San Francisco is taking the largest steps in history toward creating a fully public energy system.
In filings with the California Public Utilities Commission, the city has determined that PG&E's local property is worth about $2.3 billion – and if the commission agrees, the city can seize those assets under the power of a significant one Apply for ownership.
This would fulfill the century-old promise of the Raker Act, which allowed San Francisco to build a water supply dam in Yosemite National Park on the condition that the city also establish a public power system.
Almost everyone agrees that it's time for SF to take over PG&E's facilities
Much of this happened under the public's radar: None of the major news media outlets have reported much on the proceedings, which date back to 2021.
But the implications are enormous: At a time when PG&E is largely unpopular, the chances of San Francisco running its own electric utility that could deliver cleaner electricity much more cheaply and reliably are much closer to reality.
A little background:
Since 1913, San Francisco has been under a federal mandate to provide public power to its residents and businesses. That was the deal that allowed the city to build a dam in Yosemite National Park. You can read the entire story here (I spent weeks at the National Archives in Washington DC collecting this data.)
But PG&E, through its political influence in City Hall and its unlimited campaign funds, managed to block any effort to make this mandate a reality, and after the 1950s the Interior Department stopped caring.
The sticking point was always a choice: To take over PG&E's system, the city would have to condemn it as an honorary domain and seize it for fair market value — but that would mean a bond act that required a two-thirds vote. PG&E has spent countless millions (from taxpayers) to ensure this never happens.
But times have changed, and thanks to a move a few years ago by Sup. Aaron Peskin, the SF Public Utilities Commission can now issue revenue bonds for clean energy projects, including a public power system. Tax bonds are backed not by the city's property taxes, but by a specific source of revenue – in this case, the money the city would make from selling retail electricity.
SF starts here with a big advantage: The city already has a huge hydroelectric dam that produces enough clean electricity to power all city departments, including Muni, with plenty left (in good water years).
The city already has a CleanPowerSF operation that offers 100 percent renewable electricity.
What the city doesn't have is a distribution system. This belongs to PG&E.
All San Francisco needs to do at this point to get rid of a company that charges far too high fees and provides poor service that, among other things, hinders the construction of new housing is to file the legal paperwork to take over this system.
Every time I run these numbers, and I have done it many times over the years, the results have been clear and unequivocal: San Francisco could spend up to $3 billion or more for the existing lines, poles, meters, trucks etc. pay for other infrastructure, invest millions in modernizations, reduce interest rates significantly – and not only pay off the bonds, but also generate hundreds of millions of dollars per year that could flow into financing affordable housing, for example.
Under the U.S. Constitution, the government cannot seize private property without paying fair compensation—that is, fair market value for the property.
That's why the SFPUC, under General Manager Dennis Herrera, has filed a series of complex documents with the California Public Utilities Commission over the past two years to determine the true value of PG&E's local distribution system. The CPUC agreed to proceed.
The documentation is extensive and sometimes difficult to understand – but when you get to the end result, it looks like this:
The system is worth between $2.3. and $2.8 billion. At that price, a buyout financed with revenue bonds would be a huge bargain for the city. Remember: Once San Francisco takes over the system, all the money we now pay to PG&E would go to the city. That's hundreds of millions of dollars per year.
PG&E is doing everything it can to delay the process. But at some point the CPUC will demand a counteroffer — and at that point, which could come in the next 24 months, the city will take the next step.
In an ideal world, Barbara Hale, the deputy general manager for energy at the SPFUC, told me, PG&E would come to the table and negotiate. In the real world, the company will try to delay and obfuscate – and work to elect a mayor and supervisors who would refuse to move forward.
Mayor London Breed is on record supporting a PG&E takeover. I have no doubt that six Sups – everything we need to file the eminent domain lawsuit – are now on board.
Of course, that could change in November.
I haven't seen much PG&E money in the mayoral or superate contests, This makes sense: The company is extremely unpopular right now, especially given recent rate hikes and power outages, so no one wants to be a “PG&E candidate.”
But with its most lucrative fortune at stake, the company with more than 100 years of history will consider all sorts of political angles.
At a hearing last week, Sup. Myrna Melgar asked PG&E officials why power keeps going out on the city's west side – even when there isn't bad weather. Representatives didn't have good answers – but people who live there lined up to talk about how impossible it is to get help, how some power outages last for days and how “we feel abandoned.”
No powerful lobbyists can counter this widespread feeling.
So the process is moving forward like never before, and when it's over, the lights are back on and the city has money (pretty much every public power grid in the country is making money), the city can move to 100 percent renewable energy for everyone including rooftop solar power that PG&E is trying to undermine, we can all have a big party and thank Bruce Brugmann, founder of the Bay Guardian, who has been fighting for public power for more than 50 years.
And in the QT I know a former PG&E lobbyist who promised to buy the first round.
