joined the Proposition 16 party? After all, they were invited.
Andrew Souvall, a spokesman for PG&E confirmed that representatives from the utility did talk to its Southern California brethren about getting involved. "There were some early discussions in the early part of the process," he said.
But the other utilities chose to stay home.
"They've got this idiot neighbor willing to spend $35 million. Why should they get drawn in and suffer the good will loss?" said John Geesman, who served on the California Energy Commission from 2002 to 2008. "If it passes, they'll benefit, but they don't have to lift a finger to help it pass."
While there's no reliable polling on how the public feels about the initiative, the measure has caused PG&E a loss of goodwill with its regulators and some lawmakers.
Michael Peevey, the president of the California Public Utilities Commission, which regulates the utility, blasted the initiative as a "clever, brazen, buzzword-driven effort by one company to manipulate the California Constitution to protect its current monopoly," in a recent opinion piece published in the San Jose Mercury News.
Last December, eight members of the California legislature, including Senate President Pro Tem Darrel Steinberg and State Senator Mark Leno, sent a blistering letter to Peter Darbee, CEO of PG&E asking him to stop pursuing the initiative. The letter noted that PG&E supported legislation that made the kind of program launched in Marin possible, which the initiative now seeks to squelch. "PG&E's willingness to use the initiative process to unwind a carefully negotiated statute that PG&E supported lacks the mutual respect and honor that the Legislature expects from stakeholders in the legislative process."
By staying out of the fight, the other utilities are avoiding the backlash. Southern California Edison, which has 4.9 million customers, gives this comically bland position statement on the initiative: "Southern California Edison is not taking a position on the initiative, but encourages Californians to vote to express their views on all important ballot measures."
But the other major utilities also have less to gain from the initiative passing than PG&E. "We have had some municipal efforts in the past, but those have not materialized, and currently we don't have any municipal or community-choice aggregation issues that we're dealing with," said Jennifer Ramp, a spokesperson for San Diego Gas & Electric, which has 1.4 million customers, explaining why the company has not taken a position on the proposition. "Therefore, it's not a top issue for this company."
PG&E put up a bruising and costly fight against Marin Clean Energy, as it has against many past attempted forays into public power in its territory. Marin Clean Energy is now serving electricity that's 25 percent from renewable sources. PG&E's electricity is only 14 percent from renewable sources and costs the same as Marin's. The utility is currently trying to stop San Francisco's attempt to start a program similar to Marin's.
PG&E has a long history of fighting to keep customers when cities try to break free. The southern California utilities simply have not had as many public power fights as PG&E. "Historically, they have not been anywhere near as frequent in Southern California as in Northern California," said Geesman.
While attempting to sell the proposition to the public as the Taxpayers Right to Vote Act, PG&E has made it clear to employees and investors that it has grown weary of spending millions to fend off incursions into its territory. In 2006, the utility spent $11 million to keep Sacramento Municipal Utility District from expanding in eastern Yolo County, and it spent $10 million in 2008 to defeat a public power measure on the San Francisco ballot, known as Proposition H.
Proposition 16 is an attempt to stop many of those types of fights before they begin. If the initiative passes, it would make such efforts less likely. "It will have enough of a chilling effect to eliminate some public power initiatives going forward. Those that do go on the ballot--it's likely that many of those might lose," said Steven Weissman, associate director of the UC Berkeley School of Law's Center for Law, Energy and the Environment.
While PG&E has spent tens of millions, the opposition has raised a paltry $80,000. The largest contribution was a mere $25,000 from the California Association of Realtors Issues Mobilization PAC.
The fight is so lopsided in part because municipalities cannot spend public money to take on ballot measures. "The laws do not allow public entities to put any money toward fighting political campaigns. We can put stuff out that's educational," said Jim Pope, the general manager of Northern California Power Agency, which serves almost 800,000 customers.
Yet, PG&E is able to spend as much as it wants of its shareholders' money on the initiative, money that was collected from ratepayers.
Speaking as a citizen, not for the agency, Pope said that the proposition is a heavy-handed misuse of the initiative process. As for the other commercial utilities, "I think that they're just standing on the sidelines and holding their nose."