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PG&E fights rise in public power

SAN FRANCISCO — Proposition 16 would change the California Constitution to require a two-thirds vote before local governments could use tax dollars to start a power agency, a requirement the initiative’s opponents say would serve only to further Pacific Gas & Electric Co.’s monopoly.

The initiative has received nearly $35 million in funding, all of it from PG&E, Northern and Central California’s dominant utility with about 15 million customers.

The company has fought the expansion of competing public power agencies in San Francisco, Marin County and other areas in recent years.

At issue is the emergence of a power market called “community choice aggregation,” which allows local governments to buy energy on the wholesale market and set their own rates for residents.

In Marin, where the state’s first community choice program began providing power on May 7, and in San Francisco, the program also offers the option of buying electricity from a larger percentage of solar, wind or other renewable sources than PG&E offers.

Marin’s community choice market will deliver power over the same transmission lines, while PG&E will continue to handle billing. Customers can opt-out of the local plan and choose PG&E at any time.

The utility sees the program as a threat to its business. It has mailed fliers to residents warning them of the “costly energy scheme being proposed by a new government entity” and has lobbied city officials against joining the community choice program.

The utility claims Proposition 16 is needed to give taxpayers more of a say about how taxes are spent and that community choice plans in Marin County and elsewhere expose public coffers to a volatile energy market.

“Under current law, our customers are not guaranteed a vote when their local government wants to spend public money to enter the electricity business,” PG&E spokeswoman Katie Romans said. “We think they should have a voice in that very important decision.”

A recent legal analysis by UC Berkeley found Proposition 16 does not protect taxpayers as much as it defends the markets of private utilities.

The analysis refuted PG&E’s claims, saying any city or county considering a community choice program must get public input and meet legal and regulatory requirements. Additionally, the California Public Utilities Commission must approve a specific community’s plan before it can proceed.

“Just over 100 years ago, our government granted local officials the right to form public utilities as a check on potential price gouging by power monopolies,” wrote Steven Weissman, co-author of Berkeley’s analysis and associate director of the university’s Center for Law, Energy and the Environment, which conducted the study. “Prop. 16 throws that check out the window.”

Opponents also say requiring a two-thirds majority vote would effectively prevent any new community choice programs because the threshold is too high. Robin Swanson, spokeswoman for the Yes on Proposition 16 campaign, disagrees, saying the high voter threshold will merely require cities and counties to get more input.

“A two-thirds majority is a common standard in California, used in hundreds of special tax and bond situations,” Swanson said. “Although California law currently does not require a vote to start a municipal utility, it does require a vote — a two-thirds majority — to sell one.”

When Marin Clean Energy’s program is fully functional, the county’s almost 200,000 PG&E customers in seven towns will have the choice of buying energy at a higher cost from 100 percent renewable sources, or go with a 25-percent renewable energy plan at rates mirroring PG&E’s.

“Our primary concern with Prop. 16 is that we want consumers to have a choice of public power, which offers lower rates than for-profit utilities like PG&E,” said Mark Toney, executive director of The Utility Reform Network, which has donated about $10,000 of the $74,000 raised by opponents of the initiative. “Prop. 16 will benefit only one corporation, PG&E, which is why PG&E is the sole funder of Prop 16.”

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