Ongoing threat - Page 2

PG&E asserts dominance while Mayor Newsom waffles on city-owned power
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Each Mirant diesel unit currently puts out 52 megawatts.

As for other options Newsom requested from the agency, Hale said they're exploring how to get more demand response and efficiency from the existing grid.

That suggestion comes from Pacific Gas and Electric Co., which actively opposes the city's peaker plan and sent representatives to meet with Newsom's staff May 5 (while Newsom was in Israel with Lauter, who said the two did not discuss Mirant or the peakers while overseas), shortly before he sought the delay.

PG&E spokesperson Darlene Chiu confirmed the contents of the proposal as presented to the mayor's staff, which includes ways to eke more from the grid as well as a new transmission line between two substations.

Tony Winnicker, spokesperson from the PUC, said of PG&E's plan: "We absolutely support each of these projects, think they're long overdue improvements to the city's transmission reliability, and hope they are committing the necessary funding to begin and complete them."

He added that there is little in the plan that differs from a past PG&E proposal that Cal-ISO rejected — except the new transmission line. But, he said, its target completion date of 2012-13 was "very ambitious, given that they haven't even started the permitting."

PG&E's Chiu, a former spokesperson for Mayor Newsom, didn't respond to a question about the time frame for such a project, nor did she comment on whether PG&E considers the city's ownership of the peakers a threat to its jurisdiction.

She didn't have to. While City Hall scrambled to come up with an alternative that hasn't been vetted during the last eight years of community meetings, city studies, and negotiations, PG&E was telling its shareholders that the threat of public power is alive and well.

At the May 14 annual meeting of PG&E investors, held at the San Ramon Conference Center, CEO Peter Darbee assured the assembled, "I, too, am concerned about municipalization and community choice aggregation."

He was responding to a criticism from an employee and member of Engineers and Scientists of California Local 20, who said PG&E shouldn't be contracting outside the company because it created an experienced proxy workforce ripe for employment by another entity, like a municipality, that would be a threat to PG&E's jurisdiction.

In responding, Darbee recalled the recent efforts in Yolo County, where the county attempted to defect from PG&E and join the Sacramento Municipal Utility District. "Peter, it's half-time, your team is down, you better get directly involved with this," he said of the potential loss of 70,000 customers. The company mustered 1,000 employees to volunteer their time, walking from house to house and knocking on doors, prior to the November 2006 vote. "I was one of them," he said. "That vote went overwhelmingly in favor of PG&E."

Beyond knocking on doors, PG&E dropped $11 million on the campaign, outspending the competition 10 to 1.

But Darbee said it was a real victory in a state like California. "There's always been in the water a desire for public power," he said, adding that 30 percent to 40 percent of the population approves of municipally-owned utilities.

Customer service, Darbee went on to say, is the best defense against threats to PG&E. And for the past two years, PG&E's corporate strategy has been focused on that. To that end, its ranking in an annual JD Power customer satisfaction survey rose from 51 to 43 last year for the residential sector, and from 46 to a lofty second place for business customers.

But the JD Power survey also ranks municipal utilities, and 2007 results show PG&E was outpaced by three municipalities — the Salt River Project, the Los Angeles Department of Water and Power, and the Sacramento Municipal Utility District, which also took the highest ranking in the nation.