Chronologically Ordered LOCAL POWER News Index Local Power's Legislative Agenda, March 2001 The Case for Public Power in San Francisco

or 'We Didn't Leave PG&E, PG&E left Us!'

by Paul Fenn
October 23, 2001

Link to SF Solar Initiative PROP H web site On November 6, San Franciscans will decide whether The City should take over electricity service from a bankrupt PG&E. While PG&E-funded front groups spend $1 million warning voters that public power is "too costly" and "too risky," it is critical that San Franciscans understand what they are choosing between.

A Municipal District Delivers Independence

Compared to PG&E, public power is a known quantity. In California, major cities like Los Angeles and Sacramento, have public power agencies. Their customers pay 18% less on average than private monopoly customers like us. In San Francisco, whose combined annual electric bills are $450 million, that would mean San Francisco residents and businesses would save $81 million per year to spend on something else. Finally, public power agencies did not impose the massive rate increases PG&E imposed on its customers to go into effect next March. These are uncontested facts: public power is cheaper, cleaner, and more reliable.

A San Francisco Power Agency will promote wind power, solar power and conservation PG&E, on the other hand, is a totally unknown quantity. It is in bankruptcy court proposing a complete liquidation of its remaining power plants. It has imposed draconian rate increases that will go into effect in March, and more increases may follow under a bailout scenario.

PG&E's rates are already "too costly" for our City to tolerate, particularly in an economic downturn. When the state's rate caps are finally lifted in March 2002, PG&E customers will face crippling rate increases, ranging from 18% for some residents and 40 and 50% for businesses.

PG&E's own corporate plans are "too risky" for San Francisco to tolerate. Having already sold half their power plants, PG&E has proposed to the bankruptcy judge to sell the remainder of its power plants to unregulated affiliate companies.

PG&E's proposal to sell its remaining state-regulated power plants is a very grim prospect indeed because these very power plants, currently under state regulation, were the principal factor preventing energy prices from spiraling out of control last Summer. Because the price of power from these plants was fixed by regulation, the wild price fluctuations from the unregulated power companies were partially absorbed. Under PG&E's plan these lifeline plants will be deregulated forever.

Realizing the value of these plants, the state passed a law in Spring 2001 prohibiting their sale, but PG&E's executives now claim publicly that a bankruptcy court judge can overrule state law, so there is nothing we can do about it. Does this sound like the friendly local utility of yesteryear?

When you follow the money, it becomes clear that PG&E The Local Utility no longer really exists. Attorney General Bill Lockyer is now calling on the Securities and Exchange Commission to investigate PG&E for transferring $5.3 billion of PG&E coffers to an unregulated affiliate prior to PG&E's declaration of bankruptcy. PG&E transferred the money to a new parent corporation, PG&E Corp., which in turn used it to buy 30 power plants in 10 states under a separate, unregulated affiliate company (the National Energy Group) which is based not in San Francisco but Bethesda, Maryland. PG&E the local regulated utility is now "bankrupt" but the new unregulated company in Bethesda has record profits and $1 billion in annual revenue. Sounds like a corporate relocation to us.

Worse, there is talk of more rate increases under a new plan to bail out PG&E along the same lines that Edison was recently bailed out in Los Angeles. Either we do something about this now or prepare for more bailout plans, more non-bypassable electric bill surcharges, more consumer captivity.

"To Act or Not To Act; that is the question." In reality, San Franciscans are faced with choosing between two PG&E takeover options on November 6. Either The City takes it under local control by passing Measure I and Proposition F, or an unregulated, out-of-state energy company will soon take over its assets in bankruptcy court. Worse still, a second bailout of PG&E will add insult to injury with more rate increases next year.

Either we wait and see, or we take action now to minimize the damage to be caused next Summer. Don't let PG&E's bankruptcy become yours. San Francisco needs a local utility.

Copyright 2001 by Local Power.