In a May 3 letter to Patricia Poppe, CEO of California investor-owned utility Pacific Gas & Electric, San Francisco officials including Dennis Herrera, General Manager of the San Francisco Public Utilities Commission, urged the utility to reconsider its position related to the city’s plan to buy PG&E’s grid assets, which would allow the city to become responsible for all electric distribution service within San Francisco’s boundaries.
The letter also asked for information on recent power outages that affected the city.
Joining Herrera in the letter were Mayor London Breed, City Attorney David Chiu and President of the Board of Supervisors Aaron Peskin.
City Acquisition of PG&E Assets
“The city is focused on ensuring timely access to affordable, reliable, and clean electricity for our businesses, residents, and essential services,” the letter said. “After a substantial commitment of time and resources on this issue, we remain united in our belief that the only path forward to achieve these goals is for the city to become responsible for all electric distribution service within our own boundaries.”
The city is uniquely positioned to acquire these assets, the San Francisco officials said, noting that for over a century, the city, through the San Francisco Public Utilities Commission, has owned and operated its own electric utility (Hetch Hetchy Power).
Through Hetch Hetchy Power, the city supplies electricity to municipal facilities, schools, hospitals, public transportation, and other facilities. In 2016, the city launched CleanPowerSF, San Francisco’s Community Choice Aggregation program.
Through these two programs, the San Francisco PUC already supplies nearly 80% of the electricity consumed within the city, but both programs rely on PG&E for use of its local distribution grid.
“This arrangement is unusual, a source of friction for both the city and PG&E, and inconsistent with the City’s goals and objectives,” the letter noted.
“In recent years especially, this arrangement has caused substantial delays in the provision of essential services. After many decades, it is time for the city to gain the energy independence that comes from owning its local grid,” the San Francisco officials said.
They pointed out that during PG&E’s bankruptcy, the city submitted a proposal to purchase PG&E’s assets serving San Francisco. After PG&E emerged from bankruptcy, the city reiterated its desire to engage in a mutually beneficial negotiation.
“These calls went largely unanswered under previous PG&E leadership, so the city has moved forward under state law. But we continue to hope you will reconsider the company’s position and realize that a cooperative process leading to an agreement would provide significant value to PG&E’s customers and shareholders.”
The letter said that PG&E’s recently announced asset sales illustrate the company’s ongoing need for capital and the limited capital market options available. “As PG&E explained in a FERC filing, asset sales can ‘strengthen PG&E’s financial condition; allow PG&E to more efficiently access equity capital to fund significant capital requirements to improve the safety and reliability of its system; and be consistent with PG&E’s path to an investment grade credit rating,’” the letter said. “The city’s purchase of the PG&E assets serving San Francisco would provide those same benefits.”
Whether or not PG&E decides to work with the city on a negotiated transaction, “we want to engage cooperatively with PG&E to determine the most reliable, efficient and least disruptive means of separating PG&E’s electric system from the assets that the City intends to acquire,” the San Francisco officials said. “This will benefit PG&E and all ratepayers and allow PG&E to focus more on important matters such as wildfire hardening and improving the overall reliability, capacity, and safety of its system.”
The officials said that engaging collaboratively on the technical aspects of this project is consistent with PG&E’s core goals of providing safe, reliable and efficient service to its customers.
“We request that PG&E’s engineering team meet with the city’s engineering team to identify the preferred engineering solutions for separation. We are prepared to begin these meetings as soon as possible. We look forward to further discussions with you on both of these matters and hope to achieve expeditious and mutually beneficial resolutions.”
Power Outages
The letter also notes that the city recently has experienced several power outages that created significant public health and safety risks and economic disruption.
“We are concerned about the frequency and duration of these outages and PG&E’s response to them. The city currently lacks sufficient information about these outages to understand whether or how PG&E could have prevented them or minimized their impact. But PG&E has not met its obligations to provide accurate, responsive, and informative communications to affected customers and local officials,” the officials said.
The city “requires information from PG&E about these recent outages and seeks PG&E’s commitment going forward to provide affected customers and local officials timely and accurate information about the nature of the outage, what PG&E is doing to restore service, and its best estimate of when it will restore service.”
