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11 Prop 16 Resolution
Agenda Item # 11 TRUCKEE DONNER __J ACTION To: Board of Directors From: Stephen Hollabaugh Date: April 21, 2010 Subject: Consideration of a Resolution about Proposition 16, "New Two- Thirds Vote Requirement for Public Electricity Providers — Initiative Constitutional Amendment" 1. WHY THIS MATTER IS BEFORE THE BOARD This item involves a possible Resolution and only the Board can adopt a Resolution. 2. HISTORY On June 1, 2009 the Initiative was filed with the California State Attorney General for the June 2010 statewide ballot. The proposed Initiative is being sponsored by Pacific Gas and Electric (PG&E), and, if passed, would impact the ability of publicly-owned electric utilities to expand electricity service beyond their current boundaries. The Initiative would also impact the ability of cities and counties to engage in community choice aggregation. On July 23, 2009, the California Attorney General authorized the proponents of the Initiative to gather the necessary 694,354 verified signatures by December 21, 2009, to qualify for the June 2010 ballot. The Initiative was originally named "The Taxpayer Right to Vote Act" . After the San Francisco Local Agency Formation Commission filed a protest against the name, the Attorney General required the proponents to change the title to be more reflective of the issue. The Initiative was renamed to its current title in July 2009 (Attachment #1) the "New Two-Thirds Requirement for Local Public Electricity Providers - Initiative Constitutive Amendment," however, PG&E continues to publicly refer to the Initiative by its original title. 3. NEW INFORMATION Under existing California law, most cities can annex new areas that include the expansion of electric service by the approval of a simple majority of the voters in the area to be annexed. The Initiative would change existing law such that prior to expanding electricity service into a newly annexed area, or any portion of the public utility is not the sole provider of electricity, the public power provider would need to obtain two-thirds voter approval from both the existing service area and the proposed expansion area. The Initiative would also require cities or counties intending to pursue community choice aggregation (CCA) or the formation of a new publicly owned utility to first obtain two-thirds voter approval within the local jurisdiction before proceeding. Authorized by the State Legislature in 2007, CCA allows a city or county (or a group of government agencies) to supply electricity to residents and businesses within their jurisdiction. The proposed Initiative provides for several exemptions to the two-thirds voter requirement. First, voter approval would not be required for electricity service expansions within a public power providers existing jurisdictional boundaries. Additionally, two-thirds voter approval would not apply to the purchases of renewable electricity (e.g. solar, wind, biomass) or for the provision of electricity service for the public power providers own consumption. The predominant impact of the ballot initiative to existing publicly owned electric utilities would be the establishment of new two-thirds voting requirements for the utility system expansion as outlined above. However, the vague and ambiguous language contained in the Initiative raises additional concerns. For example, it is unclear if a two-thirds vote would be required for the development of non-renewable generation facilities or transmission lines located outside of the public power providers jurisdiction. Such restrictions could constrain Truckee Donner Public Utility District's (TDPUD) resource planning and procurement efforts by imposing two-thirds voter approval requirements prior to TDPUD committing to new investment in transmission or generation infrastructure. More broadly, although TDPUD is already a public power community, this Initiative would thwart the ability of citizens to opt for locally controlled public power in other communities throughout the state. Further questions raised as a result of ambiguities of the Initiative language are described in the attachment (Attachment # 2), prepared by the Northern California Power Agency (NCPA). Additionally, it should be noted that this Initiative has attracted the attention of the print news media. Examples of print news coverage published in the Los Angeles Times and the Sacramento Bee relating to this issue are also attached. (Attachment# 3) 1 have included a website link that has a running inventory on most articles printed regarding Proposition 16; To date, at least eight NCPA members have officially taken the "Oppose" positions on the Initiative: Alameda, Gridley, Lodi, Lompoc, Palo Alto, Redding, Roseville, and Santa Clara. It is important to note that the employees and elected officials serving the Truckee Donner Public Utility District may not advocate on behalf of the District for or against a ballot initiative if public funds or public resources are in anyway involved. However, local governing boards may officially take a support or oppose position on a ballot initiative during an open meeting. 4. FISCAL IMPACT There is no financial impact associated with the adoption of a resolution opposing the ballot Initiative. If the Initiative were approved, the cost for Truckee Donner Public Utility District is uncertain. The California Legislative Office concluded that the Initiative would create an unknown impact to state and local government costs and revenues, depending on the future voter decisions, due to the potential impacts on electric rates and publicly owned electric utility operations (Attachment# 4). 5. RECOMMENDATION Adopt a Resolution opposing Proposition 16, the "New Two-Thirds Vote Requirement for Local Public Electricity Providers - Initiative Constitutional Amendment." Attachments: 1) Letter requesting California Attorney General prepare title and summary for the proposed Initiative, dated May 28, 2009 2) Summary and Analysis of the Initiative, prepared by NCPA, dated February 10, 2010 3) Four sample news articles relating to the Initiative: (1) "PG&E Ballot Measure Is a Stealthy Power Play," by Michael Hiltzik, Los Angeles Times, December 28, 2009; (2) Editorial: PG&E Makes a New Power Grab," The Sacramento Bee, January 19, 2010; (3) "PG&E Amps Up Bid for Power," by Michael Hiltzik, Los Angeles Times, February 10, 2010. (4) Cartoon from the Opinion page of The Sacramento Bee, April 14, 2010. 4) California Legislative Analyst's Office analysis of the proposed Initiative, dated July 7, 2009. 5) Proposed Truckee Donner Public Utility District Resolution Opposing Proposition 16. Stephen Hollabaugh Michael D. Holley Assistant General Manager General Manager Attachment 1 May 28, 2009 09 — 00 15 VIA PERSONAL DELfVERY The Honorable Edmund G. Brown,Jr.. . JUN 0 12009 M'1 Attorney General INITIATIVE COORDINATOR 13001 Street ATTORNEY GENERAM OFFICE Sacramento, CA 95814 Attention: Krystai Paris, Initiative Coordinator Re: Request for Title and Summary- Initiative Constitutional Amendment Dear Mr. Brown: Pursuant to Article II, Section 10(d)of the California Constitution and Section. 9002 of the Elections Code, I hereby request that a title and summary be prepared for the attached initiative entitled "The Taxpayers Right to Vote Act"as provided by law. Included with this.submission is the required proponent affidavit signed by myself as proponent of this measure pursuant to section 9608 of the California Elections Code. My add as a registered'voter is provided and attached to this letter, along with a check for$200.00. All inquires or correspondence relative to this initiative should be directed to Nielsen, Merksamer, Parrinello; Mueller& Naylor,.LLP, 1415 L Street, Suite 1200, Sacramento, CA 95814,.(916)446-6752,Attention:-Steve Lucas (telephone:4151389- 6800). Thank you for your assistance. Sincerely' ob rt Lee Pence, �roronent Enclosure: Proposed.Initiative Section 1. FINDINGS AND DECLARATIONS p g _ Q o 15 The People do find and declare: A. This initiative shall be known as "The Taxpayers Right to Vote Act." B..California law requires two-thirds voter approval for tax increases for specific purposes. C. The politicians in local governments should beheld to the same standard before using public funds,borrowing, issuing bonds guaranteed by ratepayers or taxpayers, or obtaining other debt or financing to start or expand electric delivery service,or to implement a plan to become an aggregate electricity.provider. D. Local governments often start or expand electric delivery service,. or implement a plan to become an aggregate electricity provider,without approval by a vote of the people. E. Frequently the start-up, expansion, or implementation plan requires either construction or acquisition of facilities or other services necessary to deliver the electric service,to be paid for with public funds, borrowing,bonds guaranteed by ratepayers.or taxpayers, or other debt or financing. F. The source of the public funds,borrowing, debt, and bond fmancing is generally the electricity rates charged to ratepayers as well-as surcharges or taxes imposed on taxpayers. G. Such use of public funds and many forms of borrowing, debt or financing do not presently require,approval by a vote of the people, and where a vote is required, only a majority vote may be required. Section 2. STATEMENT OF'PURPOSE A. The purpose of this initiative is to guarantee to ratepayers and taxpayers the right to vote any time a local government seeks to use public funds,public debt,bonds or liability, or taxes or other financing to start or . 1 expand electric delivery service to a new territory or new customers, or to implement a plan to become an aggregate electricity provider. B. If the start-up or expansion requires the construction or acquisition of facilities or services that will be paid for with public funds, or financed through bonds to be paid for or guaranteed by ratepayers or taxpayers, or to' be paid for by other forms of public expenditure,borrowing, liability or debt, then two-thirds of the voters in the territory being served and two-thirds of the voters in the territory to be served,voting at an election, must approve the expenditure,borrowing, liability or debt. Also,if the implementation of a plan to become an aggregate electricity provider requires the use of public funds, or financing tbrough bonds guaranteed by ratepayers or taxpayers, or other forms of public expenditure,borrowing, liability or debt,then two- thirds of the voters in.the jurisdiction,voting at an election,must approve the expenditure,borrowing,liability or debt. Section 3. Section 9.5 is added to Article M of the California Constitution to read: Sec. 9.5. (a) Except as provided in subdivision(h),no local government shall, at any time, incur any bonded or other indebtedness or liability in any manner or use any public funds for the construction or acquisition of facilities,works, goods, commodities,products or services to establish or expand electric delivery service, or to implement a plan to become an aggregate-electricity provider,without the assent of two-thirds of the voters within the jurisdiction of the local government and two-thirds of the voters within the territory to be served, if any,voting at an election to be held for the purpose of approving the use of any public funds, or incurring any liability, or incurring any bonded or other borrowing or indebtedness. (b) "Focal government"means a municipality or municipal corporation, a municipal utility district, a public utility district, an irrigation district, a city, including a charter city, a county, a city and county, a district, a special district, an agency, or a joint powers authority that includes one or more of these entities. 2 (c)"Electric delivery service"means (1)transmission of electric power directly to retail end-use customers, (2) distribution of electric power to customers for resale or directly to retail end-use customers, or(3) sale of electric power to retail end-use customers. (d) "Expand electric delivery service"does.not include (1) electric delivery service within the'existing jurisdictional boundaries of a local government that is the sole electric delivery service provider within those boundaries, or'(2) continuing to provide electric delivery service to customers already receiving electric delivery service from the local government prior to the enactment of this section. (e)"A plan to become ari aggregate electricity provider"means.a plan by a local government to provide community choice aggregation services or to replace the authorized focal public utility in whole or in part for electric delivery service to any retail electricity customers within its jurisdiction. (f) "Public funds"means,without limitation, any taxes, funds,-cash, income, equity, assets,proceeds of bonds or other financing or borrowing, or rates paid by ratepayers. "Public funds' do not include-, federal'funds. (g)"Bonded or.other indebtedness or liability"means,without limitation, any borrowing,bond,note, guarantee or other indebtedness, liability or obligation,direct or indirect,of any kind, contingent or otherwise, or use of any indebtedness, liability or obligation for reimbursement of any moneys expended from taxes, cash,income, equity, assets, contributions by-ratepayers,the treasury of the local government or other sources. (h)This section shall not apply:to any bonded or other indebtedness or liability or use of public funds that(1) has been approved by the voters within the jurisdiction of the local government-and within the territory to be served,if any,prior to the enactment of this section; or (2) is solely for the purpose of purchasing,providing or supplying renewable electricity from biomass,*solar thermal,photovoltaic,wind, geothermal, fuel cells using renewable fuels,small hydroelectric generation of 30 megawatts or less,digester gas,municipal solid waste conversion,landfill gas, ocean wave, ocean thermal, or tidal 3 current, or providing electric delivery service for the local government's own end use and not for electric delivery service to others. Section 4.-Conflicting Measures A. This initiative is intended to be comprehensive. It is the intent of the People that in the event that this initiative and another initiative relating to the same subject appear on the same statewide election ballot, the provisions of the other,initiative or initiatives are deemed to be in conflict with this initiative. In the event this initiative shall receive the greater number of'affirmative votes,the provisions of this initiative shall prevaitin their entirety, and all provisions of the other.initiative or initiatives shall be null and void. B. If this initiative is approved by voters but superseded by law or by any other conflicting ballot-initiative approved by the voters at the same election, and the conflicting law or ballot initiative is later held invalid,this initiative shall be self-executing and.given.fall force of law. Section 5. Severability. The provisions'of this initiative are severable.If any provision of this' initiative or its application is held to be invalid,that invalidity shall not affect other provisions or applications that can'be given effect without the invalid provision or.application. 4 Date: July 23,2009 Initiative No.: 09-0015 The Attorney General of California has prepared the following title and summary of the chief purpose and points of the proposed measure: NEW TWO-THIRDS VOTE REQUIREMENT FOR LOCAL PUBLIC ELECTRICITY PROVIDERS. INITIATIVE CONSTITUTIONAL AMENDMENT. Requires local governments to obtain the approval of two-thirds of the voters before providing electricity to new customers or expanding such service to new territories if any public funds or bonds are involved. Requires same two-thirds vote to provide electricity through a community choice program if any public funds or bonds are involved. Requires the vote to be in the jurisdiction of the local government and any new territory to be served. Provides exceptions to the voting requirements for a limited number of identified projects. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Unknown impact on state and local government costs and revenues,depending on future voter decisions,due to the measure's potential effects on electricity rates and publicly owned utility operations. (09-0015.) Attachment 2 A PUBLIC AGENCY NCPA February 10, 2010 NORTHERN CALIFORNIA POWER AGENCY 651 Commerce Drive Roseville, CA 95678 (916) 781-3636 www.napa.com The "New Two-Thirds Reguirement for Local Public Electricity Providers" Initiative Supported by: Pacific Gas and Electric Company Stated intent: "The purpose of this initiative is to guarantee to ratepayers and taxpayers the right to vote any time a local government seeks to use public funds,public debt, bonds or liability,or taxes or other financing to start or expand electric delivery service to a new territory or new customers,or to implement a plan to become an aggregate electricity provider." (initiative sec. 2A) Operative Provision of Initiative: Section 9.5 is added to Article XI of the California Constitution (a) "Except as provided in subdivision(h), no local government shall,at any time,incur any bonded or other indebtedness or liability in any manner or use any public funds for the construction or acquisition of facilities,works,good,commodities, products or services,to establish or expand electric delivery service;or to implement a plan to become an aggregate electricity provider without the assent of two-thirds of the voters within the jurisdiction of the local government and two-thirds of the voters within the territory to be served, if any voting at an election to be held for the purpose of approving the use of any public funds,or incurring any liability,or incurring any bonded or other borrowing or indebtedness. (b) "Local government"means a municipality or municipal corporation,a municipal utility district a public utility district,an irrigation district,a city, including a charter city,a county,a city and county..a district, a special district,an agency,or a joint powers authority that includes one or more of these entities. (c) "Electric delivery service"means(1)transmission of electric power directly to retail end-use customers,(2)distribution of electric power to customers for resale or directly to retail end-use customers,or(3)sale of electric power to retail end-use customers. (d) "Expand electric delivery service"does not include(1)electric delivery service within the existing jurisdictional boundaries of a local government that is the sole electric delivery service provider within those boundaries,or(2)continuing to provide electric delivery service to customers already receivin electric delivery service from the local government prior to the enactment of this section. g (e) "A plan to become an aggregate electricity provider"means a plan by a local government to provide community choice aggregation services or to replace the authorized local public in whole or in part for electric delivery service to any retail electricity customers within its jurisdiction. (f) "Public funds means,without limitation,any taxes,funds,cash,income,equity,assets,proceeds of bonds or other financing or borrowing,or rates paid by ratepayers. "Public funds"do not include federal funds. (g) "Bonded or other indebtedness or liability"means,without limitation,any borrowing, bond,note, guarantee or other indebtedness,liability or obligation,direct or indirect,of any kind,contingent or otherwise,or use of any indebtedness, liability or obligation for imbursement of any moneys expended from taxes,cash, income,equity, assets,contributions by ratepayers,the treasury if the local government or other sources. (h) "This section shall not apply to any bonded indebtedness or liability or use of public funds that(1)has been approved by the voters within the jurisdiction of the local government and within the territory to be served, if any, prior to the enactment of this section;or...(2)is solely for the purpose of purchasing, providing,or supplying renewable electricity from biomass,solar thermal,photovoltaic, wind,geothermal,fuel cells using renewable fuels,small hydroelectric generation of 30 megawatts or less,digester gas, municipal solid waste conversion, landfill gas, ocean wave,ocean thermal or tidal current or providing electric delivery service for the local government's own end use and not for electric delivery service to others." Ambiguities make it difficult to assess the impact Uses non-standard terms Is the effect retroactive? Subdivision (h) indicates an exemption if the indebtedness or use of funds was approved by the voters "...prior to the enactment of this section..." (Sec. 9.5(h) ) Municipally Owned Utilities are very unlikely to have ever sought such approval in the past as it was not required. If the use of indebtedness/use of funds began prior to enactment, but was not approved by the voters,does this forbid continued use? What does it mean to"Expand electric delivery service" ....what does"sole"mean? "'Expand electric delivery service' does not include (1)electric delivery service within the existing jurisdictional boundaries of a local government that is the sole electric service provider within those boundaries..." Does this apply where an Investor Owned Utility serves just a couple of customers, by agreement with the Municipal Utility? Lodi example of 23 IOU accounts left from past annexations. Does this apply to"distributed power"generated by the customers themselves,such as solar? ....what does"boundaries"mean? `Expand electric delivery service'does not include(1)electric delivery service within the existing jurisdictional boundaries of a local government that is the sole electric service provider within those boundaries..." Does this mean current corporate limits, or might it mean the sphere of influence or other service area? What does"renewable electricity"mean? The exemption in (h)applies to the "purchasing, providing or supplying renewable electricity from...small hydroelectric generation of 30 megawatts or less..." If a Central Valley Project customer purchases less than 30 MW from Shasta dam,is that included in the exemption,or must the dam itself be less than 30 MW? What does it mean? "(c) 'A plan to become an aggregate electricity provider'means a plan ...to provide community choice aggregation services or to replace the authorized local public utility either in whole or part for electric delivery service to any retail customer within its jurisdiction." Is any replacement of an Investor Owned Utility customer by an Municipal Utility subject to a vote? Is any annexation subject to a 2/3 vote,despite LAFCO approval? What do the"transmission"provisions mean? "...no local government shall ...use any public funds...for the construction or acquisition of facilities...to expand electric delivery service..." "Electric delivery service means (1)transmission of electric power to retail end-use customers, (2) distribution of electric power to customers for resale or directly to retail end-use customers,or(3)sale of electric power to retail end use customers..." Electric delivery service does not seem to include"generation", but how is such generation "transmitted"?. Who is a"retail end use customer"? "Transmission"to end use customers is considered "distribution" rather than "transmission." Would distribution facility improvements require a 2/3 vote? Clear Impacts to Existing Municipally Owned Utilities Annexation of new territory requires 2/3 vote to serve, even after LAFCO required approval? (seems a certainty) New facilities, especially transmission and distribution,outside the municipal jurisdiction as"expand electric delivery service'requiring 2/3 vote (arguably) What does it mean for a Joint Powers Agency that has no"existing jurisdictional boundaries"? ....may current customers be served? 'Expand electric delivery service'does not include (1) electric delivery service within the existing jurisdictional boundaries of a local government that is the sole electric service provider within those boundaries ..." May an MOU that is not the sole provider continue to serve current customers without a 2/3 vote? ....are new customers inside city ok? "Expand electric delivery service does not include...or(2)continuing to provide electric delivery service to customers already receiving electric delivery service ...prior to the enactment of this section." May a Municipal Utility that is not the sole provider sign up new customers even within its city limits without a 2/3 vote? ....may increased load be served? 'Expand electric delivery service'does not include...or(2)continuing to provide electric delivery service to customers already receiving electric delivery service from the local government prior to the enactment of this section." May a Municipal Utility already serving a customer outside its boundaries serve the increased load of that customer without a vote? ....may new property owners with old load be served? Expand electric delivery service'does not include...or(2)continuing to provide electric delivery service to customers already receiving electric delivery service from the local government prior to the enactment of this section." Is a new property owner a "customer already receiving electric delivery service"even when the load is the same? What does it mean to"purchase..provide or supply"? Section does not apply to funds used "...solely for the purpose of purchasing, providing,or supplying renewable electricity..." (sec. 9(h) ) Strongly implies it does apply to use of funds for the purchase of any other type of electricity. Is the purchase of property or the construction of generation,even for renewable electricity, exempt? Legislative Analyst's Office Analysis: The legislative Analyst's Office reviewed the proposed constitutional amendment(A.G. File No.09-0015). Fiscal effects of the initiative include: Local Administrative Costs for Elections and Potential Impact on State and Local Government Costs and Revenues. "Local Administrative Costs for Elections. Because this measure requires voter approval for specified local government actions,it would result in additional costs to local governments each time a proposal requiring voter approval was placed on the ballot.These costs would primarily be related to preparing and mailing election-related materials. In most cases,the balloting could be consolidated with already scheduled elections.The increased election-related costs due to this measure would probably be minor. Potential Impact on State and Local Government Costs and Revenues. This measure could affect local government costs and revenues due to its potential effects on the operation of publicly owned utilities and CCAs. It could also affect the finances of state and local government agencies in California because of its potential impact on electricity rates.These effects would largely depend upon future actions of voters and local governments.We discuss these potential effects in more detail below. First,the new public voter approval requirements for the start-up or expansion of publicly owned utilities or the formation of CCAs could, in some cases, result in public disapproval of such changes. Also,the existence of these new voter approval requirements could deter some local government agencies from proceeding with such plans.To the extent that this occurred, local government agencies could collect lower revenues from electricity customers, and incur lower costs for the operation and coordination of electricity services,than would otherwise be the case. Second,the enactment of this measure could also affect the finances of state and local government agencies in California due to its potential impact on electricity rates. As noted above, some local government agencies might not start up or expand a publicly owned utility into a new territory or create a CCA as a result of the measure's new voter approval requirements. In this event,the rates paid by electricity customers in that and neighboring jurisdictions could be higher or lower than would otherwise have been the case.This could affect state and local government costs, since many public agencies are themselves large consumers of electricity.To the extent that changes in electricity rates affect business profits, sales, and taxable income,these factors could affect state and local tax revenues. The net fiscal effect of all of these factors on the finances of state and local government agencies is unknown:' Attachment 3 I O's A 1,0 C C�:!!Mes PG&E ballot measure is a stealthy power play The proposed Taxpayers Right to Vote Act illustrates what California's initiative process has come to. It's a plaything of powerful interests using deception to line their pockets. By Michael Hiltzik December 2S,2009 On the face of it,nobody should find anything objectionable to the Taxpayers Right to Vote Act,a proposed initiative now awaiting certification to go on the state ballot. The measure would require a two-thirds vote by residents of a municipality to approve certain public expenditures or borrowings.It's cast as the most virtuous of good-government propositions.Or as Greg Larsen, head of the initiative's campaign committee,puts it,"Why shouldn't the people who are going to pay the bill have the right to vote on that?" But let's shine a light on this initiative from another angle. First,the only expenditures it applies to are those devoted to setting up or expanding a municipal electrical utility. And its sole sponsor,according to state campaign finance records--is Pacific Gas and Electric Co.,one of the biggest electrical utilities in the state.So far,PG&E has spent$3 million of ratepayers'money to advance the Taxpayers Right to Vote Act. What are the chances that PG&E ginned up this innocuous-sounding initiative,shrouding its own involvement behind a scrim of public relations and law firms,largely to preserve its monopoly against competition from public power agencies?I'd say 100%. Thanks to state campaign finance laws,PG&E can't entirely hide its financial links to the initiative campaign. But it's not exactly proclaiming them from the rooftops,either.When I asked to speak to someone at PG&E overseeing the campaign,the company steered me to Larsen,a Sacramento P.R.man.But he wouldn't tell me how PG&E got the ball rolling,either.God forbid that the PG&E executives who cooked this thing up come out of hiding. such is what California's initiative process has come to. It's a plaything of powerful interests using deception and misdirection to line their pockets. We're about to enter another silly season of California initiatives.At this moment,51 have been oleared by the state attorney general and secretary of state to collect petition signatures,preparatory to claiming a spot on an upcoming ballot.Two are undergoing signature verification,the last step before being scheduled for a vote --PG&E's and a measure to undermine state auto insurance regulations,promoted by Mercury insurance.(I wrote about the latter back in July.) Almost every one illustrates the flaws in our state government.Some promote extremist or just loopy goals across the political spectrum.There are a pa it forbidding the use of taxes to fund schools or schools to set curricula.Another outlaws divorce in California. One proposes a 55%wealth tax on big estates,the money to be spent on buying up stock of defense and environmentally unsound companies and shutting down the offending operations. Several propose a constitutional convention.A convention is needed,their supporters argue,to overturn the budgetary roadblocks,the term limits and other rules that doom us to an inexperienced and extremist Legislature,and laws favoring special interests.Chief among the latter is the initiative process itself. The real danger in the initiative process lies in its domination by rich corporations. This is exactly the opposite of the intentions of the system's creator,Gov. Hiram Johnson,when he was fighting the Southern Pacific Railroad and Harry Chandler, proprietor of the Los Angeles Times,a century ago. Which brings us back to PG&E and its stealth initiative.The Taxpayers Right to Vote Act is a dagger aimed directly at a movement to enable municipalities to offer renewable green power to their residents in competition with private utilities.Such Community Choice Aggregation programs,which are enabled under a 2002 state law, have drawn particular interest in Northern California,which PG&E considers its diocese. One reason for the interest may be the utilities'poor record in meeting their renewable power goals,such as a legal deadline from the state requiring them to get 20%of their power from renewable sources by next year. As of 2008, PG&E was only up to 11.9%.Southern California Edison hit 15%but isn't expected to meet next year's deadline either. PG&E's fight against CCAs continues an assault by private utilities against public power dating to the 1920s and 1930s. In those days,they bribed politicians and paid off schoolteachers and textbook publishers to fight public projects like Hoover Dam and the Tennessee Valley Authority.Nowadays,they use the ballot box and the power of TV advertising to achieve similar ends. Their fear today is that municipal utilities will undercut them on pricing and recruit their customers.That's not an unrealistic fear,as municipal utilities have consistently beaten the private utilities on rates. Larsen,PG&E's front man in the initiative campaign,says its goal is merely to protect taxpayers from being drawn unwittingly into unwise and costly power investments.This gives new meaning to the word "disingenuous." The giveaway is the two-thirds vote requirement,which is poison to any attempt to enact public policy in this state.Rather than backers persuading a majority of voters to favor a policy,it means that opponents merely have to muster a tiny minority to kill it.The two-thirds vote requirement for passing a budget or enacting taxes in Sacramento has bequeathed us permanent fiscal gridlock and a$20-billion deficit,so PG&E knows exactly how mortal a weapon it can be. And it's not as though CCAs are so easy to set up--not one has yet gone into operation in the state in the seven years since the enabling legislation was passed.But PG&E may wish to make sure there's no breath in the body. "PG&E has infinite sums of money to manufacture their own story,"says Ross Mirkarimi,a San Francisco supervisor involved in setting up that city's CCA,which hopes to start delivering green power sometime next year."But its clear goal is to kill all competition.That's reprehensible." Is there any way to wrest the initiative process out of the claws of corporate interests? Here's a suggestion: Any time a corporation contributes more than 50%of the original funding for an initiative campaign,the campaign's TV advertising should be limited to shots of its CEO explaining directly to the camera exactly what n his company expects to gain from it.At least then the voters will be able to judge the sincerity of its commitment to civic virtue. Of course, it would probably take a ballot initiative to enact such a rule.We could call it the Taxpayers Right to See the Wolf in Sheep's Clothing Act. I may start gathering signatures today. Michael Hiltzik's column appears Mondays and Thursdays. Reach him at michael.hiitzik@latimes.com, read previous columns at www.latimes.com/hiltzik, and follow @latimeshiltzik on Twitter. Copyright © 2010, The Los Angeles Times 3 '11-IE SAMU IENTO BEE sacbae.cc.rn Editorial: PG&E makes a new power grab Published Tuesday,Jan. 19,2010 Pacific Gas and Electric spent$3.5 million to collect more than a million signatures to qualify what it calls the Taxpayers Right to Vote Act for California's June ballot.The self-serving title makes it sound like motherhood and apple pie. It is neither;the opposite, in fact. If voters approve the measure, it will protect the investor-owned utility from dissatisfied customers angry about bad service and high costs.The initiative makes it virtually impossible for those customers to escape PG&E and create their own public power agency or to be annexed by a neighboring government-owned and operated utility. Under its provisions, a super majority, or two-thirds of the voters, in any jurisdiction would have to approve a proposal to switch from an investor-owned utility and move to public power. Stated another way, one- third of the electorate, a minority,would get to decide this vital issue for the majority. PG&E's motives in this effort are obvious. Northern California's largest investor-owned utility has among the highest electricity rates of any power provider in the country,and those rates will likely go a lot higher soon.Currently PG&E has some 10 rate hike requests worth more than $5 billion pending before the California Public Utilities Commission. Increasingly,customers straining to pay those high electric bills are turning to public power for relief. PG&E charges its average customers 15.2 cents per kilowatt-hour for electricity.Sacramento Municipal Utility District customers pay 11.4 cents per kilowatt-hour, 25 percent less. Roseville's rates are comparable to SMUD's. In recent years PG&E has spent tens of millions of dollars to fend off efforts by ratepayers in San Joaquin, San Francisco, Marin and Yolo counties who've tried to form their own public utilities or annex themselves to public power agencies. If its initiative passes, PG&E won't have to worry about fighting small battles all over the state. The constitutional amendment makes it virtually impossible for any jurisdiction to escape the PG&E monopoly. it also makes it difficult for cities that have public power agencies to extend that coverage to areas they annex in the future without going through onerous and expensive public votes. Given the two-thirds threshold they face under the initiative,they would likely lose. It gets worse.Attorneys for the Northern California Power Agency,the organization that represents public utility districts, say the way the initiative is drafted may prevent public agencies from providing power to a new subdivision, apartment building or business built within their own jurisdictions without first getting a two-thirds vote of approval from the public. 1 PG&E amps up bid for power--latimes.com v latimes.com/business/la-fi-hiltzikl0-2010feb 10,0,1802722.column latimes-com MICHAEL HILTZIK PG & E amps up bid for power The utility's initiative has become Proposition 16.It will benefit no one except PG&E and other private utilities Michael Hiltzik February 10, 2010 Speculation has been raging over whether the U.S. Supreme Court's recent kin�iun of federal campaign spending limits on corporations will be very bad for democracy, or not so bad. The secret to getting highly discounted cruise As with many important trends in American tickets society,California was there first, and we have the answer.Thanks to a nakedly cynical$6.5-million ballot campaign launched by our biggest utility, Pacific Gas&Electric,we can say this:It's going to be worse than you can possibly imagine. When I first wrote in December about the ballot Go get some nature in Panama and Costa Rica initiative PG&E concocted to undercut competition a from municipal power agencies,the monster hadn't yet been shocked into life. State officials were still ,S million. verifying petition signatures, and PG&E had lard out only$3 Much has happened since then.The measure has been certified for the June 8 primary ballot,where it will appear as Proposition 16. Realization of what the utility is up to has penetrated the political establishment EinCelsatate legislators, an Peter led by Senate President Pro Tem Darrell Steinberg(D-Sacrament t rferine with the creation of new Darbee by letter that PG actions might violate state law by interfering municipal power services. PG&E's self-interested exploitation of the initiative process,they told him, p P also "calls into question your company's integrity." How did Darbee respond. His company placed an additional$3 million in the campaign kitty .If you were to translate that response to the legislators into English,it wouldn't be printable in a family newspaper. (PG&E didn't grant my request to interview Darbee.) Be we get et into what precisely is wrong about PG&E's behavior, let's look at the Supreme Court's Jan. 21 decision. 0-2010feb10,0,3220605,print.column 2/16/2010 PG&E amps up bid for power-- tatimes.com B a 5-4 majority,the court held that most federal restrictions on corporate spending n federal the same free Y granting corporations campaigns discriminated against their free speech rights--m effect,gr g rp speech rights as individuals. The flaws in this argument were identified in a dissent by Justice John Paul Stevens.He said the law distinguishes between corporations and human beings because they're,well,different. Corporations can't vote or run for office, and"their interests may conflict in fundamental respects with the interests of eligible voters," he observed. Their financial resources, among other things, "raise legitimate concerns about their role in the electoral process." If these cautionary words sound too abstract,here comes Pacific Gas &Electric to put meat on their bones. PG&E's measure would require any public entity to get approval by two-thirds of voters before launching or expanding its public power service, or floating bonds to finance the service. The utility says it created Proposition 16 because it's concerned about a particular new form of municipal utility known as community choice aggregation. Authorized by a 2002 state law, CCAs allow communities to import energy from renewable sources for their residents.PG&E supported the law when it was enacted but now says it has had second thoughts-- that it's looking out for residents who may find CCAs more costly than they expected. CCA backers say PG&E itself has done its best to drive up the cost of CCAs by refusing to cooperate with them,even though that's required by state law. Indeed,San Francisco officials have told the Public Utilities Commission that PG&E's machination Mann s already threaten to inflict"crinnlin and irreparable harm to its plans to implement a C County officials say PG&E has tried to undermine their efforts to get a CCA off the ground,too. Proposition 16,in any case,is written broadly to apply to all public power systems.By undermining all com etition from public power agencies,it will benefit no one except PG&E and other private utilities. P In official documents,PG&E identifies its campaign finance committee as coalition o taxpayers,one: environmentalists,renewable energy,business and labor, but at this stage it's a coalitiNo one else has contributed a dime,according to the most recent campaign finance filings. Bythe way, PG&E claims it is so strapped for money that it is currently seeking a$1.1 b rate increase. The utility touts its measure as the essence of democracy--who can object to requiring a vote of the people? In reality,it's profoundly anti-democratic:A two-thirds vote is nothing but a tool to thwart the will of the voters by giving an extreme minority an outsized voice. That's how a minority in the state Legislature blocks intelligent budgeting in California, and how national health insurance reform has been blocked by a congressional minority in the pocket of the insurance lobby. ,.,.....,/t,,,,,;.Pee/l n-fi-hi lt7ikl0-2010feb 10,0,3220605,print.column 2/16/2010 PG&E amps up bid for power--ianmes.com Other public power agencies see the measure as a dagger aimed at their own hearts.It could block their construction of crucial transmission lines, drive up their financing costs and leave new homeowners without electrical hookups. That's because it's drafted so haphazardly that all such activities,if they haven't been preceded by costly elections,could be challenged by private utilities.According to former California Enery Commissioner John Geesman,that could affect home sales in districts served by municipal utilities. "The fertile minds of utility lawyers are going to be able to dream up all kinds of things," S. David Freeman, general manager of the Los Angeles Department of Water and Power,the nation's largest municipal utility,told me last week. "This is just another attempt by a private utility to inhibit the right of public power to be a competitive yardstick.It's so hurtful of consumers that it would be laughable, except that PG&E's ability to put up brainwashing ads makes it a real threat. Worse,state law prohibits elected officials and public agencies from spending public funds to oppose a ballot measure.That means any effort to counteract PG&E s bankroll will be crippled from the start. "It's a grim reality that public agencies won't be able to fight back at all," says Charles McGlashan, a Marin County supervisor. PUC staff told the commission that PG&E be violating state law as well PUC regulations requiring utilities to cooperate fully j and in good faith with community choice aggregators.But the � commission won't take up the matter at least until its Feb. 25 meeting. It's time for the PUC to speak up,along with the rest of our political leadership. Every candidate for governor should be required to state,for the record,whether he or she thinks it's OK for PG&E to subvert the electoral process by spending$6.5 million(and counting)exclusively for its own corporate benefit.Thus far the GOP candidates,Meja Whitman and Steve Poizner,have been silent as far as I can tell,as has the putative Democratic nominee,Atly. Gen. Jerry Brown. And the rest of us should turn out to vote June 8,by the millions,to make a statement about who owns the state of California:the people, or PG&E? Michael Hiltzik's column appears Sundays and Wednesdays.Reach him at michael.hiltzik b latimes.com,read past columns at www.latimes.com/hiltzik, and follow a,latimeshiltzik on Twitter. Copyright©2010,The Los Angeles Times .. _ ,,,,vnfk,,cirPcc/la-fi-hiltzikl0-2010feb10,0,3220605,print.column 2/16/2010 Attachment 4 i tFARS of July 7,2009 Hon.Edmund G.Brown Jr. Attorney General 1300 I Street,17''Floor Sacramento,California 95814 Attention: Ms.Krystal Paris Initiative Coordinator Dear Attorney General Brown: Pursuant to Elections Code Section 9005,we have reviewed a proposed constitu- tional amendment initiative relating to voting requirements for expanding or establish- ing publicly owned electricity providers(A.G.File No.09-0015). BACKGROUND Provision of Electricity Service in California California Electricity Providers.Californians generally receive their electricity service from one of three types of providers:investor-owned utilities(IOUs),local publicly owned electric utilities,and electric service providers(ESPs).These providers provide 68 percent,24 percent,and 8 percent,respectively,of retail electricity service in the state. Investor-Owned Utilities.The IOUs are owned by private investors and provide electricity service for profit.The three largest electricity IOUs in the state are Pacific Gas and Electric,Southern California Edison,and San Diego Gas and Electric.Each IOU has a unique,defined geographic service area and is required by law to serve customers in that area.The California Public Utilities Commission(CPUC)regulates the rates charged by IOUs and how they provide electricity service to their customers. Publicly Owned Utilities.Publicly owned electric utilities are public entities that pro- vide electricity service to residents and businesses in their local area.Not regulated by CPUC,publicly owned electric utilities set their own terms of service,including the rates charged to their customers.Electricity service is currently provided by local governments through several different governmental structures authorized under state law,including: • Utility departments of cities,such as the Los Angeles Department of Water and Power. Municipal utility districts,such as the Sacramento Municipal Utility District. Hon. Edmund G.Brown Jr. 2 July 7,2009 • Public utility districts,such as the Truckee Donner Public Utility District. • Irrigation districts,such as the Imperial Irrigation District. Electric Service Providers.The ESPs provide electricity service to customers who have chosen not to receive service from the IOU or publicly owned utility that would otherwise serve their geographic area.Under this approach,an electricity customer en- ters into what is termed a"direct access"contract with an ESP that delivers electricity to the customer through the local utility's transmission and distribution system.Electric service provider rates are not regulated by CPUC.There are currently eighteen regis- tered ESPs,mainly serving large industrial and commercial customers.Individual elec- tricity consumers are currently barred from entering into ESP contracts,although state law will again permit this to occur several years from now. Community Choice Aggregation In addition to the ESP arrangements discussed above,state law allows a city or a county,or a combination of the two,to arrange to provide electrical service within their jurisdiction through a contract with an electricity provider other than the IOU that would otherwise serve that local area.This version of direct access is referred to as "community choice aggregation."Although no community choice aggregator(CCA) currently exists to provide electricity service in California,several communities are ex- ploring this option. Under this approach,electricity would be purchased by the CCA from an ESP in- stead of the local IOU. However,the transmission and distribution system of the IOU serving that local area would continue to be used to deliver the electricity to the cus- tomers.Electricity customers within that jurisdiction would automatically get their elec- tricity from the CCA unless they elected to continue to receive service from the IOU serving their local area. Voter Approval Requirements for Publicly Owned Electricity Providers As noted above,publicly owned utilities can be organized under several different types of government structures,such as municipal utility districts. Each type of local government entity that is authorized to provide electricity service,and that is consider- ing either the start-up of electricity service or the expansion of existing service beyond its current service area,is subject to certain state requirements. Various statutes specify whether voter approval is required for the start-up of electricity service by authorized local government entities.Under state law,if a local government intends to expand its electricity service into a new territory,that new area must be annexed and a majority of the voters in the area proposed for annexation must approve the expansion. However, no vote of the public is generally required in such cases within the existing service terri- tory of the local governmental entity that is proposing the expansion. (In some cases,a local commission requires such a vote as a condition of approving the annexation.)Lo- Hon.Edmund G.Brown Jr. 3 July 7,2009 cal agency action to create a CCA,in contrast,may be undertaken upon a vote of the lo- cal agency governing board and does not require local voter approval. PROPOSAL The measure places new voter approval requirements on local governments before they can use"public funds"--defined broadly in the measure to include tax revenues, various forms of debt,and ratepayer funds—to start up electricity service,expand elec- tricity service into a new territory,or to create a CCA.First,if an authorized local gov- ernment entity seeks to start up electricity service,it must receive approval by two- thirds of the voters in the area proposed to be served.Second,if an existing publicly owned utility seeks to expand its electric delivery service into a new territory,it must receive an approval by two-thirds of the voters in both the area currently served by the utility and the new area proposed to be served.Third,the measure requires two-thirds voter approval for a local government to create a CCA. The measure provides three exemptions to-local governments from these voter ap- proval requirements: • If the use of public funds has been previously approved by the voters both within the existing jurisdiction of the local government and the territory pro- posed for expansion. • If the public funds would be used solely to purchase,provide,or supply specified types of renewable electricity,such as wind or solar power. • If the public funds would be used only to provide electric delivery service for the local government's own use. FISCAL EFFECTS Local Administrative Costs for Elections.Because this measure requires voter'ap- proval for specified local government actions,it would result in additional costs to local governments each time a proposal requiring voter approval was placed on the ballot. These costs would primarily be related to preparing and mailing election-related materi- als.In most cases,the balloting could be consolidated with already scheduled elections. The increased election-related costs due to this measure would probably be minor. Potential Impact on State and Local Government Costs and Revenues.This meas- ure could affect local government costs and revenues due to its potential effects on the operation of publicly owned utilities and CCAs.It could also affect the finances of state and local government agencies in California because of its potential impact on electric- ity rates.These effects would largely depend upon future actions of voters and local governments.We discuss these potential effects in more detail below. Hon.Edmund G. Brown Jr. 4 July 7,2009 First,the new public voter approval requirements for the start-up or expansion of publicly owned utilities or the formation of CCAs could,in some cases,result in public disapproval of such changes.Also,the existence of these new voter approval require- ments could deter some local government agencies from proceeding with such plans. To the extent that this occurred,local government agencies could collect lower revenues from electricity customers,and incur lower costs for the operation and coordination of electricity services,than would otherwise be the case. Second,the enactment of this measure could also affect the finances of state and lo- cal government agencies in California due to its potential impact on electricity rates.As noted above,some local government agencies might not start up or expand a publicly owned utility into a new territory or create a CCA as a result of the measure's new voter approval requirements. In this event,the rates paid by electricity customers in that and neighboring jurisdictions could be higher or lower than would otherwise have been the case.This could affect state and local government costs,since many public agencies are themselves large consumers of electricity.To the extent that changes in electricity rates affect business profits,sales,and taxable income,these factors could affect state and lo- cal tax revenues. The net fiscal effect of all of these factors on the finances of state and local govern- ment agencies is unknown. SUMMARY In summary,the initiative would have the following major fiscal effect: • Unknown net impact on state and local government costs and revenues,de- pending on future voter decisions,due to the measure's potential effects on electricity rates and publicly owned utility operations. Sincerely, Mac Taylor Legislative Analyst Michael C. Genest Director of Finance Attachment 5 R Solu ion No. 2010 - XX OPPOSING PROPOSITION 16 THE "NEW TWO-THIRDS VOTE REQUIREMENT FOR PUBLIC ELECTRICITY PROVIDERS - INITIATIVE CONSTITUTIONAL AMENDMENT" WHEREAS, the "New Two-Thirds Vote Requirement for Public Electricity Providers — Initiative Constitutional Amendment"(the Initiative)has qualified for the June 8,2010 Statewide Primary Election;and WHEREAS,the Initiative would require a public power provider to obtain a two-thirds voter majority in both existing territory and proposed territory expansions prior to spending funds for a utility system expansion; and WHEREAS,the Initiative would prevent a simple majority of citizens from determining whether they wish to pursue Community Choice Aggregation,a program authorized by the State Legislature in 2007 that allows a city, county, or group of government agencies to supply electricity to residents and businesses within their jurisdiction; and WHEREAS, the Initiative contains vague and ambiguous language which can be construed to require and existing public utility to obtain a two-thirds majority vote of citizens for the development of non-renewable generation facilities or transmission lines located outside of the public utilities jurisdiction; and WHEREAS, such restrictions could constrain Truckee Donner Public Utility District's (TDPUD) resource planning and procurement efforts by imposing two-thirds voter approval requirements prior to TDPUD committing to new investment in transmission or generation infrastructure to serve its electric load; and WHEREAS, although the Truckee Donner Public Utility District is already a public power community, this Initiative would thwart the ability of citizens to opt for locally controlled public power in other communities throughout the state. NOW, THEREFORE, IT IS HEREBY RESOLVED, that the on April 21, 2010, the Truckee Donner Public Utility District Board, by motion adopted a resolution opposing the Initiative, Proposition 16. PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility District in a meeting duly called and held within said District on the 21 st day of April 2010. AYES: NOES: ABSTAIN: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT Jeff Bender, President ATTEST: Michael D. Holley, P.E. Clerk of the Board