Sunday, February 21, 2010

PG&E's Threat to Halt Marin Electricity Deliveries -- Does Peter Darbee Think He's CEO of Gazprom?

  • as the California Public Utilities Commission this Thursday gingerly takes up the question of PG&E's misconduct uh, aggressive behavior in Marin County, it would do well to remember that even the most tooth-and-claw visions of market capitalism require commitment to a rule of law.
  • commerce -- indeed, civilization -- simply doesn't function well in arenas dominated by brute force and lawlessness.
  • so PG&E's bellicose threats this month,  intended to stave off the formation in Marin County of a community choice program for renewable energy procurement -- though fruitless thus far -- rocked California's regulatory world.
  • the first couple of shots could be dismissed in today's scorched earth culture as macho trash talk coming from poorly supervised lawyers:  first, to sue the Marin Energy Authority on CEQA grounds if it proceeded, then to sue the Water District and the County itself if they guaranteed a start-up loan to the Authority.
  • this despite the clear requirements of the California Public Utilities Code Section 366.2 that electrical corporations like PG&E "cooperate fully" with the investigation, pursuit, or implementation of such programs.
  • but the final belligerence -- now apparently withdrawn, according to the San Francisco Chronicle --  bizarrely drew from the playbook used in Russia's cut-off of gas supplies to Ukraine:  just refuse to deliver electricity to the Marin Energy Authority.
  • physically, of course, it would be impossible to isolate the Marin Energy Authority's customers from the rest of Marin County -- or, for that matter, Marin County from the rest of Northern California -- but collateral damage to neighboring jurisdictions certainly didn't restrain Putin from shutting the valves in 2006, 2008 or 2009.
  • legally, such a move would probably violate the Federal Power Act and an array of Federal antitrust laws -- not to mention California's plaintiff-friendly, omnibus unfair competition statute, Business & Professions Code Section 17200.  
  • but none of that restrained Peter Darbee's leg breakers.  The Marin Independent Journal account of the County's approval of the loan guarantee starkly laid it out:
Marin County Counsel Patrick Faulkner told supervisors Tuesday that PG&E chief counsel Christopher Warner warned him that PG&E will refuse to sign an agreement with the Marin Energy Authority to distribute electricity to the authority's new customers. 
"He's made the same threat to Public Utilities Commission staff," said Stephen Roscow, a program and project supervisor with the commission.  "We told them they're not allowed to make that threat under the commission's tariffs."
  • what to make of Peter Darbee's seeming recantation of the delivery threat?  Not much. 
  • rather than executing some overarching plan, Darbee seems to rely on the improvisational instincts of all delinquents -- test the limits, locate the boundaries, shrink back when you hear the police sirens.  
  • that can substitute for strategy for awhile, as long as no one lays down the law, but the perpetrator is often so intoxicated with early success and uninhibited behavior that he fails to recognize the exponential growth in the risks he is taking.
  • which gets back to the CPUC's February 25 meeting and the mild, can't-we-all-just-get-along resolution drafted by its staff and now placed on its consent calendar.  
  • it will presumably be adopted without discussion, thereby depriving at least one utility CEO of the "teachable moment" that can sometimes only be administered by a trip to the woodshed.
  • but the degree to which Darbee is debasing his own regulatory and commercial environment is perhaps best captured by the contrast with his large utility counterpart, Southern California Edison.
  • as pointed out in the CPUC resolution, "Unlike PG&E, SCE states that it does not intend to market against the CCA program."
  • in the CPUC kabuki, maybe that's enough said.  But probably not.  Subtlety doesn't appear to be Peter Darbee's strong suit.

(photo credits:  Putin, Robert Amsterdam Deutsch; Darbee, Genesis Photo Agency)