PG&E

The year in blog

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By Steven T. Jones
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It’s been a big year on this blog, as I discuss in this week’s paper. To go along with that story, I’m including in this post a ridiculous number of links to issues and stories that we covered the most in 2009, as well as some to one-time or limited coverage stories that we liked. We hope you find this useful.

Fiscal issues
The year began with the Board of Supervisors calling for a special election on revenue measures to prevent deep cuts to city government, but that effort was thwarted by Mayor Gavin Newsom’s preference for hollow fiscal gimmicks and opposition to general tax increases. Similarly, on the state level, Republican opposition to revenue side solutions has all but destroyed the California Dream — including the state’s commitment to supporting quality, affordable higher education – prompting calls for a constitutional convention in the near future, as the political dysfunction leads to bad decisions about critical state resources.

Police oversight and crackdowns
The fatal shooting of Oscar Grant by a BART police officer a year ago led to a long saga of promised civilian oversight that still hasn’t been delivered. In the meantime, San Francisco got a new police chief who promised reforms, but has so far delivered only crackdowns, pushing the city closer to the Death of Fun as popular events and nightclubs face an ever more restrictive enforcement environment. Police also failed to own up to a bungled murder investigation.

City life
The face of San Francisco began to change in 2009, for better and worse. Lennar and PG&E continued to corrupt the local political system, compromise the promise of green power, break promises, and subvert popular will. But partially countering their corporate malevolence were grassroots efforts to reclaim the streets and promote alternative transportation options (despite a major defeat this year for those who want motorists to pay for more of their societal impacts), including the long–awaited construction of bicycle projects after a three-year ban.

PG&E’s stealth initiative gets some press

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By Tim Redmond

Pacific Gas and Electric Co’s $3 million ballot-box attack on public power is starting to get some press attention. The L.A. Times today has a nice story by Michael Hiltzik that points out the essential lie:

What are the chances that PG&E ginned up this innocuous-sounding initiative, shrouding its own involvement behind a scrim of public relations and law firms, largely to preserve its monopoly against competition from public power agencies? I’d say 100%.

It’s going to take a huge amount of effort to defeat this thing, but at least (some of) the media is starting to notice.

PG&E’s morning line of bullshit

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By Tim Redmond

KQED’s Forum had a show on Marin County’s clean energy efforts and community choice aggregation this morning; the audio should be posted in an hour or two here. It gave me an opportunity to hear the greatest line of Pacific Gas and Electric Co. bullshit that I’ve come across in a while.

The director of the Marin Energy Authority, Dawn Weisz, talked about how her agency will be able to offer renewable power to Marin residents at a cost competitive with PG&E. Paul Fenn, the president of Local Power, pointed out that there’s not a lot of risk here, and that public power agencies routinely offer cleaner power at lower prices than PG&E, which can’t even meet the state’s weak renewable energy standard.

Then up pops PG&E flak David Rubin, who has the most amazing line: PG&E, he says, loves clean energy and really wants to help the good people of Marin and San Francisco and the rest of California reduce their carbon footprints. But gee, he’s concerned about CCA — not, of course, because it might cause PG&E to lose customers (perish the thought) but because nice ol’ PG&E is “worried about the risks to the taxpayers and the community.”

Ladies and gentlemen: Pacific Gas and Electric Company has never worried about risks to taxpayers and communities. The company worries only about its bottom line — and as host Scott Shafer (too gently) pointed out, CCA — like any form of public power — is a serious threat to PG&E’s profits.

That’s what the company is sponsoring a ballot initiative that would essentially end public power in California by mandating a two-thirds vote of the public for any new municipal power efforts.

PG&E has jacked up rates, gone bankrupt, provided lousy service and screwed San Francisco for decades. Now they nice folks over there are worried about the taxpayers.

Amazing. And this is the line that we will hear in the upcoming campaign to pass the PG&E ballot measure.

PG&E attack mailer puts City Hall on defensive

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PG&E attack mailer puts City Hall on defensive

GREEN CITY On a Pacific Gas & Electric Co. conference call in late October, with top PG&E executives and analysts from Goldman Sachs, Deutsche Bank, and other prominent investment firms on the line, PG&E president Chris Johns explained how a company-sponsored ballot initiative could save millions of dollars for the utility.

“We have faced potential takeovers multiple times over the last several years and we have had to expend significant resources to oppose these efforts,” Johns explained, referring to attempts by public agencies to set up independent electricity programs that threaten to compete with PG&E. “The success of this initiative, if placed on the ballot, could significantly reduce the need for taxpayers and utilities to oppose these local government takeover attempts.”

His comments appeared in a transcript from an earnings call posted on a financial Web site called SeekingAlpha.com. When pressed by an analyst about how PG&E had come up with the idea, company CEO Peter Darbee chimed in. “What occurred to us was we were repeatedly faced with this, and we were spending significant amounts of money year after year,” Darbee said, according to the transcript. “So we asked ourselves: what would be something that could discourage this over the longer term?”

What surfaced was a proposal for a statewide ballot initiative that would amend the state constitution to require a two-thirds majority vote at the ballot before any local government could develop its own electricity program. With such a high hurdle in place, efforts to move forward with publicly-owned power programs would essentially come to a standstill. But with San Francisco’s own stab at it expected to get underway long before the proposed initiative is placed on the ballot, PG&E is back to its default tactic of pouring millions into an opposition campaign.

San Francisco’s community choice aggregation (CCA) initiative, called CleanPowerSF, took a leap forward last month when a request for proposals (RFPs) went out to potential electricity service providers. The program aims to provide 51 percent renewable electricity by 2017, a meaningful step toward reducing greenhouse gas emissions.

But on the heels of this milestone, a wave of mailers bearing PG&E’s name in fine print crashed into San Francisco homes and businesses, screaming “Business Beware” in 1.5-inch type and proclaiming CleanPowerSF to be a “costly energy scheme.” The mailer cites a city controller’s report projecting that customer bills could be 24 percent higher under CCA.

But the San Francisco Local Agency Formation Commission (LAFCo), which is working in partnership with the San Francisco Public Utilities Commission to craft the emerging power program, responded in a press statement that this claim is misleading, since a fee structure has not yet been nailed down. While the controller’s report also noted that it was too early to say just what the pricing structure would be, it’s been a primary goal of the city’s CCA all along to offer customer billing rates that meet or beat PG&E prices.

Meanwhile, the city appears ready to fight back — and questions have already been raised about whether it was legal to distribute the attack mailer. Sup. Ross Mirkarimi, who chairs LAFCo, announced at the Dec. 15 Board of Supervisors meeting that he was requesting that the city attorney examine whether PG&E had violated state law by distributing the mailer. According to the state law that laid the groundwork for CCAs to exist, investor-owned utilities are required to “cooperate fully” with the public power efforts of cities. “PG&E has blanketed this city … with mailers that distort and misrepresent what CCA is doing,” Mirkarimi said. “I believe this is a potential violation of California Public Utility Commission law.”

Several days before Mirkarimi’s announcement, the Guardian received confirmation from City Attorney Dennis Herrera that his office is looking into the matter.

The mailer included a link to the Web site CommonSenseSF.com, launched by an entity called the “Coalition for Reliable and Affordable Electricity.” A call to Townsend, Raimundo, Besler & Usher, a Sacramento public-relations firm that has worked with PG&E in the past, revealed that this coalition is one of the firm’s clients, and that the person handling that client is Bob Pence. The proponent listed on the statewide ballot initiative is Robert Lee Pence — evidently the same person. The Guardian left a message for Pence inquiring who, besides PG&E, the coalition members are (the mailer claims there are 50,000), but he did not return the call. Multiple calls to PG&E were not returned either.

Meanwhile, the Guardian has received a handful of anecdotal reports that when clipboard-wielding signature gatherers were out on the streets circulating a petition in support of the PG&E-backed ballot initiative, people were fed some fishy stories about what the proposed constitutional amendment would actually do.

A voter who lives in Bakersfield contacted the Guardian to say she’d signed the petition because she was told that the ballot initiative would limit PG&E expansion — but she later did some research and found that PG&E was the primary force behind it, so she called the Registrar of Voters to have her name struck from the list.

Mark Toney of the Utility Reform Network told the Guardian that he’d also been misinformed. But as someone familiar with the issue, he knew better. “I ran across signature gatherers in Emeryville. They told me that if I signed the petition, I’d be supporting a two-thirds majority vote to raise PG&E rates,” Toney said. “I said, ‘Well that’s interesting. The language here doesn’t say PG&E at all.

John Srebalus of Pasadena wrote in an e-mail that he was also misled by a signature gatherer. After he signed a petition to legalize marijuana, he said the woman with the clipboard flipped a few pages and asked him to sign again, as if in duplicate. But there was a rubber band securing the top half of this second page, hiding the text. When he peeled it back, he found that it was actually PG&E’s ballot initiative, which he had already refused to sign once before.

According to a source familiar with the campaign who asked not to be named, the petition was a particularly hard sell for signature gatherers, many of whom stake their entire livelihoods on earning less than $2 per signature. According to this individual, the erratic sales pitches caught on like wildfire because without a compelling hook, it was nearly impossible to convince random passersby to support something that came off as convoluted and wonky. This person said PG&E became alarmed when it caught wind of all the distorted representations and tried to put a stop to them.

Campaign spokesperson Greg Larsen told the Guardian he hadn’t heard anything about that, but he did emphasize the importance of the signed document, as opposed to the signature gatherers’ pitch. “The hope is that you read what you’re signing,” he said. “That’s really what the issue is — it’s what’s on this piece of paper.” Larsen added that the campaign had submitted 1.1 million signatures, “far in excess of the number of required certified signatures” to have the initiative placed on the ballot.

LAFCo: “PG&E’s claims have no basis in fact or reality”

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By Rebecca Bowe

The SF Weekly once made up a story on its Snitch blog about how LAFCo is the Guardian’s imaginary friend (this was back before they had imaginary delivery vehicles). So it’s kind of ironic that LAFCo should be the one to respond to an attack mailer paid for by Pacific Gas & Electric Co. which has quotes from an SF Weekly story splashed all over it.

The PG&E-funded mailer even borrows from the language of that Weekly article, calling CCA a “scheme” after the title of the piece, “Green Scheme,” and telling voters that the program will be implemented “whether you like it or not,” which sounds a lot like a line from the Weekly article, which says, “like it or not, you’re already signed up.” Given all this striking similarity, it’s almost like the Weekly is PG&E’s very own imaginary friend.

LAFCo is the Local Agency Formation Commission, the driver behind San Francisco’s Community Choice Aggregation program, which a “coalition” financed by PG&E attempted to shoot full of holes in a smear campaign we told you about yesterday.

LAFCo’s response to PG&E’s mailer is posted below.

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PG&E Continues Campaign against San Francisco’s Clean Energy Program
Latest Salvo from PG&E is riddled with False Assumptions and Deceptive Marketing

SAN FRANCISCO, CA – On December 9, 2009, San Francisco businesses received a direct mail piece from the “Common Sense Coalition.” In it, the alleged “Coalition” critiques the City’s Community Choice Aggregation plan to provide cleaner, more renewable energy to its residents and businesses through a newly proposed clean energy program to the businesses and residents of San Francisco. Financed by Pacific Gas and Electric Company (PG&E), the mailer makes several specious economic claims sourced from outdated documents, including a 2007 City Controller’s report. However, that very same report states that the program “has not yet advanced to the stage where any definitive economic impact statement can be made. A detailed economic impact assessment will not be possible until the RFP process is complete.”

The City just issued its own comprehensive and through RFP four weeks ago and responses are due on December 29th. There is no set contract with an energy service provider and more importantly, no structured, long-term rate plan has been formulated. Consequently, PG&E’s claims have no basis in fact or reality.

That’s funny, they didn’t mention climate change

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By Rebecca Bowe

“The war with PG&E over clean energy is now fully on folks.”

That’s what local public power activist Eric Brooks had to say in a widely distributed email to alert green-power advocates that Pacific Gas & Electric Co. has started a smear campaign against San Francisco’s community-choice aggregation program, CleanPowerSF.

A “coalition” backed by PG&E recently sent glossy brochures to San Franciscan’s mailboxes, and launched a Web site called CommonSenseSF.com. Based on the information provided, it was unclear who, besides PG&E, the coalition members are.

The intent of CleanPowerSF is to reduce the city’s overall greenhouse gas emissions by offering San Franciscans the choice to use 51 percent green power supplied through a program administered by the San Francisco Public Utilities Commission, instead of buying power exclusively from PG&E, whose electricity sources are primarily fossil fuel and nuclear power plants.

PG&E often mentions climate change in its ads, but the topic doesn’t come up on either the mailer or the Web site. Instead, the message focuses on proposed exit fees that consumers would have to pay if they decided to go back to PG&E after the close of a two-month CCA opt-out period. It calls San Francisco’s CCA — one of the most dramatic attempts at community-wide greenhouse-gas reduction that any U.S. city has taken on — a “costly energy scheme.”

The campaign’s Web site notes that the information is provided by the “Coalition for Reliable and Affordable Electricity, a coalition of concerned consumers, small businesses, labor, community organizations and Pacific Gas and Electric Company.”

A representative from Townsend, Raimundo, Besler and Usher, a Sacramento-based PR firm, confirmed that the Coalition for Reliable and Affordable Electricity is one of its clients.

The person who is handling that client, we were told, is Bob Pence. If that name sounds familiar, it may be because Robert Lee Pence is listed as the proponent of a statewide ballot initiative that would impose a two-thirds majority vote requirement before CCA could be implemented.

The mailer includes a form that members of the public can send in, postage-free, to sign up for an alert when the Board of Supervisors votes on CCA. The address the postcards would be sent to appears to be a mail drop at Mailboxes Etc.

“Hit job” on Marin Clean Energy

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By Rebecca Bowe

In a report officially released yesterday, the Marin County Civil Grand Jury tore apart Marin Clean Energy, a community-choice aggregation program that is intended to reduce the region’s greenhouse-gas emissions to address climate change.

The Civil Grand Jury report called the project “costly and extremely risky” and recommended that the whole effort be abandoned. It criticized the program as adding another layer of bureaucracy at a time when resources are limited, and described it as being plagued with uncertainty. The report was titled “Pull the Plug,” and it warned of risks ranging from market volatility to legal costs if Pacific Gas & Electric should take steps to attack the effort once it is launched.

“The county and all participating municipalities of Marin Energy Authority should step away from their adversarial political posturing and seriously work with foundations, federal, state and local agencies and PG&E to foster cooperation,” the Civil Grand Jury report recommended.

The report was released on the same day as the start of the historic United Nations Climate Change Conference in Copenhapen, and coincided with the Environmental Protection Agency’s ruling that greenhouse gases endanger human health. MEA Chair and Marin County Supervisor Charles McGlashan said the timing was poignant, and called the civil grand jury report “a purposeful hit job by a biased group of conservative people in the county” that is “riddled with errors and misinformation.”

According to McGlashan, energy customers who accept the transition to MCE would automatically begin using electricity that is 25 percent greenhouse-gas-free, as opposed to PG&E’s 15 percent GHG-free power, with no difference in price.

PG&E news roundup: Discounts for energy hogs, new power plants in poor communities, and the CEO’s incredible expanding pension

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By Rebecca Bowe

A couple of news items related to California’s most powerful utility company caught our attention this week.

Pacific Gas & Electric Co. is planning to raise electricity rates for the customers who use less — in order to slash costs for big-time energy hogs, Mission Local reported this morning.

In an application filed with the California Public Utilities Commission (CPUC) on Oct. 14, PG&E explained that typical residential customers paying $74.14 a month would see their average monthly bill rise to $76.63, a 3.4 percent hike. Meanwhile, consumers using 1,500 kilowatt-hours per month could see their average monthly bill drop from $434.98 to $419.66, a discount of 3.5 percent. If approved, the change could take place Jan. 1, 2010 along with a bundle of other rate hikes.

It isn’t the only PG&E request to raise eyebrows recently.

A trio of environmental organizations filed formal letters of protest with the CPUC this week against PG&E’s application for two new gas-fired power plants.

The facilities, which would generate up to 1,300 megawatts of power, would be constructed in Oakley and Antioch, and PG&E expects them to be in operation by 2013 and 2014, respectively. According to the application, the utility would purchase the power generated by one facility, which would be owned and operated by Mirant. It would enter into a deal to purchase and operate the second facility once it was up and running.

Newsom and the next chapter

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By Tim Redmond

It’s a little weird that Gavin Newsom just disappeared after dropping out of the governor’s race. I had a feeling that he wasn’t going to hold up well under the pressure; he loves celebrity, loves to be on the A-List and loves to hear himself talk, but he can’t take a punch. And getting hit, a lot, is a big part of statewide politics. So I suspect that when he realized that this particular dream was over — clunk! — and that in two years, he’s not going to be anything but Gavin Newsom, citizen, he had a little meltdown.

This ought to be cause for concern: Somebody has to run the city for the next two years, and either Newsom is going to buck up, get back to work and try to change the way he does business — or he’s going to be a bitter lame-duck who can’t get anything accomplished except to go all Nixonian and attack his enemies.

I’m really hoping it’s the former — and now that he’s off his statewide horse, I think it’s safe to say that most of the supervisors, including the progressives he so disdains, would be more than willing to start working with him. I’d love to see the mayor come back from Hawaii with a clear understanding of what went wrong with his campaign. As we point out in an editorial today:

If the real Gavin Newsom had been anything like the campaign picture his handlers tried to present, he would have been a serious candidate. Newsom the candidate was a leader who brought San Franciscans together to get things accomplished. He was a progressive thinker who created universal health care and an effective budget process with a rainy day fund that prevented teacher layoffs. He was bold enough to challenge federal and state law on same-sex marriage and demand equality for all.

But Newsom the mayor was actually a snippy politician who refused to work with the Board of Supervisors and would never engage his opponents. He was great at press releases but short on accomplishments — universal health care and the rainy day fund were projects put together by Tom Ammiano, one of the supervisors the mayor disdained, who is now a state Assembly member. He refused to take a lead role fighting Pacific Gas and Electric Co. to promote clean energy and public power. And for all his success in moving same-sex marriage forward, he never once managed to bring that kind of progressive energy or policy-making to economic issues. His budget this year was the same as Republican Gov. Arnold Schwarzenegger’s budget — cuts and fees only. No new taxes.

As a result, the progressives and independent voters in his own town didn’t support his campaign — and without the environmentalists, labor, tenants, and progressive elected officials from San Francisco behind him, there was no way he could generate an honest grassroots movement.

I’d love to see the mayor reach out to the folks who have been snubbed all these years. Let’s talk about making the city budget work for everyone — and if that means some new revenue sources (which lots of other cities seemed to be able to pull off), at least he doesn’t have to worry about running statewide after raising local taxes.

He can take a hard look at where his cuts have really hit and try to work with labor to spread the pain a little better and chop from the top, not just the bottom.

He can become a real, serious clean-energy leader by strongly supporting CCA and taking a visible public role in the campaign against PG&E’s anti-public-power initiative.

The city’s ready for a Gavin, Chapter Two. And he wouldn’t be the first politician to rebound from a defeat, learn his lesson and start his career up again.

Any bets on whether that’s going to happen?

Editorial: The next Gavin Newsom

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Editorial: The next Gavin Newsom

EDITORIAL It’s possible that Mayor Gavin Newsom took a long look at himself, his life, and his future last week and decided that politics — intense, 24/7/365 politics — wasn’t what he wanted right now. It’s possible (as Randy Shaw noted in Beyondchron.org) that Newsom "now joins longtime adversary Chris Daly in putting family relationships ahead of one’s political career." It’s possible that he never really wanted a future in electoral politics and was driven to run for governor less by personal ambition than by the desire of his advisors to see him in a higher political role.

In that case, Newsom has a responsibility to do the best job he can over the final two years of his term as mayor, then step away and find something else to do with his life.

But since it’s also possible — even likely — that Newsom still hopes to have a political career, and that his decision to drop out of the governor’s race was as much about his failure to gain any traction as it was about his family obligations, it’s worth talking about why his campaign failed and what he can and should do next.

For starters, Newsom never expected to beat Attorney General Jerry Brown in the big-donor fundraising battle. He was hoping to put together a grassroots operation, to mobilize the Obama constituency, and build a war chest with tens of thousands of small donors organized through social media and technology. And that kind of effort could have worked — Brown has name recognition and money, but not much else. It’s hard to imagine large masses of young activists donating time and energy to his primary campaign.

The problem was, those legions of California activists weren’t terribly excited about Newsom either. And there are good reasons for that — reasons Newsom needs to understand if he wants to run for statewide elected office in the future.

If the real Gavin Newsom had been anything like the campaign picture his handlers tried to present, he would have been a serious candidate. Newsom the candidate was a leader who brought San Franciscans together to get things accomplished. He was a progressive thinker who created universal health care and an effective budget process with a rainy day fund that prevented teacher layoffs. He was bold enough to challenge federal and state law on same-sex marriage and demand equality for all.

But Newsom the mayor was actually a snippy politician who refused to work with the Board of Supervisors and would never engage his opponents. He was great at press releases but short on accomplishments — universal health care and the rainy day fund were projects put together by Tom Ammiano, one of the supervisors the mayor disdained, who is now a state Assembly member. He refused to take a lead role fighting Pacific Gas and Electric Co. to promote clean energy and public power. And for all his success in moving same-sex marriage forward, he never once managed to bring that kind of progressive energy or policy-making to economic issues. His budget this year was the same as Republican Gov. Arnold Schwarzenegger’s budget — cuts and fees only. No new taxes.

As a result, the progressives and independent voters in his own town didn’t support his campaign — and without the environmentalists, labor, tenants, and progressive elected officials from San Francisco behind him, there was no way he could generate an honest grassroots movement in a Democratic primary.

Now he’s back from the campaign trail — and he has two years to pick up on the lessons of his ignominious political collapse. If he wants any kind of a political future, he needs to change. First, he needs to start engaging and working with the supervisors — even the ones who disagree with him. (Showing up for "question time" would be a huge step). He needs to take the city’s structural budget deficit seriously and present plans for progressive taxes to help close it. He needs to show he can take on big powerful local interests — PG&E, for example — by opposing the utility’s anti-public power initiative and putting his political capital on the line to support community choice aggregation.

Newsom the imperial mayor has, we hope, been a bit humbled. Let’s see if he comes out of this chapter as an embittered, angry (and ultimately unsuccessful) mayor committed to punishing his enemies — or a serious city leader who can live up to his own hype.

SF seeks green power alternatives to PG&E

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By Steven T. Jones and Rebecca Bowe

With a unanimous vote by the Board of Supervisors today, San Francisco took a big step into the clean energy business, approving the issuance of a Request for Proposals for projects that will be part of the Clean Power SF program that will compete for customers with Pacific Gas & Electric Co.

The city’s version of the so-called Community Choice Aggregation program has involved “seven years of preparing San Francisco to get into the green energy business,” said Sup. Ross Mirkarimi, who has shepherded the program as chair of the Local Agency Formation Commission (LAFCo).

While PG&E has relentlessly attacked CCA efforts, both locally and through a statewide initiative campaign for would require a two-thirds popular vote for counties to create them, the 11-0 vote here seems to indicate Clean Power SF isn’t as controversial as PG&E would like people to believe.

“This step is a very important step and it’s been an eye-opening experience to serve on LAFCo,” Sup. Bevan Dufty, referring to opposition from PG&E and some of its business community allies and adding, “When the public understands the issues, they like competition and a more sustainable city.”

Leno goes after PG&E initiative

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By Tim Redmond

State Sen. Mark Leno is asking the leadershiop of the state Democratic Party to pass an emergency measure opposing Pacific Gas and Electric Co’s plans for a statewide initiative against public power.

Leno told me he will travel to San Diego Nov. 14th to personally introduced a resolution to the party’s Executive Board putting the party on record in opposition to the measure. The company has been paying signature gatherers to collect enough names to place the measure on next spring’s statewide ballot.

The board is meeting that weekend. Since this would be an emergency measure, Leno said, any member of the Resolutions Committee could block it. But Leno thinks that’s unlikely; “who,” he asked, “is going to stand up and defend PG&E right now?”

PG&E’s spooky stories headed to your mailbox

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By Rebecca Bowe and Rachel Sadon

At a Halloween-themed press conference on the steps of City Hall this afternoon, Supervisors Bevan Dufty and Ross Mirkarimi warned that PG&E plans to disseminate misleading information about the city’s Community Choice Aggregation (CCA) program.

The attack comes on the heels of the Board of Supervisor’s approval of a request for proposals for Clean Power SF, San Francisco’s own fledgling CCA, which seeks to provide competitively priced and significantly greener energy than PG&E. The CCA would challenge PG&E’s monopoly in the San Francisco Bay Area, and the utility is expected to fight it tooth and nail.

Sup. Dufty got a heads up from a PG&E employee this morning that mailers criticizing the program would be sent out tomorrow. Recalling last year’s multimillion dollar campaign against Prop H, an initiative for public power, Dufty emphasized that the city does not nearly have the funds to match a misinformation campaign.

Tom Ammiano denounced PG&E and their tactics as “avaricious, criminal, morally corrupt” and “a throwback to robber barons.”

Though the content of the mailers is unknown, it has already created a stir around City Hall and throughout the community that is advocating for community choice. At the press conference, which was scheduled with very little advance notice, Dufty and Mirkarimi were joined by Sup. David Campos, San Francisco Public Utilities Commission director Ed Harrington, state senator Mark Leno, and Sierra Club representatives Michael Borenstein and John Rizzo.

Mirkarimi, chair of the Local Agency Formation Commission (LAFCo), insisted that “San Francisco is steadfast in its commitment to Community Choice Aggregation,” and stressed that “PG&E continues to mock our commitment to green energy and will do everything in their power to circumvent the process.”

Cal-ISO still won’t approve full shutdown of Potrero power plant

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A group of San Franciscans who’ve been pushing for complete closure of the Mirant Potrero Power plant traveled to Folsom, Calif. today to testify before the California Independent System Operator (Cal-ISO), a quasi-governmental agency that has required the plant to stay open for reliability purposes despite longstanding opposition from elected officials and grassroots organizations.

“I keep hearing the word ‘stakeholders,’” noted Marie Harrison, an organizer with San Francisco-based Greenaction for Health and Environmental Justice, following comments delivered by the Cal-ISO’s Board of Governors. “I simply want to let you know that your biggest stakeholders are not at the table — and that be us,” she said. “I realize that the grammar is not quite correct, but I did that purposely, because I needed to have your attention when I say that. Unless we are at the table with, quote, the stakeholders, you don’t really have a true representation.”

The aging power plant has been opposed by multiple community organizations, Boards of Supervisors, and San Francisco mayors, but it remains in full operation. And as of today’s Board of Governor’s meeting, the most the Cal-ISO would commit to is removing the largest unit by the middle of next year, despite an agreement that the San Francisco City Attorney’s office struck with Mirant to shutter the entire plant by the end of 2010.

Others who turned out from San Francisco included John Lau, an aide to Sup. Sophie Maxwell; Theresa Mueller, representing the San Francisco City Attorney’s Office; and two representatives from the Brightline Defense Project, a nonprofit organization that focuses on environmental justice.

“We really are almost there,” Mueller told the ISO Board of Governors. “We would like to push you as much as we can on the Unit 3 closure.” As for the other units, “We’ve submitted comments to you over the course of the last few months based on work that PG&E has done, work that we’ve done, and work that the ISO staff has done, and we believe those units will not be needed after 2010,” she added.

Unit 3 is the primary electric generating unit at the plant. Powered by natural gas, it operates close to 24 hours a day, and community organizers say it has contributed to health problems in the city’s Southeast sector. At today’s meeting, Cal-ISO representatives said that Unit 3 could be released from a requirement to stay in operation by the middle of next year — provided the TransBay Cable comes online as scheduled. That’s much later than San Francisco activists and elected officials had hoped for.

PG&E ballot initiative clears a hurdle

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By Rebecca Bowe

The Guardian has received several accounts that paid signature gatherers for a ballot initiative backed by Pacific Gas & Electric Co. that could darken prospects statewide for public-power programs were pitching it in a way that, at best, wasn’t entirely straightforward. And by several accounts, the petition has stopped circulating because proponents successfully gathered the 694,354 signatures needed before it can qualify for the ballot.

One voter wrote to say that a canvasser approached him in Pasadena seeking signatures for two different petitions: the PG&E-backed initiative, and a proposal to legalize and tax marijuana. Once he signed the petition to legalize pot, she asked him to sign the PG&E petition as if it were merely a second copy, he charged. She later stated that she had been instructed by her supervisor to do so, according to his account.

The Guardian also got reports that signature gatherers have denied that the petition was funded by PG&E, told people that signing it would result in lower utility rates, or described it as an initiative to promote clean energy in California.

In reality, the initiative, which was previously titled the Taxpayers Right to Vote Act, would require a two-thirds majority vote before any community choice aggregation program could be funded or implemented. This could jeopardize San Francisco’s fledgling CleanPower SF, a community choice aggregation program that would provide San Franciscans with electricity from cleaner energy sources. The Board of Supervisors voted 10-1 to oppose the initiative.

While voters can — and should — read the title and summary of a proposed initiative before signing on the dotted line, canvassers who are paid by the signature clearly have an incentive to speed the process along and frame a proposal in a favorable light. And if signature gatherers stand outside health food stores in the Bay Area asking voters to support legalizing marijuana and developing clean energy, it’s an easy sell.

Killing the dream

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Killing the dream

tredmond@sfbg.com

When the first issue of the Bay Guardian hit the stands in 1966, it was still really possible to talk about the California dream. The state had seemingly limitless potential and was in many way a model for the nation — a free public university system that was the envy of the world, an economy that provided jobs to hundreds of thousands of new arrivals, the beginnings of what would be the nation’s premier environmental movement pushing to save San Francisco Bay, save the coast, save Lake Tahoe … and the Free Speech Movement, the Summer of Love, the United Farm Workers Union, and so much more that was transforming politics and culture in the United States from the West Coast.

Twelve years later, it was all falling apart. Eight years of Gov. Ronald Reagan and then the passage of Proposition 13 launched a very different kind of movement out of the West, a movement that sought to dismantle the public sector and the social safety net, to treat government as the enemy, and to use culture wars to convince working-class Americans to vote against their own economic interests.

And now California is being described as the nation’s first failed state. Gov. Arnold Schwarzenegger — the second Republican actor to hold that role — has driven the state to the brink of bankruptcy. The University of California is drowning in red ink, raising fees and turning away students. The state’s water system is a mess; cities and counties are in fiscal collapse; the economy’s in the tank; and nobody seriously talks about a California dream anymore.

The story of how that happened — and how the diseases of tax-revolts, privatization, government corruption, and public disempowerment spread east from California — is the focus of this 43rd anniversary issue. It’s both enlightening and a bit scary to read through old issues, because in hundreds of stories over the past four decades, the Guardian has warned of exactly what was to come.

The very first issue of the Bay Guardian talked about the "historic election" pitting the incumbent, Democrat Pat Brown, against Reagan. A lot of people in the emerging "new left" were arguing that there wasn’t a bit of difference between the two, and that you might as well sit out the election. But the Guardian had a different take. The election was really about the direction California wanted to go, the paper said, a choice between a state that cares about the public sector and social welfare and a state where those things don’t matter.

"Reagan’s stands typify the temper of the cause," the Nov. 7, 1966 editorial stated. "He is on record, at various times, in opposition to the progressive income tax, Social Security, Medicare, the anti-poverty program, farm subsidies, the TVA, the Civil Rights Act, the Voting Rights Act, public housing, federal aid to education, and veterans hospitalization for anything other than service-connected disabilities. How can a man or a movement govern the state of California with such a political philosophy?"

Reagan’s election may have seemed like a fluke, but it was nothing of the sort. By the mid 1960s, with the counterculture — and equally important, the economic left — looking to make major inroads in American policy, the broad outlines of a right-wing attack plan were in place.

That’s something the Guardian always recognized — that powerful people who moved the levers of government typically did so with a long-term plan.

In San Francisco, part of that plan was the transformation of a human-scale city to a West Coast version of Manhattan. The idea: tear up South of Market (then mostly low-income housing) for a shiny new convention center and hotels. Dump dozens of big high-rise office buildings downtown. Construct a fixed-rail system to carry suburban commuters into the dense downtown. Drive up property values — massively — and if that means blue collar jobs and working class people had to go to make way for wealthier office workers, so be it. In the end, of course, the architects of the plan — landowners, developers, bankers, and big business leaders — became immensely wealthy.

On the state and national level, their plans were broader. Even so, they had one major aim: throttle the pubic sector. Cut off the funding for government programs, reduce regulations, undermine any concept of a welfare estate — and cut taxes on the rich.

As we report on page 8, the architects of this plan are happy today to talk about how it worked — how Reagan launched his war on government back in the 1970s, how a group of well-funded think tanks developed plans, and political consultants took advantage of people’s fears (and the Democratic Party’s failures) to put those plans into action.

The movement really got off the ground in 1978 with the passage of Proposition 13.

Prop. 13 emerged from a state in the middle of a massive growth spurt and a heated political cauldron of money, race, and Legislative failure. Howard Jarvis, a Republican landlord lobbyist who hated taxes, hated government, hated public schools, and disdained most Californians — "63 percent of [public school] graduates are illiterate" and would have no need for public libraries, he once quipped — took advantage of a gaping hole in political leadership and set off a movement that would cripple the United States of America.

The measure marked the final, fatal end in California of the era known as the ’60s — a period when the left was ascendant, when taxes on the wealthy funded education, infrastructure and programs for inner cities, and when economic and cultural liberalization seemed to be spreading across the nation.

Rising property values, driven by rapid population growth, were driving up property taxes — and the problem was real. Long-time residents, particularly people on fixed incomes, saw their taxes rise so high they couldn’t afford to stay in their homes. The Legislature could have addressed that (with, say, a split-roll measure that taxed residential and commercial property at different rates) but utterly failed to move on the crisis.

A series of assessor’s office scandals didn’t help, either. And, at the same time, the California Supreme Court ruled that rich school districts had to share revenue with poor districts, infuriating wealthy white property owners.

Jarvis and his partner Paul Gann circulated petitions to roll back property taxes and make it almost impossible to raise taxes in the future. It passed with 65 percent of the vote.

Of course, big businesses (particularly utilities) were the big winners. As the Guardian pointed out on June 1, 1978, the top five utilities in California alone (including Pacific Gas and Electric Co.) would gain billions from the tax cuts.

But beneath it all was a simmering discontent with government — something Jarvis had set afire and would later be used by Ronald Reagan and the right-wing operatives who backed him to undermine the New Deal, the social safety net, and the basic social contract in America. The antitax folks played to white people who didn’t want to see their money going to minorities, to the middle-class folks who thought (thanks to the assessor scandals) their tax money was being wasted by corruption — and to a lot of younger people coming out of the 1960s who had learned from Vietnam, COINTELPRO, and Watergate not to trust government.

The Bay Guardian opposed the measure strongly: "Most analyses indicate that without replacement taxes, hundreds of thousands of California public servants would be thrown out of work (which is exactly what Howard Jarvis intends) … " a May 18, 1978 editorial noted. "Vote for Prop. 13 only if you favor decreased government services (including cutbacks in everything from libraries to schools to street-cleaning crews and possibly police and fire departments) and are fond of half-baked measures that favor the rich."

Prop. 13 set off a national movement to cut taxes — and riding that wave, Reagan was elected president in 1980. He immediately set about attempting to slash taxes on big business and the wealthiest Americans, and eliminate environmental, workplace safety, and employment regulations.

You can see the results in California — and across the nation. The very strategies that emerged in this state and that the right has supported over the years have come very close to destroying the United States economy, leaving millions out of work — while the gap between the rich and the poor has risen to unsustainable levels.

Part of the reason this national attack on government and the public sector worked was the failure of Democrats to recognize that corruption matters. It was no small wonder that Californians were losing faith in government — in the 1970s and 1980s, the state Legislature, under the Democratic control of Speaker Willie Brown, was awash in sleaze, paralyzed by lobbyist influence and campaign money. Yet leading Democrats, fearful of Brown’s power, did little to reign in the appalling corruption.

In fact, when Brown became mayor of San Francisco, the entire Democratic Party, from the president of the United States on down, seemed to treat him as royalty — despite the fact that he was selling the city to every developer and corporate lobbyist who waved money under his nose. When taxpayers knew that a large part of their money was going to fund juicy jobs for Brown’s cronies and pet projects, it was hard to argue for higher taxes.

And it was the Democratic Party leadership in San Francisco who presided over two of the greatest examples of privatization of public resources in modern history: the Presidio and the Raker Act. Rep. Nancy Pelosi was the author of the bill that, for the first time, turned a national park over to the private sector — and hardly a Democratic leader in the city dared to lift a finger in opposition. And for decades — since the Guardian first broke the story in 1969 — the city’s Democratic power brokers have bowed and genuflected to PG&E and allowed the private utility to control the local electric grid and block implantation of the federal law that mandates public power for San Francisco.

And now PG&E wants to pull off one of the greatest feats of privatization in American history. The company has launched a ballot initiative that would wipe out any further attempts at public power in California, essentially guaranteeing that private companies, not the public sector, control the vast, critical resource of electric power in this state.

It’s the latest big battle between two divergent visions of America — and this time, the folks who have done so much damage to this state and this nation can’t be allowed to win. In fact, maybe the campaign against PG&E can be the turning point, the time when California realizes that privatization, attacks on the public sector, tax cuts for the rich, and political sleaze are a formula for disaster.

A tale of two hoaxes

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by Rebecca Bowe

YesMen.jpg

Bonner & Ass 2.jpg

Politico has reported that the Yes Men, a left-leaning activist group that has created public-relations messes for big business before, fooled Reuters, CNBC, and the Washington Post this morning by issuing a fake press release from the U.S. Chamber of Commerce declaring that it had withdrawn its opposition to the climate-change bill.

This is from the fake press release:

“We believe that strong climate legislation is the best way to ensure American innovation, create jobs, and make sure the U.S. and the world are on track to reduce global carbon emissions, and to provide for the needs of the American business community for generations to come,” said the spokesman, Hingo Sembra.

“The new position is an about-face on climate policy for the Chamber, which previously lobbied against government action. The shift comes after the defection of several prominent members of the Chamber, including PG&E, Apple, PNM Resources, and Exelon.

Here’s the reaction from a Chamber of Commerce spokesman (as reported by Fox News) after the COC figured out they’d gotten punked:

“Public relations hoaxes undermine the genuine effort to find solutions on the challenge of climate change,” spokesman Thomas Collamore said. “These irresponsible tactics are a foolish distraction from the serious effort by our nation to reduce greenhouse gases.”

The Yes Men are self-styled pranksters, their media stunts are immediately recognized for being the bold political statements that they are, and they serve to amplify public pressure on crucial issues such as human rights or global warming. Although the Yes Men may have temporarily posed as Chamber of Commerce press contacts, it’s worth noting that there’s a huge difference between that media stunt and the AstroTurf hoax that PR firm Bonner & Associates evidently thought it could get away with this past summer.

The PR firm, which was tapped by the American Coalition for Clean Coal Energy (ACCCE), sent forged letters opposing the climate bill purporting to be from the National Association for the Advancement of Colored People (NAACP) and other minority groups. Bonner & Associates is now under Congressional investigation for the fake letters.

A popular term for this PR tactic is AstroTurfing: Creating the illusion of a grassroots campaign driven by ordinary people when in fact the campaign is a targeted attack powered by millions of dollars to advance a business agenda. And according to an article in the National Journal, AstroTurfing is on the rise.

According to a quote from a Congressional aide that appeared in that story:

“I think what we’ve seen, especially this summer with the energy and health care debates, is that AstroTurf has become much more widespread than I think we’ve ever seen it before … The American public is honestly confused about what is real and what is not.”

So while the Yes Men’s “foolish distraction” may have been successful in focusing attention on how big business is trying to block efforts to address climate change, don’t forget that they aren’t the only ones pulling a fast one — and the tricksters on the business side are trying to avoid the attention of the media, rather than attract it. By the way, there’s a movie coming out soon called The Yes Men Fix the World. It opens Oct. 30 in the Bay Area.

Editorial: PG&E’s biggest power grab ever

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Wake up, City Hall — and get moving on community choice aggregation power

(B3 note: I made a mistake in this story. See the correction below.)

EDITORIAL San Francisco’s chance to create a semblance of public power, through community choice aggregation, faces a devastating threat from Pacific Gas and Electric Co. — and the city needs to move with a sense of real urgency to get this program off the ground.

CCA would allow San Francisco to buy electric power in bulk and sell it to customers at a reduced cost. It wouldn’t create a true public-power system — PG&E would still own the transmission facilities. And while customers would see price breaks, the city wouldn’t make much money off the deal. But it would be a major step toward breaking PG&E’s illegal monopoly.

Wake up, City Hall – and get moving on CCA

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Wake up, City Hall – and get moving on CCA

EDITORIAL San Francisco’s chance to create a semblance of public power, through community choice aggregation, faces a devastating threat from Pacific Gas and Electric Co. — and the city needs to move with a sense of real urgency to get this program off the ground.

CCA would allow San Francisco to buy electric power in bulk and sell it to customers at a reduced cost. It wouldn’t create a true public-power system — PG&E would still own the transmission facilities. And while customers would see price breaks, the city wouldn’t make much money off the deal. But it would be a major step toward breaking PG&E’s illegal monopoly.

The giant private utility desperately wants to avoid that, but right now its options are limited: The state law that authorizes CCAs, written by then-state Sen. Carole Migden (D-San Francisco), bars utilities from interfering with or trying to shoot down community attempts are creating the buying coops. So PG&E is paying to collect signatures for a statewide ballot initiative that would mandate a two-thirds vote before any city, county, or public agency can attempt to create or expand a public-power utility.

We all know what the two-thirds vote requirement has done in Sacramento — it’s paralyzed the Legislature. The PG&E initiative would do the same thing, making it almost impossible for any community to get rid of the dirty, high-priced power the utility peddles.

It’s going to take a huge statewide effort to defeat that initiative, and San Francisco — the only city with a federal mandate for public power — ought to be leading the way. Sup. Ross Mirkarimi has been pushing the issue, and the supervisors have passed a resolution opposing the measure. That’s a start, but city officials need to do a lot more. We suspect the initiative may violate Midgden’s law — by any reasonable standard, PG&E is interfering with the rights of local government here — and San Francisco City Attorney Dennis Herrera is investigating the issue. He needs to move aggressively and quickly to determine whether the city has a legal case that could get the measure thrown off the ballot. If so, he needs to connect with city attorneys in other public-power cities and launch a full-scale legal assault.

But if it looks as if a legal strategy won’t fly. Herrera, Mayor Gavin Newsom, the city’s state Legislative delegation and every other elected official in San Francisco needs to be speaking out against the measure — and working to set up a statewide coalition that can raise money to defeat it. The measure can’t be fought just with a few press conferences and statements of support — every public-power city, including Los Angeles, Sacramento, and Santa Clara, needs to be on board, with a high-profile campaign committee and public officials across the state holding fundraisers and looking to build a war chest in the millions of dollars.

And in the meantime, San Francisco absolutely must be moving at full speed to get its own CCA measure passed, in place and under way before this initiative gets on the ballot. For several years now, the San Francisco Public Utilities Commission has been dragging its feet on CCA, and General Manager Ed Harrington is hardly making it a top priority. That has to change, now. Mirkarimi, as chair of the board’s Local Agency Formation Commission, is pushing the PUC to get the process moving, and the mayor, who claims to support CCA, needs to direct Harrington to press forward as if there were a hard deadline of next spring for implementation. Because if the PG&E measure makes the spring 2010 ballot, and wins, San Francisco’s program will have to be fully under way — or it will be dead.

Other than Mirkarimi, who is trying to organize statewide opposition, nobody at City Hall seems to be taking this threat seriously. It’s time to wake up, folks — the future of public power, and all the benefits it could bring San Francisco, is on the line. *

Mayor Gavin Newsom directs wind power energy to the Guardian!

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By Rebecca Bowe

Newsom wind.jpg
Photo courtesy Luke Thomas, Fog City Journal

Here’s the scoop: The San Francisco Bay Guardian will get 50 megawatts of wind power, courtesy of San Francisco Mayor Gavin Newsom.

Don’t get excited — the mayor was only kidding. Newsom’s witty remark came in response to a question by local journalist and blogger Luke Thomas, when he asked the mayor who would own the energy being generated by the municipal wind turbines that are envisioned throughout the city in a report unveiled today.

Newsom’s response: “I hope it’s the Bay Guardian.”

SFBG publisher Bruce B. Brugmann was delighted by the news, and immediately emailed a San Francisco Chronicle City Hall reporter to say he was available for comment on how he plans to use the power.

The press conference was held to announce the recommendations of San Francisco’s Urban Wind Power Task Force, a group convened to study possibilities for small urban wind projects in the city. The vision involves siting turbines at famous city landmarks, mapping micro-climates to figure out how best to harness wind energy potential, and making it easier for small urban wind projects to be permitted.

“Wind needs to be part of the urban mix,” Newsom said. “There are still a lot of questions, but nonetheless there’s a lot of enthusiasm.” Wind-power demonstration sites could include the Civic Center Plaza, The W Hotel, a new San Francisco Public Utilities Commission headquarters on Golden Gate Ave., and Treasure Island, Newsom said.

My question for Newsom was whether the city’s Community Choice Aggregation effort, which has a stated goal of supplying publicly owned power generated by 51 percent renewable energy by 2017, would be integrated into the bold new wind-development plans. The overarching vision of the Wind Power Task Force report is to develop 50 megawatts of wind power over the next few decades, a much longer time line than the initial 2017 target established by CCA. Newsom replied, “It certainly could be. I haven’t gotten that far along.”

To which we’d like to respond: Did you have a nice time on that PG&E-funded trip to Mexico?

LAFCo and SFPUC joint meeting: The clock is ticking

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By Rebecca Bowe

tide clock.jpg

In the next few years, San Francisco residents will have the opportunity to switch to electricity that is publicly owned, more environmentally friendly, and either the same price or cheaper than power supplied by Pacific Gas & Electric Co. — if all goes according to plan.

That’s turning into a big “if.”

At a joint meeting held between the Local Agency Formation Commission (LAFCo) and San Francisco Public Utilities Commission (SFPUC) last Friday, LAFCo chair Sup. Ross Mirkarimi tried his best to start a fire under everyone’s rear. Clean Power SF, a public power program that will supplant PG&E in the city, had better get into gear without any foot-dragging or hesitation, Mirkarimi warned.

What’s the hurry? A proposed, PG&E-backed statewide ballot measure has cast a pall over Clean Power SF and other municipalities’ efforts at crafting public power alternatives, or Community Choice Aggregation (CCA) programs.

The PG&E-backed ballot measure would require 66 percent of voter approval before any local government could spend so much as a dime establishing a CCA, effectively creating an insurmountable hurdle. If successful, the ballot measure would snuff out any PG&E competition before it even caught on. The utility is poised to spend millions collecting signatures and pushing it through, and it has until Dec. 21 to gather the 694,354 signatures needed to place it on the ballot next year.

Energy efficiency gets a boost, but foxes still guard the hen house

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By Rebecca Bowe

electric meter.jpg

The California Public Utilities Commission (CPUC) approved a $3.1 billion budget yesterday for statewide energy efficiency programs that will be in place until 2012. California’s powerful investor-owned utilities — Pacific Gas & Electric Company, Southern California Edison, San Diego Gas and Electric Company, and Southern California Gas Company — are in charge of implementing the programs, while the funding is derived from ratepayers.

While the decision marks the creation of the largest energy-efficiency program in the country, some question the wisdom of the colossal investment, because it relies on utility companies to implement dramatic reductions in energy use.

It’s the greatest financial contribution the state utility commission has ever pledged toward energy efficiency. According to the CPUC, the potential energy savings will negate the need for three new 500-megawatt power plants, and avoid 3 million tons of greenhouse gas emissions. The funding from this decision could create between 15,000 and 18,000 green jobs, the CPUC estimates.

The decision will provide $260 million for local efforts such as municipal building retrofits. It also requires utilities to track progress toward goals and strategies established in a long-term statewide plan for reducing energy use. Included in the effort is an ambitious home-retrofit program, which sets a goal of 20 percent energy savings for up to 130,000 homes.

“This investment in California’s clean energy economy is just what we need to create new jobs for our communities and fight global warming pollution,” said Lara Ettenson, director of California Energy Efficiency Policy at the Natural Resources Defense Council (NRDC), a prominent environmental organization.

Not everyone shares NRDC’s optimism, however.

The Division of Ratepayer Advocates (DRA), an independent consumer advocacy division of the CPUC, warned that the powerful utility companies should be closely monitored to see how they make use of such a tremendous sum.

In a statement released this morning, the DRA highlighted “a continuing need for stronger mechanisms to ensure transparency and accountability in the utilities’ use of the billions of dollars of ratepayer money.” Utility giant PG&E has been criticized in the past for misuse of energy-efficiency funds.

The $2.8 billion rate hike

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news@sfbg.com

In the middle of what economists are calling the worst economic downturn since the Great Depression, when California unemployment rates have hit post-WWII records, commercial defaults are rising, and families and businesses are hurting, Pacific Gas and Electric Co. is asking for electricity rate hikes that would take at least $47 million out of the local community, a Guardian analysis shows. By some estimates, the impact could be has high as $787 million.

And the economy is already losing between $174 million and $483 million a year because the city hasn’t created a public power system. So the total impact on the San Francisco economy of paying PG&E’s high private rates could total $2.8 billion. That’s money that local residents can’t spend on good and services, local businesses can’t use to hire more workers and city government can’t collect taxes on.

The analysis is based on work done in 2002 by Irwin Kellner, chief economist for Marketwatch and a former economics professor at Hofstra University. Kellner analyzed the savings to the Long Island economy after that community replaced a private utility with a public power system (see "The $620 million shakedown, 9/4/2002).

It’s not a complicated set of calculations.

During the fiscal year ending in 2009, San Francisco residents and businesses paid $644 million on electricity, according to data from the city’s Controller’s Office. If PG&E’s proposed 6.5 percent average rate hike is approved for 2011 (with additional hikes of 1.4 percent and 1.1 percent the following two years) that number would ultimately rise to $704.5 million.

Over the next four years, as those rate hikes kick in, San Franciscans would be handing PG&E an extra $157 million. That’s $106 million businesses won’t have to pay employees or make capital improvements, and $51.3 million consumers won’t have to spend in local businesses.

"That’s $51 million less that would otherwise go into San Francisco neighborhood businesses," said Ted Egan, chief economist in the city’s Office of Economic Analysis. "Instead the $51 million goes to PG&E, and they won’t spend it all in San Francisco. Some will go to shareholders and outside the region, so the rate hike would end up having a larger impact than the initial $51 million."

That "larger impact" is called the multiplier effect: if you give one dollar to someone likely to spend it locally, he or she will buy shoes at a local shoe store, whose owner will use the dollar to buy groceries at the local grocery store, whose owner will pay the counter worker, who will spend the money on paint at the local hardware store — and by the time it’s circulated through the local economy, that dollar has created far more than a dollar’s worth of economic activity.

Economists argue on how to figure the exact impact of that dollar. Kellner has done studies of the economic impact of utility rates and estimates the multiplier — the economic impact of electricity rate hikes — to be five, expanding the $157.4 million to over $787 million.

Egan takes a more conservative view of the San Francisco economy and consumer spending. He estimates that the multiplier for utility rate hikes is closer to 0.3 — or slightly higher when commercial rates are factored in. According to his estimate the impact would be closer to $47,231,083.86.

The multiplier suggested by federal government economists during the stimulus bill discussion is 1.8, the number cautiously posited by Cynthia Kroll, senior regional economist for the Fisher Center for Real Estate and Urban Economics at UC Berkeley. Based on her calculations, PG&E would be yanking $283 million out of the local economy.

Either way, it’s a huge sum of money, particularly in a bad economy.

A PATTERN OF RATE HIKES


This latest rate hike, Mindy Spatt, communications director of the Utility Reform Network told us, is only part of a pattern of attempts by PG&E to raise rates. Every three years, utility companies present a general rate case to the California Public Utilities Commission. But Spatt said utilities can come to the PUC in between to ask for other rate hikes.

"They’re constantly coming back to the commission for this that and the other thing," she said. "[PG&E] came back after they got money for smart meters to get money for smarter meters.

"Overall, the pattern is that rates continue to go up," she continued. "The only other thing going up is executive compensation. We are still plagued with blackouts, we still get crappy service."

She’s right: data from other local utilities show that PG&E rates are anywhere from 20 percent to 40 percent higher than cities that have public power. PG&E would like its customers to believe that higher rates will improve service and reliability — but that’s not what’s happening.

"They don’t spend the money on giving us good service, instead [they focus] on convincing us they are giving us good service," Spatt said.

In its announcement of the proposed hike, PG&E claimed the rate hikes are to maintain infrastructure and reliability. A further $1.1 billion is also being asked for as part of a Cornerstone Improvement Project to increase reliability.

"Reliability" is an old battle horse trotted out every few years as the justification for rate hikes. PG&E is consistently less reliable than other local utilities and even less reliable than other large private utilities. So the company constantly asks for money to upgrade its system — except that reliability doesn’t seem to improve much, and it hasn’t improved much in the past decade, according to California Public Utilities Commission data.

"It’s interesting to compare their rates to municipal utilities and how much higher they are," Spatt said. "What do we get for the extra money we pay? Because by most measures they’re not doing a great job."

In fact, Guardian research shows that local municipal utilities have consistently better reliability records than PG&E (see "The blackout factor," 8/5/09).

PUBLIC POWER SAVINGS


The direct cost of PG&E’s high rates costs the local economy — and those losses are compounded by the money that could have been saved with public power.

A detailed Guardian analysis concluded last year that San Francisco would be able to cut electric rates by 15 percent if it ran its own utility (see "Cleaner and cheaper," 9/10/2008). That’s an entirely reasonable estimate, according to Jeff Shields, general manager of the South San Joaquin Irrigation District, which is fighting with PG&E to take over electricity distribution in its service area. He projects similar savings for his customers.

Shields thinks his system (and one in San Francisco) could cut rates even further. As nonprofit, he explained, SSJID can save money in multiple areas and pass those savings onto customers.

"We don’t pay taxes on earnings," he told us. "PG&E, as a shareholder company, can collect an 11.45 percent margin of profit. We don’t pay that. We don’t have the same overhead. We don’t have high-rises or corporate jets."

Public power agencies pay less to borrow money, are eligible for tax-exempt financing, typically have a higher credit rating and often keep a substantial cash reserve.

"[Selling electricity] will continue to produce substantial income," he said. "As a nonprofit, the only thing we can do with that income is continue to drop rates."

Other municipal utilities, like Silicon Valley Power in Santa Clara, have been able to keep rates low as PG&E has continued to raise rates. Larry Owens, customer services manager at SVP, said its residential rates are half of PG&E’s, and less for larger users.

The opportunity cost of not having municipal power — factoring in PG&E’s proposed rate hike and the assumption, based on Guardian and SSJID analyses, that rates would be lowered by at least 15 percent — is approximately $545 million over the next four years. Theoretically, that money could have resulted in a $980 million to $2.8 billion bump in the local economy.

This doesn’t include what some municipal utilities call "general fund transfers" or money that goes directly into a city’s piggy bank to be spent on libraries, schools, public health, and other services.

"Private sector utilities pay money to shareholders," said Joyce Kinnear, utility marketing services manager in Palo Alto. "We give these payments to the general fund to give services to local residents."

In Palo Alto’s case, this amounts to more than $9.25 million annually, or 9 percent of annual sales revenue, according Ipek Connolly, senior resource planner for the Palo Alto Utilities Department. Alameda Municipal Power’s Alan Hanger says AMP pays at least $4.2 million into city coffers. Silicon Valley Power, according to Owens, sends 5 percent of its revenue back to the city in the form of $12.92 million.

Shields, at SSJID, said the utility plans to give 4 percent of revenue to a public benefits program for "various social services, conservation, and energy efficiency programs." This, in addition to general fund transfers, constitutes a direct contribution to the community 50 percent larger than PG&E’s.

"Public power systems provide a direct benefit to their communities in the form of payments and contributions to state and local government," Nicholas Braden, director of communications at the American Public Power Association, told us. "The total value of the contributions made by the publicly-owned utilities often comes in many forms and is not always easily recognized. In addition to payments such as taxes, payments in lieu of taxes, and transfers to the general funds, many of the utilities make other contributions in the form of free or reduced cost services provided to states and cities."

San Francisco has a 7.5 percent utility user tax, but the tax is only levied on homes and businesses. In other words, PG&E takes hundreds of millions out of the local economy — and gives back nothing.

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HOW SF COULD LOSE $2.8 BILLION

Amount San Franciscans paid for electricity IN 2009: $644 million

Additional cost of PG&E rate hike (per year): $157 million

Multiplier (maximum estimate): $787 million

Reduction in costs under public power: $483 million

Multiplier: $2.1 billion

Total impact of high PG&E rates: $2.87 billion

SOURCE: Guardian research based on public records

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RATE HIKES HIT THE POOR HARDEST

Pacific Gas and Electric Co. estimates that its current rate hike proposal will add between $2.23 and $16.76 per month to an average residential electricity bill. That may not seem huge — but it adds up.

"Each rate hike in and of itself isn’t that much money," acknowledges Mindy Spatt of the Utility Reform Network (TURN). "But overall, rates are very high."

And if you’re in one of the 24,000 San Francisco families that, according to U.S. census data, livie in poverty, even the smallest increase in utility bills can have serious ramifications.

"A few dollars here, and a few there can really affect low-income households," said Stephanie Chen, legal fellow at the Greenlining Institute, a public policy research and advocacy group. "It can mean the difference between ‘Do I pay the power bill, or do I buy groceries?’"

Utility bills are not a discretionary expense, and, as unemployment continues to rise and adjustable rate mortgages continue to adjust upward, more households are finding themselves squeezed on all sides. Depending on timing and cash flow, Chen said it would be easy to imagine a formerly stable household unable to pay the utility bill.

And if a household can’t pay the bill for two weeks, PG&E sends a notice of termination and shuts off power. According to Spatt, PG&E shuts off 15,000 households in its service area each month.

"Rate hikes are certainly not going to bring down that number," she said. "These are not people who can’t pay for a Mercedes and got it repossessed. They are people who are losing heat, electricity, the ability to cook."

To turn the power back on, PG&E requires a deposit of twice the average bill to reestablish credit. If a household can’t pay its regular bill, paying twice the amount is even harder.

Spatt says TURN is working to push the CPUC to do something about this and help consumers who are struggling. Chen says utility companies already know their customers are hurting during the recession.

"All the utilities are facing decaying infrastructure concerns and renewable energy goals," Chen said. "They are facing increased costs, which they pass on to ratepayers. We know rate increases are inevitable — but we want to make sure they are necessary and cost-effective."

Stopping PG&E’s fraudulent initiative

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EDITORIAL A ballot measure that could spell the end of public power in California is headed for either the spring or fall 2010 ballot — and so far, the opposition is missing in action. This is a profoundly important issue, and every elected official, city council, board of supervisors, and utility agency in the Bay Area needs to immediately come out in opposition and start organizing to defeat it.

The source of the proposition, of course, is Pacific Gas and Electric Co. PG&E is facing political wildfires all over the state as communities rebel against bad service and high rates. In Marin County, a community choice aggregation (CCA) plan is moving along, full speed. In San Francisco, CCA is a little slower, but still on track. These efforts could turn two of PG&E’s most profitable territories into public power beachheads. Meanwhile, in San Joaquin County, a public power movement is trying to take over part of PG&E’s service area, and PG&E just spent millions of dollars fighting a similar effort in Davis.

So the utility has decided to fight back — not just in the local communities where activists can beat PG&E back, or in the state Legislature, where the giant company has fewer and fewer friends, but with a ballot initiative that has a misleading name, a misleading political message — and tens of millions of dollars to back it up.

Signature-gatherers are out in force already, collecting names for a measure called "New two-thirds requirement for local public electricity providers." The paid petition crews are describing it as a "right to vote" measure, giving the public a chance to weigh in on government action.

What the measure would really do is require a two-thirds affirmative vote before any public power agency could add new customers, or any local agency could get into the power business. It would force the existing CCA movements to get two-thirds of the local voters to approve their efforts.

That’s an almost impossible standard — particularly when PG&E spends millions to block public power efforts everywhere they appear.

The two-thirds voting requirement is increasingly being assailed as undemocratic. The state Legislature has been paralyzed by its own two-thirds requirement for passing a budget, and there are multiple moves to reduce that threshold. The two-thirds mandate for passing local taxes has been widely blamed for driving cities and counties to the brink of fiscal ruin.

And yet PG&E is trying to add a new, crushing mandate — aimed entirely at snuffing out public power advances. The impact on the state will be enormous. As Megan Rawlins reports on page 8, high PG&E rates and the lack of public power cost the San Francisco economy alone as much as $2.8 billion a year. Multiply that by a factor of 10 or 20, and you see what a devastating financial blow this PG&E move would be to California’s crumbling economy.

So where, exactly, is the opposition?

Sup. Ross Mirkarimi called a meeting last week at the offices of the Utility Reform Network (TURN) to try to get other public power communities involved in a statewide campaign. But it’s been slow going.

That’s not going to work. Every elected agency in the Bay Area needs to get this on the agenda — now. Every city official (starting with Mayor Gavin Newsom, who wants to be governor) and every state official (starting with Attorney General Jerry Brown, who also wants to be governor) needs to loudly and publicly denounce this move, help establish a high-level coalition to beat it back, and start raising money for the campaign.

There may be a legal strategy, too. The law that authorized cities and counties to set up CCAs bars PG&E and other private utilities from interfering with local CCA efforts — and it’s pretty clear that this initiative is designed to do exactly that. City Attorney Dennis Herrera needs to immediately investigate the possibility of suing to get this disastrous initiative off the ballot. *

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