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What was wrong with the two energy-related commentaries in Sunday’s Monterey Herald? It’s hard to know where to start, so let’s just go with the first headline.

Both pieces were objections to the planned Monterey Bay Community Power project, a three-county, government-led consortium that would compete with Pacifc Gas & Electric Co. One piece was one written by Pacific Grove businessman Jeff Gorman and the other by Libertarian Party stalwart Lawrence Samuels, who seems to be opposed to just about everything.

The headline on Gorman’s piece, reflecting a theme also picked up by Samuels, reads “Monopoly on power not the answer.” OK, as I pointed out a jillion times in my reporting days, the headline is not written by the author. It is written by a copy editor, who, in the case of The Herald, probably lives somewhere near Chico.

Regardless, it’s an airball of a headline even if it isn’t entirely Gorman’s fault. The three-county MBCP entity would be an alternative to Pacific Gas & Electric Co., a true monopoly. As a competitor of PG&E, the new entity would, by definition, not be a monopoly. PG&E would remain in business. And here’s a point not made in Gorman’s piece, residents of the three counties involved – Monterey, Santa Cruz and San Benito – would be allowed to opt out of the new power structure and stay with PG&E at a cost of $10 a month.

Gorman writes that state law “allows these new government entities to convert PG&E customers into government customers without customer approval.” That simply is not so. Rather than be a monopoly, MBCP would eliminate a monopoly and customers would have a choice.

Organizers of the MBCP, led by former Republican state senator and California Secretary of State Bruce McPherson, say the goal is to provide cheaper power than the power we are forced to buy from PG&E and to promote the use of sustainable power supplies such as solar and wind-generated energy. Low-income households now receiving discounts from PG&E would be able to retain the discounts.

Each of the three county governments and most of the cities in those counties have signed onto the plan.

The headline on Samuels’ piece declares “Rates will zoom with new agency.” Which might be true but a more accurate headline would have been “Rates will zoom with new agency or they might actually go down.” A similar setup in Sonoma County led to lower rates while the other consortiums in California are still pursuing that goal.

Samuels, like Gorman, gets lost in the monopoly thing. “As any first-year student of economics can attest, government monopoly and state ownership is far less efficient and greatly more expensive than the private sector …. “ He mentions “backward incentives.” But quite a few first-semester students of economics would remind Gorman that there is a worse creature out there, generally less efficient and more expensive than the others, and that is the government-regulated monopoly. If PG&E isn’t proof of that, just think about California American Water, which pretty much invented backward incentives. Enough said.

Samuels wasn’t finished, though, having still another foot to shoot. After his wayward lecture on monopolies, he tells us “no private sector utility is able to compete with a government agency swimming in taxpayer-provided state subsidies.” In other words, he seems to be saying MBCP’s prices would likely be lower than PG&E’s, which maybe should have been his point in the first place.

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  • Eric Petersen March 13, 2017, 3:45 pm

    Recent headlines in the San Jose Mercury-News =
    “PG&E customers may get relief from soaring power bills”
    “PG&E electricity bills will rise this week amid rate restructuring”
    “PG&E job-cut details arrive, along with higher bills”
    And most recently, on March 09, “PG&E customers seeing red over high bills”

    Not bad for just over one month in one newspaper!

    As many know, a few years ago I inherited stock in PG&E, and kept it. I’ve been to a few stockholders’ meetings (and was kept out of one, “I remember you from last year”). I have observed the power structure of PG&E in action.

    At stockholders’ meetings, there are basically three groups:
    1. Retired people, there to ensure that their money continues;
    2. Employees (and retired employees), there to ensure that their money continues; and
    3. A smattering of dissidents — including some who don’t think they are receiving enough money.

    So, who does the PG&E Board of Directors clearly work for? Not a difficult conclusion…

    Certainly not ratepayers. Certainly not the people of San Bruno, even those who were not in the area blown up due to negligent maintenance serious enough to result in a criminal conviction. Certainly not those in the area of the house in Carmel which was blown up a few years ago (it isn’t just San Bruno). Certainly not the employees electrocuted or otherwise killed or injured due to shortcuts in safety.

    Late last year, PG&E was convicted of criminal violations in Federal court in San Francisco. The judge, Senior Judge Thelton Henderson, is an excellent judge (look him up)! There is a find of well over $1 million — which PG&E wants ratepayers to cover — as well as a requiorement of community service.

    Additionally, PG&E faces billions of dollars of civil penalties for various misconduct — penalties they have already asked the Public Utilities Commission to recover from ratepayers.

    Does it look likely that PG&E rates will go up to cover the fines and penalties? After all, they can’t let the dividends decrease (refer to the beginning of this post). I’m waiting for PG$E to request that the community service be performed by ratepayers.

    PG$E is the company which spent $44 million a few years ago on a ballot measure trying to prevent agencies such as Monterey Bay Community Power. Fortunately, PG$E was not able to buy that election.

    PG$E also was discovered to have had inappropriate e-mail contact with Public Utility Commission members.

    Many, including Supervisor John Phillips, have speculated that there are likely under Monterey Bay Public Power. Have they considered what is the present situation with PG$E rate increases? Or the future of rate increases for PG$E ratepayers? Since you can keep PG$E service, you can expect that rates will skyrocket!

    And don’t believe the red herring about a “monopoly.” Not true! We currently have a monopoly with PG$E, a very poorly-regulated monopoly. Monterey Bay Community Power will have to do a good job to make it.

    Let Lawrence Samuels keep his PG$E service, and I hope he refers back to his opinion piece often as his PG$E rates reach the moon, and his neighbors enjoy lower rates and local control with Monterey Bay Community Power.

    Even if Monterey Bay Community Power rates do continue, they will not be burdened by PG$E misconduct and are likely to be very much lower.

  • Kristina Baer March 13, 2017, 4:12 pm

    In the universe of alt-facts only the “alt-monopolies” get rich(er): PG&E and Cal Am, in this case. Now, more than ever, we need another Measure O. A two-fer, this time.

  • Jean March 13, 2017, 4:33 pm

    PG&E owns the transmission lines. What’s to prevent the CPUC from increasing PG&E’s transmission charges to compensate for its lost power sales? As it did for Cal-Am’s decreased volume of water sold?
    If Eric’s story about return on shareholder investment represents reality, what’s to prevent PG&E from rearranging its cost recovery model to produce the same electric bill?

    • Jeff Gorman March 13, 2017, 7:13 pm

      Thanks for pointing out I didn’t chose the title. I was hoping to focus the public on some things not well known, such as what other parts of the US are paying for electricity. I also wanted to inform about the “opt-out” feature. I am still under the impression that SB 790, with the default switch of customers, was key to getting this agency idea to mature.

      Somehow, other states have private utilities AND lower rates. California politics and policies are truly unique and it shows up in its troublesome electric rates. We pay double. I’ll be pleasantly surprised if we get within 120% of the national average.

      I didn’t have room to site Warren Buffett’s annual letter. For those interested, read his comments about the subject. He is a smart guy.

      • Eric Petersen March 13, 2017, 8:38 pm

        If you want to know why PG$E gets what they want, get to know PG$E better. That’s what I did.

        In the interest of full disclosure, though, I probably should disclose that my parents’ investment provides good dividends.

  • Donald Slinkard March 13, 2017, 5:53 pm

    Royal: Having worked for McClatchy, you know that public utility ownership was part of the
    company’s DNA. In one of the last editorial pieces he wrote, Jim McClatchy spoke up for
    public ownership. It already existed in Sacramento, Modesto, Turlock and Los Angeles, but
    a ballot measure to do the same for Fresno in the 1930s lost, written off as communistic.

  • Midvalley abalone March 13, 2017, 6:01 pm

    PG+E does charge for use of its electrical transmission line. I have a small, very efficient rooftop solar panel installation. During the first year and a half I paid PG+E an extra fee for the meter reader [remember them?] to come read the meter because I had refused to have a Smart Meter installed to monitor the panels’ output. These are the same transmission lines that PG+E installed when our home was built, the same ones that the meter reader checked once a month for the last 40+ years. Then the State told PG+E it wasn’t legal to charge solar customers that monthly fee.
    So they now charge monthly for use of the same lines that have been there all these years, the same lines that send PG+E electricity if the solar panels don’t produce enough.

    My property now has a No Trespassing sign for any employee of PG+E intent on any change in my analog meter, with copies to PG+E headquarters and my attorneys. A neighborhood watch keeps tabs on any utility trucks and checks in with homeowners to report “visits”. The poorly titled CPUC, packed with appointed, not elected, members who have the same disdain for the public as PG+E.
    and Cal Am corporate suits and “experts” do. Check out the San Francisco website http://www.turn.org, the consumer watchdog agency for all utility providers. Printable signs, guidance in protecting your rights and rates are all there.
    stockholders and corporate structures,
    for the solar- generated electricity to feed back in PG+E lines

    • Midvalley abalone March 13, 2017, 6:04 pm

      Egregious last two lines were deleted from an earlier draft or so I thought.

  • Joyce Newell March 13, 2017, 7:20 pm

    Will someone who is knowledgeable on this subject please respond to Jean’s post. I think her question is quite good and to the point.

    • Royal Calkins March 14, 2017, 12:25 am

      In the six other California consortiums like the one proposed here, the PUC has not increased the amount PG&E can collect for use its power lines, according to trustworthy people involved in setting this up here. It could happen but isn’t likely. Having said that, one of the PUC’s chief missions, in addition to supposedly looking out for the ratepayers, is to make sure that the utilities remain solvent and able to borrow capital at reasonable rates, so loss of income in one part of PG&E’s portfolio could result in the PUC allowing a makeup move elsewhere.

    • L. Parrish March 15, 2017, 10:15 pm

      If PGE is allowed to collect replacement revenue for lost revenue, I would say – let them. It would greatly encourage a mad dash by all ratepayers to Community Choice Energy and leave PGE well on the way to the poor house. If they’re allowed to collect the lost revenue from other counties not participating in CCE, that would likewise urge those counties to form their own CCE authorities.

  • Eric Petersen March 13, 2017, 8:42 pm

    What is to prevent PG$E from rearranging things in their own interest? Since they can afford good attorneys and Public Utilities Commission members, not really anything. That’s why we need to watch.

    My next-door neighbor when I was growing up, a five-term councilmember in Menlo Park, used to say “Even if you trust ’em, you watch ’em.” Here, since we have a lot of people we simply cannot trust, we all need to watch as many of them as we can as closely as we can.

  • Eric Petersen March 13, 2017, 8:44 pm

    Well, it looks like I missed the more recent relevant headline = San Jose Mercury News, Saturday, March 11: “PG$E users in Bay Area blindsided by rate hikes.”

  • Ann Hill March 13, 2017, 8:54 pm

    PG and E reported 2015 profits of $847 million and paid 0 taxes — that’s right, zero. Shareholders must be very happy and their tax lawyers must be very busy exploiting all loopholes. 35 per cent tax rate for corporations? Not for big smart ones like PG and E, which undoubtedly will continue to rake in HUGE profits and pay no taxes. We will surely be better off with a true public utility run for the benefit of the public. Greed is not good, especially in the field of so-called public utilities.

    • Eric Petersen March 23, 2017, 9:41 pm

      As much as I dislike PG$E, I’ve got to admit that the money is good. That allows me to donate to good political campaigns!

      Sometimes it is a weird feeling, but I hold onto the stock for two reasons:
      1. To donate to good causes, and
      2. To be as much a thorn in their side as possible!

  • Jim guy March 14, 2017, 5:33 am

    In the new world of newspapers, the headline IS written by the reporter. 😎

    • Eric Petersen March 23, 2017, 9:42 pm

      Not when I was taking Journalism… Sometimes “Yes,” usually “No.”

      • Eric Petersen March 23, 2017, 9:43 pm

        But Royal would know better.

  • bill leone March 14, 2017, 12:16 pm

    More proof that privately run monopolies can degenerate into criminal organizations…when corporations can influence government agencies which have been created to regulate them in the public interest.

  • Vicki Pearse March 14, 2017, 10:20 pm

    Much confusion exists about the roughly $10 “exit fee”. Royal, you write, “residents of the three counties involved – Monterey, Santa Cruz and San Benito – would be allowed to opt out of the new power structure and stay with PG&E at a cost of $10 a month.” As I understand it, only the first part of your statement is correct. Residents can opt out of MBCP and stay with PG&E. But this choice incurs no cost. The cost of $10 a month is imposed on MBCP customers.
    This is similar to Cal Am’s charging its customers for water it didn’t deliver because they were conserving. PG&E will charge its former customers for no longer buying its electricity. No wonder there’s confusion!

  • Lawrence Samuels March 14, 2017, 10:41 pm

    In reply to bill leone–the government is a criminal organization. Like the mob, the state has all the earmarks of a “protection racket.” If you don’t pay protection money (compulsory taxes), they can and will seized your bank accounts, house, children (foster care), part of your salary, throw you in jail, and if you RESIST, they will use deadly force. I had friends who opposed the Vietnam War and refused to pay taxes. And they got hammered. Any kind of monopoly is wrong, especially the government and their gun toting ways.

  • bill leone March 16, 2017, 8:19 am

    I am Not a cheerleader for All government interventions & activities; however, to suggest Government is the root of all evil….or Capitalism (or any economic system, political philosophy, or religion) as the root of all evil is, in my opinion, more than a bit Daft. There are Tricky Dick Nixons, Bernie Madoffs, Lenins & Bin Ladins in every government, business political movement & religion.

    Regarding the subject under discussion, I hope we would both agree, Cal Am & PG&G need more Public (Government control), to prevent these private corporations from abusing (us) their customers. How else do you suggest we solve these types of problems? “Free Market Forces” do not seem to be working.

    • Jim guy March 16, 2017, 5:36 pm

      Hey now. Ease up on Lenin, Man.

  • bill leone March 16, 2017, 11:14 pm

    That’s Vladimir Illich Lenin, not John Lennon.

  • bb March 20, 2017, 11:53 am

    “As any first-year student of economics can attest, government monopoly and state ownership is far less efficient”

    I’ll point out that Paul Samulson wrote the most popular textbook used in first year economics classes and his opinions are clearly that government ownership is not always bad. He encouraged it as a usable device. He provides numerous examples of public ownership being as good as and as bad as private ownership.

    It would be prohibitively expensive to put competing electric grids in place. Therefore government creates an electric monopoly and regulates it. We all must have 110 alternating current, traveling over right of ways taken by eminent domain. Even the libertarians seem down with that.
    Private ownership of the monopoly is not necessarily efficient. A Private utilities asks PUC for a return on their capital. The more they invest the more the get back. Their incentive to build large power plants and to gold plate them. If the utilization of the capital goes down they ask for rates to go up to cover the cost of capital. The PUC is appointed by politicians who are incentivized to appoint people who will grant this.

    Government ownerships incentives of the monopoly are to keep rates artificially low and skimp on maintenance and sell assets when they get strapped for cash l to private ownership

    Obviously neither situation is an ideal solution. The energy landscape is shifting from one where PSE&G owns power production to one where people invest in their own solar arrays. The shift is not good for PSE&G’s bottom line. PSE&G has little option but to try run the old model as far as it can, to the detriment of the rate payers. A public option is needed to help the transition period.