California ballot prop would force state takeover of utilities

by Chris Clarke,

Activist Ben Davis, Jr., who led the 1980s initiative campaign to close the Rancho Seco Nuclear Power Plant near Sacramento, now has an even more ambitious initiative project in the works.

The measure, which was cleared for signature-gathering Monday by Secretary of State Debra Bowen, would abolish the state’s investor-owned power companies — including Southern California Edison (SCE), Pacific Gas and Electric (PG&E), and San Diego Gas and Electric (SDG&E), and replace them with the publicly owned "California Electrical Utility District."

The measure must gain 504,760 voter signatures by July 1 to qualify for the ballot.

If the ballot measure gains the needed number of signatures and then wins voter approval, all investor-owned utilities would be replaced by the state-owned utility, managed by an 11-member board of directors elected from districts across the state. Existing publicly owned utilities such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District would not be affected by the ballot measure, though they could choose to join the California Electrical Utility District if they wished.

According to the Secretary of State’s office, the measure would give the state district the power to "acquire property, construct facilities necessary to supply electricity, set electricity rates, impose taxes, and issue bonds."

One thing counting in favor of the concept behind the measure: removing the profit motive from generation and transmission would likely allow a renewable energy policy less skewed toward remote utility-scale projects and toward more efficient, effective generation near demand.

The state’s Legislative Analyst’s Office (LAO) is required by law to assess the likely financial impact of all initiatives, but this one is so broad, and would affect so many varied government activities and agencies, that the LAO pretty much threw up its hands:

Pursuant to subsection (c) of Section 9005 of the Elections Code, we are informing you that, in our opinion, a reasonable estimate of the net fiscal impact of this proposed initiative measure cannot be prepared within 25 working days from the date this proposed initiative was received. Given that the measure grants such potentially broad authority and discretion, the full scope of the changes this measure would put in place is highly uncertain.

As required by Section 9005, we are informing you that it is our opinion that the measure would result in a substantial net change in state and local finances.

Just by way of example: the initiative would potentially throw a monkey wrench into implementation of the state’s Renewable Portfolio Standards, which are written with investor-owned utilities in mind. Power Purchase Agreements with solar and wind developers would need to be reassigned, and net-metering arrangements with thousands of individual property owners. Staff time spent on the change at the California Energy and Public Utilities Commissions would likely be considerable.

In other words, it would be a big project.

That’s if the initiative makes it through the election. The measure would essentially shut Southern California Edison down entirely, possibly excepting the company’s power plants, and it’ll carve off the electrical activities of PG&E and SDG&E, leaving those two companies with just their gas distribution to get by. California can thus expect that if the measure makes the ballot, the campaign to oppose it will almost certainly leave previous campaign spending records in the dust. These are billion dollar companies that will not let themselves be nationalized without a fight.

Whatever happens, if Davis’ utility initiative makes the ballot it’s going to be an extremely interesting campaign season.