Information Technology companies know far too well that big monopolies are not the engine of innovation. If they were, we’d all be using Windows Vista and Internet Explorer. But California, notoriously an incubator of innovative policy models that spread to other parts of the United States, is just days away from potentially passing a law that would squash a green tech powered clean energy transformation of the electricity grid, thereby setting a very bad precedent.
The proposed law in question, Proposition 16, would block communities from taking back control from the investor-owned utilities of where and how their electricity is generated and delivered. Not coincidentally, Prop 16 is on the ballot courtesy of the state’s largest investor-owned utility, Pacific Gas & Electric (PG&E).
Prop 16 is a California ballot initiative that would amend the state constitution to preserve PG&E’s (and other big investor-owned utilities') monopoly status indefinitely, requiring local governments to win super-majority approval of two-thirds of its voters before providing electricity to residents through a municipally-owned utility or "community choice" initiative. If passed, Prop 16 would effectively kill the ability of local jurisdictions in California to take charge of where they get their electricity and how fast a clean tech revolution can occur locally and beyond.
PG&E’s privately funded rewriting of the State Constitution is a pernicious response to California’s 2002 Customer Choice Aggregation (CCA) law, which was designed to foster greater competition by permitting cities and counties to create buying pools of their residents to purchase cheaper electric power than provided by the existing utility. However, each time a community has considered adopting the CCA model in its community, PG&E has vigorously opposed it, pouring significant resources into convincing the public and decision-makers that such a move would be too risky to tax payers.
After a prolonged battle with PG&E, the CCA model is now available for the first time in California to residents of Marin County, just north of San Francisco, who can choose to buy renewable power through the newly established Marin Clean Energy Program. But faced with the prospect of fighting the same battle again and again as other communities follow suit, the monopolists at PG&E are attempting one big effort to slam the barn door shut.
PG&E has poured US$35 million from its corporate coffers to get Proposition 16 on the ballot and flood the airways with a deceptive ad campaign to help it pass. California’s voter initiative system was not intended to provide corporations an avenue by which they can hijack state law with a profit-driven agenda. But that’s exactly what is happening with Prop 16, as a single utility devotes millions of dollars to restricting market competition to the detriment of the public and other businesses.
Why IT Companies Should Oppose PG&E’s Prop 16
The IT sector, a cornerstone of California’s economy, has been unfortunately silent on Proposition 16, demonstrating an apparent lack of concern over a threat to competition and a loss of tremendous business opportunities, in addition to the opportunity to partner with local governments in a transformational way to speed the deployment of clean technologies at a scale scientists say is needed to address climate change. If only PG&E had made the mistake of trying to outlaw the iPad.
But Silicon Valley companies like Google, HP, and Cisco stand to lose significant business development pathways if the initiative passes, as the proliferation of locally managed energy districts would create new long-term customers for IT innovations that manage and measure energy. More competition in the utility market and local control of power distribution would ultimately drive renewable energy deployment across a decentralized grid and, in turn, boost demand for IT energy solutions, such as the smart grid and building efficiency management tools.
It’s therefore befuddling that California IT companies aren’t more engaged. They have already experienced first-hand one of the key benefits of having an alternative to big investor-owned utilities: lower cost. Many IT companies, looking to site new energy-voracious data centers in California, have already identified their favorite utility jurisdiction — that of Silicon Valley Power, locally run by the City of Santa Clara. Vacant commercial buildings in Santa Clara are regularly sized up by IT companies for their potential to be converted into data centers because Silicon Valley Power offers businesses lower prices on electricity than PG&E. Prop 16 would make it practically impossible for Silicon Valley Power to expand its territory.
As was highlighted in recent analysis by legal experts at UC Berkeley, there is an environmental benefit to local control. Municipalities will do more, faster to incorporate renewable energy into the power mix, and consumers will be able to exercise greater control over their electricity use and purchasing. Locally-managed power entities can drive faster experimentation and deployment of a decentralized, dynamic grid that would deploy energy-saving and renewable energy solutions. Decisions about energy issues affecting diverse communities will reflect a higher degree of consultation with their businesses and citizens and drive faster innovation and adaptation to their energy needs, as opposed to uniform distribution of fossil fuel based electricity over the long distances currently operated by private utilities.
Community aggregation programs will provide a much needed incubation space for rapid deployment of IT energy solutions and a much broader customer base for IT companies, as local jurisdictions work to leverage the use of smart meters and data that measures energy use and efficiency effectiveness. Google’s PowerMeter and other programs that provide real-time energy use information have been shunned by PG&E and many other utilities for fear of losing control of the customer relationship. IT companies would likely find many more interested partners in locally-run power districts. IT companies will no longer have to depend on the adoption of their technologies by a single, large and slow-moving utility primarily interested in maintaining its monopoly.
Defeating Prop 16 sets the stage for much stronger clean tech partnerships between IT companies and local governments. As cities and counties attempt to define and measure their regional emissions and energy impacts in order to develop comprehensive Climate Action Plans, they struggle with a dearth of data to inform policy development. By leveraging a fraction of the revenue from CCAs, local governments can invest in IT software and other clean tech tools to help them quantify impacts, collecting and leveraging data from smart grids, smart meters, and other technologies that better inform local codes and policies to drive faster innovation and energy savings.
Given the clear economic benefits and market opportunities of maintaining the existence of locally-controlled power, why haven’t the IT brands spoken up against Proposition 16? Is it because they do not want to get on the wrong side of the biggest bully in the California energy market? IT companies, with their significant political influence and resources must better utilize the bully pulpit to speak out against this PG&E power grab.
Two entities that have been vocal in their endorsement of Prop 16 are the Bay Area Council and the California Chamber of Commerce. Not surprisingly, PG&E holds a seat on both the Executive Committee and Board of the Bay Area Council. But IT companies, such as Google, HP, and Oracle, are also members. Which begs the question: Why are the IT companies allowing two business associations that represent them advocate for a law that would take away a major pathway for the growth of their business? While it is positive that many IT companies recently wrote a letter to President Obama demanding greater consumer access to energy use data from utilities, back on the ranch in California, they are conspicuously absent from the debate as PG&E fills the airwaves with Prop 16 propaganda.
PG&E and other investor-owned utilities are not interested in a green revolution. They would prefer a slow transition to what will inevitably have to be a cleaner grid, one which allows them to maximize profits by prolonging the status quo. If IT companies want to preserve competition and ensure rapid transformation to a smart grid fueled by renewable power in the most innovative and trend-setting markets of the United States, they had better speak up quickly and boldly.
Passage of Prop 16 will mean a loss of competition, stronger monopoly control, and a subservient role for IT companies in a drawn-out transition to cleaner technology. Defeat of Prop 16 will be a win for the clean tech sector, a win for the public, and ultimately a win in the fight against climate change. Well... Google, Microsoft, IBM, Cisco, Oracle, HP... which is it going to be?
Click here to see a list of groups that oppose Prop 16.