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PG&E using eminent domain to compete against private firms

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POSTED March 16, 2010 1:22 a.m.

Eminent domain, we are told by PG&E, is an evil thing but only if it is used against them.

PG&E whipped up enough furor about a public agency such as South San Joaquin Irrigation District possibly using eminent domain under state law to take part of their business that they were able to sidetrack SSJID’s last application to enter the retail power business that was heard before the San Joaquin County Local Agency Formation Commission. It was atrocious, PG&E mouthpieces wailed, that a public agency could use eminent domain to compete against a private sector firm.

Forget the fact LAFCO attorneys advised the commission that the issue of eminent domain had no bearing on their decision. PG&E still rode the indignation horse hard enough to block SSJID.

For detractors who noted that PG&E often uses eminent domain – or the threat of - as allowed by the state as a quasi-public agency to put in everything from power lines to power plants, PG&E simply says ”that’s different.” Power lines, after all, are for the public good.

One must not – as PG&E’s government relations folks hammered constantly – allow eminent domain to be used to go after a thriving private sector business.

Those who contend PG&E would never use eminent domain to hurt a private sector competitor will have a hard time explaining away PG&E’s Feb. 2 filing before the California Public Utilities Commission.

PG&E wants to use eminent domain to compete with 100 percent private business ventures involved in the storage of natural gas. While their competitors who don’t have government protection as PG&E does through the CPUC that assures them of a “reasonable rate of return” on their investments and either are thwarted by property owners reluctant to sell or have to pay above market prices to make deals work, PG&E doesn’t have to bother with such stumbling blocks.

Instead, they can just ask the CPUC for permission to condemn private property for the PG&E bottom line.

PG&E and a separate legal entity known as Gill Ranch Storage LLC want the authority to condemn certain natural gas mineral rights and nine-tenths of a mile of a natural gas pipeline easement near Fresno. Understand this isn’t just for PG&E customers. The natural gas storage is to allow Gill Ranch – a Portland-based concern – to not only accept stored gas for California utilities, but also merchant generators, producers, and marketers.

Gill Ranch - and their partner in eminent domain condemnation PG&E - are getting a bit antsy since they wanted the profit-generating venture that required taking the use of other people’s property up and running by this year.

Gill Ranch is an extension of NW Natural. It is a natural gas distribution company based in Oregon and not California. It is seeking to develop Gill Ranch as an extension of its ability to generate profits.

The California constitution, as you can see, is just a business tool for PG&E to use to maximize its profitability. In this case, it is competing against other privately held concerns in the business of storing natural gas.

It is why PG&E thinks it is perfectly OK to spend upwards of $35 million or the equivalent of 9 cents per share to fund its effort on the June 8 ballot to get state voters to amend the California constitution to require any public agency that wants to enter the retail power business – either as a basic provider or through aggregation – to secure a two-thirds approval first.

Proposition 16 was conceived, circulated and is being pushed by no one else but PG&E. Why, you ask, aren’t the state’s two big utility players – San Diego Gas & Electrical as well as Southern California Edison – jumping on board or even sending them a dime for the cause?

During a rate hearing on July 26, 2009 CPUC President Michael Peevey told PG&E representatives, “You cannot continue to have a system that, where apparently despite differences in weather and the physicality of the system, still has outages that by the data we collect are approximately double those of other utilities in the State of California.”

That’s right. They are twice as unreliable as any other provider plus also charge much higher rates than the state’s two other large utility providers.

There is no open revolt against SDG&E or Southern ConEd. PG&E is the leader when it comes to piling up the rate hikes due to “infrastructure concerns” that never seem to get addressed.

Getting Californians to support Proposition 16 means PG&E won’t have to worry too much in future years when they roll out rate increase after rate increase such as the Mother of All Rate Hikes coming on Jan. 1, 2011.

That’s when PG&E wants its biggest rate hike in history - $1.101 billion – to primarily address infrastructure. That doesn’t even cover the actual procurement of power.

No wonder why some are calling Proposition 16 the Protect PG&E Profitability Act.

To contact Dennis Wyatt, e-mail

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