Pacific Gas & Electric (PG&E), the troubled utility giant that powers much of the state, has a very interested buyer for its local assets: the City of San Francisco.
At a press conference on Tuesday, state and local officials said that the city filed a petition with the California Public Utilities Commission, the state’s utilities regulator, to assess the value of PG&E’s San Francisco assets. In 2019, PG&E rejected a $2.5 billion offer by the city for its local assets.
“PG&E...is the poster child for a utility that puts profits ahead of people,” said City Attorney Dennis Herrera, who is slated to become the next director of San Francisco’s Public Utilities Commission (SFPUC). “That’s why San Francisco has to take control of its power future and why we are taking the action we are doing today.”
In the filing, Herrera argued that San Francisco has been providing electric service for years through SFPUC. SFPUC owns and operates Hetch Hetchy Water and Power, which provides hydroelectric power to city facilities, and Clean Power SF, a city-managed energy option for San Francisco residents and businesses.
San Francisco is “confident in its ability to execute financing” for a PG&E deal, wrote Herrera. Any purchase would likely be funded through bonds, according to the filing.
Herrera, Mayor London Breed, State Sen. Scott Wiener and SFPUC President Sophie Maxwell said that a local buyout of PG&E’s assets is long overdue, and aired grievances regarding the utility’s failures in San Francisco and elsewhere.
In 2016, PG&E was found guilty of violating federal pipeline safety regulations and of obstructing an investigation into an explosion that killed eight people and destroyed 38 homes in San Bruno.
In 2018, the company pled guilty to 84 counts of involuntary manslaughter following a blaze that devastated Paradise, CA. A grand jury report found that the fire was caused by aging power lines and that PG&E had repeatedly ignored warnings about the danger.
Facing hefty fines and mounting legal liabilities, PG&E filed for bankruptcy in 2019 and reached a $23 billion deal with the state that included tighter oversight of the company’s board and a debt repayment plan.
“This is not just a short-term issue; this has been going on forever and ever,” said Wiener. “We’ve seen the problems caused when you have a utility that is so massive, and covering such an untenable geography, that it’s not keeping up its assets.”
Wiener described an acrimonious relationship between the city and PG&E, accusing the utility of trying to undercut San Francisco’s public power projects in “petty and vindictive” ways. Wiener and others asserted that PG&E attempted to overcharge San Francisco customers to the tune of $1 billion in a recent service change, and said that it had delayed supplying power to city facilities such as museums and schools.
“PG&E is trying to strangle and kill San Francisco’s power enterprise,” Wiener said.
The city said that a buyout of PG&E’s assets would not affect local ratepayers, given that San Francisco customers represent less than 8% of PG&E’s electric retail accounts. In 2019, Mayor Breed commissioned a survey which found that 68% of San Franciscans would support a public utility managed by the city.
PG&E had previously rejected San Francisco’s $2.5 billion bid for its local assets on the basis that the price tag didn’t match the market value of those assets, which include its local grid and facilities.
The valuation request filed on Tuesday is intended to establish a fair value of the assets, but it remains uncertain whether PG&E would entertain a buyout offer from the city.
In a statement to Here/Say, PG&E spokesperson Lynsey Paolo said that its “assets are not for sale.”
“San Francisco’s request today for a valuation of PG&E’s electric assets by the California Public Utilities Commission is another waste of time and resources,” wrote Paolo in an email. “While CCSF has repeatedly offered to buy PG&E’s infrastructure for pennies on the dollar, PG&E doesn’t agree that the outcomes of this type of ownership change will benefit customers, taxpayers, other local communities, the state or our economy.”