By Steve Horn and Dharna Noor
Top Photo Credit: JP Smith | Wikimedia Commons
San Francisco has moved to municipalize Pacific Gas and Electric.
In a letter sent to the utility company on Friday, San Francisco Mayor London Breed and City Attorney Dennis Herrera offered to purchase the parts of the utility grid that serve the city and county for $2.5 billion.
“This marks the culmination of months of hard work from the City and its advisors on that effort,” Breed and Herrera said in a press release. “Our offer to PG&E is the result of detailed financial analysis conducted by industry experts and encompassing an extensive examination into the company’s assets in San Francisco.”
The offer came just days before PG&E released its long-awaited bankruptcy plan which would put a $8.4 billion cap on payments to wildfire victims who filed claims directly against the company. State officials have considered the offer since January, when PG&E filed for bankruptcy protection after being found liable for the deadliest wildfire in California’s history.
The $2.5 billion would come from bonds that San Francisco approved in 2018, and would be paid off by ratepayers through their electric bills.
“The offer we are putting forth is competitive, fair and equitable,” said Breed and Herrera in a statement. “It will offer financial stability for PG&E, while helping the City expand upon our efforts to provide reliable, safe, clean and affordable electricity to the residents and businesses of San Francisco. It also considers equity for PG&E’s remaining customers and the City’s responsibility for ongoing costs.”
PG&E isn’t thrilled about the offer.
“We all agree on the importance of continuing to serve the citizens of San Francisco with safe, clean, affordable and reliable energy,” the company said in a statement. “PG&E has been a part of San Francisco since the company’s founding more than a century ago, and while we don’t believe municipalization is in the best interests of our customers and stakeholders, we are committed to working with the City and will remain open to communication on this issue.”
The union representing over 17,000 PG&E workers also opposes the deal. “IBEW 1245 opposes the proposed takeover of PG&E electric system by the City and County of San Francisco because it hurts both the residents of San Francisco, as well as all our members — particularly those working in the City,” they said in a statement. They say the deal could hurt members’ pension plans and limit workers’ flexibility to work for any PG&E-owned power system in the state.
IBEW 1245 also says that San Francisco residents oppose making electricity publicly-owned. “Residents…have voted three times in the last 18 years to OPPOSE a takeover of PG&E,” they said.
But some say that’s not quite true. “The current proposal to get out from under PG&E marks the 13th attempt since the 1920s,” said Johanna Bozuwa, co-manager of the Climate and Energy Program in The Next System Project at The Democracy Collaborative, who has advocated for the public takeover of PG&E.
“In 2001, a ballot measure for public power lost by a mere 500 votes,” said Bozuwa. She noted that California Governor Gavin Newsom, who was then the mayor of San Francisco and received over $200,000 in campaign donations from the company during his 2018 gubernatorial campaign, opposed the measure. “Weeks later, uncounted ballots were discovered, including ballot box lids suspiciously floating in the San Francisco Bay.”
Seven years later, San Francisco considered a similar measure. “In 2008, Proposition H proposed municipalization again, which PG&E quashed with more than $10 million dollars spent on a fear-mongering campaign,” said Bozuwa.
At least one poll shows widespread support for making PG&E publicly owned. Earlier this year, Mayor Breed’s office surveyed 435 residents surveyed. 68 percent supported the city taking over PG&E.
“These results show that San Franciscans believe we can reliably provide power for our residents and businesses,” said Breed in an April press release. “The City has consistently demonstrated the ability to provide affordable water, power, and sewer services, and with PG&E’s bankruptcy we may have an opportunity to better secure San Francisco’s energy future.”
The city’s Public Utilities Commission says the deal won’t raise electricity rates in San Francisco, but it could increase them in the rest of California. “We know that there is an impact on other remaining customers of PG&E,” Barbara Hale, San Francisco Public Utilities Commission Assistant General Manager for Power, told KQED. “But our estimates show that to be a role of a relatively small amount that we think can be addressed in the approach taken by the regulators to how the proceeds of the sale are distributed.”
If rates go up in the rest of the state, the Democracy Collaborative’s Bozuwa says that other municipalities might push for municipalization, too. “PG&E could conceivably cry poor, asking for further rate hikes from the California PUC, however I think this could have the opposite effect they’re looking for and triggering new campaigns elsewhere,” she said.
This wouldn’t be the city’s first foray into publicly-owned electricity. San Francisco already owns the Hetch Hetchy Power System, a hydroelectric dam providing 17 percent of the city’s electricity. None of that electricity comes from fossil fuels.
In their proposal, Breed and Herrera haven’t mentioned weaning the city off fossil fuels. San Francisco currently sources its electricity, beyond Hetch Hetchy, from a mix of sources including renewable sources such as wind, geothermal, biomass, solar, and small hydro at a rate of 39 percent, 34 percent nuclear energy, 15 percent from natural gas, and 13 percent large hydroelectric.
In January, San Francisco Supervisor Hillary Ronen introduced legislation to create a citywide Green New Deal Fund. The ordinance would not only make PG&E city-owned, but also push to phase out fossil fuels.
“San Francisco must…take immediate steps to replace PG&E – with urgency to fight back against climate change; to ensure safe, reliable, affordable service; to create good union jobs in a new green economy, and to remove profit as a motivating factor from our most essential public utility,” the legislation says. “It is both urgent and feasible that San Francisco create a completely community-owned public power utility, independent from PG&E, and take steps toward implementing our own energy independence.”
The deal would make PG&E the third-largest publicly-owned utility in California, after the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District.
Nothing is final yet. “This represents a general statement of the City’s interest in purchasing the Targeted Assets and does not create any legally binding obligations,” said Breed and Herrera in their letter.
Breed and Herrera plan to meet with PG&E CEO William Johnson on September 26 to discuss the proposal further.