Fighting dirty

Pub date November 16, 2010

One by one, representatives from California local governments who had gone toe-to-toe with Pacific Gas & Electric Co. recounted their war stories. They were weary, fatigued, and uncertain of the future. Their resources had been depleted by hefty legal expenses, and they were forever caught up in the game of trying to undo the damage of misinformation campaigns whipped up against them by PG&E. None had ever suspected that following state law would be so arduous.

At a Nov. 8 hearing of the California Senate Select Committee on Renewable Energy, held in San Rafael, officials from the San Joaquin Valley, Marin County, and San Francisco spoke about challenges they faced trying to initiate community choice aggregation (CCA) programs, which would create alternative electricity providers to PG&E.

In accordance with Assembly Bill 117, which allows local governments to purchase power in bulk and distribute it to a customer base using the infrastructure and billing systems operated by investor-owned utilities, representatives from local government agencies said they pursued CCAs to bolster local economies and benefit the environment — but quickly fell prey to fierce marketing campaigns.

So far, PG&E hasn’t faced any real consequences for trying to derail its competitors using unethical and sometimes illegal tactics, and the director of the California Public Utilities Commission, Paul Clanon, did not commit to imposing fines or sanctions against the company.



Despite a requirement under AB117 that utilities must “cooperate fully” with CCA implementation, agency representatives testified that PG&E consistently tried to obstruct their success. The San Joaquin Valley Joint Power Authority’s CCA effort was suspended after a protracted legal battle, and has yet to be revisited.

At the hearing, Sen. Mark Leno listened attentively and offered sympathetic words of encouragement. “It is a superhuman accomplishment that you are even here with us today,” he jested after Dawn Weisz, interim director of the Marin Energy Authority (MEA), finished describing a litany of tactics the monolithic utility employed against Marin’s CCA.

Marin’s experience may foreshadow what’s in store for San Francisco. CleanPower SF, the city’s CCA program, is picking up steam again after an initial attempt to hire a contractor failed to yield an acceptable agreement. On Nov. 5, the San Francisco Public Utilities Commission (SFPUC) announced it had received four responses to a second RFP for an electricity service provider to administer the city’s CCA.

Already San Francisco has weathered some attacks. Sup. Ross Mirkarimi, who chairs the Local Agency Formation Commission (LAFCo) and has been a key figure in moving CCA forward, characterized Marin and San Francisco as “brothers and sisters in arms,” saying, “We would share what we knew of what we could expect, because we were no strangers to these tactics.”

Weisz noted that early on, PG&E sent lobbyists to meet privately with local elected officials. Soon after, the company upped the ante with a negative marketing campaign, distributing mailers that contained misleading information about the program. Their activity prompted a rebuke — but no fines — from the CPUC. “I sent PG&E a letter to say knock it off,” Clanon said at the hearing.

PG&E also set up a phone-banking operation to dial up every prospective CCA customer in Marin County and encourage them to opt out of the program and used false information to persuade customers to stick with PG&E service, Weisz charged. “Many were led to believe that their lights wouldn’t go on if they didn’t opt out,” she said.

Once the CCA was in operation, PG&E imposed a delay on the billing process that made one month’s bill artificially low and the subsequent bill abnormally high, making it appear that CCA rates were higher than PG&E rates. This gaffe, which the company chalked up as a technical error, amounted to a sleight-of-hand: “Our rates were set to match PG&E rates,” Weisz explained.

PG&E did not return calls seeking comment.

Against all odds, Marin County is forging ahead with a power program that offers a 26.5 percent renewable energy mix, with 78 percent of its power generated without greenhouse gas emissions. State records show that only 14 percent of PG&E’s energy comes for renewable sources, failing to meet a state requirement that utilities get at least 20 percent of their power from such sources.

Charles McGlashan, a Marin County supervisor who chairs the Marin Energy Authority, noted that implementing a CCA was the most effective method the county could have employed to reduce greenhouse gas emissions, yielding an estimated 500,000-ton reduction of greenhouse gas emissions annually.

While the potential exists for other municipalities to follow suit, PG&E smear campaigns will likely discourage similar projects. “This is a powerful opportunity that has been virtually destroyed by the antics of PG&E,” McGlashan said. “It has had an extraordinary chilling effect on the political leaders to even embark on such an enterprise.” Later he added, “I’m only doing it because I’m so hell-bent on answering the children’s questions about climate change.”



Meanwhile, in San Francisco, CCA advocates are getting ready to batten down the hatches. “We’re under no illusion — PG&E will compete fiercely,” San Francisco Public Utilities Commission spokesperson Charles Sheehan told the Guardian. He said the city was taking a proactive approach by conducting early outreach to residents and holding public informational meetings about CleanPower SF.

The SFPUC has received four bids from prospective electricity service providers. The respondents are Constellation Energy Commodities Group, Shell Energy North America, Power Choice Inc. (which was selected during the last RFP process but was unable to secure a binding agreement with the city), and Noble Americas Energy Solutions, formerly known as Sempra Energy Solutions. During the Senate hearing, San Francisco CCA director Mike Campbell noted that the city expected to complete a scoring process and select one of the four by the end of the year. The goal is to be fully operational by 2011, he added.

Leno predicted resistance from PG&E. “It’s like a storm coming in,” he said. “We have no doubt of its arrival. They have endless opportunities for nefarious creativity.” He queried Clanon on why the PUC wouldn’t levy fines or sanctions against the utility for the negative campaigns it waged in Marin, as a way to signal that such activity wouldn’t be tolerated in San Francisco.

Clanon did not commit to taking such an action. “That’s a choice about how you get the right behavior,” he said. He noted that the CPUC issued a decision last May preventing the utility from distributing false or misleading information about CCAs or illegally soliciting opt-outs. Clanon warned that PG&E might not be deterred by “fines and sanctions and specific rules.” Pressed on this point later, Clanon told the Guardian that imposing fines or sanctions “would take a lot of resources by us” at a time when the state agency is consumed with other pressing issues, such as the aftermath of the San Bruno explosion caused by a PG&E gas pipeline rupture. “If you set a rule, more people get around the rule,” he said.

Even if the state regulatory body doesn’t hold PG&E’s feet to the fire, Mirkarimi won’t hold back. “We’re tired of the thuggery. We’re tired of the bullying,” he said. He alluded to the Raker Act, a 1913 act of Congress that allowed San Francisco to build the O’Shaughnessy Dam and draw water from the Hetch Hetchy Reservoir under the condition that no private profit was derived from the development, saying the arrangement had been subverted by PG&E. “We should be able to chart our own energy destiny,” Mirkarimi said.