Consumer Federation of California

Want an easy way to figure out who benefits from a ballot proposition? Follow the money.

PG&E wrote Prop 16 and contributed $34.6 million to win its passage.

The flood of Prop 16 TV ads don’t mention that the initiative was written to guarantee that PG&E’s high priced electricity monopoly will never be challenged.

Prop 16 makes it nearly impossible for locally elected officials to bypass PG&E and use the purchasing power of hundreds of thousands of local residents to negotiate discounts from independent power generation companies.

Prop 16 rewrites a 2002 law that PG&E supported at the time. The law allowed municipalities to contract for direct purchases of electricity (known as "community choice aggregation") at a future time, much as large business purchasers of electricity (factories, hospitals and the like) had been allowed to negotiate bulk purchase discounts before the energy deregulation debacle of 2000- 2001 brought direct access purchasing to a temporary halt.

That moratorium is nearing an end. San Francisco and a group of cities in Marin County are gearing up to negotiate bulk electric discounts for their residents.

PG&E decided it better stop municipal purchasing in its tracks before its customers acquire a taste for lower electric rates.

PG&E wrote a constitutional amendment into Prop 16 requiring a lopsided 2/3 majority vote of residents before elected local officials can negotiate lower electric rates. This means that any time a city wants to get better electric rates, look for PG&E to do exactly what it is doing right now: spend millions to confound voters into voting against their own best interests. And sadly, with PG&E’s deep pockets, it won’t be hard to frighten one-third of voters to block any new government proposal.

PG&E’s CEO never asked ratepayers for our approval before spending millions of our dollars to crush its competition. Maybe we should eliminate this double standard with a new law that would require ratepayer approval before PG&E can spend any money pushing a ballot initiative.

Sacramento etiquette calls for the big players in the lobbying world to exhaust legislative remedies before they turn to the ballot. If the legislation fails or is vetoed, then they can go directly to the voters and argue that the ballot initiative is the only avenue left.

PG&E is a big Sacramento player and it knows the rules of the game. But PG&E never asked the legislature to revise AB 117 (Migden), the 2002 law that allowed municipal bulk purchasing from electricity generators, and that also requires the cooperation of private utilities such as PG&E.

Instead, PG&E thumbed its nose at the legislature. With its $35 million bankroll, PG&E wrote Prop 16 with no input from labor or other potential allies. Now the utility stands virtually alone, fighting opposition from the California Labor Federation, AFL-CIO, and every environmental and consumer group that has weighed in.  The other private utilities, Southern California Edison and San Diego Gas and Electric, are noticibly silent on Prop 16. Maybe they are embarrassed by PG&E’s overreach.

Prop 16 is so badly drafted that it has garnered opposition from the California Association of Realtors, the California Manufacturing and Technology Association and the California Farm Bureau.

Legal experts believe the measure would bring home sales and small business job creation to a screeching halt in cities from Los Angeles to Palo Alto to Sacramento and elsewhere. Several million Californians live in these cities and dozens more from Alameda to Vernon that are served by government-owned municipal electric utilities. Most municipal utilities provide electricity to residents at lower rates than PG&E charges.

A provision of Prop 16 requires a two-thirds vote before new customers can obtain electric power in any municipal utility district. Realtors and small business groups fear that whenever a home is sold in Los Angeles, Sacramento and another municipal electric district, a two-thirds vote is needed before that homeowner can get an electric hook up. The same is true for any new business that opens in these cities. And since Prop 16 is a constitutional amendment, the legislature cannot tweak it to correct any drafting errors. At a time when we are inching towards recovery from a prolonged recession, the last thing California needs is a new impediment to housing sales or job growth.

It its editorial opposing Proposition 16 the San Francisco Chronicle said ‘If it passes, the beneficiary would be PG&E’s bottom line’ Prop. 16 does not level the playing field. It devastates it.’

The Los Angeles Times editorial states: ‘PG&E is expected to pour $35 million into its campaign for the measure, which features commercials and glossy mailers so misleading that they could have been written by the Iranian information ministry’This initiative is the very definition of special-interest lawmaking. Vote no on Proposition 16.’   

Prop 16 is a laboratory example of how the ballot initiative has been twisted from its initial purpose of serving citizen democracy into yet another weapon in the arsenal of an arrogant special interest.

Our votes should speak louder than PG&E’s millions. This June, send Prop 16 packing.