PG&E; phone, mail tactics are illegal, regulators warn

California utility regulators Monday warned Pacific Gas & Electric Co. to stop using telephone and direct-mail tactics that could derail competition from the state’s first nonprofit group to offer electric service.

The warning letter from the California Public Utilities Commission came in the midst of PG&E;’s $35-million campaign to pass Proposition 16, a statewide initiative on the June 8 ballot aimed at making it harder for local governments and citizens to form nonprofits to provide electricity.

Proposition 16 would require local governments to win approval from two-thirds of voters in an election before they could set up any new public power network.

The PUC warning focused on PG&E;’s tactics concerning Marin County, which is set to launch a public power service -- known as a CCA -- this month under rules laid down by a 2002 state law. The nonprofit service, called Marin Clean Energy, plans to offer a higher percentage of power from renewable sources than currently available from PG& E. The electricity would still be delivered over PG&E;’s grid.

San Francisco-based PG&E;, the state’s largest electric utility, is fighting to keep every Marin customer that it can. But in the warning letter to the utility, PUC Executive Director Paul Clanon told a PG&E; top executive that the company is violating state law with its aggressive moves.

He said the utility may not use its own phone banks to call customers and then transfer them to customer service after convincing them not to affiliate with Marin Clean Energy.

He also said PG&E;’s mailers to customers were “misleading” and the utility “must refrain from sending any mailers of this nature in the future.”

PG&E; said it was reviewing the PUC’s letter and would respond in the next few days.

Utility ratepayer advocates hailed the PUC warning to PG&E; as overdue. “This is a clear indication that PG&E; will stop at nothing to keep their customers captive,” said Mark Toney, executive director of the Utility Reform Network in San Francisco. “They’ve been caught doing things they weren’t supposed to do.”

PG&E;’s effort to head off future CCAs is also under attack in the courts. A coalition of public power agencies, led by the Sacramento Municipal Utilities District, filed a suit in Sacramento County Superior Court asking a judge to remove Proposition 16 from the ballot because of alleged fraud. PG&E; called the suit a “political ploy.”

A hearing on the lawsuit is scheduled for Wednesday.

marc.lifsher@latimes.com