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California and the West

Initiative on Lower Electric Bills Qualifies for November Ballot

June 25, 1998|DAN MORAIN | TIMES STAFF WRITER

SACRAMENTO — State election officials announced Wednesday that an initiative aimed at cutting electric bills has qualified for the November ballot, setting up a major battle between utility companies and consumer groups.

Also on Wednesday, Secretary of State Bill Jones announced that an initiative to raise tobacco taxes by 50 cents a pack to pay for a variety of childhood health programs had qualified for the fall ballot. The measure is sponsored by Hollywood actor and producer Rob Reiner.

The announcements bring the number of initiatives on the state ballot this November to seven. Other major measures include an education initiative by Gov. Pete Wilson and a proposition to expand gambling on Indian reservations.

While tobacco companies will probably fight the proposed tax hike, an even bigger battle may be waged over the utility initiative.

The initiative, backed by a coalition of consumer advocates, seeks to dismantle key parts of highly complex 1996 legislation that sought to deregulate the electric industry.

The 1996 legislation, approved unanimously by the Legislature and backed by California's major utilities, imposed a 10% cut in residents' electric bills, starting Jan. 1 of this year. However, backers of the initiative promise that their proposition will slash electric bills by 20%.

"All the pundits said we couldn't do it, that [getting the measure on the ballot] was impossible," said Nettie Hoge, of The Utility Reform Network, a San Francisco-based consumer group. "Maybe they'll be just as surprised in the first week in November."

Hoge's group, along with Santa Monica attorney and consumer advocate Harvey Rosenfield and the nonprofit Public Media Center of San Francisco, organized a massive signature-gathering effort to obtain more than 700,000 names of registered voters to place the initiative before voters.

Hoge said the campaign on behalf of the utility initiative will cost "a couple million dollars; that will be a fraction of what the utilities will spend" to defeat the measure.

Opponents are likely to include major utilities, including Edison International, San Diego Gas & Electric Co., and Pacific Gas & Electric Co., and business groups such as the California Manufacturers Assn., the state Chamber of Commerce and the California Business Roundtable.

"We're going to lead a broad-based coalition to oppose the initiative because we believe the initiative will eliminate the ability to have competition and lower electric rates," said Alan Zaremberg, president of the state Chamber of Commerce.

While Hoge and others predict that the utilities will spend tens of millions to defeat the measure, Zaremberg said only that the budget for the campaign against the initiative will be enough to make Californians "aware of the true consequences of the initiative."

In an effort to derail the measure, the utilities have filed a lawsuit asking the state Court of Appeal in Sacramento to strike the initiative from the ballot before a vote. Such suits rarely succeed.

The initiative seeks to repeal parts of the 1996 law that allow utilities to charge customers for the cost of bad investments in nuclear power and fossil fuel plants, estimated to be as much as $28 billion. Under the initiative, the utilities and their shareholders would have to bear the brunt of such costs.

The initiative also would unravel a unique financing mechanism used to lower residential customers' utility bills. The 10% rate reduction was financed by a new type of bond authorized by the legislation.

Because residential customers must pay off the bond debt over the next 10 years, backers of the initiative liken the financing mechanism to running up a credit card bill to pay a debt, then stringing the debt over a long period.

When the Legislature passed the 1996 bill, it was an almost unheard of vote on such a complex measure. At the time, backers hailed it as landmark legislation that would create competition among utilities, and compared its significance to the breakup of the telephone monopoly a generation ago.

In 1996, many environmentalists, organized labor groups and consumer advocates supported the measure or were neutral on it. Even Hoge's group did not protest the bill.

But consumer advocates' concern grew after its passage, and Rosenfield, the author of 1988's Proposition 103, which regulates the auto insurance industry, entered the fray to push for the ballot measure.

The 50-cent per pack tax proposed under the tobacco initiative is intended to raise roughly $700 million a year to fund county programs aimed at improving early childhood development and health.

The programs would range from immunizations to increased child care for infants and preschool children, and efforts aimed at combating child abuse. Joining Reiner in the initiative effort is former Assemblyman Mike Roos, head of a program that supports Los Angeles public schools.

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