Buying power - Page 3

How PG&E and Mercury Insurance are spending millions to try to trick Californians into voting for corporate interests



Mercury was one of the major industry players challenging Prop. 103 in court. The company also deftly worked the political system, most scandalously through former Senate President Pro Tem Don Perata, a Democrat now running for mayor of Oakland. Mercury not only gave extensive political contributions to Perata, who then carried legislation for Mercury, including a bill to basically do what Prop. 17 would do, but a San Francisco Chronicle investigation in 2004 found that Mercury's cash allegedly went into Perata's personal account in a money-laundering scheme that reportedly triggered an FBI investigation and raid on Perata's house (no charges were ultimately filed).

Rosenfield described how the company operates in the political arena: "Mercury realizes it's going to lose the civil suit, goes to Sacramento, spreads a fortune in campaign contributions, and lo and behold, gets a bill passed overriding this provision of Prop. 103, legalizing its surcharges. [Gov. Gray] Davis vetoes it in 2002 on the grounds it violates Prop. 103. Another year goes by, Mercury spreads even more money around, and this time Davis is in a recall election and needs Mercury's money. So he takes the money — it's $100,000 or more — and Davis signs the bill. We have to go to court and challenge the bill as an unconstitutional amendment to Proposition 103, which we finally succeed in doing and it's upheld by the Court of Appeals in 2005. All that time, Mercury is overcharging people. Ultimately, Mercury is told that the law you sponsored is invalid and you can't do it anymore, so it stops in 2005 — 10 years of wanton, brazen violation of the law. And that brings us to the Mercury initiative."

Joseph refused to talk to us (he grants almost no press interviews) and Mercury spokesperson Coby King referred questions to Kathy Fairbanks, who heads the Mercury-sponsored Cal-FAIR.

But when we noted that this group is supposedly independent of Mercury, and that my questions were about the company's history of hostility to Prop. 103, King finally made this comment: "Prop. 103 is the law of the land, but to the extent there are improvements that can be made that are pro-business and pro-consumer, Mercury has not been shy about acting in the public interest."



Another corporation that has not been shy about flexing its muscle in the political arena is SF-based PG&E, California's largest and most influential utility company. It is single-handedly bankrolling the Yes on 16 Campaign. Dubbed the "Taxpayers Right to Vote Act," Prop. 16 was crafted by a Sacramento public relations outfit and law firm that have long histories with PG&E. Its goal: end the expansion of public power in California.

The utility has amassed a war chest of funding to sink into passing Prop. 16, which would make it difficult for municipal governments to break into the electricity business by requiring a two-thirds vote at the ballot before any such efforts could get underway.

Last month, PG&E executives notified shareholders that the estimated $35 million expenditure for the Prop. 16 campaign would affect individual share values by 6 cents to 9 cents. Following on the heels of this news brief was the revelation that PG&E CEO Peter Darbee received a total compensation of $9.4 million in 2009, reflecting a 9 percent pay spike from the previous year, according to the Associated Press.

Since PG&E Corp., the parent corporation, derives 100 percent of its revenue from PG&E Co., the utility company regulated by the California Public Utilities Commission, critics have argued that PG&E is using ratepayers' money to finance a campaign ultimately designed to limit ratepayers' ability to choose their electricity provider.


This is America, is it not? Are you confusing here with communist Russia?

Is your name the San Francisco Communist Guardian?

Posted by helllllooooooooooooo on Mar. 16, 2010 @ 8:41 pm

I'll ask the same question I asked in the Prop 16 story that nobody could answer.

Why does the SFBG single out P,G and E? Why the apparent multi-decade obsession with them?

Most SF'ers couldn't tell you a significant practical difference between their water supply (City run) and their gas supply (PG&E run).

They neither know nor rare whether it is private or public. Which is why they have always rejected voter initiatives designed to change either.

If it works, leave it alone. And if SF can't run Muni and can't manage its current huge fiscal deficit, why does anyone in their right mind want their light and heat dependent on Chris Daly?

Posted by Tom Foolery on Mar. 17, 2010 @ 7:46 am

Hi Tom,

Assuming you would like to have a substantive discussion I will offer this. As a journalist who has covered energy and environment issues for years, it is plain to me that the time to invest in electricity generating sources that reduce our collective, overall carbon dioxide emissions is now. While PG&E has been signing renewable energy contracts, its total renewable-energy content pales in comparison with the high standards for green power sources that have been set by Marin Clean Energy and Clean Power SF, the CCA programs getting underway in Marin County and SF, respectively. I have met a number of San Franciscans who do care deeply about this issue because they perceive it as a critical tool for launching a meaningful response to the challenges posed by climate change. If a municipal electricity program that offers a much greater percentage of renewable power can be successful in San Francisco, it can inspire and embolden others, help small business by encouraging the growth of small-scale green energy providers, and move us toward a more sustainable model. That's why I believe this issue is of interest to our readers.


Rebecca Bowe
SFBG reporter

Posted by rebecca on Mar. 17, 2010 @ 3:27 pm


It may well be that P,G & E is less "Green" than many would like.

But the SFBG's vendetta against P,G & E goes back decades and certainly long before green and climate change issues had the topicality and widespread interest that they currently enjoy.

Moreover, governments can mandate renewal energy requirements and other issues without necessarily owning power plants or power distribution networks. All of the private sector is regulated in various ways.

I can't help feeling that this issue goes a lot deeper than just concern for the environment. After all, if we really cared about the environment, we probably would want to remove the dam at Hetch Hetchy whose valley was regarded as equal, in its day, to Yosemite Valley itself.

Are you sure this isn't really just some good old-fashioned ideology about the government owning and running major services and industries? Painting it as a "green" issue makes sense as a marketing strategy but I think the issue is more fundamental than that. And it surprises me because, unlike a lot of other SFBG positions, it doesn't seem to be one that registers with the voters so much.

Posted by Tom Foolery on Mar. 17, 2010 @ 4:49 pm

I aggree that the time to invest in electricity generating sources that reduce our collective, overall carbon dioxide emissions is now, but few people, including or beloved SFBG reporters, understand renewables and the electric grid.

First, it does not automatically follow that if you want to reduce CO2 emissions you need to all the cities energy renewable. There are far more cost-effective ways to reduce CO2 emissions. Second, passing a "we only want renewables" does very little to reduce CO2 because it pushes off the problem to our neighbors.

You see, except for hydro, renewables are resources that depend on the wind and sun and are not very stable or fully predictable. The demand on the electric grid needs to be balanced instantly or the whole system crashes. Since electricity is extremely expensive to store, there are many generators out there that are built just to meet peak demand. We really only need them a dozen or so hours every few years. Renewables like wind do very little to stop new construction of peaking generators.

The electric grid cannot currently operate on renewables alone. If we say SF only will use renewable that means our neighboring ciites need to have traditional peaking units in place to support the electric system. In order to get more renewables on board, we need to either develop the technology to store electricity, or install technology to better balance the system - i.e., a smart grid. Of course, I fully expect the next article will be on how the smart grid and smart meters are bad for us because a few people incorrectly connected meters with high bills and screamed loudly. It is easy to contradict yourself if you don't know the topic.

Posted by Josh on Mar. 17, 2010 @ 5:07 pm

Yes, Tom, our problems with PG&E do run deeper than just the renewable power issue, but it's not about ideology. This company has used ratepayer money to defy the Raker Act, corrupt the political process, promote disastrous schemes like energy deregulation, maintain high rates, and use a dirty power portfolio (in defiance of state requirements that utilities get at least 30 percent of their power from renewables, a mandate PG&E hasn't met) for generations. And we're the only media outlet that has consistently raised these issues. You may be tired of hearing about it, and we certainly wish that we didn't have to keep writing about it, but it's a serious problem. Frankly, I don't know why there isn't more popular outrage at a supposedly regulated utility that has an extra $35 million of your money to spend pushing something as fundamentally undemocratic as a two-thirds vote requirement. That this is just accepted by you and others bespeaks a real breakdown in people's willingness to resist being controlled by powerful corporations.
Steven T. Jones
Bay Guardian City Editor

Posted by steven on Mar. 18, 2010 @ 9:19 am

The PG&E sponsored Ballot initiative contains false and misleading statements.
This proposition is a fraud upon the people of this State. It violates existing law. It is a monopoly using its captive customers money to wipe out competition and enshrine itself into the California Constitution. PG&E is poised to check mate our governments regulatory authority. The Proposition thwarts renewable energy and the opportunities of AB 32. It perpetuates an industry practice of pollution that disparately affects low income communities of color. The same Communities whose youth fight wars and die for fossil fuels, while the children and elders at home die from the pollution of fossil fuel burning. These are the Communities most harmed by this action. They had the most to gain from the promise of clean, locally harvested, electricity A promise potentially broken by this manipulation of the fossil fuel industry.
Rob Simpson

Posted by Rob SImpson on Mar. 18, 2010 @ 11:25 am

Have people forgotten that other shining example of private utilities, Enron? When corprations run our government, you lose a democracy.

Posted by sf24hr on Mar. 18, 2010 @ 8:11 pm

Prop 16's claim that it would assure "the right to vote" is entirely bogus. CPUC Chairman Michael Peavy pointed this out at yesterday's Prop 16 hearing is San Francisco. He said he's never believed in a 2/3 vote, because it means 1/3 plus one can block what the large majority wants. Peavy asked, doesn't community choice, at the opt-out procedure, give all ratepayers a choice? Yes it does. But Prop 16 actually limits and narrows choice. Under a CCA, all ratepayers can either opt for PG&E's dirty mix of fossil and nuclear, or opt for greener alternatives. Under a ballot vote, only 30-60 percent of eligible voters normally show up, and if only 1/3 of that smaller segment gets to veto CCAs under a Prop 16 system, "the right to vote" is not what it seems. In addition, PG&E can use its vast sums of raterpayers' money to swing elections against municipal governments who have neither the budget nor the legal right to fight back. PG&E spent $12 million to turn polling around and defeat a public power proposal for Yolo County. It is prepared to spend $35 million in ratepayers' dollar to foist Prop 16 on the State's Constitution to protect its market share. Ratepayers are funding a monopolistic corporate takeover of the Constitution and of the rights of cities and counties to determine their own energy future. Prop 16's "right to vote" is malarkey.

Posted by Guest Ed Mainland on Mar. 19, 2010 @ 1:30 pm

The negativity toward PG&E that is obvious in the Guardian and many other forums around NorCal is NOT simply a blanket rejection of Investor-Owned Utilities (though a strong economic case can be made that an inherent monopoly like electric supply should be owned and run by a public agency.)

No, PG&E has a unique history of incompetence and corruption dating to the earliest days of electricity in the west. The history of the electricity industry has been the subject of a number of very good studies and books, and in all of them, PG&E stands out as one of the major bad actors - - - virtually a poster child for the ways the private utilities abused the public trust to build their empires.

There are two other Investor-Owned electric companies in the state - SoCal Edison and San Diego Electric and Gas - and part of their business strategy in recent years has been to distance themselves from the positions taken by PG&E:

Item: While PG&E spends millions of their rate-payers' money in a to-the-death fight against Community Choice, the other two are obeying state law and cooperating with CCA efforts in their territories.

Item: PG&E is the only supporter of Prop 16, which would protect the monopolies of all IOUs. The embarrassed silence on Prop 16 from Edison and SDE&G is deafening.

Item: The other two IOUs are serious about carbon reduction and meeting the state mandates on renewable generation. They have both spent big money on innovative renewable projects. PG&E, however, spends mainly on greenwashing PR while their actual capital investments are in new fossil fuel plants and the lunatic idea of importing liquified natural gas from Asia via a pipeline from Oregon.

NO, the jihad against PG&E in these pages isn't a matter of abstract ideology. It's anger and frustration at seeing our planet go down the toilet while we're saddled with an electric company that just doesn't get it.

Posted by Guest: Bob Spofford on Mar. 20, 2010 @ 3:39 pm

It seems as though the author of this playbook took a page from her own writings about getting a "third party with credibility to act as there agents" The author Ann Sobel, got 10 other ex Mayors to sign a letter of opposition to our Marin Clean Energy project, sent it to all the local papers and PG&E is quoting her in their marketing materials. Pretty sick stuff.

Rebecca, would one be able to get a copy of this playbook to share with the Mill Valley Scope newspaper so people can see the letter from ex-Mayors is not an independant source as they assumed?

Posted by Guest on Mar. 28, 2010 @ 7:57 am