Electric utility politics take centre stage in California

17 May 2004 – Cynthia Skovgard thought she knew just about everybody who’s anybody in this northern San Diego County town of 63 000.

The 40-year resident and community activist was dumbstruck last spring, however, when she received a political mailer picturing a few dozen “San Marcos residents” huddled under the banner, “Citizens for the Right to Vote.”

The mailer was part of a heavily orchestrated campaign to quash a new form of competition worrying California’s Big Three investor-owned utilities: San Diego Gas & Electric, Southern California Edison and Pacific Gas and Electric.

SDG&E drafted an initiative for Citizens for the Right to Vote that would thwart the city’s plan to supply electricity at lower rates to thousands of future homes planned for its undeveloped hills of coastal scrub. The proposal – which would prevent the city from using any general fund money to subsidize the operation, even startup funding – qualified for the November ballot.

A woman contributed $100 to the campaign, public disclosure records show. The remaining $300 000 in contributions came from SDG&E.

Campaign ads pitched the proposal as a populist check on runaway government spending. San Marcos city officials countered that SDG&E was resorting to artificial grass-roots tactics, or “AstroTurfing,” to preserve the company’s monopoly in San Diego County.

Earlier this month, city officials capitulated nonetheless. Slowed by SDG&E – and the community concerns its campaign raised – they’d missed their window to hook up a major new residential development that was supposed to jump-start the new city utility. In the end, SDG&E agreed to help the city defeat the initiative, and the city agreed to suspend its plans to enter the energy business for at least ten years.

A remarkably similar political choreography has been playing out in the western Riverside County community of Moreno Valley, another high-growth city trying to capture the electricity business of future development.

Like the San Marcos pioneers, officials in Moreno Valley – a community of 142 400 and growing fast – believe they can supply power as reliably as an investor-owned utility but at considerably less cost. The city began servicing newly built housing tracts in February.

Edison has countered with tactics and talking points virtually interchangeable with those used by SDG&E. The Edison-backed group, Moreno Valley Residents for Responsible Utility Service, launched a “Stop the Rush” initiative, pushing a ballot measure that would require essentially every contract decision the new utility makes to be put to a public vote. Edison has poured $670 000 into a signature-gathering drive, and the measure is expected to qualify for the Nov. 2 election.

Historically, corporate utilities have been largely successful in crushing public power movements in California, the major exceptions being the 1938 municipal takeover in Los Angeles and Sacramento’s long-fought divorce from PG&E in 1947.

Under California law, cities and counties are allowed to assign themselves rights to the infrastructure that developers of new housing and commercial tracts install for electricity, natural gas and any other utility. Local government can create ratepayer-owned energy utilities, as it commonly does for water and sewer services. And under federal law, power companies cannot refuse to link competing utilities to the power grid.

It’s too early to tell whether the small greenfields movement will gain much traction, experts in municipal power say, particularly given the outcome of earlier efforts in San Marcos. Cities began pioneering the approach only a few years ago as California slid into an energy crisis.

San Diego-area residents were hit especially hard by the skyrocketing wholesale prices that followed deregulation in the late 1990s. In San Marcos, SDG&E rates soared 325 per cent in four months, between April and August 2000, according to a city report.

Fed up, city officials laid plans to form their own energy utility. “We just might be ‘the mouse that roared’ in San Diego County,” City Manager Rick Gittings said at the time.

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