PG&E threatens to sue Marin water district over 'clean energy' loan

Richard Halstead
Posted: 01/29/2010 06:25:18 PM PST
Updated: 01/29/2010 06:36:48 PM PST

Pacific Gas and Electric Co. has threatened to sue the Marin Municipal Water District if it co-signs a $2 million loan enabling the Marin Clean Energy initiative to begin operations, according to the water district's lawyer.
The threat has caused the water district's board to cancel plans to discuss the loan guarantee in open session when it meets Wednesday night. PG&E's action comes just days before the Marin Energy Authority is scheduled to vote on whether to approve a final contract with an electricity wholesaler. That vote is scheduled for Thursday.

Also, the Marin Board of Supervisors is expected to vote Tuesday on whether to co-sign the loan. Marin Energy Authority managers had hoped that the water district would join with the county to guarantee the loan. There has been discussion of granting co-signers a discounted price for 100 percent renewable power.
The Marin Clean Energy initiative would put the Marin Energy Authority, whose members include the county of Marin and seven of the county's 11 municipalities, in competition with PG&E as a retailer of electricity in Marin. The joint powers authority was formed in 2008 to explore projects to reduce greenhouse gas emissions. Authority members have criticized PG&E for moving too slowly to tap renewable energy sources.
Water district general counsel Mary Casey said she and another water district attorney, Tom Bertrand, had a conversation with PG&E chief counsel Christopher Warner on Wednesday.

"Tom asked if PG&E would sue MMWD, PG&E's biggest Marin County customer," Casey wrote in a memo. "Warner indicated in a diplomatic way that PG&E would because it believed that such a guarantee was unlawful."
Katie Romans, a spokeswoman for PG&E, said Friday, "These discussions are going to continue, so we're not prepared to discuss them publicly."
"PG&E is clearly being a bully, throwing its money and its lawyers around with heavy weight," said Marin Supervisor Charles McGlashan, who has championed the Marin Clean Energy initiative.
Casey said Warner made the argument that such a loan guarantee by PG&E would violate Article 16, Section 6 of the state constitution.
The section reads: "The Legislature shall have no power to give or to lend, or to authorize the giving or lending, of the credit of the state, or of any county, city and county, city, township or other political corporation or subdivision of the state now existing, or that may be hereafter established, in aid of or to any person, association, or corporation, whether municipal or otherwise, or to pledge the credit thereof, in any manner whatever, for the payment of the liabilities of any individual, association, municipal or other corporation."
Former Marin County supervisor Gary Giacomini, a private lawyer who works for PG&E, met with Marin County Counsel Patrick Faulkner on Wednesday and made the same legal argument. Faulkner doesn't buy it.
"I think it is legal for the county to do what is being asked," Faulkner said.
McGlashan said that if PG&E's argument was correct, "We wouldn't be able to give the health district the loan of $20 million that we recently gave them. We wouldn't be able to support the Ross Valley flood investments that we're making despite litigation there and a number of other loans and contracts that we execute with governments all the time."
"This is how they win," McGlashan said. "They win by running up big legal bills and torturing the public interest until it crumbles."
Contact Richard Halstead via e-mail at rhalstead@marinij.com

http://www.contracostatimes.com/news/ci_14297722?nclick_check=1