The $2.8 billion rate hike - Page 3

PG&E's higher electric rates will suck vast sums from SF's economy

"As a nonprofit, the only thing we can do with that income is continue to drop rates."

Other municipal utilities, like Silicon Valley Power in Santa Clara, have been able to keep rates low as PG&E has continued to raise rates. Larry Owens, customer services manager at SVP, said its residential rates are half of PG&E's, and less for larger users.

The opportunity cost of not having municipal power — factoring in PG&E's proposed rate hike and the assumption, based on Guardian and SSJID analyses, that rates would be lowered by at least 15 percent — is approximately $545 million over the next four years. Theoretically, that money could have resulted in a $980 million to $2.8 billion bump in the local economy.

This doesn't include what some municipal utilities call "general fund transfers" or money that goes directly into a city's piggy bank to be spent on libraries, schools, public health, and other services.

"Private sector utilities pay money to shareholders," said Joyce Kinnear, utility marketing services manager in Palo Alto. "We give these payments to the general fund to give services to local residents."

In Palo Alto's case, this amounts to more than $9.25 million annually, or 9 percent of annual sales revenue, according Ipek Connolly, senior resource planner for the Palo Alto Utilities Department. Alameda Municipal Power's Alan Hanger says AMP pays at least $4.2 million into city coffers. Silicon Valley Power, according to Owens, sends 5 percent of its revenue back to the city in the form of $12.92 million.

Shields, at SSJID, said the utility plans to give 4 percent of revenue to a public benefits program for "various social services, conservation, and energy efficiency programs." This, in addition to general fund transfers, constitutes a direct contribution to the community 50 percent larger than PG&E's.

"Public power systems provide a direct benefit to their communities in the form of payments and contributions to state and local government," Nicholas Braden, director of communications at the American Public Power Association, told us. "The total value of the contributions made by the publicly-owned utilities often comes in many forms and is not always easily recognized. In addition to payments such as taxes, payments in lieu of taxes, and transfers to the general funds, many of the utilities make other contributions in the form of free or reduced cost services provided to states and cities."

San Francisco has a 7.5 percent utility user tax, but the tax is only levied on homes and businesses. In other words, PG&E takes hundreds of millions out of the local economy — and gives back nothing.



Amount San Franciscans paid for electricity IN 2009: $644 million

Additional cost of PG&E rate hike (per year): $157 million

Multiplier (maximum estimate): $787 million

Reduction in costs under public power: $483 million

Multiplier: $2.1 billion

Total impact of high PG&E rates: $2.87 billion

SOURCE: Guardian research based on public records



Pacific Gas and Electric Co. estimates that its current rate hike proposal will add between $2.23 and $16.76 per month to an average residential electricity bill. That may not seem huge — but it adds up.

"Each rate hike in and of itself isn't that much money," acknowledges Mindy Spatt of the Utility Reform Network (TURN). "But overall, rates are very high."

And if you're in one of the 24,000 San Francisco families that, according to U.S.

Also from this author

  • Fewer young people using drugs

    THE DRUG ISSUE: When it comes to illicit substances, SF's kids are alright.

  • The blackout factor

    PG&E's poor reliability record costs businesses millions