Public power backers cry foul over utility effort

CALIFORNIA - Pacific Gas & Electric Co. is funding a June ballot initiative that would amend California's constitution to make it much harder for cities and counties to offer residents another choice for buying their power.

The investor-owned utility, which has about 15 million customers in northern and central California, has already spent $6.5 million on Proposition 16, according to state campaign records. The company is the sole source of the initiative's funding.

The initiative would require a two-thirds, or super-majority, vote before local governments could create a new form of public power called "community choice aggregation," or CCA. These public power entities, made possible by state legislation passed in 2002 after the state's energy crisis, allow cities or counties to buy energy on the wholesale market to sell to residents.

PG&E says a constitutional amendment is needed to protect taxpayers and ratepayers from possible losses incurred by inexperienced local governments entering the risky power wholesaling business.

Opponents say PG&E is abusing the state's initiative process to protect its business interests.

"This is a complex and risky business and we believe taxpayers should have a voice in determining whether local governments take on that risk," Andrew Souvall, a PG&E spokesman, said. "If things don't work out, the local governments and taxpayers are on the hook for what could be millions of dollars."

The initiative would also force existing public power entitites — such as Los Angeles' Department of Water and Power and the Sacramento Municipal Utility District — to obtain a two-thirds vote from customers before expanding into new territory.

"Our constitution in California for many decades preserved a right for citizens to create their own electric district systems," said Bill Slaton, a member of SMUD's board, whose seven members unanimously oppose the initiative. "This initiative would effectively make it impossible for other communities to do what we've done in Sacramento."

Public power advocates said CCA gives communities the power to buy larger portions of their energy from renewable sources than is currently available from PG&E or other investor-owned utilities.

In May, the first CCA in California will begin providing an alternative to PG&E for about 10,000 customers in Marin County, north of San Francisco over the Golden Gate Bridge. Four other states — Massachusetts, New Jersey, Rhode Island and Ohio — also have laws allowing towns and cities to create a CCA.

When up and running fully, Marin Clean Energy would give almost 200,000 current PG&E customers in seven cities the choice of buying energy derived from 100-percent renewable sources for a higher cost, or a 25-percent renewable energy plan for rates mirroring PG&E's.

Energy will still be delivered over PG&E transmission lines, and the company would still handle billing. The company has launched an aggressive campaign in Marin County, warning customers of the "costly energy scheme being proposed by a new government entity."

"It's an absolute canard that city officials aren't qualified to do this sort of thing," said Marin County Supervisor Charles McGlashan, who also chairs the Marin Energy Authority, which oversees Marin Clean Energy. "One out of four Californians already get their power from their City Council today, and they pay less than we as PG&E customers do," he said.

Marin and San Francisco counties are two of about a dozen CCA plans in various stages of developement. San Francisco's public power plan is currently before the California Public Utilities Commission, and if approved would also cut into PG&E territory.

While CCA is a more recent public power arrangement, more than 2,000 cities and towns in the U.S. already provide energy to 45 million people, according to the American Public Power Association. In California, dozens of local governments are providing renewable and traditional sources of energy throughout the state.

Prop. 16 proponents say the initiative is not a criticism of public power, but an effort to give residents more voice in investment decisions made by their communities.

But officials in Marin and San Francisco, communities that want to offer residents far more renewable energy than PG&E, say it is simply about protecting PG&E's monopoly in their cities.

"Proposition 16 takes self-interest in a ballot initiative to a new level, by rewriting the constitution to protect a private corporation from competition from public entities," said Mark Toney, executive director of The Utility Reform Network, a nonprofit consumer advocacy group.

In contrast to PG&E's heavy spending, public power advocates have so far netted only $15,500 to battle Prop. 16, nearly all from TURN. City and county governments are not allowed to donate funds.

Severin Borenstein, co-director of the Energy Institute at the University of California, Berkeley's Haas School of Business, said it would be wise to require more public input than currently exists when local governments choose to enter a complicated new business venture. However, Borenstein thinks changing the state's constitution to require a two-thirds vote goes too far.

"There should be a very high bar for amending our constitution, and we should ask 'Does this rise to the level of a constitutional amendment?' It's hard to see how this clears that bar," Borenstein said.