PG&E; measure requiring public-power votes loses

(06-09) 08:53 PDT SAN FRANCISCO -- A ballot initiative that would have limited the ability of local governments to enter the electricity business was narrowly defeated in a loss for the measure's main backer, Pacific Gas and Electric Co.

The utility company, California's largest, sank more than $46 million into its campaign for Proposition 16, which would have forced cities and counties to win the approval of two-thirds of their voters before spending public money to start or join a public power agency.

PG&E; has often beaten back efforts by some of the cities it serves - including its hometown of San Francisco - to break away and form their own utilities. Prop. 16 would have required each of those efforts to face a vote of the public, which hasn't always been the case.

"Obviously, people want a right to vote on this issue," said Robin Swanson, a spokeswoman for the Prop. 16 campaign. "Folks who have taken notice have decided they want a say in these decisions."

Opponents argued that PG&E; was simply trying to protect its monopoly. Requiring supermajority approval would doom most public power efforts, they said. They complained that PG&E;, which supplied all of the initiative's funding, was trying to buy an amendment to the state Constitution, perverting a ballot initiative process that was created to rein in the political power of corporations.

California has seen pitched battles over public power for decades.

In 1913, the federal government authorized San Francisco to flood the Hetch Hetchy Valley and create a municipal utility using electricity from hydroelectric dams. But city leaders decided to sell the electricity to other communities and keep the profits, an act that infuriates public power advocates to this day. They note that municipal utilities, such as those serving Sacramento and Palo Alto, typically have lower rates than investor-owned utilities such as PG&E.;

This year, the battle has shifted to a new type of public power service called community choice aggregation.

Established by a 2002 state law, community choice allows counties or cities to buy electricity on behalf of their citizens, while traditional utilities continue to own the power lines and distribution equipment, supply natural gas and handle billing. The arrangement lets communities decide where their electricity comes from, and many advocates see it as a way of expanding the use of renewable power.

Cities and counties can create community choice aggregation systems without a vote of the public. Residents who want to continue buying their power from the traditional utility can opt out of the new system at no cost.

Marin County established California's first community choice system in May, despite fierce opposition from PG&E.; San Francisco officials have been assembling their own community choice program, putting in place as many pieces as possible before Tuesday's primary election.

Prop. 16's defeat would make San Francisco's effort much easier to accomplish.

With PG&E; willing to devote millions to the campaign, the fight over Prop. 16 turned into a lopsided contest. The opponents - a collection of consumer groups, environmental organizations and city councils - raised just $101,400.

E-mail David R. Baker at dbaker@sfchronicle.com.