Sacramento Bee Editorial: PG&E has destroyed enough California communities. It’s time for a public takeover

SF CHRONICLE Editorial: How PG&E keeps making the case for its own takeover

After years of PG&E obstruction, San Francisco is taking the next step for full public power.

For over 100 years, the San Francisco Public Utilities Commission (SFPUC) has provided electricity to all City buildings and some of our biggest public assets like our airport, general hospital, and Muni. Through the power generated by the Hetch Hetchy System and provided by CleanPowerSF, SFPUC already provides more than 70% of the electricity used in the City.

But that public power still runs through the power grid that PG&E controls in San Francisco—and we’re paying a big price for their monopoly. The corporation has imposed millions of dollars on the City by requiring expensive and unnecessary equipment to deliver public power, including raising the cost of all streetlight connections by up to $1 million. And that’s just the latest attack from PG&E, with over 70 public projects from affordable housing developments to new clinics and park spaces facing years of delays due to obstruction from PG&E.

These delays on our biggest priorities can’t continue. 

In 2019, as PG&E declared bankruptcy, San Francisco put forward a fair offer to purchase PG&E’s local electrical assets. They refused to engage our offer despite carrying a crushing level of corporate debt.

Now, San Francisco is taking the next step in our transition to full public power by calling for an independent state valuation of PG&E’s local electric assets. It’s now up to the California Public Utilities Commission— PG&E’s state regulator—to determine the value of PG&E’s electrical infrastructure in San Francisco. 

San Francisco is united like never before behind full public power. Mayor London Breed, the full Board of Supervisors, and 70% of San Franciscans agree: It’s our City, it’s our power, and it’s time.

Evidence & Exhibits

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SF CHRONICLE: San Francisco asks state PUC to name a price for PG&E's local power lines

J.D. Morris | July 27, 2021

San Francisco is redoubling its efforts to take over Pacific Gas and Electric Co.’s power lines in the city, this time by asking state officials to determine a fair price.

City officials on Tuesday petitioned the California Public Utilities Commission to study the value of PG&E’s local electric equipment. San Francisco wants regulators at the commission to decide how much PG&E’s poles and wires are worth, so the city can try once more to purchase them.

The petition comes about two years after San Francisco unsuccessfully tried to pay $2.5 billion for PG&E’s local electric system amid the company’s wildfire-caused bankruptcy.

PRESS RELEASE: San Francisco Announces New Major Step in City's Effort to Transition to Public Power

San Francisco requests the State determine the value of PG&E’s local electric assets as the next step in acquiring them in order to provide clean, affordable and reliable public power

San Francisco, CA —The City and County of San Francisco submitted a petition today with the California Public Utilities Commission (CPUC) requesting a formal determination of the value of PG&E’s local electric infrastructure, the next step in San Francisco’s efforts to acquire the utility’s city-based electric facilities and complete the City’s transition to public power. 

Owning the grid would allow San Francisco to provide clean, reliable and affordable electricity throughout the City while also taking meaningful climate action, like reaching its set target of using 100% renewable electricity by 2025. Controlling energy use and delivery would also allow San Francisco to ensure equity in electric service and workforce development while providing transparency and public accountability in rates, service and safety.

The move comes after the City made a $2.5 billion offer in 2019 to purchase PG&E’s local electric assets following years of the investor-owned utility’s failure to provide reasonable, safe, and cost-effective service to its ratepayers. The City resubmitted its offer when PG&E emerged from bankruptcy in 2020. PG&E rejected both San Francisco purchase offers, and in the last year has begun seeking to impose more than $1 billion in unnecessary charges on City customers while delaying basic power hookups on a range of public buildings from schools to new transit projects.

“San Francisco is ready to transition to full public power, and today we are asking the CPUC to determine a fair price that will allow us to move forward with the acquisition of our local power grid,” said Mayor London Breed. “It’s been clear for a long time that full public power is the right choice for our City and our residents, and we know we can do this job more safely, more reliably, and more cost effectively than PG&E. It’s time for everyone in the City to have access to clean, reliable, affordable public power.”

Mayor London Breed announced the City’s valuation request at an event at Zuckerberg San Francisco General Hospital, which for decades has relied on the San Francisco Public Utilities Commission (SFPUC) to provide clean, safe, reliable, and affordable power for its critical facilities and has been instrumental in the City’s widely lauded COVID-19 pandemic response. The hospital is also the site of a major joint research and academic facility with the University of California San Francisco, whose construction was delayed by PG&E’s intransigence, driving up costs by an estimated $30,000.

San Francisco’s local elected leaders remain united behind the transition to public power, all of whom have urged PG&E to reconsider the City’s acquisition offer. Mayor Breed was joined by State Senator Scott Wiener (D-San Francisco), City Attorney Dennis Herrera, Board of Supervisors President Shamann Walton, San Francisco Public Utilities Commission President Sophie Maxwell and community advocates. In addition to having the support of City and local officials, transitioning to public power has public support; a 2019 poll found that nearly 70% of San Franciscans support switching to public power.

In the valuation petition filed today by City Attorney Dennis Herrera, the City asks the CPUC to determine the just compensation to be paid for PG&E’s electricity distribution assets that serve San Francisco. State law gives the CPUC the authority to set definitive valuations for utility assets. San Francisco’s petition also proposes a process for the Commission to assess the value of PG&E’s electric facilities.

“San Francisco has been a reliable public power provider for more than a century. PG&E is the poster child for a utility that puts profit ahead of people. San Franciscans have had enough,” said City Attorney Dennis Herrera. “This proposed acquisition makes sense for San Francisco, it makes sense for PG&E’s other customers, and, quite frankly, it makes sense for PG&E. San Francisco is offering billions of dollars that could be used to pay fire victims and keep PG&E from sticking customers with rate hikes. San Francisco made a very fair offer to buy PG&E’s local assets. PG&E refused. Now we’ll use an impartial process to set the definitive value of this infrastructure so we can move forward.”

“The current relationship between San Francisco and PG&E is untenable. For years, San Franciscans have paid the price for PG&E’s service delays and cost overruns, with terrible impacts on public facilities across the City, from schools and homeless shelters to affordable housing and recreational facilities,” said Senate Scott Wiener (D-San Francisco). “This has never been acceptable, and it’s getting worse. It’s time for the City to reconsider its options for getting out from under PG&E’s corporate monopoly, and I urge the CPUC to act quickly to provide a fair valuation of PG&E’s assets so this acquisition can move forward.”

San Francisco has demonstrated its effectiveness as a local power provider for more than 100 years, delivering clean, reliable hydropower from Hetch Hetchy Power to customers like the San Francisco International Airport, the San Francisco Zoo, and Zuckerberg San Francisco General Hospital. Hetch Hetchy Power employs hundreds of highly skilled, locally-based union workers throughout the SFPUC operations area, which stretches from the Sierra Nevada mountains to the Pacific Ocean. The SFPUC’s CleanPowerSF program also purchases renewable power for over 370,000 homes and businesses. Collectively, the two programs provide more than 70% of the electricity consumed in San Francisco.

San Francisco has also set a goal of shifting to 100% renewable electricity by 2025 and 100% renewable energy by 2040—a target that will be easier to achieve if San Francisco had local control of its power grid. San Francisco would use bonds secured by future revenues from electricity generation to acquire PG&E’s infrastructure, so no funds for existing City services, like affordable housing, libraries or addressing homelessness, would be affected.

“Our public power and utility system has proven itself over more than a century, and the City is prepared to begin managing the rest of our local grid. The Board of Supervisors unanimously supported our original offer in 2019, and city leaders continue to believe public power is in the best interest of San Francisco,” said Board of Supervisors President Shamann Walton. “San Francisco has always had the right to full public power, and we are committed to make it a reality.”

In today’s valuation request, the City outlines a long list of reasons for pursuing today’s petition, noting PG&E’s ongoing failure to provide adequate service to both the City’s utility and individual ratepayers, resulting in years of disrupted services and millions of dollars in unnecessary costs. In one recent case outlined in a new white paper produced by the SFPUC, PG&E has pushed for the City to pay as much as $1 million per streetlight connection for a series of unneeded upgrades.

More information on projects facing delays can be found at OurCityOurPower.org. The petition also notes that the CPUC itself has described PG&E’s recent safety history as ranging “from dismal to abysmal,” including multiple local incidents resulting in injuries and property damage.  

“PG&E has not been a good partner to San Francisco—undermining the City’s ability to provide core services, imposing unnecessary costs on our ratepayers, and making it harder for public power providers to do our jobs,” said San Francisco Public Utilities Commission President Sophie Maxwell. “The City has sought unsuccessfully to resolve these issues for years, through litigation and direct negotiation. It has become clear that acquiring and assuming responsibility for the distribution system is the only way for San Francisco to operate its electric utility in a way that meets the City’s objectives.”

San Francisco’s acquisition of PG&E’s assets would not burden PG&E’s remaining ratepayers, and very well could benefit them. San Francisco is a small part of PG&E’s large service territory, representing less than 8% of PG&E’s total electric retail accounts in 2019. PG&E’s revenues per San Francisco customer are smaller than its revenues per PG&E customer outside the City. San Francisco’s acquisition would reduce the size of PG&E’s remaining service territory and its service obligations. This alone could benefit remaining ratepayers as PG&E would no longer have any expenses or obligations related to the upkeep – and future capital needs – of the assets purchased by San Francisco. Relieving PG&E of this obligation can help it focus on critical needs elsewhere.

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Evidence & Exhibits

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SF CHRONICLE: City says PG&E's plan for service changes in San Francisco could cost over $1 billion

San Francisco and PG&E are at it again, this time with city officials pushing back against what they say are expensive changes in the way their infrastructure connects to the utility’s poles and wires.

City leaders say the alterations Pacific Gas and Electric Co. is seeking are far too costly and may force the government to install unnecessary equipment, such as meters on streetlights that currently lack them.

IS PG&E really ‘reimagined’ ?

“[I]t’s unclear there’s anything fundamentally different about the utility, which over the last decade has caused a deadly pipeline explosion, deadly fires and days-long power shut-offs affecting millions of people.”

— Los Angeles Times

PG&E claims they will emerge from bankruptcy as a “fundamentally improved and transformed utility,” reformed and “reimagined.” Here are five distinct issues that PG&E’s customers and regulators should consider while evaluating the utility’s claims that they’ve drastically changed and deserve to exit bankruptcy:

 1. Debt

How will PG&E stay afloat - and handle the next fire or catastrophe - with their massive debt? PG&E entered bankruptcy with a debt load of $22 billion. Now the “reimagined” company is preparing to exit bankruptcy with $38 billion in debt - 73% more debt than when they entered, according to the Los Angeles Times. PG&E’s Plan is a complex house of cards, built on rosy scenarios and vague promises. It will not provide sufficient long-term financial strength or flexibility for the company—or for ratepayers. 

2. Safety

After creating massive damage and suffering, is PG&E now delaying critical safety measures needed to prevent future wildfires, while seeking to hamstring the CPUC’s oversight? U.S. District Judge William Alsup, who oversees the utility’s federal criminal probation, told PG&E earlier this spring that it had “cheated on maintenance”—and ordered the company to completely overhaul its process for inspecting high-voltage power lines, hire more people to oversee the work of tree trimmers, and keep better records about the status of transmission equipment. Instead, the company proposed much more limited changes—and is threatening an appeal to a higher court. In the meantime, PG&E is announcing the likelihood of another round of planned power shutoffs across Northern California this summer.

3. Rates

Will PG&E continue to increase costs for ratepayers? PG&E has certainly “reimagined” how it names its rate hikes, passing along increased costs to customers hidden under new names, fees, and securitization. The increased debt load will only increase the likelihood of even more rate hikes for consumers—while also providing dangerous incentives for the company to do whatever it takes to overperform financially and increase profits.

4. Decentralization

Is “decentralization” just another empty buzzword for PG&E? They claim that they will “decentralize” their operations for safety and closer ties to local communities—without offering any details, or acknowledging their lackluster performance as a utility provider before they consolidated their operations decades ago. They also continue to refuse to allow communities like San Francisco to control its own power grid.

5. SF Values

If PG&E values San Francisco so much, why are they moving out of SF and refusing to accept $2.5 billion to let the city run its own power grid? PG&E claims it is motivated by what’s best for ratepayers. Well, San Francisco has the same goal—and a strong track record of providing safe, reliable, and affordable service across the city, with greater reliance on renewable energy and significantly higher levels of customer satisfaction. PG&E should respect the city’s wishes, stop its years-long practice of holding up power connections for local facilities, and allow San Francisco to operate its own local power system.
      

Update On San Francisco’s Opposition to PG&E’s Plan

PG&E’s latest plan to emerge from bankruptcy made several minor adjustments, though it’s telling that none were substantial enough to require re-circulating their disclosure statement. Among the changes – and lack of changes – in their new proposal:

• Sale is Theoretically Possible: PG&E is now agreeing to a provision allowing the company to be sold if it doesn’t meet the June 30 deadline. This seems unlikely and the process is not clear, and PG&E still does not explain why it is so resistant to cities like San Francisco taking on more responsibility for local power distribution, even though the company claims to want to localize and decentralize.

• Delayed Dividends: PG&E will delay payment of dividends for an additional year. This is arguably good for wildfire victims getting paid from a trust holding significant PG&E stock, yet it’s notable that major representatives of the victims still oppose the proposal as fundamentally inadequate.

• Minor Regulatory Shifts: PG&E agreed to some minor regulatory and governance provisions proposed by the CPUC president, although they come far short of addressing the many years of harm PG&E has inflicted on its customers in terms of safety, service, and rates. PG&E’s plans do little to spell out the safety improvements it would make. The plan does not have specific safety metrics, only PG&E’s promises that the metrics would be determined later.

• Massive Debt Remains: The company’s huge debt continues to be ignored. The main feature of PG&E’s plan to get out of bankruptcy is to pile on new debt, at least $13.9 billion, which will bring PG&E’s total debt to a staggering $35.4 billion. Taking on this mountain of debt and stretching it out into the future allows PG&E to avoid real structural changes and shifts risks to ratepayers and our state.

• Rates Could Rise: PG&E has insisted that it will not be raising rates as part of its path out of bankruptcy—or shifting costs from shareholders to its ratepayers—but in reality it is proposing a securitization plan that relies on adding a charge to every ratepayer’s bill so they can borrow money against it to stay solvent. In addition to this plan to add costs to ratepayers, PG&E appears to be relying on faulty assumptions that it can get a lower interest rate than it usually uses in its forecasts, even though it will be in a worse financial position. When PG&E claims its plan is neutral to ratepayers, it means only that the bankruptcy plan does not include a rate increase. Analysis shows that PG&E’s weakened financial condition makes it highly likely rates will go up following the bankruptcy as PG&E attempts to invest in improving safety and service.

These minor adjustments are inadequate and insufficient. San Francisco has continued to shine a light on this plan with the California PUC, explaining that “San Francisco does not believe that the motion materially impacts significant issues raised in this proceeding regarding PG&E’s financial health upon emergence from bankruptcy and over the longer term.”

We also made the case that IF the plan is approved, it must adopt measures including:

• Requiring PG&E to:

  • implement alternatives to its current management and operational structures.

  • undertake asset sales that could improve PG&E’s financial condition.

• Permanently barring PG&E from recovering from ratepayers costs associated with its bankruptcy and Plan.

• Approving any securitization only if it is: (i) neutral, on average, to ratepayers in light of PG&E’s bankruptcy and Plan overall, and (ii) recognizes the contributions of ratepayers and compensates them accordingly.

The best path forward is public power.

The City of San Francisco continues to believe that the best path forward — for PG&E, for fire victims, and for all of the company’s ratepayers — is for San Francisco to assume full control over electric power distribution within the city. This would allow PG&E to reduce its wall of debt and give San Francisco residents more responsive, focused service, and greater protection from PG&E’s future financial risk. Meanwhile, state leaders and residents should push for real reform and restructuring of PG&E.

Local control of the entire San Francisco electric system will provide increased affordability, safety, reliability and accountability. Public power is aligned with the City’s aggressive clean energy and resiliency goals. Our offer benefits all parties involved and is consistent with San Franciscans’ desire to move our city in a new direction through public power.

- San Francisco Mayor London Breed

Creates New Funding for Victims, Protects Ratepayers From PG&E’s Unsustainable New Debt Load

• At a time when PG&E’s bankruptcy plan weakens the company financially and harms ratepayers by adding $13.9 billion in new debt to exit bankruptcy, the City and County of San Francisco has offered $2.5 billion to acquire PG&E’s local power grid infrastructure in San Francisco.

• This is a good offer for equipment serving just 5 percent of PG&E’s service area.

• These funds, and funds offered by other local entities seeking to provide their own service, could be used by PG&E to compensate fire victims and other creditors and achieve a more sustainable financial position.

• The acquisition can also relieve PG&E of the costs and responsibility of maintaining San Francisco’s aging local electric system. 

Benefits All Ratepayers and Strengthens the State’s Power System

• By reducing PG&E’s massive debt load, the acquisition can benefit PG&E’s remaining customers. Without additional funding, the utility will have to raise rates to support its operations, according to a recent City analysis of PG&E’s plan.

• San Francisco public power would continue to pay PG&E for transmission costs from Hetch Hetchy and any other power sources to reach San Francisco’s local power grid.

• San Francisco is committed to paying its fair share to ensure other PG&E ratepayers are not harmed. The California Public Utilities Commission (CPUC) will serve as an important backstop — reviewing the acquisition price and ensuring there are no adverse impacts on ratepayers outside of San Francisco.

Advances and Accelerates Statewide PG&E Reforms

• San Francisco is part of a growing chorus demanding real reform of PG&E — to ensure communities across California have safe and reliable electricity service.

• San Francisco’s acquisition of local infrastructure can complement all of the major reform ideas being considered in the Capitol — whether it is restructuring PG&E, shifting to public ownership of the utility, or other approaches.

• With San Francisco focused on its own local power grid, PG&E could focus on the rest of Northern California, especially on providing long distance electricity transmission.

• Consideration and engagement with San Francisco’s offer is a key test of the company’s willingness to engage with local partners, focus on safety, and accept that real change is needed.

The City’s offer is good for San Francisco, good for wildfire victims, good for the state’s power system, and good for PG&E’s customers throughout Northern California

PRESS RELEASE: City of San Francisco Testifies in PG&E Bankruptcy Case: Utility Taking on Too Much Debt to Meet State Wildfire Law Requirements, Will Need to Raise Rates to Stay Solvent

February 26, 2020

In its new reorganization plan, PG&E outlines strategy for emerging from bankruptcy with $35.4 billion in debt—65% more debt than the company holds today.

This high level of financial instability will prevent PG&E from meeting the requirements of “ratepayer neutrality” in AB 1054—unless the company can find new funding sources.

San Francisco, CA—With evidentiary hearings underway this week on PG&E’s proposed plan of reorganization for exiting bankruptcy, the City and County of San Francisco has submitted testimony to the California Public Utilities Commission raising concerns about the tens of billions of dollars in debt the utility plans to take on—and casting doubt on whether PG&E can meet the standards of the state’s new wildfire liability law, including the law’s explicit “ratepayer neutrality” requirements, without identifying additional non-debt funding sources.

The City testimony, filed with the CPUC on February 21, includes detailed financial analysis of the PG&E plan that raises questions about whether the utility’s “post-bankruptcy financial condition” meets the requirements of AB 1054 (2019), the state’s recently adopted wildfire liability law. To qualify for the state’s new wildfire fund, AB 1054 requires PG&E to demonstrate to the CPUC before the law’s June 30 deadline that it has an “acceptable” governance structure in place for maintaining safety and financial stability—and that its plan is “neutral, on average, to the ratepayers.”

In both cases, San Francisco makes the case that PG&E’s plan falls short of these standards. Specifically, the City testimony states:

• “PG&E’s Plan does not provide PG&E with financial strength and flexibility, at emergence from bankruptcy or over the long term.”

• “PG&E’s Plan is not neutral, on average, to ratepayers, at emergence from bankruptcy or over the long term.”

Based on PG&E filings, the City concludes the utility is planning to take on $13.9 billion dollars of debt to satisfy its creditors—in addition to its existing $21.5 billion of debt. This $35.4 billion debt load reflects a 65% increase in the utility’s borrowing—an unusually high, unwieldy level of indebtedness that will hamper PG&E’s ability to operate as a viable entity as it exits bankruptcy.

“It is clear from a close financial analysis of PG&E’s proposed plan of reorganization that PG&E is much weaker financially than the company needs to be to operate as a viable entity after bankruptcy—and to meet the standards of the state’s new wildfire liability laws,” said San Francisco Public Utilities Commission (SFPUC) General Manager Harlan L. Kelly, Jr. “The City and County of San Francisco urges the Governor and the California Public Utilities Commission to carefully consider this as they review PG&E’s reorganization strategy—and to push for the structural changes and funding sources that will be needed to ensure PG&E can provide electricity safely, reliably, and affordably.

If PG&E’s current financial plans are approved, the City testimony notes that the utility’s high level of indebtedness will substantially increase borrowing costs, magnify PG&E’s exposure to unexpected disruptions, and raise the likelihood of default or failure to adequately fund capital needs.

Importantly, it will also force PG&E to raise rates that are already among the highest in the nation to support its operations. From the City testimony: “PG&E’s Plan requires substantial ratepayer contributions for PG&E’s Plan to succeed. The Plan is a financial restructuring that leaves PG&E highly leveraged upon its emergence from bankruptcy, and from there, is dependent on massive capital spending and rate base growth. This growth boosts shareholder earnings, which allows PG&E to de-leverage itself over time. PG&E’s return to financial strength is only possible through ratepayer contributions due to steady rate increases going forward.”

San Francisco is moving forward with its plan to take over PG&E’s local electric infrastructure assets and transition to public power—providing residents and business with cleaner, safer, and more reliable energy at lower cost than PG&E. In February 2020, the City launched its Our City, Our Power campaign to highlight the potential of public power—and demonstrate the City can operate its local power system better than the bankrupt, heavily indebted utility.

Other highlights of San Francisco’s CPUC testimony:

• PG&E plans to spend $1.8 billion this year on lawyers and financing costs: PG&E disclosed during bankruptcy proceedings that the utility expects to spend $1.8 billion in the bankruptcy case just on professional fees (lawyers and experts) and financing alone by the end of 2020.

• PG&E calls for “constructive” regulatory treatment to exit bankruptcy: PG&E in its reorganization plan has prefaced its ability to emerge from bankruptcy as possible only with “constructive regulatory application”—never explaining what will happen to electricity rates or state funds if its preferred level of regulation is not achieved. In response to recent data requests, PG&E has indicated what it means by “constructive,” with the utility stating in a November 2019 filing that “optimal public policy under the circumstances involves no imposition of monetary fines or penalties for prepetition conduct.” San Francisco contends that this places a huge burden on regulators and ratepayers to support PG&E’s financial position after bankruptcy, no matter what the cost.

• PG&E has overstated the amount of money it can save ratepayers through refinancing: While PG&E has made claims that it can provide $1 billion in ratepayer savings by refinancing existing debt, San Francisco says this claim is “overstated.” In fact, using PG&E’s own methodology, the City notes that ratepayer cost savings “could be essentially zero”—as PG&E has said in recent filings that it may use the refinancing tool to fund other obligations, including bankruptcy-related costs like financing-related fees.

• PG&E needs more funding to stay solvent—and San Francisco can help: San Francisco’s testimony includes a list of potential remedies for PG&E to better meet the requirements of AB 1054. Among them: “Require PG&E to consider asset sales and restructuring of long-term contracts that could improve PG&E’s financial condition upon its emergence from bankruptcy.” The City of San Francisco has made a $2.5 billion offer to purchase PG&E’s local electricity infrastructure assets serving the city. That offer remains on the table, with the San Francisco Public Utilities Commission and the Board of Supervisors both giving conditional approval in January 2020 to issue revenue bonds to fund the purchase.

The City of San Francisco’s full testimony w/attachments can be found here: Testimony | Attachments.

Contact
Will Reisman
415-551-4346
wreisman@sfwater.org

About the San Francisco Public Utilities Commission

The San Francisco Public Utilities Commission (SFPUC) is a department of the City and County of San Francisco. It delivers drinking water to 2.7 million people in the San Francisco Bay Area, collects and treats wastewater for the City and County of San Francisco, and generates clean power for municipal buildings, residents, and businesses. Our mission is to provide our customers with high quality, efficient and reliable water, power, and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care. Learn more at www.sfwater.org.

PRESS RELEASE: San Francisco Continues its Advance Toward Public Power—Launching Our City, Our Power Campaign

The Our City, Our Power campaign will showcase the benefits of the City’s multi-billion-dollar offer to purchase PG&E assets and absorb the costs of one of the state’s oldest electric systems—allowing PG&E to make needed statewide investments in safety and reliability 

San Francisco, CA—After Governor Newsom recently demanded sweeping reforms to PG&E and said the utility, in its current form, “no longer exists,” and Senator Wiener’s bill announced this week to turn PG&E into a publicly-owned utility, the City and County of San Francisco has launched Our City, Our Power, a new campaign highlighting San Francisco’s ongoing plans to take control of its energy future, acquire the local PG&E power grid, and shift to a cleaner, more reliable, locally controlled power system.

City leaders are united behind this endeavor led by Mayor London Breed, City Attorney Dennis Herrera, the Board of Supervisors and the San Francisco Public Utilities Commission.

“Local control of the entire San Francisco electric system will provide increased affordability, safety, reliability and accountability,” said Mayor London Breed. “Public power is aligned with the City’s aggressive clean energy and resiliency goals. Our offer benefits all parties involved and consistent with San Franciscan’s desire to move our city in a new direction through public power.”

As the debate expands in the state Capitol about a state takeover of PG&E—and other potential new models for providing energy in the 21st century—the new Our City, Our Power campaign will highlight the benefits of willing, committed communities like San Francisco taking on a greater share of California’s power burden. This reliable, time-tested model is already serving California consumers well in communities throughout the state, as has been recognized by state leaders in addressing PG&E’s bankruptcy. Governor Gavin Newsom has called for a state takeover if PG&E doesn’t substantially change, and Senator Scott Wiener introduced legislation February 3 to turn PG&E into a publicly-owned utility, with support from some San Francisco leaders, including Mayor Breed. This bill will protect the ability of local entities to provide their own utility service.

The City made a fair, thoroughly vetted $2.5 billion offer in September 2019 to buy PG&E’s local electric infrastructure, and the Board of Supervisors and the San Francisco Public Utilities Commission on January 14 gave conditional approval to take the next step—authorizing up to $3.1 billion in revenue bonds to fund the both the acquisition of local electric assets and cover related costs, including expanding personnel capacity and establishing operating reserves.

The Our City, Our Power public information campaign will expand on this message: raising awareness among local residents and businesses, as well as policymakers outside San Francisco, about the improved service that will result from local public power—including lower costs, cleaner energy, and a safer and more reliable electric system, along with significantly improved local accountability from a locally-elected Board of Supervisors and Mayor.

Through its local public power system, the City already meets more than 70% of the electricity demand in San Francisco—powering San Francisco International Airport, the San Francisco Zoo, the San Francisco Public Library, Muni, City College, public schools, and San Francisco General Hospital. A recent poll found 70% of San Franciscans support switching to public power, along with the Mayor and every member of the Board of Supervisors.

The Our City, Our Power website highlights the significant benefits to ratepayers in and out of San Francisco once the City operates its own power grid. In addition to a major infusion of funds PG&E can use to invest in needed regional transmission updates and other safety measures, a recent San Francisco Chronicle article documented substantial local cost savings as well. The article noted more than $148 million the City’s local power programs have saved customers since 2016, compared to what they would have paid if they stayed connected to PG&E—while also tapping more renewable energy.

The Our City, Our Power website catalogues 64 recent cases of local projects experiencing interconnection delays and increased project costs as a result of ongoing PG&E disputes —on projects from homeless Navigation Centers and affordable housing developments to a children’s museum in Corona Heights.

“The City’s offer is a good deal for San Francisco, a good deal for PG&E and good deal for all Northern California residents,” said City Attorney Dennis Herrera. “These resources can be used by PG&E to compensate fire victims, reduce rates for remaining customers, and help PG&E refocus on the balance of its system outside San Francisco—where most of its customers live. Our city is only a tiny part—just 5 percent of PG&E’s service territory, and we are no longer willing to be held hostage by an unsafe, untrustworthy, and unreliable electricity provider. San Francisco’s public power system already provides more than 70% of the city’s electricity demand. We’re ready to take the next step to manage all of it under public power.”

The City’s offer and subsequent letters to PG&E and the California Public Utilities Commission demonstrate how thoroughly San Francisco has studied this issue. Its $2.5 billion offer was the result of nine months of extensive technical and financial analysis, conducted by City experts and outside advisers, including specialists in asset appraisal, financial feasibility, and engineering. Though PG&E’s underinvestment in San Francisco’s power grid and electrical infrastructure has left the City with some of the oldest power infrastructure in the state, City analysis shows these assets can be upgraded and perform much more efficiently and reliably through local public power.

The City also remains committed to ensuring competitive compensation and retirement benefits for local utility workers. The City has also released a letter highlighting how its local power plans could complement ongoing efforts by the Newsom Administration and state legislature to reform PG&E.

“The Our City, Our Power campaign will make it very clear that San Francisco is incurring millions of dollars each year in unnecessary costs as a result of PG&E’s control of our local power grid,” said Harlan Kelly, General Manager of the San Francisco Public Utilities Commission. “This campaign will be active in every community across the city. We are going to show San Francisco where and how we can modernize our system, and we’re going to demonstrate that public power is a better option than maintaining the status quo with PG&E.”

For more information on the Our City, Our Power campaign and the next steps the City of San Francisco’s is taking toward public power, go to: https://www.ourcityourpower.org.

Contact:
Will Reisman
415-551-4346
wreisman@sfwater.org

About the San Francisco Public Utilities Commission

The San Francisco Public Utilities Commission (SFPUC) is a department of the City and County of San Francisco. It delivers drinking water to 2.7 million people in the San Francisco Bay Area, collects and treats wastewater for the City and County of San Francisco, and generates clean power for municipal buildings, residents, and businesses. Our mission is to provide our customers with high quality, efficient and reliable water, power, and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care. Learn more at www.sfwater.org.

SF CHRONICLE: Three years in, SF power program reaping cost, environmental benefits

Dominic Fracassa | January 1, 2020

San Francisco has managed to reap some considerable environmental and economic benefits since launching its duo of municipal electricity just over three years ago — CleanPowerSF and Hetchy Hetchy Power — according to new data from the city’s Public Utilities Commission, which runs both programs.

Both programs allow San Francisco to purchase electricity from a variety of sources, including solar, wind and hydroelectric suppliers. At the time, city officials envisioned supplying San Francisco with a cleaner mix of electricity compared with what had been supplied by Pacific Gas and Electric Co., and at competitive rates.

“When we were launching these programs ... it was important to ask ourselves, ‘Could we maintain affordability? Could we meet or beat PG&E’s rates?’ And we succeeded in doing that,” said Barbara Hale, the SFPUC assistant general manager in charge of power.

Combined, the programs serve roughly 80% of San Francisco’s total electricity demand.

The Hetch Hetchy program powers San Francisco’s municipal buildings, the Muni system, San Francisco International Airport and Zuckerberg San Francisco General Hospital, among other customers, with greenhouse-gas-free electricity.

From April 2016 to October 2019, the Hetch Hetchy program saved the city and its additional customers $137 million, compared to what they would have paid if they stayed connected to PG&E, according to the San Francisco Public Utilities Commission. Because the SFPUC bought the power from carbon-free sources, customers also avoided pumping nearly 723 million pounds of greenhouse gases into the atmosphere.

That’s the equivalent of removing nearly 70,000 passenger vehicles driving more than 813 million miles from the road for a year, according to the Environmental Protection Agency.

The SFPUC automatically enrolled swaths of San Francisco in its CleanPowerSF program in stages. It wrapped up this year with about 360,000 dwellings participating in the program. Savings for CleanPowerSF have been comparatively modest.

Since it launched in May 2016, the program has saved customers more than $11 million, compared to what they would have paid with PG&E, according to the city. Rates are adjusted year-to-year, but currently, CleanPowerSF customers each save $21 annually compared with PG&E’s rates.

“It’s not a huge amount, I acknowledge that,” Hale said. “But all costs are going up for households, so anything we can do to slow down those increases is helpful.”

The savings would have been greater, Hale said, if the city didn’t have to pay to use PG&E’s last-mile infrastructure.

While the power is sourced and purchased by the SFPUC, the city still relies on PG&E’s vast network of infrastructure to distribute the power to homes, businesses and government buildings.

In recent months, both power programs have been thrust into the center of the city’s attempts to reimagine its energy future, particularly around achieving its ambitious climate goals. The city has pledged to rid the city’s energy supply of greenhouse gases by 2030 and become entirely net-zero emitters by 2050.

San Francisco officials — including Mayor London Breed and members of the Board of Supervisors — have signaled a desire to lessen the city’s reliance on PG&E by buying chunks of the company’s infrastructure, which would likely cost billions of dollars. The company has rejected San Francisco’s initial overtures, but city officials insist the proposal remains a possibility.

The desire to divorce from PG&E has deepened in the face of repeated spats between the city and the utility company that arise when officials try to hook up power to city-owned facilities. SFPUC officials maintain that PG&E has mandated arbitrary technical requirements that force designers to retool their projects, leading to cost overruns and significant delays.

Programs like CleanPowerSF also have to pay PG&E’s so-called “exit-fees” when they siphon customers away from the utility. The fees are meant to offset the costs that utilities incurred to purchase energy contracts and for other investments, many of which were inked before programs like CleanPowerSF launched.

“It’s challenging in part because state regulations require us to continue to pay for so much of PG&E’s costs, as well as our own costs,” Hale said. “The savings would definitely be deeper if we didn’t have to pay for costs PG&E is incurring.”

Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa

SF CHRONICLE OPEN FORUM: Now is the time for SF energy independence

By Mayor London N. Breed and City Attorney Dennis J. Herrera | October 11, 2019

San Franciscans deserve safe, reliable and affordable power.

They deserve better than the status quo. That is why San Francisco’s leadership is united as we put forth a fair, equitable and competitive offer to buy PG&E’s electrical distribution assets that serve our city.

We recognize this is a big step, and we are proceeding carefully. We are also committed to this endeavor over the long term because it is in the best interests of all San Franciscans.

Our offer of $2.5 billion for PG&E’s electricity assets that serve San Francisco was the result of nine months of extensive technical and financial analysis conducted by city experts and outside advisers, including specialists in asset appraisal, financial feasibility and engineering.

We did our homework.

The money will not come from San Francisco’s general fund, which pays for things like police, parks and homeless services. Instead, this money would come from revenue bonds that would be paid back using proceeds the city would generate from delivering power to all San Francisco customers.

This is not money currently sitting in an account. This funding only exists if San Francisco acquires power infrastructure, and it couldn’t be spent on anything else. It is a false choice to suggest this money would be better spent on a different city priority. It can’t.

We looked at all the relevant costs: financing the purchase price, transition costs, maintenance and repairs over time. We’re confident the revenues will be more than adequate to cover these costs, and we will continue to review that as the project moves forward.

This offer is good for San Francisco, good for wildfire victims, good for PG&E’s remaining customers and good for PG&E. The $2.5 billion is an attractive price that reflects more than PG&E would likely get outside of the bankruptcy process.

We have heard the concerns that carving out San Francisco will harm PG&E’s remaining customers or delay payments to PG&E’s fire victims. Both of these fears are unfounded.

Money is what’s needed to compensate fire victims, and our offer will provide $2.5 billion toward that. The sale can be completed on schedule with the bankruptcy.

We would not be leaving PG&E’s remaining customers in the lurch. San Francisco is only a small portion of PG&E’s service territory. Our city includes some of PG&E’s oldest equipment that will require substantial work to remain in service. If we take on that responsibility, PG&E can refocus on the balance of its system. San Francisco will remain a customer of PG&E transmission service, and we will continue to pay our fair share of those costs, which are regulated by the federal government.

This acquisition will allow the city to make improvements to modernize the grid and provide safe, affordable and reliable power.

PG&E’s safety problems are unfortunately well-known. Additionally, PG&E has caused myriad delays in hooking up power to schools, health clinics, homeless shelters, libraries and other buildings that would be served with San Francisco public power.

The San Francisco Public Utilities Commission has already been providing safe and reliable electricity to city buildings and other customers for 100 years, including San Francisco’s airport, general hospital, police stations and many other public facilities. It has experience operating transmission and distribution systems, and it already provides 80% of the electricity used in San Francisco through the CleanPowerSF program and the greenhouse-gas-free Hetch Hetchy Power System.

Customers will enjoy lower long-term rates because prices won’t be inflated to meet investors’ profit demands. The City will also have direct control so we can achieve our aggressive — and necessary — climate change goals.

Some PG&E employees are understandably nervous about their future. That’s only natural. We intend to create opportunities for interested PG&E employees, with attractive salaries and benefits in our “community-owned” public service culture. We will offer competitive compensation packages in stable union jobs. Unlike PG&E, the city and county of San Francisco has not gone bankrupt twice in the past 18 years.

There’s a reason a recent poll showed that nearly 70% of San Franciscans support public power.

Now is the right time for us to take back this essential service.

London N. Breed is the mayor of San Francisco. Dennis J. Herrera is the city attorney of San Francisco.