Smart Ideas From Other Cities: Utilities Powered by the People

What would California’s increasingly devastating wildfires look like if PG&E were beholden to the people instead of to its shareholders?

That’s the crux of a proposal by state regulators that could prove trouble for the utility headquartered in San Francisco — despite the California Legislature’s repeated bailouts amid lawsuits and criminal investigations. In December, the California Public Utilities Commission announced that, in the name of public safety, PG&E could soon have its board replaced or be broken up into regional subsidiaries.

But the most striking option is for it to be designated as a public utility run by the government, not merely a regulated monopoly. This presents an opening for San Francisco to join dozens of other cities that either have long-established municipal utilities or are considering it.

The concept has proven itself beyond major metropolitan cities like San Francisco. Winter Park, Fla., Gosnold, Ma., and Bowie, Texas, are among smaller jurisdictions in 49 states that manage power for their residents.

Public utilities nationwide power one in seven electricity customers, who pay almost 15 percent less than they would to a private company, according to the American Public Power Association. They also face power outages for an average of only 59 minutes a year, compared to 133 minutes from private utilities.

Boulder, Colo., began its path toward establishing its own utility in 2011, when it conducted a feasibility study. In December 2018, its city council voted to proceed while the agreement to take over functions of private utility Xcel is being considered by Colorado regulators, the Boulder Daily Camera reported.

Public utilities do come with a caveat. The political backlash of raising rates can lead to less funding, meaning fewer resources to meet regulations, warned a 2015 American Journal of Political Science paper titled “When Governments Regulate Governments.”

Still, San Francisco’s tolerance for the privatization model has waned as leaders push to break from a change-resistant PG&E.

CleanPowerSF brings renewable energy to more than 100,000 residents, but with PG&E owning the grid infrastructure, it’s delegated to a city program that faces the whims of state regulators. In December, the San Francisco Public Utilities Commission voted to absorb $25 million in exit fees — approved by the same CPUC proposing to shake up the private utility — rather than raise rates for customers switching from PG&E.

But voters provided a big push to bringing that closer to reality in June with the passage of Proposition A, which allows the city to issue revenue bonds to fund clean power facilities. Supervisor Aaron Peskin, no stranger to battles with PG&E, proposed using $50 million of the unexpected $181 million windfall to front costs for establishing a municipal utility. (Mayor London Breed and other supervisors have their own ideas and how the money will be spent is far from settled.)

What is clear is that anger against PG&E over wildfires and public safety is at a fever pitch and regulators are facing pressure. Regulators may ultimately decide not to opt for an era of public-run power in California but San Francisco has a stronger chance than ever to take cues from dozens of other cities and split from the investor-owned utility.

The California Public Utilities Commission is scheduled to discuss the proceeding at its Jan. 10 meeting at 9:30 a.m. held at 505 Van Ness Ave.

 

Smart Ideas From Other Cities: Utilities Powered by the People, Ida Mojadad, SF Weekly, January 2, 2019.

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