PG&E pushes its attack on clean power past some powerful opponents
BY REBECCA BOWE
Wednesday January 13, 2010

rebeccab@sfbg.com
GREEN CITY Pacific Gas & Electric Co. has spent some $5 million on a campaign for a ballot initiative that would hinder the creation of locally operated community choice aggregation (CCA) programs like Clean Power SF.
But the powerful utility picked a fight with some high-ranking officials in the process, and in recent weeks, the utility took a few lumps. With the initiative expected to qualify for the June ballot in the next several weeks, a battle of grand proportions is brewing between the utility giant and supporters of CCA programs, which can rapidly increase the number of clean-energy sources.
The first blow came in late December when California State Senate President Pro Tem Darrell Steinberg, Sen. Mark Leno, and six other senators sent a strongly worded letter to Peter Darbee, CEO of PG&E. The proposed initiative, called the "New Two-Thirds Vote Requirement for Local Electricity Providers," would change California's Constitution to require two-thirds of a community's voters to approve new CCAs. If passed, it could halt momentum toward greener, community-driven power programs that would challenge PG&E's monopoly.
In the letter, Steinberg and Leno warned Darbee in plain language to "refrain from pursuing this initiative," and reprimanded PG&E for making an end run around the Legislature by trying to use the ballot initiative process to alter a state law that was forged with the company's input and support. "To use the initiative process to pursue PG&E's self-interests ... calls into question your company's integrity," the letter states.
"I don't think anyone in Sacramento can remember a special interest so disrespecting the legislative process," Leno told the Guardian. The letter also questions the legality of PG&E's move. Assembly Bill 117, the 2002 legislation that enabled the creation of CCAs, specifically requires utilities to "cooperate fully" with CCAs.
"The statute's very clear: investor-owned utilities will not interfere with the creation of community choice aggregation," Leno said. "I'm not an attorney, but I can't imagine how anyone could build a strong argument that such an initiative is not interference."
Multiple calls to PG&E were not returned.
The next strike against the ballot initiative came in the form of a petition filed by San Francisco City Attorney Dennis Herrera on Jan. 11 urging the California Public Utilities Commission to clamp down on PG&E's hostile activity against CCAs. Herrera's office asked the CPUC to modify one of its decisions to explicitly forbid PG&E from sending out marketing materials, making misleading claims, or engaging in other activities that interfere with CCA implementation. The City Attorney's argument is that while PG&E previously supported AB 117, the company has since gone on the war path, so tougher restrictions are needed.
"The requested changes are urgently needed to prevent well-financed and broad-based utility attacks on CCA from rendering the Legislature's carefully crafted CCA law a meaningless piece of paper," the petition warns. There isn't much time to lose before PG&E's anti-CCA campaign goes into full swing, so Herrera requested an expedited review.
"The California Public Utilities Commission exists to police giant utilities, to assure that their monopoly advantages aren't abused to exploit consumers or frustrate the policy objectives of our state lawmakers," Herrera said. "Yet that is exactly what has happened since PG&E locked CCA into its crosshairs. It is critical for state regulators to move quickly and decisively to tighten regulations, and restore teeth to the law."
Meanwhile, San Francisco's emerging CCA program, Clean Power SF, passed a milestone recently when it closed the bidding process and accepted five applications from prospective electricity service providers. A panel of four experts recently began reviewing the proposals, noted CCA Director Mike Campbell, and contract negotiations with the candidate who receives the highest score could start in February. "We're aggressively moving forward," he said.
In the long run, Campbell said CCA rates will likely be more stable than PG&E's because they'll be better insulated from the unpredictable fluctuation of natural gas pricing, which is tied to the production of crude oil.
"By being more renewable-energy based than PG&E, that's a great hedge against what makes prices volatile," Campbell explained. "The cost for renewable energy is upfront capital cost. Once you've made that investment, the fuel is something you don't have to pay for."
Sup. Ross Mirkarimi, who has been instrumental in moving CCA forward, told the Guardian that the fight brewing now has implications that reach beyond San Francisco. "If PG&E wins, it will completely subvert indefinitely our ability to launch and grow a clean, green energy movement. PG&E wants to be the one to own that movement, which means that it won't ever happen to the degree that any of us would like," he said. "If PG&E prevails in California, it sends the same kind of message to other private utility companies."
Leno said he hoped the letter would have an impact, saying that if the CEO ignored a letter from the leader of the Senate, "it would make quite a statement."
But Mirkarimi wasn't so sure. "PG&E is so arrogant, they don't give a damn," he said. "They don't respect cities' rights. They're bullies. And the only way that you can stop a bully is to deliver a bloody nose — the proverbial, metaphoric bloody nose — or they will continue to run roughshod over every California city."
When asked if he thought the current opposition was sufficient to challenge the initiative, Mirkarimi laughed. "Are you kidding?" He said. "We're at the posse level. We need to be growing an army."

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