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Davis, California

Thursday, October 28, 2021

Column: Bitter 16

A new season is about to begin and hope springs eternal. The familiar stalwarts from yesteryear are gone, and its time to evaluate the fresh crop of hopefuls. Yes, the ballot season is upon us, and it’s time to break out the voter information guides.

A number of significant initiatives will appear on the June 8th ballot, breaching complex issues that require deep analysis and difficult choices. There are, however, some that are merely written in an effort to confuse voters and are proposed to protect narrow interests. Proposition 16 seems to fall into the latter category.

Called “New Two-Thirds Requirement for Local Public Electricity Providers Act,” Prop 16 will make local districts obtain a two-thirds vote before setting up their own electricity utilities. Currently, the governor-appointed California Public Utilities Commission (CPUC) can make this decision without public approval. On the surface it may sound like a good deal for the people of California by giving greater freedom to choose our own energy provider. Unfortunately, the intent of this law and its inevitable impact will be just the opposite.

Due to the technical challenges of supplying energy to a large population, it is necessary that each district be controlled and serviced by a single monopoly. In the case of most California districts the monopoly is a privately operated but publicly regulated utility: Pacific Gas and Electric Company. CPUC attempts to control costs and ensure that everyone in a district has access to energy, but inefficiency, waste and high prices are still the norm.

What districts can do to get around the abuses of PG&E is to create their own publicly operated energy utility, or at least threaten to do so. Local California governments can decide to enter a Community Choice Aggregation Program (CCA), and effectively set up their own energy provider. While this by no means ensures better service, efficient energy use, or lower prices, it does create a competitor for PG&E. This choice could give both organizations a reason to improve. This isn’t a case where there is a clear-cut “good” option. The choice is basically to pick from two monopolies, one run by the government and one that is quasi-governmental in nature.

Prop 16 was crafted to basically stop local governments from leaving PG&E. Since most districts already use PG&E, any future change would require a two-thirds vote from a local population to change. PG&E claims that this will prevent local governments from abusing the voters and will stop them from taking risks with people’s money. This reasoning is pretty flimsy given that setting up public utilities does not require an increase in taxes, and the system will work like the one already in place. You will simply pay for the energy that you use at whatever rate the company or government agency dictates. A two-thirds vote is extremely difficult to attain, and it would virtually lock in PG&E’s monopoly.

It is no wonder that Prop 16 was crafted and funded by PG&E, and that the company has poured tens of millions of dollars into a massive ad campaign. It’s in PG&E’s interest to solidify their monopoly to ensure that they never have competition. Wording the proposition in order to make it sound like they want to give voters more of a choice is a deception. PG&E wants to write its monopoly into our state’s constitution and disguise itself as a protector of citizen choice.

Had there been a true free-market solution to the problem of electric utilities then Prop 16 would have validity, as injecting large government run monopolies could run better, privately owned companies out of business. Given that Prop 16 essentially protects a single company’s monopoly gives no real advantage to California citizens. The fact that PG&E has pushed so aggressively and has expended such great resources to this effort with little opposition should be a clear warning sign.

California citizens have to decide whether or not they are willing to let one company solidify its control by essentially signing a monopoly into law. Government-run energy utilities won’t necessarily be any better, but at least we can fire the managers.

JARRETT STEPMAN doesn’t want to give a single company constitutional protection of its monopoly. You can send him your comments at jstepman@ucdavis.edu.


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