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March 05, 2010

All your power are belong to us

By: John Caruso

Pacific Gas and Electric Corporation is participating in democracy!

PG&E Corp. plans to spend $25 million to $35 million on a California ballot initiative that would limit the ability of cities and counties to go into the public power business, the company reported Friday.

PG&E Corp. is the parent company of the Pacific Gas and Electric Co. utility, which is fighting efforts by Marin County and San Francisco to start their own power agencies. Proposition 16, on the June 8 ballot, would force any local governments that want to establish electrical service to win the approval of two-thirds of their voters first.

So far, PG&E has supplied all of the proposition campaign's funding, totaling $6.5 million. On Friday, PG&E took the unusual step of telling its investors that funding for the campaign would affect the company's 2010 profits, lowering them by 6 to 9 cents per share.

Now, some cynics might believe that PG&E is taking this hit to its bottom line for selfish reasons.  In fact, they might even assume that if a corporation spends $25-$35 million to pass a ballot measure, it's solely because it believes it will accrue more than $25-$35 million in additional profits as a result in the future.

But it would be wrong to assume that in this case, because nothing could be further from the truth.  Here's the real reason why PG&E is providing the sole backing for this ballot measure:

When local governments enter the retail electricity business, it can cost taxpayers millions or billions of dollars in public money or debt. These are risky long term capital decisions that can impact local spending on other budget priorities, can increase consumer electric rates, and cannot be easily reversed.

See?  PG&E is just worried that these risky public power agencies would end up costing taxpayers more money, thus depriving them of important public services like, say, pillow-providing for the elderly or possibly adorable puppy-petting.  And by the way, the quote above is from the web site of "Taxpayers Right to Vote"—the grassroots organization PG&E has just founded for the sole purpose of helping taxpayers retain their precious right to vote, which is apparently mortally threatened in some way by the creation of municipal power authorities.  That's just how dedicated they are to democracy!

In fact, PG&E is so selflessly devoted to the common good that they're even planning to reduce electric rates this summer:

Pacific Gas and Electric Company (PG&E) is asking the California Public Utilities Commission and the Federal Energy Regulatory Commission to approve proposals that would reduce average electric rates by 2.5 percent from March 1 levels, beginning June 1. The proposals are among a number of measures PG&E is taking to help customers with their electricity costs.

"We understand that electricity is a fundamental need, and know that many of our customers are deeply affected by job losses and the economic downturn," said Helen Burt, senior vice president and chief customer officer at PG&E. "While our customers work hard to conserve energy and pay their bills, at PG&E we are also working hard to help customers save."

You see?  PG&E obviously just loves their customers, who are of course also taxpayers and (though it has nothing whatsoever to do with anything else mentioned here) voters.  And in a gigantic and no doubt entirely unrelated coincidence, this rate reduction will  happen on June 1st—one week before the June 8th election.  Life's funny that way, isn't it?

Now, it's true that this reduction will basically just balance out a rate increase that PG&E has already scheduled for March 1st.  And I don't doubt there are a few people out there so cynical that they might suspect that PG&E planned these offsetting rate changes in order to use the rate "decrease" to curry favor with voters right before the election, without affecting their bottom line.

And that's what's wrong with this country: too many people (like these nogoodniks) refuse to believe that corporations have only their best interests at heart.  Thank goodness there are magnanimous corporate citizens like PG&E to prove them wrong.

— John Caruso

[ Crossposted since we're on the topic of power. And if you just can't read enough about PG&E's commitment to democracy, here's a followup. ]

Posted at March 5, 2010 02:55 PM

And one other thing, P G & E is also installing somenew meters which are very computerized.

Critics of the nbew meters are saying that their rates have gone up significantly and that the meters are not calibrated correctly.

Well, wouldn't it be awful if the utility users in Califronia understood that large magnets attached to such meters can totally disrupt them?

Especially after reading how P G & E is wanting to save California citizens from being forced by awful local governments to set up their own localutilities.

Gee I just hope that the word about magnets vs. meters doesn't get out there!

Posted by: Elise Mattu at March 5, 2010 11:19 PM

"PG&E is just worried that these risky public power agencies would end up costing taxpayers more money...."

PG&E is counting on the memory deficiency of the average voter. In truth, it's probably a safe bet. Nevertheless, I recall quite well the winter of 2000/2001. There occurred something they called an energy crisis. Electricity rates at the three major privately held utilities in California--PG&E, Southern California Edison and San Diego Gas & Electric--more than doubled.

Meanwhile, rates at the publicly owned LADWP remained constant. Just a coincidence, I guess.

Posted by: jm at March 6, 2010 01:41 AM

Frankly, I remain unconvinced by this whole "capitalism" thing.

Posted by: Christopher at March 6, 2010 04:31 AM

I'm sure that part of this campaign will involve tea party antics, bought and paid for by the good folks at PG&E, with full coverage by the Fox News noise machine, and that this will become the new modus operandi for legislating a corporate agenda. America is so screwed.

Posted by: ian at March 6, 2010 08:49 AM

'Nogoodniks', you hardly ever see that anymore, and it's such a great word . . .

Posted by: Murfyn at March 6, 2010 10:09 AM

My electricity is supplied by one of those dreadful local government power companies that PG&E--with the best intentions in the world of course--is attempting warn people about.

Thanks to PG#E's thoughtful warning, I can see where I'm getting ripped off by governmental incompetence. Jeeze. The bill for my 2,400 sq ft, solely electrically heated house here in Eastern Washington runs a whopping $125 a month in winter, and as much as $20 in the summer. Sure, they give out free low-energy lightbulbs to any customer who wants them, but that's probably just bribery. And they respond promptly to the rare power outage. But...well, it's run by local government, and we all know government is bad.

All snark aside, anybody who opts for a private power company over one that's local government owned is just flushing money down the loo.

Posted by: muldoon at March 6, 2010 11:45 AM

Thanks - we've always got some proposition sheenanigans out here in CA, and some of the ploys aren't easy to research.

Posted by: Batocchio at March 6, 2010 03:23 PM

I live in PG&E country, and I got me a solar array when I re-roofed my house. And every time the electricity rates go up, I go, "Ka-ching, baby! bring 'em on!" At these rates, I will pay off my solar array way sooner than I budgeted when I put it on. In five more years, I break even, and it's gonna be nothing but free money coming from the sky. Everyone should have one. Seriously. Why should PG&E have all the fun? I'm gonna start heating my house with toasters put all over the floor when the rates go up again, I'm having so much fun at this. It's great!

Posted by: Dr. Pablito at March 6, 2010 06:12 PM

I am an electrical engineer who lives in California.
PG&E's recently installed "smart" meters are much more accurate than the meters they replace. People whose bills go up have probably been underpaying for years. Some people's bills go down, becaus they have been overpaying for years; those people tend not to complain, so they're not much noticed.

Posted by: joel hanes at March 7, 2010 02:13 AM

Has anyone asked Erin Brockovich about this?

Did the old PSE&G meters only underreport usage? If so, wouldn't PSE&G's management have adjusted rates to compensate for the shortfall? I just find it very hard to believe that they got consistently screwed. In an analogize vein, grocery store scanners always make mistakes FOR THE STORE. (I almost never catch a mistake that goes my way.) I can understand those types of problems never getting fixed, but not the other way around.

Posted by: N E at March 7, 2010 01:32 PM

Did the old PSE&G meters only underreport usage?


It wasn't a computer algorithm thing; it was physics.

The old meter mechanism accurately reported a particular aspect of power consumption. That particular aspect does not accurately reflect the cost-to-power differences between different types of load. Some kinds of load are more expensive to power than the old meters would report; some kinds of load are less expensive to power than the old meters would report.

The new meters measure a different aspect of power, and that aspect is a better representation of the generation/transmission costs.

It's difficult to explain this correctly without resorting to calculus in complex variables.

Posted by: joel hanes at March 7, 2010 06:27 PM

joel hanes

Ouch! Please don't resort to calculus in complex variables! I surrender!

Posted by: N E at March 7, 2010 07:02 PM

well, if it is too complicated for us simpletons to understand, we will just have to trust the power companies to get it right.

Anybody got a problem with that?

Posted by: Susan at March 8, 2010 12:12 AM

Indeed, using complex variables would only impede the discussion.

Posted by: john at March 8, 2010 09:28 AM

Actually, Joel Hanes, I'd be glad to hear about complex variables - although I'm guessing you just mean phasors. Please explain!

Posted by: Aaron Datesman at March 8, 2010 11:42 AM

Look, there's plenty of demonstrable PG&E bad behavior in the main post without presuming that a different way of determining power consumption must be an evil plot. PG&E could indeed be more accurately determining people's electricity usage and screwing them over on the unit charge. In fact, I would expect this, since it allows them to point to the validity of the former without addressing the latter.

although I'm guessing you just mean phasors.

Actually, I'm guessing he means "complex variables," not a simplified version of same from back when engineers didn't want to do actual math.

... Okay, fine, so phase vector methodology is often still legitimate for AC power systems. Now, if you'll excuse me, there's an angry mob of EE majors at my office door.

Posted by: mds at March 11, 2010 12:42 PM