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Tuesday, October 29, 2002

Prop D

Fiction is Expensive – Here are the Facts

By Gino Rembetes

PG&E expects to spend more than $2 million of its customers’ money to distort the intent and the prospective results of a proposed city charter amendment (Proposition D) that would permit San Francisco to issue revenue bonds for building energy-generation plants.

Through a surrogate organization called San Franciscans Against the Blank Check (SFABC), the bankrupt utility is trying to convince voters that the amendment would enable the city to raise and spend unlimited amounts of money to seize PG&E’s local power-distribution grid, with citizens losing their say in the matter.

PG&E/SFABC further claims that a Prop. D victory would lead to a sharp rise in electricity rates because the city could set them with no intervention from the California Public Utilities Commission.

The company has also enlisted the aid of U.S. Sen. Dianne Feinstein (D-California), who’s sending out mailers arguing that the city is incapable of running a power utility. The mailers assure us that they’re not coming at public expense, so we can guess who is providing the money: PG&E, or more accurately, its customers.

Aside from the fact that the opponents’ contentions are blatant lies, there are some things they would just as soon the voters forget.

Topping the list are the “blank check” issue and the CPUC’s regulatory role. If the reorganization plan in PG&E’s bankruptcy petition gains approval, the company will be largely deregulated (SF Chronicle, front Business page, Aug. 31, 2002). There’s your blank check – made out to PG&E, which already charges more per kilowatt-hour than any public-sector utility in California.

And remember what happened when San Diego Gas & Electric was deregulated in 2000: within three months, electricity bills rocketed by as much as 300 percent.

Regarding the claim that citizens will lose their vote on revenue bonds, they’ve never had one. The city routinely issues such bonds for numerous projects; they don’t need voters’ approval because they’re paid back with user fees from the services they fund, not with tax dollars.

PG&E wants voters to confuse revenue bonds with general-obligation bonds. The latter are paid back with tax dollars, so they do require voters’ consent. Prop. D will not change that.

The fact is, San Francisco voters haven’t had a say in their energy future since the city put it in PG&E’s hands almost 90 years ago. And Prop. D will actually give them a voice, because the San Francisco PUC, which would oversee the development of new generation, must comply with city and state open-meetings and public-records laws. PG&E makes its decisions behind closed doors.

Furthermore, Prop. D’s passage would not automatically trigger a move by the city to take over PG&E’s local distribution grid; it would permit the city to do so if, after an independent study is conducted, the controller certifies that the acquisition would not force retail power rates above what PG&E charges.

Another favorite argument from the opponents is that the city has messed up the water infrastructure – which also is under SFPUC oversight – and the Muni system and therefore can’t be trusted to provide electricity reliably.

That would be true if they were talking about the city officials who, over many decades, allowed the water and public-transit systems to deteriorate.

An initiative that voters approved in 1999 restructured Muni’s governance and, by many accounts, service quality has since gone way up.

Likewise, Prop. D would restructure the SFPUC in significant ways. First, it would add two seats to the current five on the commission. Second, it would give the board of supervisors a share in the authority to appoint the commissioners; that power now rests solely with the mayor. And PG&E is a long-time client of the current mayor, Willie Brown. Third, it would reserve one seat on the commission for an environmental expert and another for a consumer advocate.

Moreover, thanks to a reversion to elections by district, San Francisco now has a board of supervisors that isn’t a rubber-stamp agency for Brown and PG&E.

One must also bear in mind that the quality of a system depends not only on its governance but also on the resources available for its development and maintenance. Due to a property tax ceiling initiative (Prop. 13) that California voters were hoodwinked into passing in 1978, numerous local and regional services are below par.

Equally important to remember is what happened in early 2001: private-sector energy providers created an energy shortage and gave us rolling blackouts to drive wholesale prices up, and PG&E in turn boosted its retail rates; meanwhile, public-power cities such as Alameda, Palo Alto, Sacramento, and Los Angeles continued to supply reliable, inexpensive electricity to their customers.

Would building new generation cost money? Absolutely. But it must be done, and soon, because PG&E’s plant in the Hunters Point neighborhood and Mirant’s plant on Potrero Hill are aging and must eventually be shut down because they fail to meet federal Clean Air Act standards.

The city could borrow the money at a lower interest rate and could thus build new generation more cheaply than either company could. In fact, PG&E would have to pay extremely high interest because of its bankruptcy.

With the benefits of public power so readily apparent, you’d think Prop. D would be a cinch to gain voters’ approval. But polls show it will win or lose by a razor-thin margin. Generally, support of the measure is strongest in the eastern half of the city and opposition to it is strongest in the western half. The outcome will hinge on which precincts get the highest voter turnouts next Tuesday – and, of course, how many ballots wind up, uncounted, in San Francisco Bay.

Gino Rembetes is a SanFrancisco-based freelance writer and progressive activist.