PG&E Anti-Annexation Campaign Put to the Smell Test

The new chair of the Senate Energy, Utilities, and Communications Committee may hold a hearing next year on whether Pacific Gas & Electric's campaign to fight the Sacramento Municipal Utility District's unsuccessful annexation plan complied with the letter and spirit of the law. Senator Christine Kehoe (D-San Diego) will make a decision after conferring with lawmakers from Sacramento and Davis who are seeking a public hearing on the matter, Randy Chinn, committee consultant, said this week. Earlier this month, Kehoe asked California Public Utilities Commission president Mike Peevey to investigate whether PG&E's activities were legal and appropriate. The senator asked Peevey to evaluate the propriety of PG&E's activities, including the use of anti-annexation utility bill inserts and customer service recordings. She also sought a comparison of the regulatory treatment applied when the Sacramento muni took over the city of Folsom in 1984 and when SMUD was created early in the last century. Peevey wrote Kehoe November 9 that the commission will audit PG&E's expenses. He added that the utility stated it used shareholder funds for its campaign, not ratepayer money. The First Amendment allows PG&E to use bill inserts "and presumably its customer service line to deliver messages to the customers as long as the messages may be avoided," Peevey continued. He agreed to have CPUC staff conduct a comparative study of the recently failed annexation and SMUD's two other moves into PG&E turf. The Senate Energy Committee had not seen Peevey's letter before press time so could not comment on it. Three measures in Yolo and Sacramento counties asked voters last week whether they approved SMUD providing electricity in place of PG&E to Yolo County cities. PG&E spent $11 million protecting its territory, and the annexation was defeated (Circuit, Nov. 10, 2006). PG&E spent "$11 million from ratepayers to silence the voice of change," SMUD board member Susan Patterson said this week. "I understand ratepayers are protective of our wonderful company [PG&E]," said Davis mayor Sue Greenwald, adding that if annexation proponents had had the resources to advertise the benefits that SMUD service offered, the merger would have won approval. Kehoe's letter to the CPUC was in response to requests she received from three lawmakers. Senator Deborah Ortiz (D-Sacramento) and Assemblymembers Dave Jones (D-Sacramento) and Lois Wolk (D-Davis) raised concerns "that current law has permitted the existence of an uneven playing field contrary to the public interest." Munis are prohibited from using customer-owners' funds to pay for political messages. SMUD general manager Jan Schori also took issue with PG&E's political activities. In a letter to Peevey, she complained that some muni customers were forced to listen to its competitor's anti-annexation propaganda, and she asked to have the source of political funds traced. Peevey replied at the end of the last week that PG&E's political expenses are not allowed to be passed on in rates, "and there is no reason why these expenses leading up to the elections in November 2006 should be reflected in expenses during the base period in 2004 or forecasts for the test year 2007." - Elizabeth McCarthy

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PG&E Anti-Annexation Campaign Put to the Smell Test

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