Never Again, Says Senator Mark Leno Aiming To Avoid a Repeat of PG&E’s Prop 16

pge.jpgTwo weeks ago, the voters of California said no to PG&E’s attempt to buy marketshares and avoid competition from public power.  Davis residents saw through the charade, voting against the measure by nearly an 80-20 margin.  However, PG&E pumped in more than 46 million dollars into a campaign aimed at deceiving the voters into support.  It nearly worked, but not quite.

Still Senator Mark Leno wants to prevent another close call.  Last week, he announced legislation that would prevent PG&E from using ratepayer funds to finance future political campaigns. The bill allows the corporation to continue participating in political campaigns, but stipulates that money derived from ratepayers cannot be used for political or public affairs expenditures.

During the Proposition 16 campaign, PG&E argued that it’s $46 million in spending on the ballot measure came from “shareholder funds” and from earnings that normally flow through to shareholders.

In February, PG&E reported that they would spending between $25 and $35 million on its campaign at a cost of $.06 to $.09 per share in shareholder money.  “PG&E Corp. will spend between $25 million and $35 million on its campaign to fight public power this year, according to its Securities and Exchange Commission filings released today.  PG&E Corp. will spend between $.06 and $.09 per share in shareholder money on costs “to support a state-wide ballot initiative requiring local governments to gain voter support before using taxpayer money to establish electric service,” the filings said.”

However, critics pointed out that virtually all of PG&E’s revenue is generated by its customers.  “PG&E’s whole campaign for Prop. 16 was based on lies, and the biggest lie of all was that ratepayers didn’t pay for it,” said Mindy Spatt of the consumer advocacy group TURN, The Utility Reform Network. “They did.”

As Bill McEwen from the Fresno Bee argued, “The utility claims otherwise, saying that the $35 million is from a reduction in shareholder dividends. But all dividends are straight out of ratepayer wallets.”

“PG&E launched a dangerous and misleading political campaign – with ratepayer funds – that had only one goal, to preserve the corporation’s monopoly,” said Senator Leno (D-San Francisco). “The state’s largest electrical and gas company should not be able to use ratepayer-generated profits to write special rules into the state constitution protecting it from competition. This measure ensures that local communities across the state have the ability to launch their own municipal power agencies, which will in turn encourage competition and help keep our rates low.”

Senator Leno’s bill requires PG&E to report its annual political and public affairs spending to the California Public Utilities Commission. The PUC will ensure that all political and public affairs spending identified in this report did not derive from ratepayer funds.

Is this a reasonable approach?  The San Jose Mercury News notes that this legislation would only be aimed at PG&E.  “As written, Leno’s proposed legislation does not apply to Southern California Edison or San Diego Gas and Electric, the state’s other investor-owned utilities.”

On the other hand, I have noted that it is simply too easy for companies of this sort to bankroll a signature campaign and then an ad campaign to get these type of measures on the ballot and hope to fool enough voters to get them passed.  This year between PG&E and Mercury Insurance, over $60 million was spent on failed campaigns to promote blatantly self-serving measures.

I would like to see real discussion about the initiative process in addition to declawing PG&E.  However, this bill would seem to at least be a good start.

It would be worth noting that such an effort could help Yolo County directly.  In 2006, the entire Yolo County was behind the effort to bring in SMUD in hopes of producing cleaner and more cost effective public power.  In response, PG&E spent $10 million in ratepayer money to defeat the effort.  Such efforts and costs likely encouraged PG&E to tilt the table even further in their favor.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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6 Comments

  1. itsme

    David,
    Thanks for reporting this. The PG&E fiasco is our most recent example of shameless corporate greed. And it is an absolutely local issue, no further than our “smart meters.” It’s a huge moral victory that we won over the corporate strangle hold that is suffocating our nation.

    It’s time to use the freedom of choice that defeat of Prop 16 allows; now’s our chance to get out from under PG&E’s control There are cheaper and greener alternatives.

  2. David Thompson

    In the annals of California politics the defeat of Proposition 16 is amazing. Thankfully, the electorate and ratepayers saw through the $46 million smokescreen. As a state approved private monopoly I think PG&E should bear the same restrictions as SMUD. As we know from our efforts, the DMUD and SMUD campaigns SMUD and the City were severely restricted in any spending on a public campaign but PG&E could spend $16 million without a problem. Regulated monopolies should not have the right to strengthen their monopoly.

    It is great that Mark Leno is taking this action. We’ll see where it goes.

    A thank you to Dan Berman and all of those who worked on DMUD and SMUD for achieving a local victory that had not been achieved in California for decades.

    As beating Prop 16 preserved alternatives, we now need to look again at local options for Davis.

  3. E Roberts Musser

    DMG: “Senator Leno’s bill requires PG&E to report its annual political and public affairs spending to the California Public Utilities Commission. The PUC will ensure that all political and public affairs spending identified in this report did not derive from ratepayer funds.
    Is this a reasonable approach? The San Jose Mercury News notes that this legislation would only be aimed at PG&E. “As written, Leno’s proposed legislation does not apply to Southern California Edison or San Diego Gas and Electric, the state’s other investor-owned utilities.””

    Because the bill singles out only one utility company, I think it may have difficulty passing constitutional muster. Why not make the bill apply to all utilities?

  4. roger bockrath

    I was under the impression that the use of rate payer monies by privately owned utilities for political purposes was already illegal. PG&E pushed hard to explain away the ten million spent to defeat Yolo’s attempt to gain public power. Would monies generated from P,G,&E’s huge real estate holdings be legal to use under the restrictions in Leno’s legislation? And does anybody know why So.Cal Ed. and San Diego, two other huge privately owned utilities are exempt from Leno’s proposed legislation? As public energy grows ever more attractive to the voters, they may also be faced with the same challenges as P,G,&E and may well try to use the same tactics to protect their monopolies.

  5. David Thompson

    When I said,

    “We’ll see where it goes” I had the same reaction as Elaine. How can you legislate for only one utility company in the state.

    Most observers of the traditional utility companies say that the business model will soon no longer work. When you add up, more efficient homes, growing use of solar, green efficiencies, alternative power sources,
    there is lower per capita demand.

    Davis should contemplate the next steps for community energy!

  6. J.R.

    This is a great start. While we’re at it, let’s also prevent public employee unions from participating in political campaigns. After all, by the same logic in this argument, the funding used by these unions comes from the taxpayer. The amount of harm they have done to the state is vastly larger than that done by PG&E.

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