Pacific Gas & Electric is transparently trying to create an energy monopoly for itself in the California Constitution through Proposition 16. PG&E spent $3.5 million to gather signatures for the bill and has promised to spend up to $35 million to get it passed. The bill, which PG&E dishonestly calls the "The Taxpayers Right to Vote Act" would require a 2/3rds supermajority for any local government to try and implement public power. This would effectively end all local power threats to PG&E, which is one of the few options out there for ratepayers to remove themselves from PG&E.
This Proposition has little support outside of PG&E. In fact PG&E is the ONLY entity that has provided any money to the bill. Keep in mind that $35 million is a ton of money to spend on an initiative. Couple that with the fact the Local governments and municipal utilities are forbidden from spending money on political advocacy and you have a fight of David vs. Goliath,but with Goliath holding the slingshot.
One vigilant voice against Proposition 16 is John Geesman, a former California PUC commissioner, who has a blog titled: PG&E Ballot Initiative Factsheet
Below I re-print, with permission from Mr. Geesman, today's devastating attack on the bill and especially on the cynical PG&E CEO Peter Darbee.
Today's scorching editorial against Proposition 16 in the San Jose Mercury News, hometown newspaper to a business culture many consider the most advanced in the world, makes clear that March has been a very bad month (with 10 days still to go) for PG&E's embattled CEO, Peter Darbee.
While each of the newspapers that has taken up Proposition 16 has attempted to outdo its competitors in heaping scorn on the manipulative debasement PG&E has brought to the initiative process, the Merc is the first to specifically call out Darbee as the mastermind behind this brazen assault on his own electricity customers.
If Shakespeare made a soothsayer's warning to Julius Caesar to "beware the Ides of March" resonate through the ages, consider what has befallen Darbee over the course of the first three weeks of the month:
- March 1 marked his prideful confession of the real thinking behind Proposition 16, veering miles off his political consultants' message to boast to Wall Street. The written transcript doesn't do justice to this debacle. Real gawkers will go to the raw audio, found here at 2:39:21 to 2:44:09.
- March 2 was the meltdown of the PG&E corporate profile in Kern County, a hotbed of customer revolt against high air conditioning rates and an early warning sign of distemper throughout the Central Valley. The local spokesman admitted in a public hearing of the Kern County Board of Supervisors that PG&E's rates are unfair and that Valley customers are charged excessively in order to subsidize the Bay Area. The Kern Supervisors voted unanimously to put an advisory measure on the ballot to replace PG&E as the local utility.
- March 8 was when PG&E filed its Preliminary Proxy Statement, detailing Darbee's $10.5 million pay package for 2009 -- some 8% more than Goldman Sachs paid its CEO -- and announcing an advisory vote on the company's Executive Compensation Plan at the May 12, 2010 shareholder meeting in San Ramon. CalPERS and other shareholder activists had successfully forced through a "say on pay" resolution at the 2008 meeting, but this will be the first time it has been implemented.
- March 11 marked the San Diego Chamber of Commerce Energy and Water Committee's vote on Proposition 16: 22 to 0 to oppose, with 4 abstentions. Perhaps no surprise, given PG&E's acknowledgment that its top tier residential rates are 49 cents per kwh compared to 29 cents for the Southern California investor-owned utilities, but an early indicator that PG&E's jihad against local governments doesn't play well south of the Tehachapis.
- March 17 was the California Public Utilities Commission informational hearing on Proposition 16, which somehow Darbee deemed too unimportant to attend. Odd behavior for the CEO of a regulated business which is dependent upon its regulator for its entire cash flow and which, for the first time in the CPUC's 99-year history, is attempting to unilaterally write its own business advantage into the State Constitution. You'd think publicly communicating PG&E's rationale would be in the job description of a $10.5 million CEO.
March 31 is the intended date for a Final Proxy Statement. Even allowing for the forensic cleanup that might be applied to the disclosures in the March 8 filing, unless the shareholder vote is canceled outright there are several features likely to trigger controversy between now and the May 12 meeting:
- the size of Darbee's take is driven by what are considered to be comparable companies, but the PG&E Board's Compensation Committee has managed to define this peer group so that it is dominated by multi-state and multi-national companies that derive significant portions of their revenue from competitive energy markets and consequently entail a much higher level of business risk.
- no recognition is given to the fact that PG&E derives all of its revenue from its regulated business, that its regulatory risk is concentrated in one state rather than across multiple jurisdictions, and that it benefits from a bankruptcy settlement that obligates its regulator to maintain a level of generosity that will assure at least a single "A" investment grade rating for its debt.
- Darbee has packed the four-member Compensation Committee with two of his telephone company cronies from his days at PacBell, including the Committee Chair. Even with the two other members, the Committee is completely devoid of any professional experience in the regulated electricity or natural gas business.
- the Committee, which met four times in 2009, is unavoidably dependent upon its "independent executive compensation consultant" but had to replace said independent consultant after determining that "in order to avoid potential conflicts of interest, its consultant should provide no other services to PG&E Corporation or its affiliates." Apparently, discovery of $996,000 of other work being done for Management compared to $118,000 for the Committee stretched the concept of "independent" too far, and in September 2009 the Committee switched consultants.
- although PG&E shareholders adopted a resolution in 2006 restricting golden parachutes, the policy apparently did not restrict platinum arrangements with Darbee: he's entitled to $10.0 million upon termination for cause; $27.6 million upon death or disability; $29.5 million upon resignation or retirement; $34.2 million upon termination without cause; and $48.1 million upon change in control and other triggering events.
Awkwardly, these measures along with the excess service credits Darbee has received in the PG&E Corporation Supplemental Retirement Plan (16.5 years of credit after 6.5 years of participation) appear to be in substantial conflict with the "Guiding Principles" released by the Conference Board Task Force on Executive Compensation -- a group of 13 business leaders on which PG&E board member David R. Andrews served and whose web site prominently displays the endorsement of CalSTRS.
Let us recap what PG&E is doing:
- Fought burgeoning local power initiatives tooth and nail for years by throwing tons of cash at the local elections. Of course no one could match PG&E resources and PG&E was generally successful. However,...
- PG&E thought it was a pain in the ass to battle every single instance of defection with millions of dollars. Why not just make it practically unconstitutional to do so by requiring a 2/3rds vote. What would that take? Well...
- First off, spend $3.5 million to gather signatures to make it a ballot proposition. The...
- Pledge to spend up to #35 million to assure its passage, knowing full well no one can match your resources. Not even close. Oh yea while you are at, ask the PUC for millions in rate increases, just to add humor to the whole thing. By the way, don't forget to...
- Create a disinformation campaign, by calling it the "Taxpayers right to vote" and plead to everyone that all you care about is "What's right".
- Profit
- Profit
- Profit
- Profit
- Profit
Oh yeah, did you know PG&E has a playbook for all of this? They sure do as outlined in this article in the San Francisco Bay-Guardian (who's website is currently down). It basically explains EXACTLY how to combat local and public power measures with astroturfing strategies and enlisting local notables (politicians, sheriffs, etc.).
Not one newspaper has come out in support of Proposition 16. Several city councils and county boards have voted UNANIMOUSLY against it. a half dozen public utilities have filed a lawsuit to have it removed.
It is the absolute pinnacle of Democracy run amok. A multi-million dollar corporation literally trying to cement its Monopoly into the State Constitution by spending so much money as to overwhelm the process.
It stinks.