Sunday, January 31, 2010

Landmine Buried Within Vague Wording: Vote Required Before New Residents Can Hook Up!

  • in an election where the only hot-button contests pulling voters to the polls are high profile Republican primaries for Governor and U.S. Senator, PG&E's political consultants have devised a clever strategy for the San Francisco utility to aim at unsuspecting conservatives:
  1. Disguise yourself as a taxpayer protection movement.
  2. Define your adversaries with precision and emphasis -- community choice aggregators (soft-headed environmentalists) and new or expanding government-owned utilities (socialism on the march).
  3. Spend freely to disseminate your message, confident that the public agencies you are targeting are prohibited by law from spending one nickel of public funds to counter it. 
  • under these circumstances, what self-respecting Republican (and many a Democrat or Independent) wouldn't be expected to vote to erect a two-thirds-vote-of-the-people safety fence to protect the public treasury from such looting? 
  • but a close reading of Proposition 16 reveals that its largest impact -- whether intentionally or through sloppy drafting -- may be in disrupting the ordinary, day-to-day operations of existing municipal utilities which presently provide 25 - 30 % of California's electricity.
  • the problem is clear from the first sentence of the initiative's title and summary, a legal interpretation written by the career staff in the Attorney General's office, which says the approval of  two-thirds of the voters must be obtained "before providing electricity to new customers..."
  • the language which PG&E actually wants to cement into the State Constitution is more convoluted and speaks instead of an effort to "expand electric delivery service" as the trigger for the two-thirds vote requirement.
  • PG&E's  proposed Constitutional Amendment doesn't define either "new customers" or "expand electric delivery service" but it does say that the latter phrase does not include "continuing to provide electric delivery service to customers already receiving electric delivery service from the local government prior to the enactment of this section."
  • so, the phrase "expand electric delivery service" apparently does include providing such service to customers who didn't receive such service from the local government prior to enactment.
  • of course, PG&E's ballot initiative also purports to exempt "electric delivery service within the existing jurisdictional boundaries of a local government that is the sole electric delivery service provider within those boundaries."  But with the statewide proliferation of distributed generation and direct access accounts over the last 30 years, it may be empirically impossible to qualify for that exemption.  Especially in court.
  • Bottom Line:  if you're a resident of Anaheim, or Burbank, or Glendale, or Pasadena, or Riverside -- not exactly socialist towns, but all served by municipal utilities -- or any of the other several dozen similarly impacted jurisdictions, your new neighbor isn't going to be getting his electricity turned on until two-thirds of the voters say so. 

Monday, January 25, 2010

PG&E Defies Steinberg 8 and Puts Another $3 Million Into the Pot -- What's Darbee Thinking?

  • last Friday, in its first official move since its initiative qualified for the June ballot, PG&E dumped another $3 million into the arsenal, which now stands at $6.5 million -- all from the San Francisco utility.
  • the gesture is an unmistakable  thumb in the eye to Senate President Pro Tem Darrell Steinberg and the posse of seven other senior Senators who sent a cease-and-desist letter to PG&E CEO Peter Darbee -- pictured above -- in late December (read full text of letter below).
  • PG&E from time to time pretends to be a private sector business, but as a regulated monopoly it is as closely intertwined with State Government as CalTrans or the Department of Motor Vehicles.
  • as noted in Wikipedia, it was not quite nine years ago that PG&E entered bankruptcy and "(t)he State of California bailed out the utility, the cost of which worsened an already bad budget situation.  This played an important part in the eventual recall of California Governor Gray Davis."
  • Darbee may remember this better than most, since he was the CFO of PG&E's holding company before, during and after the bankruptcy, until his promotion to CEO in 2005.
  • ironically, the wording of Steinberg's warning to Darbee seems directly lifted from the "positive discipline" philosophy of parenting recently invoked by Esquire writer Tom Junod in his adoring profile of the Obama leadership style (its pre-Massachusetts vintage, anyway):

    It could serve as a precis for how Obama has dealt with ... Mahmoud Amadinejad, who was never threatened but rather told to 'think carefully' while answering the protests of the Iranian presidential election with the truncheon and the gallows.  One could almost hear Obama saying, 'Use your words, Mahmoud.  Use your words.'
  • or, as Steinberg put it after accusing PG&E of violating the law, "We strongly urge PG&E to carefully consider our concerns and refrain from pursuing this initiative." 
  • so what's up with Darbee?  Either (a) he didn't get the letter; (b) he thinks "positive discipline" is for wimps; (c) the upside of running an initiative campaign with a $30 million budget and no funded opposition is like shooting fish in a barrel (also against the law); or (d) he knows that Darrell Daddy never gets mad enough to spank anyone.
  • but read the letter yourself.  As the journalists say: "we report, you decide."

    December 22, 2009

    Mr. Peter A. Darbee
    Chairman and Chief Executive Officer
    PG & E Corporation
    One Market Street, 24th Floor Spear Tower
    San Francisco, CA  94105

    Dear Mr. Darbee:

    We, the undersigned members of the California Legislature, write to express our concerns about a proposed ballot initiative relating to municipalization and community choice aggregation (CCA) for electric power services.  PG&E Corporation, and its utility subsidiary, Pacific Gas and Electric Company, have been circulating for signatures the "New Two-Thirds Vote Requirement for Local Electricity Providers."  This measure would prohibit communities from condemning utility property or pursuing CCA without two-thirds vote approval from local residents.  It would place this super-majority vote requirement in the state Constitution.

    We believe the initiative is misguided as a matter of public policy for several reasons. First and foremost, PG&E has equated CCA, which relates to how communities choose to obtain their power supplies, with condemnation, which involves the seizure of utility property.  There is no enacted policy preference in California law regarding condemnation of utility property, but there is a policy preference for CCA.

    Assembly Bill 117 (Migden) was enacted (Chapter 858, Statutes of 2002) with broad support, including the support of your company.  This legislation prohibits utility company interference with CCA and requires utilities to "cooperate fully with any community choice aggregators that investigate, pursue, or implement community choice aggregation programs."  PG&E is aware that many communities currently are examining CCA.  Your efforts to erect roadblocks to communities' pursuit of CCA can be interpreted as a violation of the statute.

    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.  If PG&E has recanted its support for CCA, it has an obligation to seek those revisions in the Legislature.  To use the initiative process to pursue PG&E's self interests and avoid engaging your partners in the AB 117 agreement, calls into question your company's integrity.

    Second, PG&E's putative reason for pursuing this initiative is to protect ratepayers with the mandate for an election and the two-thirds vote requirement.  But this initiative attempts to conflate "taxpayer" with "ratepayer," even though it has nothing to do with the general fund of a municipality nor the taxpayers within it.  In fact, the existing statute provides far greater protection for ratepayers because (1) it provides that every customer has the right to opt out of a CCA program; (2) it provides a detailed scheme for the review and approval of the CCA program by the California Public Utilities Commission, a constitutional body whose prerogatives are impaired by this proposed initiative; and (3) it ensures, through reporting requirements, the Legislature's oversight of public policy in this area.

    Finally, we believe a crucial element of the Legislature's overwhelming support for AB 117 was the premise that CCA would provide another means for California to maintain its leadership in the development of preferred and renewable energy resources.  CCA encourages willing jurisdictions to go beyond the renewable portfolio thresholds to provide clean energy to their citizens.

    We note that PG&E, while it has taken many positive steps to advance the cause of renewable energy, today provides less renewable power as a percentage of total sales than it did when this legislation was enacted in 2002.  It is unacceptable for a company that is falling behind in meeting state adopted goals for clean energy to impede the efforts of others who would attain those goals through innovative means.

    We strongly urge PG&E to carefully consider our concerns and refrain from pursuing this initiative.


    DARRELL STEINBERG                                MARK LENO
    Senate President Pro Tempore                     State Senator, 3rd District

    Jenny Oropeza, 28th Senate District

    Lois Wolk, 5th Senate District

    Christine Kehoe, 39th Senate District

    Alan Lowenthal, 27th Senate District

    Gilbert Cedillo, 22nd Senate District

    Dean Florez, 16th Senate District

    (photo credits:  Darbee, Genesis Photo Agency; Steinberg, Deseret News)

Saturday, January 23, 2010

What Does the PG&E Ballot Initiative Claim to Do?

  • well, it's no longer the "Taxpayers Right to Vote Act" -- the Attorney General's staff determined that was too misleading.
  • now it's the more prosaic but no less ambiguous "New Two-Thirds Vote Requirement for Local Electricity Providers."
  • under existing law, most local governments can annex new areas for the expansion of electricity service with the approval of a simple majority of the voters in the area to be annexed.  The PG&E Ballot Initiative would embed in the State Constitution -- meaning that it can only be changed by another statewide election -- the requirement that the approval come from "two-thirds of the voters in the territory being served and two-thirds of the voters in the territory to be served."
  • a similar requirement would be written into the State Constitution for the formation of any new publicly owned electric utility.
  • in addition, any local government pursuing Community Choice Aggregation -- an electricity procurement process created by statute in 2002, when the investor-owned utilities were too weak financially to procure for themselves -- must also obtain a constitutionally required two-thirds voter approval before proceedingThe ability of any customer to opt out of a Community Choice program provided by existing law would be preserved.
That's the simple part, and perhaps all that PG&E intended:  a ratcheting up of voter requirements in order to create a permanent business advantage for itself.  But some combination of sloppy drafting and/or sheer malevolence could mean chaos for the municipal utilities that presently provide 25 - 30% of California's electricity. 

On December 22, 2009, eight senior members the California Senate -- including President Pro Tempore Darrell Steinberg -- sent a blistering letter to PG&E's CEO, Peter Darbee, accusing PG&E of violating the law which requires utilities to "cooperate fully" with those trying to organize Community Choice programs.  More seriously, the Senators said PG&E had dishonored the unwritten code of conduct that governs how business is transacted in Sacramento:
PG&E's willingness to use the initiative process to unwind a carefully negotiated statute that PG&E supported (emphasis in original) lacks the mutual respect and honor that the Legislature expects from stakeholders in the legislative process.  If PG&E has recanted its support ... it has an obligation to seek those revisions in the Legislature.  To use the initiative process to pursue PG&E's self interests and avoid engaging your partners in the AB 117 agreement, calls into question your company's integrity. 
The Senators' bottom line:  "We strongly urge you to carefully consider our concerns and refrain from pursuing this initiative."