PG&E contracts: an $80 million legacy - Page 2

A story of corruption, waste, and raw political power that makes many of today's scandals look like cornflakes

Budget analyst Harvey Rose took a hard look at the proposed contracts and, using strong and decisive language, told the board the deals were terrible for the city, would cost taxpayers a fortune, and should be rejected.

Right before the final vote we obtained public records that outlined Feinstein's sellout — but the documents from the key negotiating period had somehow mysteriously disappeared.

Then a team of seven PG&E lobbyists descended on City Hall, and Louise Renne, a PG&E ally who was then the city attorney, privately advised the supervisors that they would be in legal trouble if they didn't do PG&E's bidding. The contracts were approved, with only Sups. Harry Britt and Richard Hongisto voting no. Our front-page headline of Feb. 24, 1988, told the story: "PG&E 8, SF 2." Although Agnos had run as a public power candidate, he buckled too and signed the contracts — without ever so much as searching for the missing records.

The Dec. 5, 2007, budget analyst's report notes that the city lost between $2.5 million and $3 million per year on the deals — and during the two years of the energy crisis, when the true downside of what Feinstein, Renne, Agnos, and the Board of Supervisors did became apparent, the tab was $27 million. That's a total of as much as $87 million of city money thrown away on sweetheart deals with PG&E and the two districts.

After the energy crisis — and after Renne left office — the current city attorney, Dennis Herrera, went to court to renegotiate the deals. The new agreements are much better and will save San Francisco millions. That's what the board quietly approved this month.

But much of San Francisco's power is still tied up for another 10 years, and huge damage has been done.

Meanwhile, PG&E is suing the city to keep public power out of the Ferry Building, is trying to corner the market on wave and tidal power in the bay and along the coast, is trying to undermine community choice aggregation, and remains an entrenched, illegal monopoly with far too much clout at City Hall.

The good news is that there's real talk of a new public power push in San Francisco, and it can't come too soon. And the lessons from the fiasco of 1988 can and should guide any future efforts.

For starters, nobody — no city attorney, no department head, no mayor — should ever again be allowed to negotiate with PG&E in secret. Any talks with the utility should be recorded and all documents and memos made public before any city agency votes on any contract or deal.

PG&E loves to argue that public power is an expensive proposition and that taxpayers will be on the hook for a lot of money to buy out or create a municipal power grid. But advocates can accurately point to the history of private power in San Francisco: dealing with PG&E has cost the city (and the taxpayers and the ratepayers) far more than the price of creating a municipal grid. The 1988 contracts are a particularly visible example. And 20 years later, the overall lesson is clear: as long as a private company is running the city's energy policy, the public is going to get screwed.