The last several weeks the television and radio air waves have been heavily loaded with big dollar advertising placed by Meg Whitman in her quest for the Republican nomination for Governor and by special interests backing Proposition 16. Money sure talks this election cycle.
The Proposition 16 advertisements begin with the message of “Did you know that municipalities can decide to go into the electric delivery business at public expense without a vote of the people?” The message then delivered is that taxpayers need to be called upon to vote on these kind of public policy decisions and Proposition 16, marketed as the “Taxpayers Right to
Vote Act”, will require a public vote on any municipal decision to go into the electricity delivery business.
After seeing this advertisement on TV several times, I began to get suspicious. First, the name “Taxpayers Right to Vote Act” hit me as an attempt to capitalize on motherhood and apple pie. Second, I still believe in representative government (even in these troubled times) and believe few voters would be analytical enough to make a business decision on a matter like this.
When I did some on-line research, I discovered that the pro-Proposition 16 advertisements did not mention that not only would such a public policy issue go to the voters, it would require a 2/3rds vote for approval. No majority rule on this one. Geeze, we don’t even elect most of our elected officials by a 2/3rds vote!
In some cases a municipal government is the provider of electrical service. The City of Anaheim and the City of Riverside for instance. Also, Alameda, Azusa, Palo Alto and many others. So, it is being done now in some places in California. So, what is going on here – why is this an issue?
The special interests backing Proposition 16 mentioned at the end of these advertisements include the Pacific Gas and Electric Company (PG&E) and the California Chamber of Commerce. A web search also found that the measure is endorsed by the California Taxpayers Association, but that the money to fund the yes on 16 campaign is coming from PG&E only.
A number of State legislators and cities have gone on record as opposed to Proposition 16, and some have reportedly signed a letter to PG & E President Peter Darbee calling the campaign misguided. Also, several local government entities, including the City and County of San Francisco, have filed a suit to remove Proposition 16 from the ballot. The primary argument is that the proposition’s language is misleading and the only solution is to remove it from the ballot. A December 28 article in the Business Section of the Los Angeles Times called Proposition 16 a stealthy power play by P G & E and said “it illustrates what California’s initiative process has come to. It is a plaything of powerful interests using deception to line their pockets.”
Does Proposition 16 and the campaign financing by a provider of electrical energy (PG&E) pass the giggle test? Not to me it doesn’t. It seems a very transparent attempt to mislead the public so that the business of a special interest – in this case PG & E – can be protected. I say no.
Click here for the No on Prop. 16 website.
OverbutNotOut thanks for this post!
I am like you…I distrust groups that hide who they are really representing, especially when they use nice, flowery, catchy phrases that may NOT necessarily represent who they truly are representing, or what they are intending to accomplish..
Seems like PG&E is trying to lock-up a “monopoly” in California, by creating a higher threshold for the voters, in order for the voters to agree to do anything…and thus INACTION or inability to pass something by the voters, would allow PG&E to lock in the market.
But is this necessarily bad, especially as it pertains to utilities?
Can someone else shed more light on this????
Per the 10-K (ANNUAL AUDITED report)filing with the SEC (Securities & Exchange Commission):
http://sec.gov/Archives/edgar/data/75488/000100498010000016/form10k.htm
EMPLOYEES:
At December 31, 2009, PG&E Corporation and its subsidiaries had 19,425 regular employees, including 19,401 regular employees of the Utility. Of the Utility’s regular employees, 12,648 are covered by collective bargaining agreements with three labor unions: the International Brotherhood of Electrical Workers, Local 1245, AFL-CIO (“IBEW”); the Engineers and Scientists of California, IFPTE Local 20, AFL-CIO and CLC (“ESC”); and the Service Employees International Union, Local 24/7 (“SEIU”). One IBEW collective bargaining agreement expires on December 31, 2010, and the other expires on December 31, 2011. The ESC collective bargaining agreement expires on December 31, 2011. The SEIU collective bargaining agreement expires on July 31, 2012.
FEDERAL Energy Regulation
As a public utility holding company, PG&E Corporation is subject to the requirements of the Energy Policy Act of 2005 (“EPAct”), which became effective on February 8, 2006. Among its key provisions, the EPAct repealed the Public Utility Holding Company Act of 1935 and enacted the Public Utility Holding Company Act of 2005 (“PUHCA 2005”). Under PUHCA 2005, public utility holding companies fall principally under the regulatory oversight of the FERC, an independent agency within the U.S. Department of Energy.
PG&E Corporation and its subsidiaries are [EXEMPT]from all requirements of PUHCA 2005 other than the obligation to provide access to their books and records to the FERC and the CPUC for ratemaking purposes. These books and records provisions are largely duplicative of other provisions under the Federal Power Act of 1935 and state law.
STATE Energy Regulation
PG&E Corporation is not a public utility under California law. The CPUC has authorized the formation of public utility holding companies subject to various conditions related to finance, human resources, records and bookkeeping, and the transfer of customer information. The financial conditions provide that:
· the Utility cannot guarantee any obligations of PG&E Corporation without prior written consent from the CPUC;
· the Utility’s dividend policy must be established by the Utility’s Board of Directors as though the Utility were a stand-alone utility company;
· the capital requirements of the Utility, as determined to be necessary and prudent to meet the Utility’s obligation to serve or to operate the Utility in a prudent and efficient manner, must be given first priority by PG&E Corporation’s Board of Directors (known as the “first priority” condition); and
· the Utility must maintain on average its CPUC-authorized utility capital structure, although it can request a waiver of this condition if an adverse financial event reduces the Utility’s common equity component by 1% or more.
The CPUC also has adopted complex and detailed rules governing transactions between California’s electricity and gas utilities and certain of their affiliates.”
COMPETITION:
Historically, energy utilities operated as regulated monopolies within service territories in which they were essentially the sole suppliers of natural gas and electricity services. These utilities owned and operated all of the businesses and facilities necessary to generate, transport, and distribute energy. Services were priced on a combined, or bundled, basis, with rates charged by the energy companies designed to include all the costs of providing these services. Under traditional cost-of-service regulation, the utilities undertook a continuing obligation to serve their customers, in return for which the utilities were authorized to charge regulated rates sufficient to recover their costs of service, including timely recovery of their operating expenses and a reasonable return on their invested capital. The objective of this regulatory policy was to provide universal access to safe and reliable utility services. Regulation was designed in part to take the place of competition and ensure that these services were provided at fair prices.
In recent years, energy utilities have faced intensifying pressures to unbundle, or price separately, those services that are no longer considered natural monopolies. The most significant of these services are the commodity components—the supply of electricity and natural gas. The driving forces behind these competitive pressures have been customers who believe that they can obtain energy at lower unit prices and competitors who want access to those customers. Regulators and legislators responded to these forces by providing for more competition in the energy industry. Regulators and legislators, to varying degrees, have required utilities to unbundle rates in order to allow customers to compare unit prices of the utilities and other providers when selecting their energy service provider.
See an expanded discussion of competition factors starting at page 7 of link above.
Francisco “Paco” Barragan CPA, CIA
DAMN, OBNO! I’m in the middle of my own NO on Prop 16 post!
Well, I’m still doing it, I’ve got some other points you didn’t hit.
Our right-wing Juice Brother Larry is against it too – now that’s across the spectrum!
http://orangejuiceblog.com/2010/03/law-suit-filed-to-disqualify-proposition-16/
Brother Vern.
We need to educate our readers. Before casting your votes check out who is funding these ballot measures. In this case I recall that PG&E was the sole financial supporter of Prop 16.
Vern and I agree. Vote NO on prop 16.
Vern Nelson:
Will you be addressing how this potential monopoly, if Prop 16 passes, may affect the prices consumers in California pay?
I think this would be helpful to readers.
Francisco “Paco” Barragan
Paco, that’s a good thing to look at too, and my story is pretty long already. Maybe you can look at that aspect next week or so… Have a whole OJ tag team against Prop 16 – Vern, Paco, Larry, and OBNO.
Remember, Prop 17 is just as bad of a corporate scam, that one from Mercury Insurance.
Friends don’t let friends vote for Props 16 & 17.
Proposition 16 is the most disturbing and shameless abuse of the initiative process I have ever seen. When I noticed that the “Taxpayer’s Right to Vote” measure amended the constitution to require a 2/3 majority, I smelled a rat. Some checking revealed that this is nothing more than a cynical attempt to mislead the public into rejecting one its most effective services: municipal electric power. I live in Riverside, and when Edison was cranking up its rates a few years ago (while the power grid was being manipulated by Enron), our rates remained constant. Vote NO on prop 16 and let Peter Darpee and PG&E know that any further attempts at deception will simply be a waste of money. And shame on you, Mr. Darpee– you’re a dirt bag.