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The Protect PG&E’s Gold Mine Act

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POSTED February 10, 2010 2:15 a.m.
Hiram Johnson and his contemporaries were mortified at the chokehold Southern Pacific Railroad had on California in the early 1900s.

Southern Pacific literally bought off politicians and had an ineffective State Rail Commission in their back pocket. The end result were towns served by Southern Pacific – the lifeline of commerce when it came to moving farm products, other goods, and passengers – were often charged rates that were considered exorbitant.

Johnson was an assistant district attorney who assisted in the corruption and graft prosecution of San Francisco Mayor Eugene Schmitz. As a member of the liberal Republican organization known as the Lincoln-Roosevelt League, Johnson led a populist movement that swept reform-minded legislators into office and him into the governorship of California.

The first key reforms that Johnson and his followers put in place were two constitutional amendments creating the imitative process so voters could bypass the California Legislature when they felt it was necessary and replacing the Rail Commission with one that had real teeth.

The Rail Commission under Johnson started neutering Southern Pacific’s political machine that was often referred to an octopus as it had its tentacles in virtually every category of business concern in California. The Rail Commission eventually evolved into the California Public Utilities Commission.

Back when Johnson was swept into office, the state was served by hundreds of fledgling power companies. None of them were acting in a monopolistic manner because someone was always threatening to start a new service and – if they gained enough subscribers or backers – they could.

The men who ultimately founded Pacific Gas & Electric took a page from A.P. Giannini’s playbook when he transformed the Bank of Italy into the mighty Bank of America. It was simple. Go out to the provinces and snap up small banks. PG&E did the same thing with small utilities.

Now PG&E is using two of the key components of the most significant reform movement that California has ever seen - the California Public Utilities Commission and the imitative process - to try and create a perpetual monopoly.

PG&E spent $3.5 million of ratepayer funds to collect enough signatures using marketing that makes Odysseus and his infamous Trojan horse seem transparent by comparison. PG&E dubbed the measure the “Taxpayers Right to Vote Act”.

The only “right to vote” it focuses on are proposals by municipalities and irrigation districts to set up or expand existing electric utilities. It also sets a two-thirds threshold.

Keep in mind California law prohibits public agencies from spending money to campaign on a ballot measure whereas PG&E et al are free to spend all they want from the 11.45 percent return they are guaranteed to get courtesy of the CPUC regardless of the quality of service or if they have unexpected expenses such as settling lawsuits for killing people in Christmas Day natural gas explosions.

And how PG&E would spend millions of dollars to pull one over on voters was illustrated by the utility not once, but twice, with illegal campaign shenanigans in elections during the past decade in San Francisco. In each case they not only buried proponents of a municipal power system in San Francisco with a well-financed campaign, but they broke state campaign laws  in order to do so. They had no problem rationalizing the fines the California Fair Political Practices Commission ultimately imposed as they viewed it as simply a cost of doing business.

It should be noted that PG&E was the only for-profit utility pushing the initiative requiring a two-thirds vote for a government agency to enter into the power business or expand existing electrical operations.

That is because the rates of the state’s other big power players – Southern Consolidated Electric and San Diego Gas & Electric - are nowhere near PG&E’s. And their CPUC documented service records in terms of power disruptions is more than 50 percent better than PG&E.  The expensive service that ranks consistently as the least reliable in the state is driving efforts to set up non-profit power systems in the north state.

PG&E’s dismal performance with power costs and service is due not to the men and women who earn their paychecks but from upper brass pocketing $1 million bonuses after driving PG&E to the brink of bankruptcy a few years back while flying around in recently acquired $12 million corporate jets. Not only does PG&E have one of the nation’s largest portfolios of hydroelectric power  which usually results in lower rates but they also have gotten a number of rate hikes they claim were to upgrade aging infrastructure.

And now they are pushing their biggest rate increase in history - $1.01 billion –that will take a typical PG&E combo customer bill in Manteca up $20.59 more a month based on using 850 kilowatt hours and 40 therms of natural gas.

A more honest name for the ballot measure would be The Protect PG&E’s Gold Mine Act.
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