City Attorney David Chiu

San Francisco Wins Public Power Service Dispute With PG&E

The decision rebuts PG&E’s attempt to eliminate competition and confirms that the City can continue to serve municipal energy customers without building costly, unnecessary equipment

SAN FRANCISCO (October 21, 2022) — City Attorney David Chiu and San Francisco Public Utilities Commission (SFPUC) General Manager Dennis Herrera released the following statements after the Federal Energy Regulatory Commission (FERC) issued an order in line with a January 2022 D.C. Circuit Court of Appeals ruling in the City’s favor. The decision diminishes PG&E’s attempts to obstruct the City’s public power efforts and ensures that the City can continue to provide public power to broad categories of municipal customers that it has been serving since 1992. The types of municipal customers that were grandfathered in include City departments and agencies as well as related entities that serve a civic purpose like schools, museums, and public housing.

City Attorney David Chiu
City Attorney David Chiu

“PG&E has spent years trying to eliminate competition and obstruct San Francisco’s efforts to power our own municipal services using our own clean power,” said City Attorney David Chiu. “Today’s FERC decision follows an appellate court opinion our Office won in January and helps ensure PG&E cannot use its monopoly to derail San Francisco’s efforts to provide affordable, public power. This victory would not be possible without the doggedness of our hardworking attorneys and former City Attorney Dennis Herrera and his staff at the SFPUC.”

“FERC’s decision makes clear that PG&E does not have monopoly control over San Francisco,” said Dennis Herrera, General Manager of the San Francisco Public Utilities Commission. “This ruling upholds the City’s rights as a local power provider and protects our ability to serve the electricity customers we have served for decades. Thanks to the leadership of City Attorney David Chiu and his team, we are continuing to take steps as a City to hold PG&E accountable for their ongoing obstruction. We are more committed today than ever to achieving full public power for all of San Francisco.”

Case Background

Since San Francisco began efforts to provide public power to municipal electric customers in the 1920s, PG&E has consistently refused to provide service to many municipal customers designated by the City and has delayed and obstructed City projects. Despite clear authority under the Federal Power Act, PG&E has also argued that the City does not have the right to serve new public facilities with public power without building extremely expensive and unnecessary equipment.

PG&E’s obstruction has cost the City more than $28 million since 2018 in additional equipment costs, delay costs, redesign costs, lost SFPUC revenue when projects are forced to become PG&E customers, and higher energy costs due to PG&E’s higher rates.

In order to push back on PG&E’s obvious attempt to eliminate competition, San Francisco filed a series of administrative appeals with FERC asserting its authority under the Federal Power Act to serve these categories of municipal customers without building unnecessary equipment.

FERC previously sided with PG&E in those appeals, but San Francisco appealed the decisions to the D.C. Circuit Court of Appeals. In January 2022, the Court found in the City’s favor and overturned the previous FERC orders siding with PG&E. The court found that FERC’s previous orders on grandfathering, which limited the City’s ability to continue to serve many of the municipal customers it was serving in 1992, were “arbitrary and capricious.” The D.C. Circuit sent the matter back to FERC for further proceedings, and today’s ruling is consistent with the Court’s opinion allowing San Francisco to provide affordable, public power to these categories of municipal customers.

The case is City and County of San Francisco v. Pacific Gas and Electric, Federal Energy Regulatory Commission, Docket No. EL15-3-004. The order can be found here.