PG&E attack mailer puts City Hall on defensive

Green City: SF officials are investigating whether PG&E broke the law with these misleading mailers

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GREEN CITY On a Pacific Gas & Electric Co. conference call in late October, with top PG&E executives and analysts from Goldman Sachs, Deutsche Bank, and other prominent investment firms on the line, PG&E president Chris Johns explained how a company-sponsored ballot initiative could save millions of dollars for the utility.

"We have faced potential takeovers multiple times over the last several years and we have had to expend significant resources to oppose these efforts," Johns explained, referring to attempts by public agencies to set up independent electricity programs that threaten to compete with PG&E. "The success of this initiative, if placed on the ballot, could significantly reduce the need for taxpayers and utilities to oppose these local government takeover attempts."

His comments appeared in a transcript from an earnings call posted on a financial Web site called SeekingAlpha.com. When pressed by an analyst about how PG&E had come up with the idea, company CEO Peter Darbee chimed in. "What occurred to us was we were repeatedly faced with this, and we were spending significant amounts of money year after year," Darbee said, according to the transcript. "So we asked ourselves: what would be something that could discourage this over the longer term?"

What surfaced was a proposal for a statewide ballot initiative that would amend the state constitution to require a two-thirds majority vote at the ballot before any local government could develop its own electricity program. With such a high hurdle in place, efforts to move forward with publicly-owned power programs would essentially come to a standstill. But with San Francisco's own stab at it expected to get underway long before the proposed initiative is placed on the ballot, PG&E is back to its default tactic of pouring millions into an opposition campaign.

San Francisco's community choice aggregation (CCA) initiative, called CleanPowerSF, took a leap forward last month when a request for proposals (RFPs) went out to potential electricity service providers. The program aims to provide 51 percent renewable electricity by 2017, a meaningful step toward reducing greenhouse gas emissions.

But on the heels of this milestone, a wave of mailers bearing PG&E's name in fine print crashed into San Francisco homes and businesses, screaming "Business Beware" in 1.5-inch type and proclaiming CleanPowerSF to be a "costly energy scheme." The mailer cites a city controller's report projecting that customer bills could be 24 percent higher under CCA.

But the San Francisco Local Agency Formation Commission (LAFCo), which is working in partnership with the San Francisco Public Utilities Commission to craft the emerging power program, responded in a press statement that this claim is misleading, since a fee structure has not yet been nailed down. While the controller's report also noted that it was too early to say just what the pricing structure would be, it's been a primary goal of the city's CCA all along to offer customer billing rates that meet or beat PG&E prices.

Meanwhile, the city appears ready to fight back — and questions have already been raised about whether it was legal to distribute the attack mailer. Sup. Ross Mirkarimi, who chairs LAFCo, announced at the Dec. 15 Board of Supervisors meeting that he was requesting that the city attorney examine whether PG&E had violated state law by distributing the mailer. According to the state law that laid the groundwork for CCAs to exist, investor-owned utilities are required to "cooperate fully" with the public power efforts of cities. "PG&E has blanketed this city ... with mailers that distort and misrepresent what CCA is doing," Mirkarimi said. "I believe this is a potential violation of California Public Utility Commission law."

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