Why Gov. Newsom and California Legislature must ban PG&E from giving campaign contributions

For decades, Pacific Gas and Electric has methodically executed what the New York Times called its “political playbook”: giving millions and getting its way.

This continued after PG&E’s first bankruptcy in 2004. It persisted after six felony convictions in 2016. And now, even after catastrophic wildfires and devastating blackouts, the playbook is bound to remain the utility’s most valuable asset—unless we make them throw out that book.

I have introduced Assembly Bill 2079 to prohibit investor-owned utilities from donating to the campaigns of state politicians. While Gov. Gavin Newsom has rightly pilloried PG&E for its negligence, he ignores the larger issue. 

It was California’s political leadership that let PG&E’s leaders get away with it. That’s why the most important part of PG&E’s restructuring, as it seeks to exit bankruptcy again, is loosening its grip on the Capitol.

PG&E has long been among California’s top political donors, spending nearly $4 million as recently as 2018. That money could have gone to safety upgrades, but instead went to electing state officials who let the company forgo safety upgrades. 

According to a Wall Street Journal investigation, “PG&E Corp. knew for years that hundreds of miles of high-voltage power lines could fail and spark fires, yet it repeatedly failed to perform the necessary upgrades.”

It’s not just that PG&E is an especially irresponsible actor (though it is) or that California political offices are especially prone to interest-group capture (though they are). 

The fundamental perversity lies in the nature of an electric utility and its uniquely intertwined relationship with state government.

Utilities are in many ways quasi-public, behaving like arms of the state: they claim monopolies on entire regions, seize property through eminent domain, and enjoy a fixed rate of return. State officials, in turn, are essentially embedded in their corporate structure. Officials closely control prices, operations, and purchasing. It is a relationship unlike any other with a nominally private entity.

Whenever political activity is restricted in any way, the First Amendment must of course be considered. 

I take this duty particularly seriously: since taking office three years ago, I’ve been our Legislature’s leading advocate for protecting and advancing First Amendment freedoms. 

In 2017, I authored a first-of-its kind free speech resolution that passed both houses unanimously. Nothing is more vital to the functioning of our democracy than robust protections for freedom of speech.

But the First Amendment does not afford absolute protection to political donations. 

The controversial Citizens United decision by the U.S. Supreme Court in 2010 does not cover contributions to candidates. Adding money to a campaign’s bank account, the Supreme Court has held, is less of an expressive activity than using that money to advance one’s own message.

Indeed, California already disqualifies several types of entities from political giving, even as they engage in other forms of advocacy. 

A municipal entity like a city—or, for that matter, a public utility like the Sacramento Municipal Utility district or the L.A. Department of Water & Power—can have a lobbyist at the Capitol but cannot give money to campaigns. 

The same goes for nonprofits. Congress and some other states go further, banning contributions by all corporations, labor organizations, national banks, and federal government contractors.

Several states, including Mississippi, Alabama, and Georgia, specifically bar utilities from donating to candidates for an elected public utility commission. Since California does not elect its Public Utilities Commission commissioners, an equivalent restriction must be aimed at the elected officials responsible for their appointment and confirmation: the governor and legislators.

Our Legislative Counsel, the Legislature’s in-house law firm, appears to agree AB 2079 is constitutional. It did not issue a “concerns letter” in connection with the bill.

Ultimately, barring utility contributions is constitutionally permissible for the same reason it is legislatively advisable: a utility is so joined at the hip with the state of California that the risk of undue influence—both the likelihood it will occur and the harm when it does—is intolerable to the public interest.

Gov. Newsom has now twice rejected PG&E’s plan to emerge from bankruptcy. But this is a choreographed political dance designed to show toughness towards the beleaguered utility while eventually giving it a path to resume business as usual. If we don’t act now to deprive PG&E of its political playbook, history is bound to repeat itself.

Not only will that make wildfires and power shut offs more likely, it could hold California back from a brighter energy future. 

With advances in storage and other technologies expanding consumer choice, decentralizing distribution, and elevating clean energy, it is possible to envision a future where society is no longer at the mercy of sprawling, monopolistic utilities.

By passing AB 2079, the Legislature will make sure they can’t use their political muscle to keep us stuck in the past. 

______

Assemblyman Kevin Kiley is a Republican who represents Assembly District 6, east of Sacramento 6th district,  Assemblymember.Kiley@assembly.ca.gov. He wrote this commentary for CalMatters. To read his previous commentary for Calmatters, please click here.