People's Gas & Electric?
Assembly speaker launches plan to buy out PG&E

By Rachel Brahinsky

Here's a solution to the California energy problem that could go a long way toward protecting consumers from Enron-style private power debacles: don't just try to take over Pacific Gas and Electric Co.'s San Francisco business. Instead, go after the whole thing.

Under a plan proposed by state assembly speaker pro tem Fred Keeley (D-Boulder Creek), the state would buy out all of PG&E's California facilities, including its network of transmission lines, its chain of Sierra Nevada hydroelectric dams, and the Diablo Canyon nuclear power plant. Then the state would run the business on a not-for-profit basis. Keeley says eliminating the profit motive might cut power bills by 20 percent.

It could be a tough sell. The public is wary of giving too much control over energy to the state, which failed to find good solutions to the energy problem and signed expensive power contracts in 2000 that will drain California budgets for years to come. Still, the bankruptcies of PG&E and Enron drove home the flaws of privately run, deregulated power.

To mend those flaws, Keeley proposes forming a nonprofit that would issue low-cost revenue bonds. Dubbed California Gas and Electric, the new entity would oversee everything from power generation and sales to energy-efficiency projects. It would be the largest such agency in the state and one of the biggest in the nation.

Local public power advocates have praised the plan but wonder whether it will garner the required political support. "Conceptually speaking, I think Keeley's plan is right on the money," said Ross Mirkarimi, who directed last fall's public power ballot-measure campaign in San Francisco. "I just don't know if there is the political will. But anything that happens on the state level only helps catalyze local efforts."

Keeley's plan goes a step further than the California Power Authority, which was formed in the midst of the power crisis. The CPA is empowered to build new power plants and invest in renewable energy; it's not seeking to buy utility property. By contrast, Keeley's plan would buy out PG&E, offering the company a fair sum.

"This would give them cash to get out of the regulated energy business, which is what they want," said Guy Phillips, a consultant to Keeley. PG&E's stated goal for years has been to escape regulation for at least some of its business. In fact, that's the cornerstone of the utility's proposal to escape from bankruptcy: to spin off its generation under an unregulated arm of its parent corporation.

Keeley, who was scheduled to speak April 16 before a gathering of public power advocates in San Francisco, may petition the bankruptcy court to view his plan as a viable alternative. Locals are lobbying the city of San Francisco to spearhead the idea in court. "There are efforts under way to convince various municipalities to join in," Dennis Mosgofian, a labor leader and public power advocate, told us.

The Keeley plan is being unveiled just as San Francisco is in the midst of a renewed debate about energy. After the lull that followed the failure of two public power ballot measures last fall, the city's energy experts and activists are actively researching new options to enforce the federal Raker Act and establish public control. The San Francisco Public Utilities Commission and the San Francisco Department of the Environment just completed a series of community meetings to develop a long-term electricity plan.

And the San Francisco Local Agency Formation Commission is continuing to hold its energy hearings. At the most recent one, held April 12, PG&E officials took the stand for three hours, followed by representatives from the California Public Utilities Commission and the Utility Reform Network, or TURN. LAFCO is also planning to hire a consultant to complete a study of the feasibility of public power.

P.S.: Noticeably absent from each of LAFCO's three energy hearings: the media. So far, the Bay Guardian has been the only paper to cover the hearings. LAFCO's inquest could have an impact on the city's energy decisions for years to come. Applicants for LAFCO's study will be publicly interviewed Fri/19, 2 p.m., City Hall, Legislative Chambers, 1 Dr. Carlton B. Goodlett Place, S.F. (415) 554-7702. E-mail Rachel Brahinsky at rachel@sfbg.com.