Utility Giants Face Criticism On Minority Contracts

New America Media, News Report, Aaron Glant, 

SAN FRANCISCO - California’s utility and telecommunications companies are doing hundreds of millions of dollars more business with minority contractors, according to a new report from the Greenlining Institute, a Bay Area think tank.

But the organization says the news is not all good for minority firms. According to Greenlining’s report, Southern California Edison and Pacific Gas and Electric are lagging behind their competitors. Cable companies , which increasingly compete with regulated telecommunications firms for broadband business , have virtually no minority contracting portfolio at all.

“There are clear industry leaders, there are those who are stuck in the middle of the pack and those who are not even stepping onto the field,” said Greenlining attorney Sam Kang.

According to Greenlining, California’s major utility and telecom firms handed out $341 million more in minority contracts in 2009 than in 2005.

Spending on African American and Latino businesses increased, while spending on Asian American and minority women-owned businesses went down.

Of the companies tracked by Greenlining, Verizon did the greatest amount of contracting with minority-owned businesses at 24 percent, followed by Southern California Gas at 23 percent, and AT&T at 22 percent.

On the other end of the spectrum, Sprint and Cox Communications gave just 8 percent of their contracts to minority-owned firms.

In an interview with New America Media, Greenlining’s Kang singled out PG&E for criticism.

The company placed in the middle of the pack, giving about 15 percent of its contracts to minority businesses.

But among all the firms monitored by Greenlining, the giant utility was the only company to see its volume of contracting to minority businesses decline.

“PG&E is the biggest utility in California and it’s missing a huge opportunity by falling farther and farther behind industry leaders,” Kang said.

“Historically, they’ve always been strategic in reaching out to minority firms,” Kang said, “but lately it seems like their attention is geared toward spending money and time on implementing a $4 billion rate increase over the next three years and shoving smart meters down our throats despite all the complaints.”

Kang also criticized PG&E for cutting back on its minority contracting at the same time it spent more than $35 million on a failed ballot initiative to make it more difficult for municipal utilities to get into the power market.

“We’ve noticed a drop off in their corporate culture,” Kang said.

PG&E spokesperson Fiona Chan gave a different spin.

While the percentage of minority firms getting contracts declined in 2009, she said, the overall volume of dollars increased by $54 million to $500 million.

“PG&E has long viewed supplier diversity as a strategic business advantage because it helps us provide the very best products and services to our customers and supports economic development in the communities that we serve,” Chan said.

PG&E and Greenlining also have different readings of the utility’s willingness to include minority firms in the emerging, alternative energy sector.

Chan said for example, last year PG&E’s renewable sourcing team awarded 30 percent of its Pilot Photovoltaic Project contracting dollars to diverse businesses.

But Kang countered that the pilot project is “very small.”

“We asked PG&E on whether they wanted to incorporate supplier diversity into their $900 million Manzana wind project,” he said. “PG&E declined.”

Ian Kim, who runs the green jobs program at the advocacy organization Green for All says PG&E’s answer is not enough.

“When you’re getting the money of millions of ratepayers the public has a right to hold those businesses to a higher standard,” he said.

“The utilities have a long way to go when it comes to building bridges with the community,” he added.

“It goes way deeper than the surface level” of contracting data," he said.

One minority-owned company that has gotten work from PG&E is Energy Conservation Options (ECO), an Oakland firm which positions itself as a one-stop solution for companies and building managers seeking to increase their energy efficiency.

Its CEO, Dahlia Moodie, makes a point of hiring from the community in Oakland, especially from chronically unemployed and underemployed segments of the population.

“It was difficult for me to find my way into PG&E, but once I got in I could see that they are being very aggressive in terms of the services that we provide,” she said.

Moodie believes many small, minority companies have difficulty finding work with PG&E for the same reason they have difficulty getting contracts from any large business, or from the government.

“You have to have this incredibly wide range of understanding about how a large bureaucratic organization works,” she said. “It takes a certain set of skills to do that and a lot of people don’t come to small business with those skills.”

When she started ECO in 2008, Moodie said she spent an entire year simply meeting any many people in corporate leadership positions as she could. She needed to make the connections, she said, in order to get her start-up off the ground.

“The problem,” she says, “is that there are very few small and minority businesses that have the skills or resources to do this.”

Aubrey Stone, the director of the California Black Chamber of Commerce says whatever the numbers, his members “are still struggling, and feel like they’re not major participants in the process.”

“I think it's great that the number of black businesses getting contracts increased, but I don’t see it,” he said. “I don’t see a major increase so I can’t relate to it personally.”