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.