Palo Alto Weekly

Spectrum - February 5, 2010

Editorial: PG&E 'power grab' threatens Palo Alto

City-owned electric utility could be restricted in ability to expand services, even to new power lines, if Proposition 16 passes in June

Palo Alto for more than a century has reaped rewards from its city-owned utilities, chiefly its electric utility.

But those rewards are directly threatened by a heavily funded state measure, Proposition 16, on the June 8 ballot. The deceptively worded measure, originally called the "Taxpayers Right to Vote Act" until the state Attorney General changed it to a neutral term, would require two-thirds voter approval for any expansion of municipal utilities systems.

For Palo Alto and more than 50 other municipal systems the law could mean severe restrictions on their ability to keep up with the latest technology and sources of power, including newly emerging "green power" energy. This could mean less savings for their customers and less revenue for other city services.

There is a growing furor over the volume of financial support being poured into this proposition. PG&E so far has invested an estimated $3.4 million in getting the measure to the ballot.

The proposed constitutional amendment would require two-thirds voter approval in existing and new jurisdictions for expansion of a municipal utility, rather than the existing simple-majority. Two-thirds approval would be needed by any city or county seeking to form a new publicly owned electric utility.

Attorneys for the Northern California Power Agency (NCPA), which represents municipally owned utilities, are concerned that the measure could even apply to expansion of service to new subdivisions or developments.

Palo Alto Utilities Director Valerie Fong said ambiguities in wording could restrict Palo Alto's ability to join with other utilities in leasing or building transmission facilities for either additional power or green power. One interpretation is that two-thirds approval would be needed in every city and county through which the power lines pass.

Palo Alto this week joined a growing list of communities opposing the measure. The Sacramento Bee, in a rare pre-campaign editorial opposition, cited PG&E rates that are the highest in the nation, and warned that PG&E has 10 applications for rate increases before the state Public Utilities Commission.

Fong said Proposition 16 if approved could threaten Palo Alto's ability to sustain lower electric rates and its historic large transfers to the general fund. For instance, PG&E rates are currently 33 percent higher than Palo Alto's system-wide average, reflecting a PG&E rate increase Jan. 1, according to Utilities Department calculations. Rates vary by category of user. Yet Palo Alto's general fund will receive $11.12 million from the electric utility this fiscal year.

The impact on Palo Alto services, infrastructure and fiscal outlook would be devastating if its electric utility is hamstrung by this "power-grab" by a huge investor-owned powerhouse of a firm. This is a terrible proposal, and we hope voters can see through the millions more PG&E will be pouring into its campaign propaganda in coming months.

Comments

Posted by Gene Coan, a resident of Barron Park
on May 7, 2010 at 5:37 pm

This horrible measure needs much more publicity, since PG&E seems to have unlimted funds provided by its unfortunate customers to promote it on TV. This is a PG&E monopoly promotion, anti-environmental, customer rip-off measure. The city of Palo Alto, other cities and the counties, and public interest groups should actively fight this pseudo-democracy measure.


Posted by Walter_E_Wallis, a resident of Midtown
on May 8, 2010 at 6:54 am

Walter_E_Wallis is a registered user.

PG&E has money to spend on empire building because PG&E was forced into a devil's bargain after the hat trick of Diablo, Helms Hydro and "deregulation". The choice was dissolution or become bureaucracy's whore. They are allowed their profit as long as they ignore their captive clientele and service the whims of regulators instead.
Let PG&E return to predicting their own growth, setting competitive rates and suffering the consequences, and then I will welcome them into Palo Alto in lieu of the Thimble Theater currently dispensing our energy.


Posted by Albert Henning, a resident of Duveneck/St. Francis
on May 10, 2010 at 9:45 am

Proposition 16 is a lose-lose measure for voters.

If the proposition passes, then PG&E will more easily be able to retain its virtual monopoly in the realm of power development, generation, transmission, and management.

If the proposition fails, then more communities will follow Palo Alto's lead. Why is this *bad* for voters/ratepayers? City of Palo Alto Utilities used to deliver quality power to ratepayers at reduced rates compared to PG&E. For roughly the last ten years, however, City Council has discovered CPAU is a source of revenue for which Council need not ask voters' permission to secure it and spend it. Analysis of the City budget and CPAU rates demonstrates the discount of rates compared to PG&E has narrowed to virtually zero; while at the same time Council transfers 'excess' CPAU receipts to Council's budget, amounting to roughly 10% of the City budget.

In other words, Council uses CPAU as a cash cow, to get around the need for voter approval for budget increases. And the Palo Alto Green program simply amplifies this trend.

Council fails to understand that, if CPAU continued to provide ratepayers with quality power at a discount to PG&E, it would encourage more businesses to locate to Palo Alto, thereby increasing sales tax revenues. Council continues to take a short-term, deficit-driven view of CPAU, rather than the long-term view which (until ten years or so ago) had been the norm for CPAU management.


Posted by Walter_E_Wallis, a resident of Midtown
on May 10, 2010 at 2:39 pm

Walter_E_Wallis is a registered user.

An early PG&E history told of a time when wires of half a dozen power companies ran down every street in Frisco, and when customers changed suppliers frequently and for little reason. They welcomed the coming of the regulated monopoly. For years that regulation was directed toward reliability and cost. Then came the era of enlightened capitalism, when social gains weighed heavier than mundane profit. Utilities became just another machine for making people better, and as long as they read from the progressive syllabus they were allowed their cut of the action. Much easier to please a thousand politicians than a million customers.


Posted by piggy, a resident of Adobe-Meadows
on May 10, 2010 at 4:45 pm

The PIGGY company is trying to steal the election with misleading advertising.


Posted by piggy, a resident of Adobe-Meadows
on May 10, 2010 at 7:17 pm

PG&E admits that they are incompetent and/or corrupt: Web Link


Posted by Walter_E_Wallis, a resident of Midtown
on May 11, 2010 at 3:23 am

Walter_E_Wallis is a registered user.

A legitimate use of smart meters would be to give the user a financial incentive to reduce or avoid energy consumption at peak load times, when the cost of "peaking " power can be as much as 50 times the off peak cost. With the traditional meter you are urged to defer peak usage, but not rewarded for doing so.
With conventional metering you can impose a load on the system up to twice the full load rating of your service short term with no adverse effect on your situation, but the utility must "be there" for that load. Utilities used to plan for expected load growth, but that function has been taken away from them when public policy shifted to sharing the scarcity rather than building for the future.
The dirty secret of today's meter readings is that a significant percent of the reported readings have been estimates, where the reader gets tired and guesses a month's consumption, and corrects the estimate when he finally revisits a site. This is the likely explanation for most reported meter errors. It is egregious only when punitive rate schedules are in effect and you get skinned as watt waster.


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