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Prop 16: A PG&E Power Grab or Taxpayer Protection?

New America Media, News Feature, Anuja Seith Posted: May 05, 2010

If youve turned on the television recently, youve probably seen an ad for Proposition 16, the initiative put on the ballot by Pacific Gas and Electric, which would make it more difficult for local governments to get into the power businesses.

To date, PG&E has spent $25 million on the campaign and has pledged $10 million more before the June 8 election.

First, the giant utility spent more than $2 million on petition circulation companies, which collected the signatures of 433,000 registered California voters.

Then, PG&E unleashed more than $20 million worth of television advertisements, most to play on peoples fears of government wasting taxpayer money.

The ads typically open with the gravelly, low voice of a man, who gives the viewer statistics of local government deficits and debt in California, which he says are at $36 billion and $145 billion, respectively.

The voice introduces Prop 16 as the solution. He calls it the Taxpayers Right to Vote Act, because it requires two-thirds voter approval before the local government provides electricity service using public funds or bonds.

This voice says that taxpayerss right to vote is priceless, but that right is not currently available to the voter, it claims, because local government can spend unlimited public funds to create its own utility company with no public vote.

Currently, state law gives local elected officials the right to arrange to provide electricity within their jurisdiction through a contract with an electricity provider other than an investor-owned utility.

We dont think a small body like City Council or County of Supervisors should decide where they invest taxpayers money, said Robin Swanson, spokesperson for the Yes on 16 campaign.

Voters should be able to weigh the promises being made to them and Prop 16 gives them that option, she said.

Campaign records show PG&E as the only contributor to the Yes on 16 campaign, which also has the support of anti-tax groups and the California Chamber of Commerce.

Marc Burgat, vice president of government relations for the California Chamber of Commerce, said his group opposes public power because municipal utilities can cherry-pick areas of highest return, which brings them more profit, while rest of the areas are left to be served by the private utilities who have less return and that forces private utilities to charge higher rates.

Opponents argue Prop16 is little more than a power grab by a private company worried about losing market share.

And while PG&Es advertisements stress the need to hold government accountable for how it spends taxpayers money, critics say that local power agencies are accountable to their elected official boards while PG&E is accountable to its shareholders.

They note that PG&E charges some of the highest electricity rates in the state. In California, they say, customers of nonprofit municipal utilities pay an average of 20 percent to 25 percent less for electricity than customers of for-profit electric utilities.

This measure is solely motivated by PG& Es special interest, and it would lock the companys high rates into the constitution by locking out public utilities and community choice, said Mindy Spatt of The Utility Reform Network, which opposes the measure.

Those opposing the initiative include consumer groups, the California Labor Federation, the League of Women Voters of California, the Sierra Club, local elected officials, and the boards of municipal utilities. Thirteen newspapers have editorialized against Prop 16.

Many business groups are also opposed to Prop 16.

Steve VanDorn, president and CEO of the Santa Clara Chamber of Commerce said the public utility in his area, Silicon Valley Power, offers rates that are 30 to 40 percent lower than PG&Es.

Gino DiCaro of the California Manufacturers & Technology Association, echoed that concern: The industrial electricity rates that we pay are 52 percent higher than national average and 95 percent higher than western states.

These rates can only come down if there is competition, but this initiative would curtail any competition, he said.

DiCaro said that in recent years, California has lost 634,000 manufacturing jobs. Since electricity is a main budget item for manufacturers, there could be more job losses if Prop 16 passes and rates continue to soar.

Environmentalists opposed to Prop 16 say that government-owned utilities have done a better job of offering energy from renewable sources public utilities than investor-owned ones like PG&E.

Edward Mainland, co-chair of the energy climate committee of the Sierra Club, said solar power currently makes up less than one percent of PG&Es energy portfolio.

Opponents may have trouble getting their voice heard before the June election, however. The No on 16 campaign has raised just $31,000.

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