Juice: Good Will Hunting

By Published On: September 14, 2012

The first job on my home improvement to-do list was replacing an old porcelain sink with a stainless steel model. After attempting to make sense of the directions for installing a new faucet I decided to hire a contractor to avoid a costly plumbing mishap. During the installation, I occasionally asked the handyman a question. He’d either not respond or make an obnoxious remark. More irritating was that he bought parts I already had and then tacked on a 10 percent fee for the unneeded trip to the hardware store. Not good for public relations. The next home project I chose to do myself. After several screw ups--none fatal--I eventually managed to re-key a lock. It was quite satisfying, particularly because I didn’t have to deal with a patronizing contractor or unfair charges. I suspect the motivation behind Marin County’s community aggregation program is similar to my recent home improvement lessons. Without a contractor, mistakes are made, but the job gets done sans the tool belt swagger in front of the little lady. The Marin Energy Authority is making mistakes while finding its way in the energy business--albeit with behemoth Shell North America--including facing higher energy supply costs. But, the choice frees it from being dismissed or put down by a patronizing Pacific Gas & Electric. The whole premise of the 2002 legislation making way for regional agencies to offer alternative sources of electricity to their residents and businesses was choice--and all that it entails--mistakes and all. Community choice aggregation got off to a roaring start just after the California’s 2000-01 energy crisis. Utilities were bankrupt--or nearly so--and loathed along with Enron. As momentum built for the legislation, AB 117, you could feel the excitement in the hallways at the state capital. That is not to say it was smooth going. For example, the author, former San Francisco lawmaker Carol Migden, was notoriously difficult. She went through three chiefs of staff fairly quickly, with the position being dubbed a “combat tour.” But the time was ripe for community choice aggregation and battered private utilities were in no position to openly oppose the bill. Also, electricity supply choice was reality in two other states--Massachusetts and Ohio. It took six years for community choice to get off the ground. In 2008, more than a dozen cities in California began actively exploring purchasing bulk electricity for resale. Supporters tout community aggregation as a monopoly-free route to local control, more renewable power resources, and a reduction in greenhouse gas emissions. The first aggregation attempt was initiated by the San Joaquin Valley Power Authority. It hoped to provide power in 2009 to 11 San Joaquin Valley cities and Kings County. The effort didn’t succeed because substitute power costs were high, and Pacific Gas & Electric actively opposed the move. San Joaquin complained to the regulators about “unfair tactics” used by PG&E. Later, Marin complained to the California Public Utilities Commission about PG&E’s interference in its community choice efforts--so much so that regulators ruled the utility could not use ratepayer money to sabotage community choice efforts. But who is checking? Utility legal and public relations fees aren’t subject to reasonableness reviews. “It’s up to intervenors to uncover unjust expenses” said Mindy Spatt, The Utility Reform Network spokesperson. Utilities project their expenses, including legal and PR, in their general rate case filings. “They can always move money around,” Spatt added. Since the get-go, PG&E has been wasting resources fighting customer choice. It should stop throwing a monkey wrench into the scheme of things. Not good public relations. Improved public relations was ostensibly the reason for hiring the new PG&E chief executive officer Tony Earley. In a recent press conference, Earley talked about the work being done to improve the utility’s safety record and customer satisfaction during his first year on the job. His focus was pipeline safety and he didn’t mention competition from community choice aggregation, but it should also be on his home improvement list. PG&E and its private utility brethren recently challenged community choice aggregators’ efforts to tap into the ratepayer-funded energy efficiency pot. The California Public Utilities Commission recently approved redirecting only 15 percent of the energy efficiency funds to Marin Energy this year. The investor-owned utilities claimed only they were entitled to the funds, arguing aggregators shouldn’t get a cent. (Current, Aug. 24, 2012). Earley appears sincere. Post-San Bruno, he has a real opportunity to make meaningful and positive corporate change. His underlings should be ordered to focus on safety and good customer relations--including getting out of the way of community choice aggregation efforts. Let Marin and other community choice aggregators coming on the scene--with the Sonoma County Water Agency and San Francisco next in line--try and re-key a new energy supply future. Regardless of the outcome, PG&E will continue to provide and be paid for the critical distribution service. If it works in other states, it can work in California too. The energy industry in and outside the state is undergoing a massive change given the explosion of wireless technologies, new resources, and pressure to curb greenhouse gas emissions. PG&E can be a positive part of the change or continue with its well-equipped legal tool belt swagger in Marin and other territories perceived as hostile. Earley should step in and remind utility executives and workers about the value of an intangible asset, known as goodwill. Goodwill represents the value of a business over and above its liquidation value. “It’s been built up over the course of business and is attributed to a company’s character, reputation, market share, and brand recognition,” notes AFN Group, a business valuation company.

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