Locally Owned Utilities Sue to Disqualify Proposition 16, PG&E’s Misleading Bid to Lock In Its Monopoly

Prop 16 challenge presskit, which includes the verified petition for Modesto Irrigation District et al. v. Bowen (March 18, 2010).
Prop 16 challenge presskit, which includes the verified petition for Modesto Irrigation District et al. v. Bowen (March 18, 2010).
SACRAMENTO, CALIF. (March 18, 2010) — A coalition of locally-owned public utilities from throughout California today filed suit in Sacramento County Superior Court to disqualify Proposition 16 from the June 8 statewide ballot for being false and misleading, and for concealing its true nature and purpose from voters. Proposition 16 is PG&E’s attempt to lock in its monopoly in its existing territories. Even though PG&E spent millions of dollars to qualify the initiative and has committed to spending tens of millions more on the Proposition 16 campaign, the lawsuit points out that PG&E carefully omitted any mention of its name in the measure, and concealed that the true nature, purpose and effect of the initiative would be to protect PG&E from competition from public providers of electric service.

Proposition 16 would make it virtually impossible for public agencies to provide any energy services to new customers because it would require supermajority approval (two-thirds of the voters) instead of the current simple majority votes. If passed, this proposition is also likely to prevent cities that have public power agencies from extending their distribution systems to newly-built neighborhoods-or even to one new customer in the future without going through the expense of seeking authorization from a two-thirds supermajority of voters.

Citing the combination of misrepresentations and concealment in the text of the PG&E-sponsored initiative that “misled the citizens who were induced to sign the petition to qualify it and will mislead the voters who are asked to adopt it,” the lawsuit was filed by the Sacramento Municipal Utility District, San Francisco Local Agency Formation Commission, City and County of San Francisco, City of Moreno Valley, the City of Redding, the California Municipal Utilities Association, the San Joaquin Valley Power Authority, the Modesto Irrigation District, and the Merced Irrigation District.

“Public utilities such as the Modesto Irrigation District (MID) could be prevented from providing electricity to new customers right next door to customers we already serve,” said MID Assistant General Manager of Transmission & Distribution Tom Kimball. “Not only will Proposition 16 have a negative impact on public utility operations, it will potentially escalate electric rates for all consumers as well. It is imperative that ratepayers understand what this proposition is truly about.”

The lawsuit focuses on the false and misleading language in both the initiative and the petition used to qualify it for the statewide ballot. Among the misinformation cited in the lawsuit:

The intent of Proposition 16 is to protect PG&E’s monopoly over its existing service area, but the initiative misrepresents that its purpose is to control taxes, borrowing, and spending.

Proposition 16 conceals the fact that the sole beneficiaries of the initiative would be the investor-owned utilities such as PG&E and that the targets of the initiative are any public competitors of these investor-owned utilities.

The self-entitled “Taxpayers Right to Vote Act” misrepresents Proposition 16 as a measure to control taxes and public spending, but the creation or expansion of public utilities do not have anything to do with taxes. The initiative is really just an attempt to impose a two-thirds vote requirement for the creation or expansion of a public utility.

The initiative misrepresents that Proposition 16 is a measure to control local government borrowing, which is already controlled by California law, including a two-thirds voting requirement.
The initiative fails to disclose that Proposition 16 would effectively eliminate local governments’ ability to develop alternatives to investor-owned utilities, as well as eliminate the ability of citizens to choose how they receive electricity.

“The so-called ‘Taxpayers Right to Vote Act’ doesn’t help taxpayers, and doesn’t empower voters-in fact it does the exact opposite. It’s anti-competitive, anti-democratic, and misleading in its entirety,” said San Francisco City Attorney Dennis Herrera. “State law enables courts to remove initiatives that misrepresent and conceal their true nature and purpose. If our elections laws are to mean anything, the court must strike this deceptive amendment from the ballot.”

The full text of the lawsuit is available online at www.sfcityattorney.org.

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* Sacramento Municipal Utility District: Dace Udris at (916) 732-5201
* City and County of San Francisco: Matt Dorsey at (415) 554-4662
* City of Moreno Valley: Michelle Dawson at (951) 413-3051
* City of Redding: Patrick Keener at (530) 339-7220 or (530) 524-8102
* San Joaquin Valley Power Authority: Cristel Tufenkjian at (559)237-5567
* Modesto Irrigation District: Melissa Williams at (209) 526-7390
* Merced Irrigation District: Ann-Marie Felsinger at (209) 354-2822