PG&E’s power trip

The electric utility pushes a ballot measure to keep SMUD out of territory

A proposed ballot measure being pushed by PG&E may kill SMUD expansion once and for all.

A proposed ballot measure being pushed by PG&E may kill SMUD expansion once and for all.

Photo By larry dalton

PG&E got a bad scare in Yolo County three years ago, when electricity customers nearly broke away and joined SMUD.

SMUD was appealing because its rates are cheaper—the publicly owned, not-for-profit utility doesn’t have to pay shareholders the way PG&E does. Its bid to offer electric service to ratepayers in Woodland, Davis and West Sacramento was supported by the elected officials of every local government in the area.

PG&E perceived that support as nothing less than a power grab. It poured millions of dollars into campaigns against ballot measures on the issue in both Sacramento and Yolo counties. The investor-owned utility won handily in Sacramento, but in Yolo County, SMUD expansion lost by less than 1 percent of the vote.

Apparently, that was too close for PG&E’s comfort.

The company is now pushing an amendment to the state’s constitution via ballot measure that would make it extremely difficult for publicly owned utilities like SMUD or Roseville Electric to expand into new territory. The “Taxpayers Right to Vote Act” would also hamper the ability of communities to create their own public utilities, an activity that ballot measure spokesman Greg Larsen likens to a government takeover.

“If communities choose to pursue any kind of government takeover, it can happen, but there has to be a vote,” he said.

Although there was a vote in 2006—four, in fact, two measures in Yolo County and two in Sacramento—those elections were not required by law. The proposed ballot measure would set the bar much higher than in the past, requiring voters to approve any takeover of an existing public power grid by a two-thirds vote. Raising the bar even further, the new law requires an election in the proposed new service area, along with a separate election in the existing service area, without exception.

The Taxpayers Right to Vote Act doesn’t give electrical ratepayers much of a choice, according to Elisabeth Brinton, director of communications for SMUD.

“It really goes to the heart of the right of people to have choices, that’s the intent of this measure,” she said. “It’s horrendous. The cost of doing these elections, the whole process is really extraordinary.”

The measure is in its early stages and is still being processed by the California attorney general. After that, it goes to the California secretary of state to be readied for signature gathering. If the measure goes forward, it will need nearly 700,000 signatures to qualify for the ballot, because it’s a constitutional amendment. Larsen said it could be before voters as early as June 2010.

Officially, the initiative is being pushed by a group called Californians to Protect Our Right to Vote. But the filing fees for the proposed measure were paid for by PG&E, and the utility is “definitely part of our coalition,” Larsen said.

Although it’s still early in the process, Larsen said any future campaign would likely rely on the services of Townsend Raimundo Besler & Usher, the same Sacramento firm which ran PG&E’s anti-public power campaigns in Sacramento and Yolo counties in 2006. Townsend Raimundo Besler & Usher is also the firm that ran Kevin Johnson’s successful mayoral bid in 2008 and is now trying to help one company obtain the rights to store 3 billion cubic feet of natural gas under the ground (and under houses and business) in the Avondale-Glen Elder neighborhood of Sacramento.

SMUD customers have historically paid lower electricity rates than PG&E customers, and they now have access to an energy mix that is slightly greener, using more power from renewable sources like wind and solar. While PG&E customers can try their luck complaining to the company’s customer-service department if they have a problem, SMUD ratepayers can directly harangue the utility’s board of directors at weekly public meetings, should they choose to do so.

Therefore, it’s not surprising that where SMUD and PG&E butt up against each other, PG&E customers occasionally try to defect. The proposed ballot measure would erect a wall making such defections difficult, if not impossible. It’s only fair, Larson says, because switching to public power generally requires the government agency to buy out the private agency’s land, power lines and other equipment.

“If a government goes to go and buy out a power system, the people wind up footing the bill,” Larsen said. “When governments want to get involved in the energy business, the voters should have the final say.”

Still, Larsen couldn’t name any occasion where the electorate had been denied a vote on a public power proposal. “You’re making it too complicated,” he said. “This measure simply sets up a standard.”

Voters have always had the final say on public power proposals, at least in the Sacramento region. In fact, as noted, there were four votes on SMUD’s expansion in 2006 alone. PG&E was successful in getting an advisory vote passed on that year’s June primary ballot. That measure called for a binding vote in both Sacramento and Yolo counties before SMUD’s expansion could be approved. Perhaps feeling the pressure from PG&E’s $3 million political campaign (the company paid $200,000 to popular former news anchor Stan Atkinson to speak out against public power), the SMUD board of directors acquiesced on the binding elections, making PG&E’s campaign redundant. Expensive, but redundant.

The real show came in the fall of 2006. Voters in Sacramento County were asked to approve SMUD’s expansion and said “no,” 62 percent to 38 percent. Voters in Yolo County were presented with two questions. The first asked voters permission to allow SMUD to annex the new territory. It won, barely, with 50.6 percent of the vote. The second question asked voters to approve SMUD as PG&E’s replacement, and was narrowly defeated, with a “yes” vote of 49.6 percent.

PG&E spent more than $11 million on the fall election, shattering local campaign-finance records. SMUD, being a public agency, didn’t spend any money on the political campaign, but local businesses and other public power supporters managed to raise a little more than $1 million.

Weeks before the vote, PG&E asked the California Public Utilities Commission for a rate increase, in part to reimburse the company for “customer retention” costs associated with fighting public power bids around the state.

There have been multiple attempts to set up a public power system in San Francisco, and PG&E has spent millions fighting them at the polls. An attempt by the South San Joaquin Irrigation District to set up a municipal electric utility district has been bitter, expensive and drawn out.

“You see people rebelling all over the place,” observed Susan Patterson, a former member of the SMUD board and one of the leaders of the 2006 campaign to expand public power into Yolo County. “This is PG&E’s attempt to put the final nail in the coffin for public power.”

In the past, attempts to form public utilities have met more success. In Sacramento, in 1923, 87 percent of Sacramento County voters overwhelmingly decided to form SMUD, carving out a huge hole in the heart of PG&E territory. In Folsom, in 1982, 72 percent of voters opted to leave PG&E and join SMUD.

However, only Folsom residents were asked to vote in 1982. Had the Taxpayers Right to Vote Act been in place then, requiring voters in the existing service territory to weigh in, the outcome might have been different.

So far, the ballot measure has barely been on the radar in Sacramento County. It’s been more visible in San Francisco. There, the San Francisco County Board of Supervisors approved a resolution condemning the PG&E initiative. The text reads, in part, “PG&E has a history of acting to maintain its monopoly in its service region, including opposing public power initiatives at the ballot.”

If the best defense is a good offense, PG&E may be onto something.

“SMUD can’t put any money into a political campaign,” Patterson noted. “But PG&E has a bottomless checking account.”