Proposition 16 - PG&E's Scheme To Buy (More Of) A Monopoly

How far will PG&E go to protect its monopoly? Too far, judging from the huge amount of money PG&E is spending to buy votes for Proposition 16, and its misleading claims in support of its pet initiative.

Currently, communities can choose to stop taking service from PG&E by joining a municipal utility district, or taking the more limited step of buying their electricity from another provider by means of community choice aggregation. But even thinking about taking either of these steps will trigger a massive retaliatory response by PG&E, making getting out of the utility's stranglehold very difficult.

Just ask the folks in Davis, who tried to escape PG&E, only to be bombarded with something close to $15 million in spending by PG&E to defeat the effort at the polls. Which means it must have been worth more than $15 million to PG&E to keep them as captive customers.

PG&E has been using its standard scorched-earth litigation strategy against the not-s0-mighty South San Joaquin Irrigation District, which had the nerve to propose to provide electric service to 35,000 PG&E customers (at a lower cost).

And PG&E has pulled a bunch of dirty tricks, including scare tactics, threats, and bribes, to thwart the Marin Energy Authority's efforts to implement community choice aggregation. It got so bad that the CPUC slapped PG&E on the wrist for its behavior: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/115960.pdf

So it is already difficult to get away from PG&E to join a municipal utility or community choice aggregator, given that PG&E will do, say and spend just about anything to stop such a move. And now PG&E wants to make it even harder.

If passed, Proposition 16 would require a two-thirds vote for a municipal utility to expand its service territory (or possibly even to sign up new customers). PG&E is threatening to spend up to $35 million to pass the initiative. PG&E's arguments as to why we should vote for the measure are heartwarmingly philanthropic:

"1. What will this ballot initiative, Proposition 16, do?

Yes on Prop 16 – The Taxpayers Right to Vote Act – does only one thing… it ensures that voters will have the final say—by requiring a vote—when local leaders decide to spend public dollars or incur public debt to go into the retail electricity business.

2. Why is Prop 16 necessary?

When local governments enter the retail electricity business, it can cost taxpayers millions or billions of dollars in public money or debt. These are risky long term capital decisions that can impact local spending on other budget priorities, can increase consumer electric rates, and cannot be easily reversed...Especially in difficult times like these, why shouldn’t taxpayers have the final say on decisions of this magnitude?"

One can reasonably ask the question: why would PG&E spend $35 million to look out for the welfare of California taxpayers? Answer: They would not do so. They are spending it solely to look out for their own bottom line.

Instead of spending $15 million every time some community wants to bolt, they can spend $35 million one time to lock them all in. PG&E admitted this to its investors: http://pgandeballotinitiativefactsheet.blogspot.com/2010/03/peter-darbees-weird-prop-16-soliloquy.html. (Otherwise PG&E would likely face a shareholder suit for wasting its money.)

The only competitive threat to a monopoly is the possibility it will lose that monopoly. PG&E will spend whatever it takes to preserve its monopoly. Proposition 16 is designed to do that, by eliminating the only potential competition to PG&E. Proposition 16 will not provide voters a choice - it takes the real choice away. Vote no on Proposition 16.