Friday, Feb. 26, 2010

Dan Walters: PG&E taking a tough line on public rivals

By Dan Walters - [email protected]


Sacramento-area voters, responding to a Sacramento Bee-led crusade, voted in 1923 to divorce themselves from Pacific Gas and Electric Co. and create a publicly owned electric utility, but it took 23 more years before the Sacramento Municipal Utility District began serving customers.

Why so long? PG&E fought a rear-guard action to delay the SMUD takeover, before finally losing in a landmark U.S. Supreme Court case.


Nearly a century later, PG&E is still resisting efforts to create publicly owned utilities, beating back several public power campaigns in San Francisco and, most recently, an effort to expand SMUD's territory into adjacent Yolo County. It's also resisted "community choice aggregation" in which local communities buy power elsewhere and use PG&E's distribution system – a battle it fought most recently in Marin County.


Tired of those battles and anticipating more on the horizon, PG&E is making a pre-emptive strike. It's sponsoring a June ballot measure, Proposition 16, that would make it much more difficult to create or expand publicly owned utilities by requiring two-thirds votes, instead of the current simple majority votes. And it's planning to spend at least $25 million to persuade voters to adopt the constitutional amendment.


It's only fair that decisions with immense financial consequences be ratified by a super-majority vote, PG&E argues. It's picked up support from major business groups, such as the California Chamber of Commerce. Predictably, however, Proposition 16 is drawing fire from consumer groups and liberal politicians, as a debate-like hearing Thursday before legislative committees demonstrated.


San Francisco legislators such as Mark Leno and Tom Ammiano sharply criticized Proposition 16 as a way for private utilities to shut down competition for customers. "In effect, this would do nothing but hurt competition," Leno said.


The measure contains a major semantic sticking point that Proposition 16 opponents are calling a "drafting error." It's the measure's core requirement that a two-thirds vote must be obtained before a municipal utility can "expand electric delivery services to a new territory or new customers."


Former state energy commissioner John Geesman calls it a "tapeworm" that could require a two-thirds vote before a municipal utility could serve new customers within its territory.


Another section says the contentious phrase does not apply to service "within the existing jurisdictional boundaries" of a utility that's the "sole electric delivery service provider," and the Legislature's budget analyst said that Proposition 16 wouldn't affect new customers within those boundaries.


However, the phrase apparently led the California Association of Realtors to oppose the measure, fearing it could be used to stop real estate development projects, thus diluting business support for Proposition 16.