California Proposition 16, Require Supermajority Voter Approval to Expand Utility Services Initiative (June 2010)

{{| name = California Proposition 16, Require Supermajority Voter Approval to Expand Utility Services Initiative | election date = June 8, 2010 | state = California | official title = Proposition 16 | year = 2010 | status = Defeated | status image = {{}} | type = Initiated constitutional amendment | topic =Energy | topic2 =}}

Measure design

Proposition 16 would have required a two-thirds supermajority vote of approval from voters in the local government's jurisdiction and voters within the territory that would be served before a local government could:

• establish a Community Choice Aggregation (CCA) program;
• use public funding to implement a plan to become a CCA provider; or
• expand electric service to new territory or new customers.

California residents can generally get electricity service from one of three types of electricity service providers: investor-owned utilities (IOUs), local publicly owned electric utilities, or electric service providers (ESPs). Additionally, a city or county (or both) could choose to provide electricity via a contract with an electricity provider other than the investor-owned utility company that would otherwise provide electricity services for that area. The CCA program, established in 2002 through Assembly Bill 117, allowed local governments to purchase blocks of power to sell to residents, and to construct municipal electricity generation facilities, meaning that cities and counties ccould become competitors to private utilities.

The voter approval requirement would not have been required if:

• public funding has already been approved by the voters both within the existing local jurisdiction and the proposed expanded jurisdiction;
• public funds would be used only to purchase or supply certain types of electricity from renewable sources, such as wind or solar power;
• public funds would be used only to provide electricity for the local government’s use.

Constitutional changes

See also: Complete text of Proposition 16

Proposition 16 would have added a new section to Article XI of the California Constitution. The following underlined text would have been added:

{{| 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) “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 receiving electric delivery service from the local government prior to the enactment of this section.

(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 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 current, or providing electric delivery service for the local government’s own end use and not for electric delivery service to others. }}

Support

PG&E building in San Francisco

Californians to Protect Our Right to Vote sponsored the measure. Pacific Gas & Electric was the primary financial sponsor of the initiative, having contributed $46.1 million as of March 25, 2010.

Supporters

• California Taxpayers Association
• The Oakland Jobs and Housing Coalition
• Willie Brown, former San Francisco Mayor
• Allan Zaremberg, President of the California Chamber of Commerce
• Teresa Casazza, President of the California Taxpayers’ Association

Arguments

• Greg Larsen of Larsen Cazanis (a Sacramento public relations firm) and spokesperson for the support campaign, said, "Why shouldn't the people who are going to pay the bill have the right to vote on that?"

• Former Sacramento County Sheriff Lou Blanas said, "As local governments struggle to fund the most essential and basic services, local leaders in several communities are working to spend millions of public dollars or debt to get into the retail electricity business. And they do not want the people to vote on it. In tough times like these, voters deserve a voice in this decision... California voters have consistently supported sound proposals brought before them. In fact, between 2002-2008, 286 local special tax and bond measures that required a two-thirds vote were approved."

• President and CEO of the California Chamber of Commerce Allan Zaremberg said, "Requiring a vote will ensure that the complicated and risky choice to create a government-run electricity business gets the public discussion it deserves. These are long-term deals that can commit generations to hundreds of millions of dollars of debt. And to pay for them, more cuts in local programs might be required or, perhaps, even new taxes or fees. The voters need to be allowed to weigh the promises of benefits versus the real risks and costs of failure."

• Jim Wunderman, president and CEO of the Bay Area Council, said, "Regardless of how you feel about public power, ask yourself: Should the public have the right to vote before elected officials spend our money entering the electric power business?"

Official arguments

The following supporting arguments were presented in the official voter guide:

{{| {{|Vote YES on Proposition 16, the Taxpayers Right to Vote Act. Proposition 16, the Taxpayers Right to Vote Act, does one simple thing: It requires voter approval before local governments can spend public money or incur public debt to get into the electricity business. And like most local special tax and bond decisions in California, two-thirds voter approval will be required. In tough economic times like these, local voters have every right to have the final say on an issue as important as who provides them with local electric service, and how much it will cost. Two-thirds voter approval is our best protection against costly and risky government schemes to take over local electric service. Several local governments in California are trying to take over private electric businesses—often using eminent domain—and are refusing to let local voters have the final say in the decision, because state law doesn’t require it. This measure establishes clear voter approval requirements before local governments can spend public money or incur public debt to go into the local electricity business. These days, with government spending out of control and mounting government debt—the best financial safeguard for taxpayers is to give voters the final say in these decisions. Supporters of Proposition 16, the Taxpayers Right to Vote Act, including the California Taxpayers’ Association, the California Chamber of Commerce and Pacific Gas and Electric Company, believe that the voters should decide. It is our electric service, our public money and, in the end, it is everyone’s problem if a government-run electricity business fails. We, the voters, deserve the right to have the final say about how our money is spent. Vote YES on Proposition 16, the Taxpayers Right to Vote Act. www.taxpayersrighttovote.com}} }}

Opposition

No on Prop 16 led the campaign against the initiative.

Opponents

• Local Power Inc.
• The Utility Reform Network
• The Modesto Irrigation District
• Former California Energy Commissioner John Geesman
• The California Democratic Party
• AARP
• Sierra Club
• Consumer Federation of California
• The Palo Alto City Council
• California state senators Darrell Steinberg, Mark Leno, Jenny Oropeza, Lois Wolk, Christine Kehoe, Alan Lowenthal, Gilbert Cedillo and Dean Florez

Arguments

• Nine California state senators sent a letter to PG&E President Peter Darbee in which they said that they believe Proposition 16 is "misguided as a matter of public policy." The letter was signed by senators Darrell Steinberg, Mark Leno, Jenny Oropeza, Lois Wolk, Christine Kehoe, Alan Lowenthal, Gilbert Cedillo and Dean Florez.

• Mindy Spratt of The Utility Reform Network said, "This is the worst kind of special interest ballot proposition. Something that would basically benefit one corporation at the expense of everybody else."

• Paul Fenn of Local Power Inc. said, "PG&E still thinks it can play energy cowboy and bully everyone into doing what they want. But communities have figured out that they can buy twice the amount of green power for the same price."

• Elisabeth Brinton, director of communications for the Sacramento Municipal Utility District, a public utility, said, "It really goes to the heart of the right of people to have choices, that’s the intent of this measure. It’s horrendous."

• Michael Hiltzik, a Los Angeles Times columnist, said, "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."

Official arguments

The following opposition arguments were presented in the official voter guide:

{{| {{|Proposition 16 does two things: First, it drastically limits your choices on who provides you with electricity. Second, it makes it easier for the for-profit utilities in California to raise your electricity rates. It’s cleverly written, because the backers of Proposition 16 want to fool the voters. They say this measure is about protecting taxpayers. But what it really protects is the monopoly enjoyed by a giant, for-profit electric utility. You should be allowed to have more choices in who provides your electricity, if those choices would give you lower cost and better service. Vote No on Proposition 16. Most people would agree that if a local nonprofit organization wants to buy green power at wholesale rates, and sell it to communities at an affordable cost, it should be allowed to do so. But Proposition 16 makes it just about impossible. Severely limiting your choice in the source of your electricity. No lower cost green energy. Fewer choices and higher costs. That’s what Proposition 16 does to you. Who’s the sole sponsor of Proposition 16? PG&E, the largest for-profit utility in the state. When this argument was written, PG&E had contributed $6.5 million to the “yes” campaign and signaled they’re prepared to spend tens of millions more. PG&E was the only contributor to put this proposition on the ballot. Why? Again, PG&E wants to protect its monopoly. Proposition 16 isn’t about protecting taxpayers—it’s about protecting PG&E’s for-profit monopoly on electricity. Just read the ballot title and summary, and you’ll see. As the Fresno Bee put it, “The PG&E ballot measure (Proposition 16) is another example of the initiative process going awry in California, of a powerful special interest seizing the initiative process for its own narrow benefit.” AARP urges No on Proposition 16 because by restricting competition, Proposition 16 could mean higher electricity costs for you. A No vote protects you against the potential for crippling rate hikes. In fact, PG&E and other for-profit utilities already charge higher rates than municipal, nonprofit utilities. And now they want to increase rates another $5 billion. The Consumer Federation of California says VOTE NO because like Wall Street, PG&E paid huge bonuses to its executives, even after it went bankrupt and ratepayers bailed it out. Now PG&E wants to lock-in its monopoly once and for all—so smaller, local nonprofit utilities are not allowed to compete. Sierra Club says VOTE NO because Proposition 16 requires a 2/3 supermajority vote before communities can purchase clean power and other power at competitive prices. These community choice programs are voluntary and do not raise taxes. Proposition 16 “is a dagger aimed directly at a movement to enable municipalities to offer renewable green power to their residents in competition with private utilities,” said Michael Hiltzik, a columnist for the Los Angeles Times. Say NO to another wasteful initiative that says one thing but really does something very different. Vote No on Proposition 16 to keep money in your pocket and to protect your utility choices.}} }}

Media editorials

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Support

The Orange County Register endorses a "yes" vote, saying, "Municipal utilities may have a better track record in service and rates, but there's no guarantee that difference will continue. There is, however, a distinct threat that financially strapped elected officials could use electricity rate increases to backfill government budgets. Increasing electricity rates is easier than raising new taxes, which generally require two-thirds vote of the people. So, too, should the government's entry into the lucrative electricity business. Weighing the benefits for ratepayers against taxpayers' exposure, we choose to urge a "yes" vote for Proposition 16, to restrain government."

Opposition

• The editorial board of the San Francisco Guardian said on September 22, 2009 that "this is a profoundly important issue, and every elected official, city council, board of supervisors, and utility agency in the Bay Area needs to immediately come out in opposition and start organizing to defeat it."

• The Oakland Tribune editorialized for a "no" vote, saying, "Voters should not be fooled into thinking Proposition 16 is anything about improving the democratic process. It is entirely about PG&E's financial interests and would do considerable harm to local governments' ability to create and expand publicly owned utilities for the benefit of electricity customers. We urge voters to soundly reject Proposition 16 to protect their own pocketbooks and local choices about electricity service, and to send a message to PG&E and other special interests that the voters cannot be bought."

• The Fresno Bee's editorial board urges a "no" vote, saying, "Proposition 16 is the clearest illustration yet of how special interests have corrupted California's initiative system."

• The Petaluma Press Democrat urges a "no" vote, saying, "The long slow descent of California’s initiative process has reached a new trough with Proposition 16 on the June 8 ballot...To make matters worse, this corporate handout is being billed as a taxpayer protection measure. Don’t be fooled."

• The Sacramento Bee: "Voters should not be fooled by this attempt at winning a guaranteed monopoly for one firm."

• The Marin Independent-Journal: "Proposition 16 is a corporate power play disguised as election reform."

• The Lompoc Record: "The measure is being bankrolled by PG&E, whose chairman told stockholders at a recent meeting that the purpose of the ballot measure was to freeze out the competition. We oppose Proposition 16 on that basis alone."

Path to the ballot

See also: California signature requirements

The Office of the California Secretary of State announced on January 12, 2010, that Proposition 16 had qualified for the June 8, 2010 ballot. As an {{}}, the supporters of Proposition 16 needed to submit 694,354 valid signatures to qualify the measure for the ballot.

The petition drive management company "Direct Voice" was hired to collect signatures to qualify the proposition for the ballot. Direct Voices was a subsidiary of Arno Political Consultants. They were paid $2,199,794 to collect signatures to qualify the measure for the ballot.

Ballot language lawsuit

A number of public utilities (including Merced Irrigation District, Modesto Irrigation District, Sacramento Municipal Utility District, and the San Joaquin Valley Power Authority) filed a lawsuit on March 18 to remove Proposition 16 from the ballot, alleging that the ballot language was misleading. On May 5, Sacramento Superior Court Judge Allen Sumner rejected the lawsuit, allowing Proposition 16 to stay on the ballot. He said that the plaintiffs had waited too long to file the lawsuit, and on the issue of the merits, that, "The question is whether the title and summary of Proposition 16 adequately disclose its purpose - not the motivation of its sponsors." The City and County of San Francisco is also a plaintiff in the lawsuit.

External links

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Basic information

• Official Voter Guide to Proposition 16
• June 8, 2010, Primary Election Voter Guide

Support

• Taxpayer's Right to Vote
• Yes on Prop 16 on Facebook
• Campaign finance reports of "Yes on 16/Californians to Protect Our Right to Vote Major Funding from Pacific Gas & ELectric Company and Ca Business PAC, sponsored by California Chamber of Commerce, a Coalition of Taxpayers and Business"

Opposition

• PG&E Ballot Initiative Factsheet
• No on Prop 16 Blogspot blog
• Taxpayers to Stop the PG&E Power Grab PAC site
• Local Clean Energy Alliance's Power Grab site
• Campaign finance reports of "No on Prop 16, Taxpayers against the PG&E PowerGrab, Sponsored by Local Power, Inc., & The Utility Reform Network"
• Campaign finance reports of "Ratepayers, Businesses and Governments Oppose Prop 16-Stop the Power Grab"
• Campaign finance reports of "Sierra Club SF Bay Chapter Issues"

Footnotes

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