PG&E has one heck of a credibility problem on its hands.

For months, the company has insisted that its new digital SmartMeters were working perfectly, even as hundreds of customers complained that their bills had inexplicably skyrocketed. The higher bills were due to rate increases, PG&E said, or ramped-up energy usage during the summer.

Finally, on Monday, the company admitted it had found problems with more than 43,000 of the 5.5 million meters installed so far. But only "a few" bills were affected, PG&E said. Given the company's previous denials, that's difficult to believe.

Comments from Helen Burt, a senior vice president, at a state Senate hearing Monday didn't help clear things up. "Last fall, when we said 'the meters work,' we meant it," she said. "They do. But that doesn't mean that every single one of them works 100 percent of the time."

There won't be a full accounting of the problem until August, when an independent evaluation ordered by the California Public Utilities Commission is expected to be complete.

But we do know this: PG&E has done an abysmal job communicating with customers about the transition to SmartMeters. It was dismissive of complaints and still appears to be less than forthcoming.

All of this shouldn't be a surprise, coming from a company that's spending tens of millions of dollars to hoodwink voters into passing Proposition 16 in June. The proposed constitutional amendment would require local governments to gain the approval of two-thirds of their voters before creating a local utility, like Santa Clara's. PG&E's ads make it sound as though it only wants to protect taxpayers. The truth is, the company is trying to enshrine its near-monopoly in the state constitution.

Voters didn't need another reason to vote no on Proposition 16; it's an appalling abuse of the initiative process. But PG&E's handling of the SmartMeter mess is a warning to anyone who's still on the fence. The company shouldn't be allowed to gain any further control over Northern California's power market.

Context:

- PG&E is the utility which supplies electricity to most of northern California.

- There are growing initiatives in California to create local utilities, so as to seize some local control over the electricity supply business, and get away from what is increasingly perceived as the arrogant, manipulative, dishonest, and boondoggling activities of the big California utilities.

- Combing all of the above, is PG&E's introduction of smart meters to its client base. You'll get a better sense in the editorial that follows.

- Proposition 16, the New Two-Thirds Requirement for Local Public Electricity Providers Act, on the June 8, 2010 ballot in California as an initiated constitutional amendment. If Proposition 16 is approved by voters, it will take a two-thirds vote of the electorate before a public agency could enter the retail power business.

This will make it more difficult than it is currently for local entities to form either municipal utilities, or community wide clean electricity districts called Community Choice Aggregators (CCAs). Pacific Gas & Electric is the primary financial sponsor of the initiative, having contributed $28.5 million through March 26, 2010. (link)