Prop 16. PG&E’s Trojan Horse?

OK. I’ll bite. Former California Energy Commissioner John Geesman just asked us to spread the word which is the role of the Orange Juice blog.

On his blog Commissioner Geesman cautions us on Prop 16, an upcoming ballot measure for the June election being promoted by PG&E. Here are some of Mr Geesman’s concerns:
“I was dumbstruck when I read that PG&E’s board has authorized spending $30 million on this initiative. The local governments, municipal utilities, and irrigation districts who are its targets are prohibited by law from spending anything to oppose it. California’s investor-owned utilities face a Himalayan task in modernizing our electricity system and building the infrastructure necessary to serve a growing economy. They ought to focus on that, rather than manipulating the electorate to kneecap their few competitors. Has there ever been a time when we needed greater downward pressure on electricity rates? Perhaps I can contribute to stopping this outrage by assembling this information. Won’t you help by using email to disseminate each post as broadly as possible?

Let’s begin with his earlier post entitled:
 “What do the California Realtors Know About Prop. 16 that the State Chamber of Commerce Doesn’t?”
answer: “that you’d better read the damn thing closely.

That may explain why the statewide California Association of Realtors last week took a formal position against the PG&E-sponsored initiative, while some months ago — before it even qualified for the ballot — the gullible State Chamber endorsed it.
but the drafting error, a failure to clearly define what constitutes the “new customer” that triggers an election with a 2/3’s vote requirement — which strikes terror into the heart of every realtor with a listing or a buyer in any of the 48 affected communities — is probably an even bigger threat to new or relocating businesses in those same locales. Analysis of wording flaws here and here.
business columnist Michael Hiltzik, writing in the Los Angeles Times and referencing this blog, conjures up the scenario of PG&E filing suit to prevent the connection of such new homebuyers within a municipal utility jurisdiction.

maybe, but a more likely risk — especially for businesses — is the easily recognized California vigilante persona, now equipped with a right enshrined in the California Constitution (assuming Prop. 16 passes), going to court to demand his/her right to a vote of the people before a new chain outlet, or a grocery that sells meat, or a convenience store that sells cigarettes, etc. is allowed to get its electricity turned on. 
in a dire time when common sense screams out the importance of improving California’s business climate, along comes Peter Darbee — CEO of the San Francisco utility, PG&E — exporting his local civil war against public power to a statewide platform and paying no heed to the collateral damage. 

how does this stuff happen?  It happens when the CEO of a monopoly utility, accountable to no one and oblivious to the competitive pressures other businesses face, gets careless with the way his political consultants unilaterally draft a proposed Constitutional Amendment.
the text wasn’t adequately vetted, because it never went through a single legislative committee or public hearing.  
Darbee used his monopoly’s money — and guess where that came from — to bring it straight to the voters, dressed up as a phony taxpayer protection measure.
and why is it a Constitutional Amendment rather than just a statutory measure that could be cleaned up later by the Legislature?
to make it extremely difficult to change — that will take another ballot measure, or the courts invalidating it. 
Darbee seems to place the same faith in the people’s representatives as he does in his customers — actually, he considers them “ratepayers” — sticking with his monopoly if they are ever given any other choices.
isn’t the State Chamber of Commerce supposed to protect California businesses from this sort of fiasco?
Darbee appears to still be a member-in-good-standing with the California Chamber, despite the national uproar caused when he stormed out of the U.S. Chamber in a transparent bid to curry favor in Obamaland over climate politics.
the late Republican conservative state senator H. L. Richardson scandalized the Sacramento of a quainter day with his memoir, So What Makes You Think We Read the Bills? 
ok, CalChamber, there are a lot of bills and some of them get pretty long.  But at least read the full text of a four-page Constitutional Amendment — and carefully think it through — before you trip over yourself endorsing it for one of your cronies.

PG&E Ballot Initiative Factsheet

Proposition 16: the Trojan Horse in California’s June 8, 2010 election

Following are Commissioner Geesman’s bullet points. Link follows below:

1. a failure to define “new customers” in PG&E’s ballot measure would make any new account in existing municipal utility territories subject to the two-thirds majority public election process.

2.  the oversight stems from the drafters’ mistaken presumption that the existing municipal utilities are the sole providers of electricity to retail end-use customers within their service territories. 

3.  the grandfather provision, which attempts to exempt current operations within existing municipal utility service territories, only applies if the local government is “the sole electric delivery service provider within those boundaries.”

4.  but “electric delivery service” is defined to mean transmission, distribution, or “sale of electric power to retail end-use customers.”

5.  which sets up a test that is impossible to meet, given the changes that have happened throughout California since the glory days of the vertically integrated utility monopoly model.

6.  many solar systems being installed today use a Power Purchase Agreement, where the customer actually buys his electricity from the company owning the equipment.  PG&E should have known this, having just invested $60 million in a company which employs this technique.

7.  larger customers (like chain store outlets, restaurant franchises, and colleges) often have direct access contracts with private providers.

8.  other customers (like schools, hospitals, and office buildings) rely on cogeneration systems that are owned by third parties who sell the electricity to the customers.

9.  with no reliable data base recording the location of this growing swarm of alternative business arrangements for the sale of electricity, how does one conclusively prove — in court, where these disputes will end up — that the municipal utility is the sole provider? 

10.  and it’s an immaculate conception standard — one solar spermatozoa shows up and you’re legally pregnant.

11.  so how do you sell a house or open a new business, if it requires a new electricity account and triggers the need for an election and a two-thirds majority approval? I don’t know. 
Ask PG&E CEO Peter Darbee .It doesn’t appear that he thought of it.

About Larry Gilbert