By London N. Breed and Dennis J. Herrera
[Originally published in the San Francisco Chronicle, Oct. 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.