Sunday, February 7, 2010

Prop. 16's Sloppy Drafting May Slow Home Sales in LA, Anaheim, Riverside, and 45 Other Locales

  • 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.
  • 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. 
  • 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."
  • but "electric delivery service" is defined to mean transmission, distribution, or "sale of electric power to retail end-use customers."
  • 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.
  • 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.
  • larger customers (like chain store outlets, restaurant franchises, and colleges) often have direct access contracts with private providers.
  • 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.
  • 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
  • and it's an immaculate conception standard -- one solar spermatozoa shows up and you're legally pregnant.
  • 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 (pictured above).  It doesn't appear that he thought of it. 

(photo credit:  Darbee, Genesis Photo Agency)