The power went out in the Sunset on Christmas Eve, and then for a fifth time Dec. 27. Neither was as bad as the earlier blackout, but it showed again: PG&E is unable to provide reliable service to the city.
Sup. Alan Wong, who represents the neighborhood, issued a statement that reads:
These repeated outages raise important questions about how our power grid is managed and whether the current system is meeting the needs of San Francisco residents and small businesses. Electricity is a public necessity, and reliability, transparency, and accountability must remain core expectations. In light of this latest outage, I will be asking City departments to evaluate what options may exist to strengthen oversight, reliability, and the long-term resilience of our electric system, including an assessment of practical, fiscal, and operational considerations to better maintain a power grid in the public interest.
That’s a lot of words that fall short of saying: We need to kick PG&E out of City Hall. I followed up, asking if he supports public power, and he told me:
I can bring up the historical context and ask for the fiscal and operational implications to figure out the practicalities of such a move.
The SFPUC has already done that.
Wong is still learning the job (and the role of PG&E in local politics) but like the rest of the newer supes, he’s going to have to get up to speed quickly. Public power is going to be on the agenda in 2026.
Natalie Gee, who is running against Wong in D4, told me she supports a municipal takeover of the grid. So does Albert Chow, who is also a candidate in the district, according to his campaign staff.
Sup. Bilal Mahmood, who is also calling for a hearing on the issue, supports a public power system, his office told me. So does fellow “moderate” Matt Dorsey. All of the progressives on the board are going to back the idea. If Wong comes along (and maybe even if he doesn’t) there’s clearly a majority in favor.
While nobody has yet called for a hearing on the next steps to municipalization, when the supes go back into session after the holidays, it’s almost certain to come up—and PG&E will be trying to find a way to delay and pretend that this reliability crisis was just an isolated problem, nothing serious, nothing more to worry about.
It’s worked for more than 100 years.
I am already hearing PG&E’s talking points on social media: San Francisco can’t even run the buses on time. The city is mismanaged. City worker pensions are too expensive already. How can we run a major public utility?
Naomi Oreskes, the eminent science historian, has written an entire book on how big business has spent millions convincing people in the US that government is bad and can’t be trusted, and the free market is the best solution to our problems. The result: The lower 90 percent of Americans has lost $47 trillion since 1975.
So let’s keep this in context.
But there’s another important point here: Many of the public services that San Francisco offers are, by definition, money losers. Muni fares will never cover the cost of operating the system. San Francisco General Hospital will never charge high enough fees to pay its expenses. That’s the point of a “public service.” When local tax money and state and federal support decline, those operations have problems providing their services at the level people want.
Public power systems are different: They make money. So, for the most part, do airports; SFO is widely considered a well-managed operation the functions very well—and the landing fees the airlines pay cover all its costs, and more.
Selling retail electricity in a compact area like San Francisco is very lucrative. That’s why PG&E fights so hard to keep its illegal monopoly. Public power systems in California, and the US, are typically well run, have better reliability than PG&E, and have far lower rates.
Just a few minutes of online research (yeah, ChatGPT is good for a few things) shows:
Silicon Valley Power (Santa Clara), Sacramento Municipal Utility District, and the LA Deparetment of Water and Power offer significantly lower electricity rates than PG&E across residential, commercial, and industrial classes, with SVP and SMUD averaging 36-58% lower than PG&E depending on customer type.
More:
Since 2010, SMUD has also been the highest-scoring utility in California for business customer satisfaction.
The idea that San Francisco can’t run a public power utility is nonsense. In fact, the last time I ran the numbers, which was more than a decade ago, I concluded the city could buy the system for $2.5 billion, pay the interest on the revenue bonds, pay all the salaries and (yes) pensions of all the PG&E workers who would become city workers, cut rates by 20 percent—and clear about $500 million in “profit” a year. Since rates have gone up so much, the profit level is almost certainly higher now.
That money could go, as it does in Sacramento, to lower rates, more reliability by rebuilding aging infrastructure, renewable power projects—and potentially to the General Fund to address the deficit. Public power could fund Muni, and SF General.
(Santa Clara made so much money from its public power system that it used some surplus to help fund the 49ers stadium and entice the team to leave SF. Not a good use of revenue, from my perspective, but you get the point. When the team was planning to leave because SF couldn’t afford and didn’t want to use public money for a new stadium, then-Mayor Gavin Newsom told a department head’s meeting that Santa Clara, thanks to its public power system, had too much available cash to match. Then-Sheriff Mike Hennessey told me he asked Newsom: “Are you saying if we had a public power system, we could keep the 49ers?” The mayor never answered.)
Public power systems are far, far more willing to fund distributed power systems like rooftop solar—because they don’t have to make a profit for shareholders. They run by elected boards or officials, who have to be accountable to the public.
SMUD made a big mistake in the 1970s, and built a nuclear power plant. It was an environmental and financial disaster. So a slate of progressives (backed by the late Tom Hayden) organized, won election to the SMUD board, put the issue to a vote, and shut the dangerous plant down. Now SMUD has one of the most robust renewable energy programs in the nation.
PG&E built a dangerous, expensive nuclear power plant at Diablo Canyon around the same time. It’s driven up our rates, and sits on an active earthquake fault. It’s still operating.
There’s never been a better time to bring the city into compliance with the Raker Act and create a reliable public power system. The major delay at this point is Gov. Gavin Newsom’s Public Utilities Commission.
San Francisco can’t run a public power system without taking over PG&E’s distribution network—the lines, the poles, the meters, the substations. The process for that is well established in law: The city uses eminent domain to take over that property, and pays PG&E fair market value.
The city has filed documents with the CPUC stating that the system is worth between $2.3 billion and $2.8 billion. The idea is that the agency will come up with a final number, and the city can use it in court during the eminent domain filing.
That’s so little money when you consider the revenue.
PG&E’s revenue and expense data is public. The company has about 472,000 residential and commercial customers in SF, and earns about $2,400 a year per customer. That’s $1.1 billion revenue in San Francisco. After costs, the profit is about $5 billion a year. San Francisco has about ten percent of PG&E’s customers.
As a dense city, the costs of providing service are the lowest in the system. So at the very worse, San Francisco would be clearing at least $500 million in profit from a public power system; at the very worst, based on today’s rates, the interest on a $3 billion revenue bond (more than the city says the system is worth) would be less than $200 million.
These revenue and cost numbers are way conservative and just based on simple data; San Francisco already has a hydropower dam that costs very little to operate. (I did an in-depth study about 15 years ago that showed far higher profits, but the Bay Guardian website lost much of its content when the paper was shut down so I can’t link to it.)
But the bottom line is: The cost of the system ($2.5 billion? $3 billion?) almost doesn’t matter. The bond payments are so much less than the profit (not revenue; profit, AFTER paying for all the workers and their pensions, and the trucks, and the maintenance) that the city doesn’t need to fight too hard over the details.
The CPUC, frankly, is dragging its feet. The agency keeps asking the city for more data that it doesn’t need. I don’t think Gov. Gavin Newsom wants this to happen on his watch.
It’s not just PG&E campaign money or lobbying: Taking the most profitable territory out of PG&E’s system will have impacts all over the state. The company will argue that it now has to raise rates in Oakland, and Sonoma County, and other places.
That could lead to ratepayer rebellions all over—and since San Francisco showed the solution, other cities and counties might also move to create public power systems. PG&E in ten years could cease to exist as we know it.
That’s not so scary: Northern California has a robust public power infrastructure. SMUD could expand to take many more customers in the northern areas. The East Bay Municipal Utility District could move beyond water and sewers and became a public power agency. The state already has a system ready to go.
Newsom, though, doesn’t like anything that could make his campaign for president harder, and he doesn’t want to offend every private investor-owned utility in the country. (He promised single-payer health care when he was running the first time, but that was empty; he never wanted to cut off access to money from the private insurance industry.)
So the governor and PG&E have every incentive to delay any action as long as they can. San Francisco doesn’t need to let them get away with it.
