San Francisco Chronicle

S.F. girds for its biggest public power fight yet

Heather Knight, Chronicle Staff Writer

Wednesday, September 3, 2008

(09-02) 19:00 PDT -- Eleven times since the 1920s, San Francisco voters have had their say on public power. And 11 times, they've voted it down.

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But like a light fixture with no off-switch, public power advocates have kept right on burning for a city takeover of Pacific Gas and Electric Co. - and they believe the 12th try on the Nov. 4 ballot will finally be their chance.

No longer does a city takeover of PG&E seem to be merely the pet issue of the San Francisco Bay Guardian, a weekly newspaper that's been crusading for public power since the 1960s. Supporters of Proposition H call publicly provided power an important democratic reform that would put an essential resource in the hands of the people rather than a for-profit company.

Now, eight of the 11 supervisors, the San Francisco Democratic Party, the Sierra Club and a number of other environmental groups are backing the measure. It appears to have the broadest political support a public power measure has received to date.

"I'm not a fan of the Bay Guardian. I'm not a progressive," said Supervisor Bevan Dufty, who is usually aligned with Mayor Gavin Newsom. "But I've come to believe this is the right thing for us to do. PG&E's had a good thing going for a long time, and I think it's time for that to end right now."

Newsom opposes the measure, saying he is regularly stopped by people who complain about Muni or panhandlers or potholes.

"No one has ever come up to me and said, 'You know what you should do? I think it's time for you to take on a utility system and manage it,' " he said. "There's no groundswell - no imperative."

In addition to authorizing a feasibility study of public power, the proposition sets clean energy mandates. All of the city's electricity would have to come from renewable sources by 2040.

Newsom said that the clean energy focus is merely designed to get votes in this age of hyper-green awareness and that the measure is really a thinly veiled takeover of PG&E. He stressed that his administration is already working on a number of environmental initiatives. And that's why proponents of Prop. H say his refusal to support the measure is striking.

"It is the epitome of hypocrisy considering how flagrantly his political trajectory is attached to green policymaking," said Supervisor Ross Mirkarimi, a longtime supporter of public power. "He really is becoming a walking contradiction when he's preaching about the need to go green while defending PG&E."

PG&E received 11.4 percent of its power from renewable resources in 2007 and, along with other investor-owned utilities in California, is likely to miss a state deadline for reaching 20 percent by the end of 2010, according to the California Public Utility Commission. Emily Christensen, spokeswoman for PG&E, said the company is already "one of the greenest utilities in the country" and is striving do better.

There's nothing inherently green about a publicly run power utility except that it gives local city leaders control over choosing renewable energy resources, said Ursula Schryver, director of customer programs for the American Public Power Association, which represents 2,000 public power entities nationwide. Public power entities in California include the counties of Santa Clara, Sacramento and Los Angeles.

Dispute over cost

Both sides disagree on how much it would cost to take over PG&E's San Francisco operations and assets, which PG&E says are worth at least $4 billion. City Controller Ben Rosenfield agreed that taking over the system would likely cost "in the billions."

Proponents say that's a wild exaggeration, that the system would pay for itself over time. There is also little agreement about what would happen to electricity bills: PG&E says rates would go up $400 a year, while Prop. H backers say rates would drop.

Jerry Jordan, executive director of the California Municipal Utilities Association, said nationwide, public power rates are almost always lower than rates of privately owned utility companies. "You're not taking huge profits out of the system, which is what any private company does," he said.

PG&E has spent more than $500,000 fighting Prop. H and is likely to spend several million by election day. The company is paying for the mailers that have been arriving at voters' homes for weeks warning them of the dangers of public power.

Mayor's ties to PG&E

The company has hired Eric Jaye, Newsom's chief political strategist, to consult on its campaign to defeat Prop. H. Newsom said that has not affected his position on Prop. H.

The private utility regularly donates to Newsom's pet causes, including a 2003 measure to stop aggressive panhandling and a 2007 push for citywide Wi-Fi. The mayor has appeared with PG&E executives at several events, including one in July to tout the company for providing solar panels to Grace Cathedral. Just last week, the company co-sponsored a party the mayor hosted in Denver in conjunction with the Democratic National Convention.

The city's obsession with public power goes back nearly a century. In 1913, Congress gave San Francisco the right to dam the Tuolumne River and build a 167-mile-long aqueduct.

The dam gave the growing city a source of water and hydropower, which under federal law cannot be sold to a corporation for resale or profit. To get around this requirement, the city has long sold off extra hydropower to irrigation districts in the Central Valley, which can then provide it cheaply to their residents and businesses.

But public power backers say the deal fleeced ratepayers here in San Francisco because it meant there was no power left for them. So while Hetch Hetchy power runs city services like street lights and Muni, it doesn't flow to homes and businesses.

Close vote in 2001

Voters have consistently voted down measures to expand the city's role in providing electricity. One in 2001 lost by about 500 votes, and uncounted ballots were discovered weeks later. Ballot box lids were found floating in the bay and washing up on area beaches.

Newsom said the agenda is being driven solely by the Bay Guardian, whose endorsements for local office carry a lot of weight in the city's left-leaning circles.

Guardian Publisher Bruce Brugmann scoffed at the notion he's driving the agenda and pointed to the big-name endorsers of Prop. H.

"This is a major movement here, and it has been for years," he said. "This time, the mayor finds himself almost alone among the politicians who will come out publicly and say they're going to stand with PG&E and go against clean energy and public power.

"I think it's got the best chance it's ever had," he said. "This is the year. This is the time."

Public power battle

San Francisco voters will soon decide whether to study the feasibility of having the city taking over the job of providing power to its residents.

What San Francisco's Proposition H would do:

-- Direct the Public Utilities Commission to study the best way to provide clean, sustainable, reasonably priced energy to residents.

-- Set targets for renewable energy, including mandating that 51 percent of the city's electrical needs come from clean resources by 2017 and 100 percent by 2040.

-- Create Office of the Independent Ratepayer Advocate to be appointed by the city administrator and confirmed by the Board of Supervisors.

-- Ensure Pacific Gas and Electric Co. employees who become city employees as part of the transition to public power retain their same pay rates and seniority.

-- Authorize the Board of Supervisors to issue bonds that would be repaid through bills paid by electricity customers rather than through taxes. The money would be used to acquire or rehabilitate utility facilities without voter approval.

Who's for it:

Eight of the 11 members of the Board of Supervisors, state Assemblyman Mark Leno, former San Francisco Public Utilities Commissioner Susan Leal, former Mayor Art Agnos, Sierra Club, San Francisco League of Conservation Voters, San Francisco Democratic Party, San Francisco Green Party.

Arguments for the measure:

There's no reason the city shouldn't at least conduct a study of the public power idea. Clean energy targets would put the city at the forefront of the fight against global warming. If adopted, public power would likely give ratepayers lower power bills because the utility won't have to answer to stockholders, though opponents say rates would actually rise to compensate for the purchase of the system.

Who's against it:

U.S. Sen. Dianne Feinstein, Mayor Gavin Newsom, three of the 11 members of the Board of Supervisors, Chamber of Commerce, Coalition for San Francisco Neighborhoods, San Francisco Republican Party, PG&E.

Arguments against the measure:

Thinly veiled city takeover of PG&E, which would cost the city $4 billion (a figure supporters dispute). City leaders can't even get potholes filled or Muni to run on time, so why give them another huge responsibility? Allowing the Board of Supervisors to issue revenue bonds without voter approval is essentially giving them a blank check.

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