As voters head to the ballot in Maine to potentially replace the state’s private utilities with a public-power agency, activists in San Francisco are pushing for California to make a similar move—and the rough outlines are already in place.
The Local Agency Formation Commission Friday accepted a report from Reclaim Our Power that calls for an existing, but little-known state agency to move to take over Pacific Gas and Electric Company.
The state Legislature created Golden State Energy in 2020 when it wasn’t clear that, after a series of fires caused by faulty or old PG&E equipment, the company would emerge from bankruptcy. It’s just a shell, a public-power system in waiting, and since PG&E somehow managed to hang on, it’s in limbo right now.
Firefighters facing the Dixie Fire, caused by faulty PG&E equipment. Photo by Joe Bradshaw/Bureau of Land Management, Public domain, via Wikimedia Commons
But the state could change that with a decision by the California Public Utilities Commission or a further act of the Legislature, Reclaim Our Power notes:
Whether initiated through GSE’s current design of decision by the CPUC, or through future legislation, gubernatorial action, or judicial ruling, GSE is designed as a non-profit public benefit corporation that would serve as the receiver for PG&E’s assets. As a not-for-profit public benefit corporation, Golden State Energy can allow for a transition to a utility model that will facilitate increased safety and resilience during climate disasters, lead to a higher reliance on clean renewable generation, and break the pattern of exponential rate increases for customers.
It would end the long history of PG&E delaying SFs ability to deliver its own public power to local projects:
As San Francisco makes progress toward purchasing its portion of the grid from PG&E to form a municipal utility, the vision for Golden State Energy can support the City in creating the will for local ownership and decision making over its distribution grid. San Francisco has been embroiled in decades long legal proceedings with PG&E to regain local control over its grid in order to reduce energy burdens on customers, speed up interconnection of local renewable resources, and increase transparency and democracy into utility regulation, decision making, and governance.
In Maine, the ballot measure would force the two major private utilities to sell their assets to the state. Golden State Energy already has that authority over PG&E, if the CPUC invokes it.
“They never took the time to define it,” Restore Our Power’s Travis Gibrael told the panel.
Moving on a statewide level would address one of the concerns that some have voiced about San Francisco taking over PG&E on its own: Since the city is PG&E’s most profitable service area, the company could retaliate by raising rates for other communities. (San Francisco, however, is the only city in the US that is required by federal law to have public power.) The union representing PG&E workers, which has always opposed public power, is using concerns about who would take over existing pension responsibility as an argument against municipalization.
But with Golden State Power, all of that stops being an issue:
The barriers for cities to municipalize are political rather than legal or technical. As a Provider of Last Resort (POLR), Golden State Energy can facilitate the transition for local cities to municipalize by guaranteeing provision of electric service to communities across the utility’s territory that cannot or do not choose to form local load serving entities. A POLR is the utility or other entity that is required to serve all customers.
The POLR for the area must be able to provide uninterrupted service if there is an unplanned customer migration in the event that a provider fails. In 2020, a proceeding was opened at the CPUC to develop rules and regulations for a Provider of Last Resort should a load serving entity fail. The outcome of that proceeding can inform investigation into the status of current law in California for the POLR framework.
In other words: Any community that wants local public power can have it. Any community that doesn’t set up a local utility will still get served by the state—at rates way lower than was PG&E charges.
And the state would guarantee all worker wages, benefits, and pensions.
“Those who want municipal power or rural electrical institutions can have them, and those who don’t will still have the GSE power,” Gibrael told the panel.
A state agency, Gibrael said, would also make better decisions about the infrastructure investments as the nation moves away from gasoline powered vehicles, which will require a much more robust electrical grid.
PG&E makes a guaranteed profit, between seven and ten percent, on all capital investments, which means the company has a built-in incentive to pay for new, expensive transmission lines, which may not be the best approach.
Small local microgrids, run by local public power systems and relying on local renewables, are much more efficient, Gibrael said—but PG&E will never invest in those because there’s no profit. The company also fails to replace aging infrastructure because profits are higher in building new projects.
And, of course, as a nonprofit public-benefit corporation, GSE would have access to much cheaper capital.
I know, at this point it seems like a longshot. PG&E still has huge clout at the state level, and Gov. Gavin Newsom isn’t going to let a battle over public power interfere with his presidential ambitions.
I don’t think anyone in this city’s Sacramento delegation is going to lead the way. Assemblymember Phil Ting is termed out, and his leading replacement candidate, Sup. Catherine Stefani, is hardly one to campaign against corporate power. Assemblymember Matt Haney and state Sen. Scott Weiner are so driven by their ambitions to move up to higher office that I don’t see them taking on an issue that could stir up so much political trouble with such a powerful set of interests (the national private-power lobby would come down hard on anyone who did, since California would be setting a national standard here.)
But 20 years ago, it could feel lonely in San Francisco talking about public power, and today, the city not only has CleanPowerSF, but even the mayor agrees PG&E should go. (She and the city attorney are not taking the steps they need to, including eminent domain, to make that happen, but the progress has been dramatic.)
And the utility isn’t going to do anything to make the situation any better.