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San Fran Wants PG&E Out

ID 135815190 © Andrei Gabriel Stanescu | Dreamstime.com

Last week, the city of San Francisco made a long awaited bid to take over part of the area’s grid from the utility that currently controls it, the embattled Pacific Gas & Electric. To date, SF has offered $2.5 billion for the PG&E assets. The move has been rumored for sometime now and upon announcing it, City Attorney Dennis Herrera explained the rationale, saying: "There has been a lack of investment in infrastructure over the course of the last decade by PG&E, and that is, and was, motivated  primarily by pursuit of profit. That's not something that San Francisco is going to be pursuing. We're not interested in profit. We're interested in providing safe affordable power to ratepayers rather than trying to make sure that stockholders are getting some great rate of return on their investment."

PG&E, however, didn’t seem thrilled by the offer, at least publically, responding: "We all agree on the importance of continuing to serve the citizens of San Francisco with safe, clean, affordable and reliable energy," "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."

San Francisco isn’t alone in their desire to take over the privately owned grid. Over the past year, a number of cities have made similar noise. New York Mayor and presidential hopeful Bill De Blasio recently announced that the City may have to consider taking over control of the grid to boost its reliability after an outage over the summer, and Boulder, Colorado has been in talks with Xcel for sometime now to possibly buy them out.

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Discussions

Jason Price's picture
Jason Price on Sep 23, 2019 5:14 pm GMT

Is any city really prepared to take over the role of a utility? I think not. Boulder thought it could and reversed course fairly quickly. "Municipalization" is the term to describe this action of turning the utility into a city-owned asset. Don't misunderstand, any outage is a serious problem but it is also a case of how good or bad is the outage being addressed to the public by the utilities. So it's a PR/communications issue.  Why did it happened? What is expected duration of the outage? What is the plan to fix and prevent from happening again? Unfortunately there was very little transparency and this upset NYers more than anything else. ConEd has its problems, like any utiltiy in a decentralized, decarbonized world, but they pale in comparison to massive fires, deaths, and billions in CA. Is San Fran prepared to take this over? Will the franchise rights be rewritten? What utility would want to step in knowing that city hall can just take the franchise rights away? SF may want to rethink this tactic and look at its  regulators. Look at PG&E management and managers? What is SF doing to boost incentives for DER and renewables in general? How are the major corporations improving efficiency and demand response? What city-wide initiatives can the city take on to support improving utility performance? In many markets the question of taking on the utility has resulted in the question, why compete with our partner? We need to think more along these lines. 

 

Matt Chester's picture
Matt Chester on Sep 23, 2019 9:41 pm GMT

Great points on these questions, Jason. These decisions aren't to be taken lightly, though of course the frustration PG&E customers have been feeling recently are quite understandable. 

Bob Meinetz's picture
Bob Meinetz on Sep 24, 2019 4:27 pm GMT

Is any city really prepared to take over the role of a utility?

Jason, over 70 years ago the Sacramento Municipal Utility District (SMUD) broke away from PG&E and never looked back.

It never really looked forward, either. Though SMUD promotional materials claims the district's current power supply portfolio is "50 percent carbon free", its financial statement tells a different story: over half of SMUD's electricity is generated by burning natural gas; of the 13 TWh of electricity SMUD provides each year, .0004% is generated by solar panels. Over half of SMUD's electricity is generated out-of-state, of indeterminate provenance.

Fitting, that the capital of fossil fuel influence in California is also the state capital; that its per-capita carbon emissions are worse than each of the three largest IOU service areas; that pathological lying associated with the fossil fuel industry has become SMUD's modus operandi.

Would a San Francisco Municipal Utility District be any better? I wouldn't bet on it.

 

Matt Chester's picture
Matt Chester on Sep 24, 2019 8:49 pm GMT

Definitely understand where you're coming from, Bob, and I don't necessarily disagree about those challenges of moving to municipal, but the shift happening 70 years ago vs. now are definitely a bit of apples and oranges based on how technologies, markets, and policies have changed since then. 

Bob Meinetz's picture
Bob Meinetz on Sep 26, 2019 12:57 am GMT

Except in details, how would modern technologies and policies make San Francisco's buyout any different than Sacramento's was 70 years ago?

The fundamentals have changed a lot less than you might believe. For example: there's still no competitive "market" in electricity, no matter how fashionable the term has become. Ratepayers remain at the mercy of monopoly providers; electricity, unlike telecom phone service, is the same wherever you go. It was standardized long ago, for safety reasons. And when selling a product that is exactly the same as that being sold by others, by definition, competition can not exist.

If the "energy transition" promises only less safe, less reliable, less affordable electricity, we're halfway there.

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