Wednesday, June 2, 2010

Corporate Psychopath: PG&E’s RoboCorp Attack on California

Teabaggers and the Angry American are the targets of a calculated propaganda effort of one of the world’s largest energy companies to grab a power monopoly in California’s constitution – all by re-directing voter anger from anger against the Wall Street collapse to anger against local governments. PG&E says Prop 16 is about voter rights, when its CEO admitted Prop 16 is really intended to reduce public votes that might interfere in its business. With a shamelessness that brings the film The Corporation to mind, PG&E has spent over $50M in ratepayer funds to pay for its faux-patriot advertisements during the same month that its attorney's are asking California regulators for the largest rate increase in its history: 30% or $6 Billion.

A $50M “saturation bomb” television advertising campaign by Pacific Gas and Electric Corporation (PG&E) attempts to persuade millions of Californians that it is local and county governments, not Wall Street CEOs, that should have their hands tied in 2010. PG&E led (arguably invented) the nation’s “Too-Big-to-Fail” bailout trend, collecting over $20B in ratepayer bailouts over the past dozen years, including the largest bankruptcy in history and a “ringfencing” scandal for siphoning $5B of bailout funds through the holding company. But its ad says only that governments should not be allowed to participate in the energy business – even if a majority of voters approve it.

PG&E’s bailouts were never voted on at all, including $ Billions in non-bypassable surcharges the utility has imposed on its customers’ monthly electric bill to pay PG&E these bailouts -- and as  these surcharges somehow escaped being called “taxes,” no vote at all was required. Same goes for PG&E's 30% rate increase. But PG&E’s campaign says now it is a champion of the right to vote -- and furthermore that majority rule is not good enough for local governments. California begins to feel like a Third World country in which corporations are puppet-masters of failed states, and in which local governments are stripped of basic, centuries-old local control authority. The Proposition 16 vote next week on June 8 signals a new kind of globalization in America – in which formerly domestic corporations begin to behave like multinationals that have little real regard for local or even state governments. Never mind that PG&E has no business without state and local consent: attack now, "mend fences" (as CEO Darbee said) later.

PG&E’s hubristic attitude has transformed its image among Californians into a machine-like, even Orwellian dissembler: enter “RoboCorp,” the corporate psychopath, at stage right. Energy Giant PG&E started the Robocorp trend following the US Supreme Court’s recent decision (Citizens United vs. Federal Elections Commission) to give corporations the same rights as individuals, by allowing corporations to fund candidates in federal elections. The justices struck down a provision of the McCain–Feingold Act that prohibited all corporations, either for-profit and not-for-profit, as well as unions, from broadcasting “electioneering communications” in federal elections. Now the world’s wealthiest corporations may play the game at will. Justice Stevens’s dissenting opinion was joined by Justice Ginsburg, Justice Breyer, and Justice Sotomayor, holding that the Court's ruling "threatens to undermine the integrity of elected institutions across the Nation. The path it has taken to reach its outcome will, I fear, do damage to this institution," concluding:

“At bottom, the Court's opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt. It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.”

California now faces the threat of a new brand of “robo-corporatism,” with a statewide vote next week on a proposal written and financed by the holding company of a regulated energy company to amend the state’s constitution. It is a preemption of both traditional local control and coup d’etat against the authority of the state, and local governments, to regulate its subsidiary company, Pacific Gas and Electric Company.

Since the Copenhagen Summit was fundamentally undermined by the U.S. Senate (under vigorous U.S. energy industry lobbying - as was the Kyoto Treaty),  several major crises have underscored the impression that the United States, California high among them, appear to be suffering from a “policy collapse” syndrome in which concentrated corporate power systematically disables governments from implementing the public mandate for action on energy independence and meaningful climate protection measures. High among them is the BP oil platform spill, which has brought to light the longstanding compromised, even co-dependent relationship between energy corporations and the government agencies that are supposed to regulate them. In BP’s case, the Interior Department had recently exempted BP's Gulf of Mexico drilling operation (the one that exploded) from a detailed environmental impact analysis just last year in 2009, according to government documents, after three reviews of the area concluded that a massive oil spill was unlikely. The cost BP avoided by not installing measures that would have prevented the spill: $500,000. The decision by the department's Minerals Management Service (MMS) to give BP's lease at Deepwater Horizon a "categorical exclusion" from the National Environmental Policy Act (NEPA) on April 6, 2009, as well as BP's lobbying efforts just 11 days before the explosion to expand those exemptions illustrate the dangerously perfunctory function of regulators over one of the largest oil importers into the United States. Even worse, President Obama’s failure to admit his mistake in supporting an end to the ban on offshore oil drilling just a week prior to the oil platform explosion highlight’s the consequences of collapsed government: that even its best leaders are rendered unable to learn from their mistakes. Today, with unthinkable long-term impacts facing the U.S. and the entire Atlantic Ocean, we face the possibility of the Gulf being permanently damaged just so Mr. BP could save half a million in equipment upgrade costs – but all President Obama can say is that BP will have to pay the damages!  This is offensive to the informed, who know as Obama does that the current federally established cap on damages for a single oil platform spill is $75 million - a tiny fraction of the $ billions in damages now occurring – if damages of this scope can even be assigned a value.  If this is what the President means by “the buck stops here,” then there would appear to be no There, There, so to speak.

Many Californians remember the film Who Killed the Electric Car? And know that General Motors and other U.S. automakers conspired to undermine California’s landmark Zero Emissions Vehicle standard which caused electric cars to appear on California’s streets in the late 1990’s. Within a few years heavy lobbying led Governor Gray Davis to buckle and suspend the Zero Emission rule requiring automakers to sell a minimum number of electric cars each year. Just a week after GM recalled the last cars its entire California fleet of 1000 Zero Emission electric vehicles to be destroyed (citing a "lack of demand"), and during the same year by which California air regulators had since 1990 required that 10% of all new cars be pollution free had not Governor Davis lifted the requirement upon taking office -  state air regulators came out with a new standard for rating new cars that instead re-classified gasoline-burning engines as "clean."  Keeping on their smiley faces, state air board regulators proudly announced the "Partial Zero Emission Vehicle," ("P-ZEV") a characteristically Moderate Democratic nomenclature to which the California Air Resources Board (CARB) and Detroit automakers have agreed - a watered down version of the "Zero Emmission Vehicles" classification following Governor Davis' decision to eliminate the 1990 landmark state regulation providing that 10% of all cars sold in California should have been Zero Emission Vehicles ("ZEV") starting in 2003.

The irony is that the global energy and automobile corporations have only succeeded in shooting themselves in the foot. GM went bankrupt because its products were non-innovative, gas guzzling lemons. By protecting their market share against competition, corporations enable themselves to grow into stupid, dysfunctional fiefdoms. In recent years, because GM’s lobbying prowess had enabled it to kill its own electric car the EV-1, one of the most admired GM cars in decades (and undermine fuel standards since the early 1980’s), GM has gone bankrupt. Indeed, many of America’s industries, such as telecommunications, have substantially harmed their own competitiveness in global markets by dominating U.S. and state regulators and legislatures– winning rules and laws that appear to meet their short-term interests while actually undermining their competitiveness with mediocrity and corruption. The negative feedback loop is indeed reminiscent of the fall of empires: as if some invisible force were drawing the lemmings over a cliff.

Energy corporations that prove unable, like BP or GM, to dominate the governments that are supposed to regulate them, are simply attacking them – with Napoleon-style plebiscites. In the case of PG&E and Valero/Tesoro, laws of California’s legislature that have taken a decade or longer to implement, and indeed the constitution itself, which is extremely rare for the legislature itself to amend, are now known to be for sale to anyone with $50M. PG&E’s Prop 16 coup attempt on the June 8 ballot has awakened two other energy giants, two oil corporations from Texas - Tesoro and Valero - to come gun-slinging to California, already ponying up $800K to write and pay sidewalk signature gatherers to qualify a subsequent November ballot initiative that would un-do California’s adopted landmark Greenhouse Gas Reduction law, AB32.  But PG&E will be the proving ground of this new robocorp trend. On June 8, PG&E would block a movement of San Francisco, Marin County and other municipalities to provide cheaper, greener power to willing residents and businesses – through the Community Choice law, AB117. Already, Marin is providing cheaper power to residents and businesses even though it is twice as renewable as PG&E’s power and 78% carbon-free without nuclear compared to PG&E’s 50% including nuclear. PG&E does not want this competition. Prop 16 would even block communities from acting to reduce greenhouse gas reductions while PG&E and others continue to fail to comply with state green power minimum laws. These days, California looks like another potential failed state, ruled by bloated monopolies and cartels. While municipal governments are prohibited by law from donating a penny to the No on Prop 16 campaign, PG&E is free to dip into bottomless wells of near-captive ratepayer revenues. Under globalization, corporations may indeed become traitors to the state. Indeed, the PG&E/Valero strategy may usher in a new era in which formerly rooted local utilities begin to act like they are operating in a foreign country. The days of bowing to state and local officials appear to be over. This is war.

California is the fifth largest economy in the world, but if PG&E’s cluster-bomb marketing campaign succeeds in persuading an angry electorate that Prop 16 is good for them, the state will have sold its constitution for $50M in corporate plebiscite advertising. The move would not only block some of the nation’s most ambitious and successful energy programs, but also disable local governments from planning economic development – a move that has led real estate and business leaders to oppose Prop 16. The Prop 16 story is a tale of revisionism – erasure even, and has evoked the word “Orwellian” to reflect the shameless deceptiveness of PG&E’s consultants’ advertisements. Prop 16 rests on a crass manipulation of the angry victims of the Wall Street downturn. The Company’s Astroturf campaign “Californians for the Right to Vote” is the ultimate poker face – a $50M trick to win back a multi-billion dollar power monopoly. Deflecting anger against abuse by large corporations that collapsed the value of Americans’ homes in the past two years and has thrown the nation into an economic depression, the nation’s Too-Big-To-Fail Trendsetter (PG&E) crafts the ultimate Orwellian twist: it is the government’s fault.

If successful, PG&E will in effect win back a monopoly it has forfeited to the state over ten years ago – in a famously prosecuted case by then Attorney General Bill Lockyer. PG&E sold its monopoly to ratepayers in return for a multibillion dollar ratepayer “stranded costs” bailout in the late nineties.  Now CEO Peter Darbee wants it back by any means necessary, and has chosen to try and buy it for $50M – the figure already donated by PG&E to its “Astroturf” campaign – calling itself “Californians for the Right to Vote.”

All along PG&E has dressed itself in patriotic garb, creating and funding “Common Sense” coalitions in San Francisco ( and Marin (, abducted from the dead cold hand of American Revolutionary Thomas Paine. Seeking to seduce angry Teabaggers into its ideological striptease tent, PG&E has had to speak with forked tongue in order to appear coherent, creating the distinct odor of a dissembler, leading Los Angeles Republicans and many traditionally conservative business groups to vocally oppose Prop 16.

In a recent defense of Prop 16, PG&E has said that Community Choice programs should be subject to the same voter approval requirements as government takeovers. “The vote for approval of a utility should require the same two-thirds super-majority that cities need to sell an existing municipal power system,” Pruett told the Los Angeles Times. "We really feel it's important to have a level playing field so everybody is treated fairly," he said. "If people in an area want to have a different provider, they ought to have the right to vote."

But the legislature and California Public Utilities Commission had already authorized $ Billions in ratepayer bailouts to PG&E based on giving Northern Californians the right to choose their power provider – and AB117, the Community Choice law, was carefully written to avoid harming PG&E and the other utilities financially, while also requiring the utilities to “cooperate fully” with Communities seeking to negotiate with other competitive power suppliers. The Marin and San Francisco programs that PG&E is trying to block are a form of choice, taking over no PG&E infrastructure. They simply offer local residents and businesses an alternative, a choice, other than PG&E. During the state’s two-year regulatory process to set up Community Choice, PG&E was asked whether it would oppose San Francisco, Marin and the other cities – and they said “No.” Today, a different story appears in millions of living rooms across California. Prop 16 would submit these communities and dozens of others to the same supermajority voter requirements as would be required a full eminent domain takeover of their poles and wires. San Francisco’s own local charter required it to win voter approval of revenue bonds to finance green power before the CCA program could issue bonds. Fifty-five percent (55%) of San Francisco voters approved the Proposition H Bond authority in November, 2001 to finance renewable energy to serve them: Prop 16 would say this majority vote is not good enough.,0,5414997.story

The RoboCorp trend has injected a siege mentality into governments already harmed by the fiscal impact of Proposition 13, which imposed a two-thirds approval requirement on the legislature for new taxes. Prop 16 threatens the ability of state and local governments to govern. Passage and implementation of AB117 (the Community Choice law) and AB32 (the state’s landmark Carbon law targeted by Valero/Tesoro) involved massive multi-year negotiations and involved long-term planning processes to complete the statutes and regulations so that adopted policy could be implemented. Now any Corporate Psychopath with $50M can destroy such complex deliberations in six months. PG&E/Valero would simply dissolve the foundational efforts of government by corporate plebiscite – directly threatening the ability of California’s government to function at all – another disturbing sign of the Thirdworld-ization of America. Both Valero and Tesoro operate two petroleum refineries in California, each causing some of the heaviest annual carbon emissions in the state. Valero owns refineries in Benicia and Wilmington, while Tesoro runs plants in Martinez and Los Angeles. Valero’s spokesman referred the New York  Times to a public relations firm in Sacramento hired to run the kill AB32 campaign. A spokeswoman for the PR firm, Goddard Claussen confirmed that the firm was retained to handle media and gather signatures to place the Valero/Tesoro measure on the ballot.

The proposed initiative formally moved into the signature-gathering phase on March 2. The measure requires 435,000 signatures to qualify for the general election ballot. It would repeal A.B. 32 until the state's unemployment rate dips to 5.5 percent. Goddard Claussen has taken over running the campaign and gathering signatures under a group called the California Jobs Initiative. The spokeswoman at the firm, Jenny Dudikoff, said she expects the signatures to be ready by the first week of June.

Environmentalists observe that refiners based in San Antonio, Texas, which is nearly 1,500 miles from Sacramento, appear to be the only companies willing to get behind the push. "Now voters can see this initiative for what it is: oil companies trying to buy their way out of their clean-up obligations," said Bill Magavern, director of Sierra Club California told the LA Times. Steven Maviglio, who handles communications for the pro-A.B. 32 effort, said Logue has slow-walked the process when the law requires his group to form a committee with the secretary of state and report contributions. "They haven't done that, as far as we can tell. They have no record of any contributions," he said. "It appears to me they are trying to do this in a stealth, and possibly illegal, way to hide the oil company backing,” he told the NY Times.

In fact America has a longstanding tradition of corporate dominance and subversion of democracy, from the origins in the Virginia Corporation, the Maryland and Massachusetts Corporations that formed the first US states to the postwar imposition of a new, more fundamentalist corporatism bolstered by Cold War anti-communism and globalization or imperialism that willingly sacrificed local democracy to global economic hegemony. The U.S. Government accused GM of conspiring to destroy the nation's urban rail systems in the 1940's. Ironically, in today’s globalized environment, the effect of America's corporatist business culture has been to destroy America’s once dynamic, innovative industries, engendering a co-dependent relationship between abuser (corporation) and abused (democracy). The consequences threaten not only prosperity in America but also our democracy itself. Considering that Prop 16 is happening not before but after a major energy crisis that already cost California $100B or more, and in the middle of a federal policy collapse on Carbon policy, a full-fledged revival of the nuclear industry and the failure of nonproliferation in the Middle East, the stakes on June 8 could hardly be higher when Californians go to vote on PG&E's corporate plebiscite, Proposition 16.


Unknown said...

Compelling reading, brilliant analysis.

Thankfully, vote no won and sense was common, which is uncommon.

When are you bringing your crusade to the UK? Scott

Paul said...

Thank you very much. Prop 16 was indeed a textbook case in which public common sense defeated manufactured Orwellian "Common Sense." It is disturbing to think that the made so often defeats the organic. Prop 16's attack on local government reflects PG&E's desperation, facing Community Choice Aggregation, after delaying and blocking it for so many years, before the levy broke. In my view, ultimately PG&E's problem (and the problem with the entire incumbent energy industry) is power localization itself, fuel reduction, automation and storage: the energy equivalent of miniaturization. Climate Change makes this necessary, because only localization (not just greening) can deliver carbon reductions. Technology makes it technically feasible. Community Choice Aggregation makes it legally and financially possible to implement the switch to 51% plus renewable and local power for California communities. This is what PG&E is trying to stop, because it has such a different future in this world - particularly less control over the business, which monopolies naturally covet. Indeed, the impacts of energy decentralization on the world's owner of legacy infrastructure in fuel rights, transportation, storage, power plants and transmission lines is somewhat obvious. I like to say it would be irresponsible for politicians to suggest that the tobacco companies should be put in charge of implementing smoking reduction policies of the state; the same applies to the coal oil and gas companies such as Pacific GAS and Electric.

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