Friday, April 23, 2010

Proposition 16: A Major Utility Corporation Run Amuck

We posted some information earlier this week about Proposition 16. A reader had sent in what I thought were some interesting revelations about not only what PG&E was trying to do to protect their monopoly in Northern California, but also the way politics is often done in this state. And that with Prop 16 we were seeing the cash-driven perversion of democracy that pervades so much of our electoral process being taken to a whole new level.

One of the great things about running this news site is you never really know who is going to show up. In many ways it is the people who post their views here that makes the place happen. So when somebody left a comment under the name of John Geesman, former California Energy Commissioner, 2002-2008, I had to admit to being intrigued. Turns out the guy is not only the real deal, but he also has a blog dedicated to one purpose only, debunking Proposition 16. Called PG&E Ballot Initiative Factsheet, Mr. Geesman lays out all the sordid details of not just the initiative itself, but also the bizarre antics of PG&E's CEO, Peter Darbee (pictured above). A man who has almost single handedly turned the concept of the citizen initiative process completely upside down.

John Geesman, on his Blogger profile page, lays out his mission statement this way:

I was dumbstruck when I read that PG&E's board had authorized spending up to $35 million on this initiative. The local governments, municipal utilities, and irrigation districts who are its targets are prohibited by law from spending anything to oppose it. California's investor-owned utilities face a Himalayan task in modernizing our electricity system and building the infrastructure necessary to serve a growing economy. They ought to focus on that, rather than manipulating the electorate to kneecap their few competitors. Has there ever been a time when we needed greater downward pressure on electricity rates? Perhaps I can contribute to stopping this outrage by assembling this information. Won't you help by using email or the "Share" button above to disseminate each post as broadly as possible?

So I thought that we'd take Mr. Geesman's request one step farther. As of this typing he has posted 8 articles on his highly informative site. We are going to reproduce two of them here. We are doing this in the hope that you will come to better understand just how bad an initiative Proposition 16 is, and that you will help to spread the world. PG&E is attempting to use the initiative process to buy themselves a permanent monopoly in Northern California. But in order to do that they will need the peoples' votes. We must help make certain that they do not get them.

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Thursday, February 25, 2010

Peter Darbee's Dog of an Initiative: 3 Tapeworms Eating Away at the Internal Logic of Prop. 16

On February 25, I had the privilege of testifying on Proposition 16 before the joint hearing of the California Senate Energy, Utilities and Telecommunications Committee and the California Assembly Utilities and Commerce Committee. This is what I said:

Thank you for the opportunity to be heard in opposition to Proposition 16. I delivered my first legislative testimony to your predecessor committees in 1975. In the ensuing 35 years, beside spending two decades in the bond markets, I served as Executive Director of the California Energy Commission when Jerry Brown was Governor; as the Chairman of the California Power Exchange during our disastrous experience with incompetent market regulation; as a Board member of the CallSO when Governor Davis asserted the State's authority over that body; and as the attorney member of the California Energy Commission from 2002 to 2008. I'm proud to say we licensed 26 power plants and one transmission line during my most recent tenure at the CEC.

I'm retired now, but spend much of my volunteer time as the Co-Chair of the American Council on Renewable Energy, prodding governments around the world to recalibrate their energy policies in order to accelerate the pace of technological change.

Never, in all of that time or in any of those venues, have I seen political activity by a regulated utility so far outside the bounds of acceptable conduct as PG&E's sole sponsorship of the Constitutional Amendment politely referred to as Proposition 16.

I am mindful of the contempt for the legislative process, reliance on deceptive wording, and resort to strong-arm tactics that are manifest in PG&E's campaign. But today I want to take Proposition 16 at face value, and focus your attention on three tapeworms that eat away at the internal logic of the measure itself.

Tapeworm #1 is the elimination of customer choice. Who among us in today's economy doesn't recognize that fewer choices mean higher prices? That's true of any commodity. Yet Proposition 16 actually wants to restrict the ability of electricity consumers to buy from anyone other than for-profit monopolies. Has California ever faced a greater need to bring competitive pressures downward on the price of electricity? But PG&E wants to lock its monopoly advantage into the State Constitution.

Tapeworm #2 is the mystery of where all this campaign money is coming from. PG&E says it will spend up to $35 million, and insists all of that money will come from its shareholders. You and I know that every nickel that passes through PG&E's books comes from its captive customers -- its regulated utility is the only business PG&E has! The CPUC determines what PG&E's cost of capital should be in order to provide for investment in needed infrastructure. But it sure doesn't set that rate at a level calculated to bring a $35 million slush fund for sole sponsored political adventurism. It ought to be illegal to take ratepayer money and use it politically against ratepayer interests. If PG&E's making an excessive return, it ought to give the money back.

Tapeworm #3 is a serious drafting error in the "grandfather clause" of Proposition 16. The authors attempted to exempt existing municipal utilities operating within their current territories, but they used an outmoded and unworkable "sole provider" definition. That means that within the existing 48 munis, every new connection -- every new home buyer, every new business -- would be subject to an election requiring the approval of two-thirds of the voters. That's the kind of drafting mistake the legislative committee process is designed to prevent.

Three tapeworms are enough to kill even the meanest dog, and you ought to do what you can to put this mongrel down. Your colleagues in the Senate who signed the Steinberg letter in December had it right. PG&E should acknowledge its mistake, abandon its campaign, and bring whatever grievance it thinks it has back to the Legislature for further consideration.

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Sunday, April 18, 2010

CEO Report Card: How Much of the Goldman Sachs Kool-Aid Did PG&E's Peter Darbee Drink?

Five years is a long time on Wall Street. It's a long time at PG&E. Peter Darbee has been CEO of PG&E Corporation since 2005. He was an investment banker at Goldman Sachs from 1989 to 1994.

It's said that you can take the individual out of "Goldmine Sachs" but you can't take "Goldmine Sachs" out of the individual.

And in the the several days since the SEC launched its historic civil fraud action against Goldman, it's been difficult to ignore some commonality between two tone-deaf CEOs having a difficult time keeping their companies out of the ditch.

Each has an odd, mildly blasphemous way of mixing divine guidance with his pursuit of Mammon. A profile in the Sunday Times of Goldman's CEO, Lloyd Blankfein, 55, put it bluntly:

An impish grins spreads across Blankfein's face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker "doing God's work."

The British newspaper characterized Goldman Sachs as a cultish teamwork environment with insecurity hardwired into the system. "There is a deep and constant paranoia about everything we do," one senior manager approvingly said. What drives this process?

One former Goldman banker describes the culture as "completely money-obsessed. I was like a donkey driven forward by the biggest, juiciest carrot I could imagine. Money is the way you define your success. There's always room - need - for more. If you are not getting a bigger house or a bigger boat, you're falling behind. It's an addiction."

The 56-year old Darbee, more than a decade out of Goldman at the time, struck a note of piety in his inaugural interviews as PG&E's CEO in 2005, telling the San Francisco Chronicle that "It's the Ten Commandments that drive my world view."

"You don't lie. You don't cheat. You don't steal. You don't commit adultery ... If you don't have the right set of values in place, you're not going to get anywhere."

Darbee has an awkward and conflicted attitude regarding his own compensation.

On the one hand, he massaged PG&E's internal system to produce a $10.6 million gusher for himself in 2009 -- that's 74% above the median for large utility CEOs measured in the Wall Street Journal's annual compensation survey. And 8% above Blankfein's 2009 take!

In the adolescent, mine's-bigger-than-yours, locker room ambiance that pervades Wall Street, that's a serious score keeping threshold.

On the other hand, as Darbee observed in an interview in mid-2009:

"I think it's fair to say that some earlier administrations here at the company really focused on "let's make money." We found that approach didn't inspire employees, it didn't cause people to admire and respect the company as much, and it didn't help PG&E attract new employees."

The 2005 Chronicle story quoted from Darbee's initial address to the employees:

"I think the clear message is you want more from management and more from your leaders in terms of identifying the vision for your company."

As the newspaper account put it, "Turning things around, he said, hinges on restoring a sense of integrity within the company and, in turn, winning back the trust of customers."

In words that may ring particularly loudly for Darbee in today's Proposition 16 context, the Chronicle reported:

In his speech to employees, he said he wants PG&E to "eliminate the term 'ratepayer' from our vocabulary." Instead, he wants workers to always say "customer." "A customer is someone that we have to go out and .. win day in and day out," Darbee explained. "A ratepayer suggests someone who is the prisoner of a regulated utility."

What to make of these remarks from the sole sponsor of a $35 million propaganda campaign carefully designed to intentionally mislead said "customers" into building an even higher wall around their captivity? Not to mention that, to date, his cynical defiling of the California initiative process has been denounced by every newspaper editorial board to address Proposition 16.

"It's going to be a big job," he acknowledges. "But over a period of three years, five at the latest, my objective is for the customers of this state to say 'Wow!'"


Bonus coverage: For a bizarre 60-second recording of PGE's CEO Peter Darbee -- who paid himself 8% more than Goldman Sach's CEO last year -- boasting to Wall Street investors that Proposition 16 is meant "to diminish" voting rights by erecting a 2/3s majority wall around his monopoly franchise, click here.


  1. John Geesman!

    I hope you attempt to go on all the local talk radio shows and expose this hideous scam!

    Thanks for posting this, Crawford.

  2. Good people do stand up and speak out. Where would we be without blogs?

  3. John and Ken-KFI will be hosting an AB 32 petition turn in today. Sierra Madre will be represented.

  4. Stop the Greenhouse Gas
    Job Killing Bill!

    Take action! This is your last chance to sign the petition to save jobs and suspend AB 32—“The Global Warming Final Solutions Act!”

    This bill will destroy jobs and cost businesses and families thousands of dollars!

    Join John and Ken this Friday, April 23 from 2-7 pm at the Ayres Inn Orange in Orange. Come and sign the petition and stay for the show! Let’s get this thing passed!

    Maricopa County Sheriff Joe Arpaio will be there also! Come early and see him at 3 pm.

    Ayres Inn Orange in Orange
    3737 W. Chapman

    Orange, CA 92868

  5. I've never quite known what to think about AB32. but if getting ridd of it stops SB 375 (the BIA Welfare Act), then i am all for it.

  6. Darbee has succeeded in getting us to say "wow."
    Wow to the long range strategy to disenfranchise the voters by manipulating their understanding of their right to vote.
    Wow to using such brutal tactics on any potential competitors in the marketplace through intentional corruption of the political process.
    Wow to the complete surrender to the narcotic lust for money.

  7. been there, done thatApril 23, 2010 at 9:15 AM

    I really, really want to know who designed the PG&E campaign.
    Who's their PR firm, who put together the ads?
    Who followed the orders and contributed to the brainstorming sessions, How to Trick the Dumb Ratepayers, oops, Customers.

  8. It's all connected 8:41
    Support killing both.
    They are disasters and are clear cut evidence of what's wrong with California.

  9. Is there any part of our state government that is playing it straight with us anymore?

  10. No there is not, 9:32 am.

    It's not just the state government, it's also our local.

    The only council member who is honest is MaryAnn MacGillivray. She works for the people. The rest work for development and Sacramento.

    The naive in this city will realize this soon enough.

  11. If they touch Measure V we should
    sue the bejeezus out of them.

  12. Darbee says "there's going to be some flap between now and June."
    Like a small blip on the way to a slam dunk.
    That's what he thinks of Geesman and his work I guess.
    Let's hope Darbeee's mighty surprised come June.

  13. What is frightening here is that if Prop 16 passes, it will open us up to an onslaught of equally horrible propositions. Plus with the US Supreme Court now allowing corporations to spend as much money as they want, you can only imagine what they come up with. Expect a constitutional amendment that will require all parents of children under the age of 12 to buy them at least one McDonald's Happy Meal a week. You had better do it, too. You don't want Ronald stopping by and asking questions about your fitness as a parent.

  14. Wow What God do you serve, Mammon Darbee?April 23, 2010 at 11:17 AM

    I was Kelly Girl Temporary worker, back in the early eighties, I had a stint proofreading SCE's bonds at Walnut Grove Corporate. I have not believed in bonds since, I imagine PG & E lives on bonds as well. While the entity may say it is,interested in providing good service, at a fair price, it is dancing & dialing for bond dollars on Wall Street. We were green in the 60's and 70's, solar power companies, windmills all shut down by the politics of a company that only wants to keep you to tied to the electrical pay your large bills teat.

    This is not new wow strategy, this is another surge, by a (you know when A dog has worms you deworm him you don't put down the whole dog, but if a dog with worms goes undiagnosed or treated he will die because the worms eat him from the inside out) by the entity to insidiously to hold back new technology, Darbee being the biggest pisser in the wall street circle men who bet they can sell traches better.
    The utility entities live an the endowments of bonds that go back to forever, the amounts of zeros on the bonds stretch into californias pay back me back later infinity.

    Now bonds have been revealed on Wall Street. So has Mr. Darbee, wee bellicose little folks all over the nation are learning their pots of gold are tungsten with a layer of gold over them.

  15. Killing AB32 guts SB 375. SB375 enforces AB32. If AB 32 does not exist there is nothing to enforce.

  16. Prop 16 is just another example of our liberties being eroded while the voters fail to look into the issues on the ballot. As for AB32, it is the engine that pushes SB375. With AB32 put on hold, SB375 will also be put on hold, or at least we hope it will.

  17. Well, it looks like corporations win again!! Too bad for small districts and municipal utilities. And as for the Public Utilities Commission, have you noticed that they haven't interfered with PG&E's ability to spend $35 million of ratepayers money on this? Oh, I forgot de-regulation. Bend over citizens . . .

  18. I am quickly becoming a Groucho Marxist. Whatever it is, I'm against it. It is the perfect philosophy for a time of political
    and economic decline since everything being
    done only makes things worse.

  19. But Dr. S! Why would anyone want to regulate utilities? Aren't they on our side? After all, PG&E is protecting our right to vote. That was very nice of them.

  20. Just plain terrifiedApril 23, 2010 at 3:31 PM

    Will it matter for much longer? This notion of voting... Sierra Madre has about 7,500 registered voters; 2,875 voted in the latest election. What percentage of those who voted will support the almost certain $6 mil bond measure the newly constituted City Council will bring them this fall to slurry seal (read resurface) the streets? What percentage of those who voted will support three major building projects that are Howie's, the SNF, and Montecito? How many will come out for Measure CC? $10 a month a parcel... How many will support a raising of the UUT? After all it's about to sunset... And at the end of MaryAnn MacGillivray's term, how will the Gang of Four have encumbered the property owners of Sierra Madre all in the name of slow growth?

    We are being assaulted from all sides! One day soon we'll have no reserves, no recourse, and the seniors will be unable to keep up with the erosion of their lifetime's investment in their homes.

    Do not be lulled into "civility" by wolves in sheep's clothing.


  21. It is usually the most uncivil people of all who complain about incivility. I think we should call them the Pot-Kettle-Posse.

  22. Speaking of pots and kettles, what is this about Terry Miller whining because Bill Coburn had the utter gall to suggest that the Sierra Madre Sneaky might have been a little over the top in its election coverage?

  23. Terry Miller is trying to make a name for himself by flogging the Tattler for losing an election that was decided a year ago. Notice Terry's alliterative style? Fancies himself a bit of a devotee of Poe I suppose. Quote the Raven "Nevermore Miller".

  24. Quoted from Bill Coburn's piece in the

    While there’s a lot of talk about the Tattler and the fact that even after being more or less rebuked by the residents of this town it’s come back out swinging, I’m also a little disappointed in the Weekly. In my opinion, the Sierra Madre Weekly has, in its election coverage, taken some unnecessary potshots. I think some of their election news coverage read like Opinion pieces. News coverage should be fact based coverage, Opinion should be clearly marked as Editorial. It’s one thing if opinion is offered in a columnist’s column, an editorial (marked editorial), or an Op-ed commentary (marked Op-ed). But when it is written into what should be “Just the Facts” news coverage, you’re crossing a line. And much of what I read in the paper this week wasn’t categorized as Opinion or Editorial, and could easily have been perceived as being news reporting, yet it was full of opinion. And frankly, some of the opinions in this week’s paper, to my mind, lacked the civility and respect that the candidates (and the paper itself) have been calling for as we approached the election. So here’s hoping that the Weekly will swing its pendulum back to its pre-election news approach.

  25. Aww, no wonder Terry Berry has his long nose in a knot. Gosh, and after all he's done for this town! That Bill Coburn, he is so uncivil.

  26. I have a question. When Bill says that The
    Tattler has come out swinging, does he mean
    in a Rat Pack Frank and Dino kind of way?

  27. The Tattler has taken on a more important mission than Sierra Madre right now.
    Sierra Madre is now in the hands of the realtors, developers and Sacramento.

    The Tattler and most of their readers will now concentrate on going after the Sacramento crooks and bums.

    I urge MaryAnn MacGillivray to lead the fight.
    We can do this! The people are standing up and protesting.
    Enough is enough!

  28. The Sierra Madre Editorial this week is a by Miller and Stephens, the editor. Credit where credit is due!

  29. Well, I've heard Miller is a swinging kinda guy... knows all the best swinging sites... a ring a ding kinda guy. I don't know if the Tattler is up to Miller's kinda swinging, tho.

    Let's just say the Tattler knows a pack of rats when they see 'um.

  30. 4:30 - which one is Curly?

  31. Well, 4:14 pm, I hope that the Tattlers will not forsake Sierra Madre in the run up to taking on the Sacramento crooks and bums! If we can expose even one would be Sacramento crook before he/she heads north on I-5 we'd be doing the state a favor.

    By all means take on State government but remember, "All politics is local."

  32. Does anybody know how Prop 16 is polling?
    Should we be worried about this?

  33. Don't take a chance 5:09

    Send this article to everyone you know in the State of California.

    I know a friend of mine already has sent this article early this morning to several people in No. Cal. They will also share with everyone they know.

    Get the word out. Get the word out, Get the word out.

    We all owe it to Geesman, he's stepping up to the plate on this one. Let's all help him out!

  34. Anybody think Edison and Sempra will suddenly step
    up in favor of Prop 16 if it looks like it will win? I
    think they're holding back until they figure out which
    way the wind is blowing.

  35. 6:55, get the word out is right. Here in Sierra Madre the slow growth side just lost an election in precisely because there was not enough of educating the voters about the issues. The pro-development side won through smeary disinformation.
    We were beaten by a PG&E style campaign of lies.

  36. Awesome reporting, Tattler. Extremely informative. Thank you.

  37. Geesman is indeed stepping up to the plate. That is what political impact is all about, people willing to devote time and energy to stand up for the truth, to expose the crass manipulations of organizations like PG&E.

  38. That's how they do politics in California. The big money guys pick their errand boys, run them for office, and then back them up with money and hired liars.

  39. Where I come from, lots of people get involved. We had a big fight with some land owners who had dreams of a huge business park in a pretty rural community, and we fought them, but as I said, lots of people participated. In Sierra Madre, judging from this last election, it seems like there are very few people who are really active. That means the burden is too heavy on a few instead of shared among many.
    I'm kind of rethinking the whole relocation thing again. How can a known and exposed liar be your mayor?

  40. lying of course

  41. Sierra Madre used to be different, but now it is just a microcosm of California. A lot of people who don't really understand the issues, but can be easily manipulated by politically correct and emotional appeals. Which results in them voting against their interests. Then they sit and wonder how things have gotten so bad.

  42. 12:40, we had a lot of people come together to fight the Carter development. We lost, but there was a real effort involving many people over years.

    The outcome damaged residents' belief in the ability to influence local government. An inept council won over principled citizenry, and a good number of people stopped participating in city politics.

  43. That's how the guys in the black hats win.

  44. it didn' ability to influence local shined like a harvest moon, I guess it all depends on your perspective