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Wednesday, May 5, 2010

Carbon War - California Regulators Threaten PG&E with Fines, Superior Court Reviews Prop 16 as Marin County Launches 78% Carbon-Free Power Service

San Francisco, California.  A "hornet's nest" surrounds PG&E's $35M political war to block California cities from following Marin County and San Francisco's lead in breaking away from PG&E's utility power service to buy greener, cheaper power. With Marin physically starting its new power service on Friday and PG&E's Prop 16 facing voters on June 8, (and a copycat Texas Oilman-funded initiative to kill California's carbon law now on the November ballot), the state appears to be ground zero for a new brand of political aggression by energy companies against the very governments that allow them to do business at all - a Carbon War. California's energy regulator "slammed" PG&E yesterday for what it called illegal efforts by the former monopoly to stifle competition, warning the energy giant that it may face fines for attempting to block two Bay Area counties, Marin and San Francisco, from implementing greener, lower carbon electricity service at rates that meet or beat what PG&E's charges. On Monday, Michael Peevey, President of the California Public Utilities Commission, was quoted in the Wall Street Journal as saying Prop. 16 embodied a "blatant misuse" of the election process. "Imagine a single company trying to seek protection for its monopoly status in a state constitution," he said. "It's offensive."

Meanwhile, the Marin Clean Energy Authority, which aims to replace Pacific Gas & Electric Co. as the primary electricity supplier in Marin County, says 78 percent of the electricity it is supplying to the county this year will be from sources that don't produce greenhouse gas emissions, and include no nuclear power, but will meet or beat PG&E's prices. The deal has finally proven the case that Community Choice can deliver much greener power much faster at competitive prices than monopolies or deregulated markets can deliver, and this fact, now official, has PG&E very worried about the future of its business. The Marin Energy Authority has invited the general public to attend the  "historic launch" of its service this Friday at 1 pm to mark the day for the launch of its revolutionary new power service, which PG&E appears determined to nip in the bud with Prop 16.

As both San Francisco and Marin move forward with Community Choice programs to green their power supply with competitive suppliers, PG&E has already spent over $35M of ratepayer bailout funds to advertise, write and place on California's June ballot a constitutional amendment that would block any other communities from pursuing Community Choice by requiring any local government to first persuade a supermajority of voters to vote for it first. A 2/3 voter approval requirement would allow just 1/3 of voters to block any Community Choice programs. Regulators and governments have come forward to block a deep-pocketed corporate attack on local governments that are prohibited by law from spending any money on ballot campaigns like PG&E's fully funded "astro-turf" campaigns, "Taxpayer's Right to Vote" for Prop 16 and the "Common Sense Coalition" in Marin and San Francisco.  In contrast, PG&E has unlimited political capital based on captive ratepayer revenues. PG&E spent over $10 million fighting San Francisco in 2008 and even more fighting Yolo County public power campaign in 2007. Apart from its public power battles, Prop 16, PG&E has already spent tens of millions in marketing locally against Community Choice programs for several years.

Yesterday, the California Public Utilities Commission called the anti-Community Choice brochures the company has been mailing all Marin residents and businesses "misleading" -and ordered the company to stop sending them. The CPUC also said that PG&E can not use its own phone banks to call customers (at ratepayer expense) and then transfer them to customer service to opt-out of the Marin Clean Energy public power effort. PG&E has been in effect imitating a government by "processing" opt-out calls for its competitors - which the CPUC officially declared illegal.

The energy giant's aggressive political strategy to permanently diminish local control over energy and reclaim its liquidated monopoly through a new kind of corporate plebiscite, has caused a "hornet's nest" of opposition from local leaders already stuck in a debt crisis that another infamous 2/3 majority requirement - Prop 13 - has largely caused.  Public voter approval requirements already exist in local government charters and state law, but Prop 16 would place a 2/3 majority requirement on all local government retail energy programs whether or not taxpayers would be impacted by a program. 

A case in point is San Francisco. Because its city charter required it to get a majority of votes to authorize the revenue bond it will use, San Francisco voters approved a revenue bond authority, Proposition H, in 2001, but the 55% majority of voters that approved the use of H Bonds to finance renewable energy facilities would not be enough voter approval to authorize a Community Choice program under Prop 16.

Today, a Superior Court in Sacramento, California, will hear oral arguments from California municipalities in the case on whether PG&E's Proposition 16 should be removed outright from the California June 8, 2010 primary ballot. Judge Allen H. Sumner will hear from a long list of local governments, including Marin and San Francisco, suing to disqualify the PG&E-sponsored Proposition 16 from the June 8 statewide ballot. In their written arguments, attorneys for over a dozen cities used PG&E's own chief executive’s public statements as evidence that the utility's proposed measure is false and misleading, according to San Francisco’s City Attorney, who has helped lead the lawsuit. The Sacramento Bee reported that, according to the petitioners' reply brief filed in Sacramento County Superior Court, a public exchange between PG&E Corporation Chairman, CEO and President Peter A. Darbee and a stockholder at the company's March investor conference revealed that the purportedly pro-vote measure actually aims to greatly diminish voting, discourage elections, having to spend millions and millions of shareholder dollars to campaign against competing energy programs, according to a release from San Francisco City Attorney Dennis Herrera. The coalition of locally-owned public utilities from throughout California, including the San Francisco Local Agency Formation Commission, filed civil lawsuit on March 18, 2010. 

While Marin and San Francisco have implemented Community Choice in parallel, only Marin will initiate service prior to June 8 when, if passed, Prop 16 will go into effect. Thus San Francisco and all other cities pursuing Community Choice would be blocked. The Marin Energy Authority signed a five-year agreement with Shell Energy North America to provide power to the county from at least 25 percent renewable sources. In contrast, PG&E today sources about 14 percent of its electricity from renewable sources though it has signed contracts with independent power producers including Oakland-based BrightSource and Tempe, Ariz.-based First Solar that would deliver more than 20 percent once the new projects are built. Not included in PG&E's renewable tally is an additional 51 percent of PG&E's power that comes from a large hydroelectric dam. State law doesn't recognize large hydropower as a renewable resource even though it is emissions-free power.

The Marin Clean Energy Authority recently added to the agreement with Shell a commitment that the power mix will include at least 53 percent emissions-free sources.The Authority aims to give Marin residents more options for using power from "non-polluting renewable sources" and will offer Marin's 7,500 largest electricity users an option to buy electricity from more renewable sources than they get from PG&E at no additional cost, or customers can get 100 percent renewable power for a $5 premium. The Authority's power mix will include 37 percent hydropower from the Tri-Dam Power Authority in San Joaquin, 9 percent landfill gas in Oregon, and 8 percent windpower and 5 percent biomass from Washington. An additional 9 percent will come from a variety of smaller sources, according to the Marin Independent Journal.

The San Francisco Examiner recently reported that San Francisco's Community Choice program is still behind closed doors, but the City is working feverishly to complete negotiations from a December Request for Proposals that selected a consortium backed by Silicon Valley leaders. "What is known about the company is that there are at least three key members at the helm. W. Kent Palmerton has more than 31 years of experience in both the private and public electric industry and has worked at companies that include Williams Energy Services. Samuel Enoka, along with working for Power Choice, is the president and chief financial officer of VIASYN, also a power company. Glen Casanova helps head the company, and he has worked in global energy and infrastructure industries.“Power Choice Inc. is a joint venture of top-tier energy services firms with decades of experience in developing electricity projects and in generating and delivering electricity,” Power Choice spokesman Trevor Curwin said. The consortium touts members as Oracle Corp., real estate firm Grubb & Ellis Co., independent power producer RealEnergy and GE Energy, one of the world’s leading power suppliers. Power Choice wound up in the negotiating seat after undergoing a competitive bidding process. “Power Choice LLC was the highest-scoring and most complete out of the five bids submitted by various vendors,” Jue said. “Their collective experience on power scheduling and pooling energy resources vaulted them to the top of the list for the [request for proposal] process.”

In Marin, however, a major success has already been achieved: 78% greenhouse gas free power without resorting to nuclear power as PG&E does. I will myself be present at the Marin Energy Authrity's event this Friday because I view this plain fact as a major proof of concept for Community Choice that breaks some of the old myths from the Market Fundamentalists who insist greener power must be more expensive than brown power. This is what PG&E is really trying to stop: a breakthrough that changes everything. “Some people have been skeptical that Marin Clean Energy could achieve its renewable energy and greenhouse gas reduction goals and keep rates the same or lower, but the proof is in the power," said Marin County Supervisor Charles McGlashan, chairman of Marin Clean Energy, in a press release.

On Friday, May 7 at 1 pm on the Island at the Lagoon off Avenue of the Flags at the San Rafael Civic Center. State Senator Mark Leno, State Assembly member Jared Huffman, other dignitaries, and hundreds of local businesses, clean energy advocates and other community supporters will celebrate the first day of service by Marin Clean Energy (MCE)."  May 7th is MCE's first day of service to the ratepayers of Marin. The general public is invited to attend this historic event hosted by Supervisor Charles McGlashan, Marin County Supervisor, 3rd District Chair, Marin Energy Authority This event is a co-production of Marin Energy Authority and Marin Green Leadership, a nonprofit partner that supplements and supports MEA's educational outreach. Friday, May 7, 2010 1:00 - 3:00 pm Marin Center, 10 Avenue of the Flags, San Rafael For more information, call 473.6624. Park in the main parking lot at Marin Center and proceed to the right of the theater to the lagoon area. Signs will direct you to the event.

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