John Geesman served
on the California
Energy Commission
from 2002 to 2008.
Proposition 16 is an ugly distortion of the initiative process, the safety valve created nearly 100 years ago as the people’s tool to combat special interest influence in Sacramento.
Proposition 16 is sponsored by a single corporation, PG&E, the San Francisco-based utility.
Its sole purpose is to insulate PG&E from competition, permanently locking its business advantage into the state constitution. If passed, Proposition 16 can be changed only by another constitutional amendment approved by the voters.
It’s paid for – that is, every single nickel in the $35 million campaign budget – with money collected from PG&E’s captive ratepayers.
And, 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.
If passed, Proposition 16 will actually result in less voting than occurs under existing law – at least that’s the strategy PG&E’s CEO, Peter Darbee, recently boasted about to Wall Street investors.
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.”
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.
Data from a Wall Street Journal survey of 2009 CEO compensation confirm that PG&E’s $10.6 million CEO was paid 74 percent above the median for major utility CEOs. That’s 8 percent more than Goldman Sachs paid its CEO last year. With rates high enough to accumulate a $35 million campaign fund, PG&E can’t be allowed to buy its way into the California Constitution.