Prop. 16’s fine print

The SMUD board of directors last week heard a stark report about the risks posed by Proposition 16—the anti-public-power initiative being pushed by PG&E on this June’s state ballot.

A few of these were mentioned in SN&R last week (see “Power outrage,” SN&R Frontlines, April 15).

But after hearing SMUD legal counsel Arlen Orchard’s presentation to the board, it seems the possible downsides for SMUD are a lot more dire than Bites first realized.

“SMUD may need to place one or a series of ballot measures seeking supermajority voter consent to continue to provide electric service to residential and commercial customers,” Orchard told board members in his report.

Let that sink in for a moment.

Prop. 16 would not only make it nearly impossible for a public utility like SMUD to start up or expand to compete with PG&E, it could also lead to SMUD and other existing public utilities being voted out of existence. Sounds alarmist? Maybe so. But is it any more far-fetched than PG&E’s claims that government power agencies are using taxpayer money to take over private industry?

Prop. 16 says that public agencies can’t spend public money to provide electricity without a two-thirds vote of approval. Orchard notes that Prop. 16 exempts existing utilities, serving existing customers, from the two-thirds vote requirement if they are the “sole provider” of electricity in their service area.

But PG&E provides some electric service inside SMUD territory in the east county. And UC Davis Medical Center has a large power plant that powers its campus. Aerojet has a 3-megawatt solar array on its property—also inside SMUD territory. And in the future, there will likely be many more companies and individual customers in the area, generating electricity from solar and other renewable technology.

If it turns out that SMUD is not legally the “sole provider” of electricity in its service area, that could mean a vote. And that could mean just one-third of those voters could vote against allowing SMUD to sell electricity to its existing customers.

SMUD and other public-power agencies are sure to sue to defend against that possibility. And Bites assumes they’d win. But the law could create chaos for PG&E’s public-power rivals until the courts sort everything out.

The Yes on 16 campaign attacked Orchard’s analysis, sending out a press release that said, “Prop 16 is a simple and straightforward measure. It would simply require that voters have the final say if local government chooses to spend public money or to incur public debt to create a government-run electricity business.”

But Bites called representatives from the Yes on 16 campaign over and over again, asking for specific examples of the creation or expansion of a “government-run electricity business” that has happened without a public vote. No reply.

Bites knows PG&E is mad that Marin County is using the state’s new “community choice aggregation” laws to buy renewable power. With CCA, it’s the elected bodies, like county supervisors and city council members, that vote on whether to buy large amounts of electricity at wholesale prices and resell it to local citizens. It’s something like a buyers’ co-op, intended to give locals a chance to get greener, cheaper power into the mix. But in those places, customers can always opt out and choose to keep giving their money to PG&E, if that’s what they want to do.

But that’s very different from creating a “government-run electricity business” with poles and wires and power plants. One thing that CCA does have in common with public utilities like SMUD is that it’s a lot more democratic than anything PG&E offers its customers.