Real market value But there's another way to look at the issue, and that involves going to the state agency that appraises the actual market value of PG&E's property for tax purposes: the Board of Equalization. Every year the board's appraisers evaluate exactly what PG&E's property is worth - and the agency's record is pretty good. When California's private utilities sold 22 power plants under deregulation, the board checked its appraisals against actual market prices, and while sale prices for some plants varied from estimates, the board was accurate to within 1 percent overall, chief appraiser Harold Hale told us. The Board of Equalization estimated that as of January 2001, all of PG&E's property in San Francisco was worth $962,140,298. That includes property that isn't at all relevant to running an electric utility. The value of the property actually used in the electricity business, the board says, is $753,978,471. But that figure includes PG&E's huge 77 Beale St. headquarters office complex, which the city almost certainly wouldn't want or need to buy in an eminent domain action. If you subtract 77 Beale St. (which one real estate expert we contacted said was worth about $225 million as of Jan. 1), then the value of the property the city might actually buy is about $528 million. It may be even less than that: the real estate market has fallen almost 15 percent since Jan. 1, according to our expert, a senior executive at one of the city's biggest firms, who asked not to be identified by name. However, to be conservative, we're sticking with the Jan. 1 figure. Epstein, who has worked as a consultant fighting municipalization efforts and thus isn't inclined to be biased in favor of a public buyout, agreed that using the Board of Equalization figures is "certainly a good place to start." There's no guarantee that the courts will accept this approach (although, with PG&E in bankruptcy court right now, it's also entirely possible, experts say, that PG&E might be forced to accept a much lower value for its property and sell it without a fight, in order to pay off some creditors with cash). So we also analyzed a worst-case scenario, essentially accepting the figures of ETAG's much maligned report and assuming that, under a replacement cost-<\d>plus-<\d>"going concern" analysis, the city would have to spend $795 million to take over the system. (Even ETAG concluded that it's unlikely the final price would be as high as PG&E's estimate; nobody whose property is up for seizure starts off by quoting a realistic price.) No matter what the price, the bond sale will have to include some money for contingencies - the actual cost of the bond sale, start-up cash, etc. We've added $50 million for those costs. Paying the staff, buying power PG&E doesn't publicly reveal its operating costs for San Francisco (or any other specific service area). And it's difficult to use the company's system-<\h>wide operating costs as a basis for estimating San Francisco costs, since the population of San Francisco is so much denser than in most of the company's northern California territory. The denser the population, the cheaper it is to serve; the distance between customers is smaller, so you need less transmission line per customer. Reading meters is faster, since the employee doing that work doesn't have to drive long distances between each house. Repairs and maintenance are cheaper for the same reason. And PG&E's costs aren't a fair comparison for a public power agency anyway: PG&E pays huge executive salaries (see "Public Power vs. PG&E," page 24), which are included in the operations overhead. So we based our cost estimate on LADWP, which is about as close a comparison to San Francisco as we could find. Los Angeles is not quite as dense as San Francisco, so the L.A.