Saving public power

THE SAN FRANCISCO supervisors have at least four weeks to discuss and amend Sup. Tom Ammiano's new public power measure, and already Sup. Matt Gonzalez has moved to toughen the proposal. The Gonzalez amendments are right on point: he wants to include language in the bill that would allow the city to take over Pacific Gas and Electric Co.'s local infrastructure if an independent cost-benefit study shows that it's feasible, and he wants to place control of the city's power agency under a directly elected board.

The first Gonzalez amendment would plug a huge hole in Ammiano's proposal. As it stands right now, Ammiano's public power lite would prevent a new power agency from issuing revenue bonds to take over PG&E's system – unless the city could prove PG&E was refusing to work in good faith to let the city hook up new public power plants to the company's lines and maybe distribute retail power on those lines. The problem is, PG&E will go out of its way to make sure it meets the letter of whatever agreements it has with the city and will fight in court to enforce those agreements – because the last thing the utility wants is to lose control of the lines and poles that make up San Francisco's grid. Ownership of the grid means control of the system – and means big profits for PG&E.

It's entirely possible a fair feasibility study will conclude that San Francisco should build its own infrastructure, independent of PG&E. But it's also possible the figures will show that the best, quickest, and most financially sound option is for the city to simply condemn PG&E's property, issue revenue bonds to buy it, and take it over. Ammiano's measure would preclude that option – and thus tie the hands of any future public power effort.

Ammiano states in an op-ed on this page that he personally supports acquisition of the grid. He just says it isn't politically smart to include acquisition authority in this year's measure, in large part because organized labor (thanks to pressure from PG&E's union, the International Brotherhood of Electrical Workers, Local 1245) will have problems with any measure that allows a buyout. But it's not at all clear labor will support even the more limited measure. Nor is it a good idea to let one recalcitrant union determine the city's position on a major public policy issue.

Ammiano is also clearly worried PG&E will use the threat of a buyout – which could come with a high price tag – as a political tool against the measure. That's on old PG&E trick: nine times in the past century (all before World War II) city officials have placed revenue bond acts on the ballot to buy out PG&E's system – and each time PG&E has insisted the buyout would lead to tax hikes and budget problems.

The reality is very different. For starters, as the Bay Guardian's own studies show (see "The Case for MUD," 10/10/01), the price tag for PG&E's system might range from a few hundred million dollars to close to a billion – and even in the worst-case scenario, a public power agency could easily absorb the debt and sell power at rates below what PG&E charges. Remember, these are revenue bonds – they would be repaid out of the cash the power system brings in selling electricity and would not, could not, lead to a tax increase or a drain on the city's General Fund. If the figures didn't make sense, Wall Street would never back the bond issue. So there's no risk to the public or the taxpayer in giving the power agency revenue bond authority. Besides, the city really has no choice: federal law (the Raker Act), as affirmed by the U.S. Supreme Court, requires the city to operate a public power system.

The second Gonzalez amendment, addressing the governance of the agency, is equally important. Ammiano would have the new power agency controlled by an appointed seven-member board, with the mayor and the Board of Supervisors each having three appointments and the city controller appointing the final member. The problem: Mayor Willie Brown will still be in office when the new board is appointed and will absolutely appoint three anti-public power types friendly to PG&E, meaning that unless the controller (whom Brown recently appointed to another 10-year term) appoints a strong, unshakable public power advocate (not by any means a sure thing – in fact, not even likely), public power supporters will be in the minority. The supervisors, by passing Ammiano's measure, would give up the ability to control the direction of this crucial new agency.

Gonzalez suggests an 11-member board, elected from the existing supervisorial districts. Although we've endorsed previous plans for a seven-member elected board, Gonzalez's plan makes a certain amount of sense – among other things, it avoids the issue of drawing new district lines. And he suggests an elegant way to solve the problem of interim governance (if the measure passes in November, it will be a year until a new board can be elected) by proposing that each supervisor appoint one interim director from within his or her district.

If the supervisors can't find the will to create an elected board, at the very least they should make certain they appoint a majority of the members.

The Gonzalez amendments are critical. A power agency that lacks the basic authority to take over PG&E's system will start with a diminished mandate, unable to pose a real challenge to PG&E's costly and dangerous monopoly. And an agency that the mayor and the controller together can dominate will never be independent enough to make the tough decisions up against withering pressure from PG&E. The supervisors should approve the changes and pass a serious, effective public power measure that can and will move San Francisco toward energy independence.

P.S.: In his op-ed piece Ammiano makes the argument that shutting down the dirty, dangerous Hunters Point power plant and preventing Mirant Corp. from building a much bigger plant at its Potrero site are goals so immediate and important that they outweigh the importance of creating a full-scale public power system in the city. This is a frustrating fallacy that needlessly pits the southeast part of the city and environmental justice advocates against the citywide public power movement. The truth is – as the overwhelming evidence nationwide shows – only an accountable public power agency can be trusted in the long and short term to be sensitive to community and environmental issues. As long as PG&E has the ability to control the new power agency, and has control of the local grid, the fight for environmental justice will be a bitter, protracted (and often unsuccessful) struggle.