A San Francisco split from PG&E wouldn't be easy
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State Sen. Scott Wiener has introduced a bill that could make it easier for San Francisco to break away from PG&E, though major questions remain about cost, timing and potential ripple effects.
Why it matters: Frustration with PG&E has been building for years amid rate hikes and outages. Things reached a new boiling point after a December blackout affected roughly one-third of the city, renewing pressure for a publicly run utility in SF.
- Local leaders say it'd result in lower rates and deliver more reliable service, but getting there isn't so simple.
Catch up quick: San Francisco has been exploring a split from PG&E since 2019, when then-Mayor London Breed offered $2.5 billion to buy the utility's electric assets in the city, according to Barb Hale, an assistant general manager at the San Francisco Public Utilities Commission. (SFPUC oversees water, wastewater and electric power services in the city.)
- PG&E rejected the offer, calling it too low and claiming customers would have to shoulder the cost to separate.
- To kick-start negotiations, the city asked the California Public Utilities Commission (CPUC) in 2021 to come up with a price tag — what's called a valuation process.
- Though the process is supposed to wrap up in 18 months, PG&E has been "very resistant and used the legal tools at their disposal to drag things out" for almost five years, Hale told Axios.
With his bill, Wiener hopes to shorten the timeline for putting a value to PG&E's SF assets, and for public takeover of utilities in general.
State of play: SB 875, introduced in February, would lower the bar for cities to switch to a public provider and enforce tighter CPUC timelines.
- The goal is to curb what Wiener describes as delay tactics like excessive court filings.
The other side: SB 875 "makes false promises," PG&E spokesperson Lynsey Paulo told Axios via email.
- If San Francisco exits the system, wildfire mitigation costs that are included in PG&E rates would be spread across a smaller base, jacking up rates for remaining customers, especially those in rural areas, Paulo said.
- Some studies have also shown that government takeovers often lead to higher customer costs for decades, Paulo added.
What we're watching: Wiener told Axios he believes he can build support to reform what he calls a "broken and corrupt process."
- He acknowledged that PG&E and other private utilities hold powerful sway in Sacramento.
Yes, but: SB 875 is unlikely to have a significant impact on San Francisco's current bid. Even if regulators settle on a price tag for PG&E's SF assets this year, either side could challenge it in court.
- "It's not going to be quick in any case," Severin Borenstein, faculty director of the UC Berkeley Energy Institute, told Axios.
Reality check: Public power, such as the type SF is seeking, comes with trade-offs, said Mark Toney, executive director of the Oakland-based Utility Reform Network.
- It can mean more local control and lower costs over time, but it doesn't guarantee better management, he added, pointing to the scandal-plagued Los Angeles Department of Water and Power (the nation's largest municipal utility).
What's next: PG&E is expected to file testimony in October, Hale said.
- It will be the first time the company "goes on the record with a value" for what they think the city should pay, she noted.