Capitol Alert: Voters reject corporate-backed ballot measures

Voters rejected two business-backed measures that would have changed the electric power and auto insurance industries in California.

With all precincts statewide reporting, PG&E-backed Proposition 16 was failing with 52.5 percent no votes. No votes on Proposition 17, sponsored by Mercury Insurance, accounted for 52.1 percent of the total.

Proponents of the measures were still holding out hope, with thousands of absentee ballots yet to be counted.

Shannan Velayas, a spokeswoman with the secretary of state's office, said the number of absentee ballots varies from county to county, so the state does not now know how many are out there. She said it's in the "tens of thousands." Counties have until July 9 to report final absentee totals.

Opponents of Propositions 16 and 17 said they were confident, given the numbers. Out of about 3.85 million votes cast, Proposition 16 trailed today by about 185,000 votes. Proposition 17 was failing by about 156,000 votes.

Proposition 16 -- formally known as the Taxpayers Right to Vote Act -- was put on the California ballot as a constitutional amendment requiring a two-thirds vote before a public utility could extend service to new customers or new territories.

From the beginning, it was spearheaded virtually single-handedly by San Francisco-based PG&E, which spent more than $45 million to persuade voters to approve it.

Proposition 17 was put on the ballot by Mercury Insurance. It would have overturned state law prohibiting insurance companies from considering a driver's insurance history to set rates, plus allow "loyalty discounts" to customers even if they switched
insurance providers.

Mercury poured nearly $16 million into the effort, according to Electiontrack.com.

The company wasn't immediately available for comment. But Mike D'Arelli, executive director with an insurance lobbying group that supported Proposition 17, called the results disappointing.

"Voters missed an opportunity to extend an auto insurance discount that could have lowered auto insurance rates for millions of drivers," said D'Arelli, executive directior of the Alliance of Insurance Agents & Brokers.

Harvey Rosenfield, the noted consumer advocate who led the fight against the proposition, was scheduled to make a statement later.

Existing law lets insurers offer loyalty (or "persistency") discounts to long-term customers. Mercury has been fighting for years for the right to extend the discounts to other insurers' long-term customers in an effort to lure them away. Rosenfield says that because of the "zero sum" regulations governing insurance premiums in California, companies that give discounts to one group have to raise premiums on others. He said newly insured motorists, or those who'd let their insurance expire temporarily, would pay big surcharges as a result.

Proposition 17 proponents said they would continue to pursue a complaint with the Fair Political Practices Commission over the financing of the opposition to the initiative.