THE ENERGY SERVICES study released June 14 and written by Sacramento consulting firm R.W. Beck makes two crucial points about the city's energy future: public power would save residents and businesses 20 percent on energy charges – and the best way for the city to realize those savings is to boot PG&E and create a city-owned power grid.

Commissioned by the San Francisco Local Agency Formation Commission, the study was never intended to provide an economic analysis of public power, so it's short on numbers and financial specifics. Instead, the 138-page study is a detailed survey of San Francisco's energy service options and how they are likely to impact energy costs, reliability, and local control.

The report is extremely conservative and makes no official recommendation and has thus been criticized by public power advocates as too cautious. Even so, it sheds positive light on creating a comprehensive local public power system.

Mike Bell, one of the primary authors of the study, told us LAFCO's next step could be to commission a more cost-focused study. "This was really kind of the first look at the overall picture," he said. "If the city decides to move forward, the next step would be to look at the economics."

The study considers wild-card factors including PG&E's bankruptcy case and the cost of wholesale power. Key findings include the following:

On PG&E's rates "PG&E's proposal in its bankruptcy proceeding would transfer ownership of strategic generation resources to its less regulated affiliate.... [which] would transition to market prices. PG&E's plan would also provide an immediate increase in the retail price of retained generation."

On public power rates "In the long term, if San Francisco is like other public power communities, it is likely to obtain a net cost advantage in the neighborhood of 20%." Such savings could be achieved over the course of about 20 years.

On public power's use of 'public good' funds Public power systems have "usually more emphasis on low-income programs (with community involvement), in mix of public purpose programs."

On the value of local control of the distribution system With local control, the study cautions, comes total financial risk. But "constituents could influence decisions on capital expenditures, including types of generation and the resource portfolio mix, (e.g. percent renewable), as well as policies on distributed generation and net metering."

On continued PG&E control of the distribution system "PG&E has a financial incentive to transfer market price risk to customers." (R.B.)