By now many have already seen the beginnings of the PG&E campaign to somehow trick the voters into approving the blatantly transparent Proposition 16 – a measure that would require a two-thirds vote in order for voters to approve public utilities. If this campaign ad that you can view below is any indication, we are in for a long spring of deceptive Proposition 16 campaigns.
After all, PG&E spent $10 million on a campaign in 2006 to keep SMUD out of Yolo County, a measure approved by every single elected official in this county. How much will they spend statewide to make it more difficult for competitors to arise?
“But in the end, it’s really government run electric service. Under current law, local government can spend unlimited public funds to go into the electricity business, and we don’t even have the right to vote on it. Requires voter approval before local governments can spend public funds to take over electric service. Whether government run electricity is a good idea or not, voters should have the final say, because we’re paying the bills.”
And therein lies the problem. Under existing law, voters already have the right to vote on such projects, just as Yolo County and Sacramento had the right to vote in 2006. Except currently, a simple majority decides whether to approve the project. Under Proposition 16, it would require a two-thirds vote. It does not get any more deceptive than that.
How deceptive? Don’t take my word. Here’s Bill McEwen from the Fresno Bee. He writes:
“I had a hard time deciding who peddled the biggest scam — the mortgage and credit card debt hustlers, or Pacific Gas & Electric, which is spending $35 million backing Proposition 16.
The utility monopoly is trying to rejigger the state constitution and protect its bottom line against start-up municipal power companies. And it’s using a deceptive advertising campaign for a law that would require two-thirds voter approval before local governments go into the power business or existing PG&E competitors expand their territories.
PG&E says Proposition 16, which is on the June ballot, is about choice, voice and transparency.
But the so-called Taxpayers Right to Vote Act is more about limiting consumer choice, preserving monopolies and keeping utility rates high.”
He later points out that PG&E ratepayers – that means you and me – are funding the Proposition 16 campaign. Mr. McEwen writes, “The utility claims otherwise, saying that the $35 million is from a reduction in shareholder dividends. But all dividends are straight out of ratepayer wallets.”
Closer to home, Dan Morain from the Sacramento Bee writes, “PG&E has legitimate concerns. But its initiative, Proposition 16, deserves its own separate wall in the pantheon of special interest-funded and one-sided ballot measures.”
As Mr. Morain points out, the two-thirds requirement would be the death-knell for public utilies such as SMUD.
“California requires a two-thirds vote before imposing most taxes, an almost insurmountable hurdle. Through Proposition 16, PG&E is seeking to create its very own constitutional amendment that would extend the two-thirds requirement to electricity-related issues in three ways:
• A local government seeking to enter the electric business could do so only after winning a two-thirds vote.
• An existing public utility, such as the Sacramento Municipal Utility District, would need a two-thirds vote before expanding its service area.
• Local governments would need a two-thirds vote before creating a “community choice aggregation” program, by which customers band together to buy power wholesale from independent operators at a discount.”
Likewise, John Geesman who served on the California Energy Commission from 2002 to 2008 wrote in an op-ed for the Sacramento Bee on Sunday:
“As a true measure of the cynicism of PG&E’s political consultants, it’s being marketed as a taxpayer protection measure that will preserve our right to vote.
What would it really do? It would alter existing voting requirements for annexations into a municipal utility service territory from a simple majority in the area to be annexed to a two-thirds majority in the entire service territory. It would do the same for a community starting a new utility. And it would require a two-thirds majority before a municipality could explore community choice aggregation – a rarely used statutory method to procure electricity, adopted recently in Marin County and under consideration in San Francisco.”
Mr. Geesman argues that Proposition 16 would result in “less voting than occurs under existing law” AND he cites PG&E CEO, Peter Darbee, as boasting about it at a recent Wall Street shareholder meeting.
In Darbee’s words, “the idea was to diminish, you know, rather than year after year different communities coming in as this or that and putting this up for vote and us having to spend millions and millions of shareholder dollars to defend it repeatedly, we thought that this was a way that we could sort of diminish that.”
But there’s more, a loophole could actually require votes even in communities that already have public power and if that were to occur, it would not only mean public utilies could not expand, it would mean they could not survive.
Writes Mr. Geesman:
“Because of its high rates (PG&E’s top tier residential rate is currently 49.9 cents per kwh compared with 29 cents per kwh for Southern California Edison and San Diego Gas & Electric) PG&E ratepayer revolts should come as no surprise. But exactly how will eliminating customer choices and restricting competition produce lower rates?
Sloppy drafting of the “grandfather clause” of Proposition 16 will create some unintended consequences if the measure is passed. Service within existing municipal utility territories is supposed to be exempted from the voting requirement, but the exemption is drafted so narrowly that none of these utilities is expected to qualify.
That means that every new hookup – every new homebuyer, every new business – in those 48 communities could trigger an election with a two-thirds majority requirement.”
Wow, that would be something. Fortunately the measure does not have a chance if the voters understand what it really does. However, that’s where the multi-million dollar compaign comes into play. According to several sources, already PG&E has spent $19 million on its air war and they’ve extracted $35 million from ratepayers like you and I to try to trick the voters into supporting a measure that will secure their bottomline against competitors like SMUD.
The Davis City Council has already passed a resolution stating their opposition to Proposition 16.
The City Council formally expressed several concerns with the initiative.
- The initiative is currently funded solely by PG&E, which has a clear conflict of interest. The passage of the initiative would make it much more difficult for any public power project to succeed. The 2/3 vote requirement is ordinarily designed to protect the structure of government from casual change and to protect people’s rights from capricious abuse of power. This initiative would do the opposite: it would remove the power of local government to protect itself from abuse by utility monopolies via a constitutional amendment. The initiative protects one private corporation and its current service area.
- Contrary to assertions made by proponents of the initiative, local governments already have experience with utilities. SMUD is a good example. Therefore, the 2/3 requirement is excessive and perhaps counterproductive to the public good.
- The SMUD Board has unanimously opposed the initiative, as has the Palo Alto City Council. Senator Lois Wolk, along with eight of her Senate colleagues, stated her concerns about Proposition 16 in a letter to the president of PG&E.
- CCAs may want to provide power from more renewable resources than PGE, such as the case with Marin County’s new CCA. CCAs arguably give customers a choice of where their power comes from. The initiative would make it more difficult to provide customers with options such as this.
- The Legislative Analyst’s Office concluded that the proposed initiative would create an unknown impact to state and local government costs and revenues, due to the potential impacts on electricity rates and publicly owned electric utility operations.
The bottom line is voter education, when the public learns what this measure is really about – protecting PG&E’s bottom line – they will not support it, however, PG&E is betting tens of millions that they can trick the voters.
—David M. Greenwald reporting
Well done, David! Those are the facts that put the lie to PG$$$E. (Not a typo) Straight forward as the facts are, under-estimating the coming deluge of deceptive ads would be a mistake. Furthermore, this issue highlights the injustice of the recent ruling by our not-so-supreme court. It seems the ruling has emboldened the already brazen corporations.
Yolo PDA will be hosting a speaker from Calpirg to further bring this shining example of corporate arrogance to the fore. The date is awaiting confirmation before a formal announcement will be made.
Excellent, David! Here’s an example of the “corporate person” now free of any regulation of corporate money in politics or constraints on “false advertising” using the First Amendment to drown out the voice of the people.
Readers might wish to go to http://www.movetoamend.org and sign the Motion to Amend the U.S. Constitution to deny corporations the rights of personhood and to strip corporations of all rights conferred on them by the Supreme Court over decades.
Corporations are artificial entities created by people through charters for specific economic purposes granted by states and subject to state and federal laws. Corporations have no claim to the First Amendment and to free political speech rights except as a result of Supreme Court decisions first in Buckley v. Valeo (1976), then in First National Bank of Boston v. Bellotti that struck down state laws restricting corporate spending on ballot initiatives and referenda, and in the most recent (Jan. 21) 5-4 Supreme Court decision in Citizens United vs. the Federal Election Commission. This decision struck down the democratically enacted campaign finance laws of 24 states and the Bipartisan Campaign Reform Act of 2002 (MCain-Feingold), as well as a 1907 law, the first to federal legislation to prohibit corporate money in national politics. It was the final opening of the floodgates to unlimited spending by corporations from their general treasury in elections. PG&E is just doing what is now legal as a result of un-elected Supreme Court Justices making law.
For more information read: “Corporations are not People” at
http://www.thealliancefordemocracy.org/brochure.pdf and the Alliance for Democracy’s latest issue of Justice Rising titled “Courts & Corporations v. Our Common Good” at http://www.thealliancefordemocracy.org/pdf/AfDJR44.pdf
David, while I absolutely and passionately agree with your sentiment, there’s a few details that aren’t entirely accurate. Local governments can enter into Community Choice Aggregation programs without a vote of the general public. That is a large part of why PG&E is doing this… SF and Marin Counties are forming CCAs.
These programs allow a JPA to become the buyer of electricity off the grid, and then to distribute it through local power lines. They essentially only change who buys the power from producers (a result of deregulation). This does a few things:
– Cuts out PG&E as a “middleman”, along with most of their markup
– Makes the purchase of electricity tax-exempt
– Allows the JPA to choose who to contract the electricity with and what type, be it affordable, renewable, etc.
Prop 16 is a scam. PG&E is pretending to be concerned, but the fact is they know they can run a multi-million dollar ad campaign and fool voters into voting their way. If Prop 16 passes, no entity will have much of a chance of doing away with PG&E. They’re trying to buy a constitutional amendment which protects their market permanently, and they’re using peoples’ fear of government to do it.
Justin Kudo,
I’d like to follow your reasoning, but there is some ambiguity in the wording.
“These programs” refers to CCA’s?
“JPA” is the acronym of what?
Thanks
Sorry!
“these programs” = CCA/Community Choice Aggregation
JPA = Joint Powers Authority. If you had one here, it might consist of (purely as an example) the City of Winters, the City of Davis, the County of Yolo, the County of Solano, the City of Dixon, the City of Vacaville. All groups act as stakeholders in the JPA and typically have equal representation of some sort on it. I might not be quite correct on this aspect – not something I have directly worked with.
Also, nprice, while I agree with your sentiment about campaign finance concerns, I do not believe Prop 16 is at all affected by that SCOTUS decision. Just look at how much the Mormon Church poured into Prop 8.
Justin,
With the spelling out of “JPA’s,” I understand different municipalities can form JPA’s to provide services as transit or electicity/gas to a group of municpalities. Since California is one of the states that can form JPA’s, I would think Davis has the potential to do so, although you say it is not currently in a JPA. So then the question that would make your point clear is: how would Prop 16 affect the formation of JPA’s?
Thanks
Prop 16 does not affect the formation of JPAs, but it would prevent the creation of CCAs.
Justin,
So the bottom line is that any plan for competition to PG$E, whether from a start up green energy company or from municipalilties (via CCA’s and JPA’s) would require approval from 66.66 % of voters after Prop 16. Currently the bar is set at 51% approval. Prop 16 would, essentially, rule out competition from municipal and other private utilities. I absolutely agree with you.
It goes deeper than that. CCAs can be formed without being voted on by the public. For example, Marin County (where I grew up) has done this. They then are giving all residents in the coverage area the option of signing up with Marin or staying with PG&E. The only thing that changes under the CCA model is where the electricity comes from and the rates, PG&E still operates the service and collects bills. Think of it as “SMUD Lite”.
Of course, you can look at this two ways:
1) PG&E would like you to look at it as that the public should get to vote on whether or not local government enacts Municipalities or CCAs, and should only move ahead if the vast majority of the public agrees with it.
2) In reality, as long as the utilities are operational, the vast majority of the public does not understand or really care how utilities are operated, which is why we rely on people we elect to office with specialized and educated staffs, as well as dozens of public meetings, to make these decisions. Because people neither understand nor care much about these issues, it’s quite difficult to win with a poorly-funded (public entities) campaign against a well-funded (multi-million dollar) PG&E campaign. If PG&E extends the threshold from a majority vote to a 2/3 vote, it will be essentially impossible.
Regardless of the “possibilities”, the practical effect of Prop 16 is to amend California law to make PG&E the permanent provider to its existing service area.
I should add that I work in the energy industry a bit, and have friends who work with the CAISO (runs the transmission grid for the state), the California Public Utilities Commission, investor and public owned utilities, and energy industry developers.
Of those folks, only two of them don’t think Prop 16 is a PG&E scam. And both of them are being paid by PG&E.
Justin:
[quote]Of those folks, only two of them don’t think Prop 16 is a PG&E scam. And both of them are being paid by PG&E. [/quote]
Interesting point, in the articles I perused to do the write up this morning, one of them mentioned that Willie Brown was supporting the Proposition but he’s on the PG&E payroll and the other was the California Chamber of Commerce, but PG&E is on their board.
Lol David.. yeah. I’m not trying to be a conspiracy theorist here. I mean you know me by now; I hate when people go down that route. But genuinely, I’ve yet to find someone who understands Prop 16, supports it, and is not on PG&E’s payroll.
Main supporters I know:
* Joe Nation – Paid consultant for PG&E
* CA Chamber of Commerce – as stated above
* “Concerntrolls for Marin County” – I can’t remember the real name, but it’s some concerned citizen’s group there. It’s fully run and funded by PG&E
* Willie Brown – Paid by PG&E
Other supporters I know:
* People who don’t understand Prop 16 but believe the advertising
* GOP anti-government crowd, esp. Tea Party folks
Interesting point, in the articles I perused to do the write up this morning, one of them mentioned that Willie Brown was supporting the Proposition but he’s on the PG&E payroll and the other was the California Chamber of Commerce, but PG&E is on their board.
Here’s Willie Brown’s editorial piece from Sunday’s Sac Bee:
[url]http://www.sacbee.com/2010/04/11/2668465/prop-16-would-protect-taxpayers.html[/url]
Also, a companion piece by John Geesman, member of the California Energy commission, 2002 to 2008, writing against Prop. 16, also from the Sunday Bee:
[url]http://www.sacbee.com/2010/04/11/2668466/prop-16-would-insulate-pge-from.html[/url]
We should put a proposition on the ballot that it would take 2/3 vote of the people to have PG&E be our gas & electric service provider.
Pillage Gas and Electric
enough said..