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The pivotal vote

Public power victory!
Last-minute surprise vote gives boost to PG&E takeover plan.

By Rachel Brahinsky

ANY PUBLIC POWER plan the city places before voters this year will contain one of two hotly contested proposals: It will either create an agency with the right to finance a takeover of Pacific Gas and Electric Co.'s electricity grid, or it will place the agency under a democratically elected board of directors.

In a dramatic three-and-a-half-hour hearing July 15, the Board of Supervisors ensured that one – but not both – will end up in the final measure, likely to be placed on the ballot for November. Neither proposal was in the original bill, cosponsored by Sups. Tom Ammiano and Sophie Maxwell, and both supervisors opposed the changes.

But an unexpected alliance of the board's left and right flanks that night pushed the proposals into two versions of the measure, and the supervisors later agreed to send both forward for a final decision July 22.

The alliance, which came as a surprise to nearly all members of the board, left observers wondering whether the more conservative board members – Sups. Tony Hall, Leland Yee, and Gavin Newsom – were attempting to sink the plan by amending it to upset moderate supporters.

The original measure, which Ammiano and Maxwell said was aimed at closing polluting power plants, would have created an agency controlled by an appointed board that lacked the right to issue revenue bonds to take over PG&E's grid. Their goal was to reduce opposition as much as possible. Last year two public power measures went down to a narrow defeat after PG&E, AT&T, and others spent more than $2 million on a misinformation campaign.

So this spring Maxwell and Ammiano listened closely to the San Francisco Labor Council and the San Francisco Planning and Urban Research Association, a downtown-dominated group financed in part by PG&E. Both SPUR and the Labor Council have indicated they oppose strong grid-acquisition language.

The two supervisors also prefer an appointed board, saying that it would allow the supervisors to retain some control over the agency. An appointed board, they have said, would be less likely to disrupt major projects – like the reconstruction of the Hetch Hetchy water system – that the San Francisco Public Utilities Commission has under way. The new agency would replace the SFPUC.

But Sup. Matt Gonzalez suggested two amendments last month, one to give the agency grid-acquisition authority and the other to replace the appointed board with an 11-member district-elected board. The amendments set off a controversy that split Ammiano from some longtime supporters of public power, who preferred Gonzalez's proposal. Ammiano said he was open to discussing changes, but two weeks later the two supervisors – who are often ideologically aligned – could not find common ground.

An 'unholy' alliance?

Before Monday's hearing on the public power bill, it was anybody's guess which way things would go. Gonzalez himself didn't seem to expect to win on both proposals.

When discussion began on the governance question, Gonzalez offered up his elected-board plan. Ammiano said he wasn't opposed to the concept in principle but added that with the likelihood of large corporations flooding board races with stooges and cash, he thought it best to have an appointed board for now. Maxwell and Sup. Mark Leno agreed.

But to the astonishment of observers, in a 6-5 vote allying Gonzalez and Sups. Chris Daly and Gerardo Sandoval with Newsom, Hall, and Yee, the amendment passed.

One supervisor immediately predicted that the "unholy alliance between the left and the far right" would sink the measure by cutting out moderate support and setting up a clash of extremes between PG&E and fully democratic public power.

Ross Mirkarimi, spokesperson for San Franciscans for Public Power, saw it differently. "I believe public power transcends political partisanship," he told us. "But now the burden of proof is on all of them to step up."

Newsom and Yee said they voted their consciences on the amendment, though neither would promise to support the final measure; they say they're still undecided. Hall later admitted he never intended to support the entire bill, raising the possibility that he believed his vote could help kill it at the polls.

Then things got even stranger, with Hall standing up to speak on behalf of Gonzalez's second amendment: to give the power agency the right to finance a grid takeover if a study shows it's economically sound and will not raise electricity rates above PG&E's. Ammiano quickly called a recess.

Some were suspicious. "He's gonna march in labor again," Hall sniped, referring to the drama over Ammiano's last public power bill that took place exactly one year ago. Back then, after the bill failed by two votes, a cadre of union activists stormed the board chambers and demanded a revote. Sandoval and Leno switched positions in response, and the campaign was on.

This year the drama was more behind the scenes. During the recess supervisors and their aides immediately began scurrying around City Hall, and rumors spread about various deals to save or defeat the measure. PG&E lobbyists Lester Olmstead-Rose and Matt Lonner conferred with each other in the hallway. (Olmstead-Rose said he had no comment, on anything, for the Bay Guardian).

After the break the debate over grid-acquisition powers grew heated. Maxwell said that she wanted it kept out of the measure and that the need to close the polluting Hunters Point plant was too urgent to risk losing at the polls, an outcome she considered likely if acquisition of the grid was a key feature. Sup. Aaron Peskin concurred: "I agree with Maxwell's political assessment. This is a battle that's waged on for the better part of half a century. I'm willing to do half a loaf and not become a two-time loser."

Hall disagreed, saying that if "we're going to move ahead, let's give voters the full measure." But again he admitted he didn't plan to support the measure, because it gave away the voters' right to control the issuance of revenue bonds under certain circumstances.

Then, all was chaos. At first the proposal failed, 6-5, to make it into the measure. But the supervisors reached agreement on an unexpected plan: they would forward two measures for final consideration next week – one with an appointed board and grid-acquisition authority, the other with an elected board and weak grid-takeover powers.

Ammiano and Maxwell tried to offer a third alternative – essentially, their original plan – but Gonzalez threatened to withdraw his measure completely, which would have destroyed any hope of compromise. Ammiano and Maxwell backed off.

Both measures call for a freeze on transfers of surplus funds from the power agency to the city's General Fund until the system is in better repair.

Jockeying for position

Gonzalez said he was thrilled. "There wasn't an anticipation of this interesting alliance," he reflected after the vote. "I think they probably each had separate motivations, but I still think it's good public policy. So we're assured of a measure on the ballot that's going to have one of these two very important components."

Ammiano told us he agreed that public power supporters now essentially face a win-win situation, and he promised to support one of the measures. "I think we're in good shape," he said. "It looks like we will have something on the ballot, and that's the good news. The form it takes may not be 100 percent of what different people wanted, but I really do think that it will address the most important issues, and we'll have a great campaign and take it from there."

Other board members said they weren't clear how they would vote next week. Sandoval, Yee, Newsom, Peskin, and even Gonzalez appeared undecided. Either measure will need to garner six votes to be placed on the ballot.

Still, the mixed decision thwarted attempts by Ammiano and Maxwell to change the tone of the public power effort in San Francisco. By bowing to SPUR – which counts PG&E and Mirant Corp., owner of the Potrero Hill power plant, as members, along with a veritable A to Z of the city's big-business interests – the supes tried to reach more moderate voters. But they also risked alienating core public power supporters who fought head to head with SPUR in the last campaign. Though SPUR presents itself as a moderate research organization on many issues, it has a long history of backing pro-downtown measures and initiatives, with a few exceptions.

SPUR president Jim Chappell denied that PG&E has any undue influence. "We're a million-dollar-plus agency, and nobody controls our agenda," he said. But clearly PG&E plays a role. Last year the utility paid up between $10,000 and $19,999 in membership fees. PG&E's Olmstead-Rose sits on the SPUR board of directors and is a member of the group's Energy Task Force, which is charged with scoping out energy policy.

SPUR member Redmond Kernan acknowledged to us that he was the one who suggested another compromise, in which the board would put off making a decision on the power agency's grid-acquisition authority. He suggested putting it before voters in 2004.

In a different way, the attempt to please the Labor Council also reflected a move toward moderation. For decades the council opposed public power, and leaders in the labor movement actively opposed attempts to even finance studies on the issue. But last year, in the midst of the state energy crisis and predictions of soaring rates for years to come, labor leaders formed the Labor Task Force for Public Power, which successfully lobbied the council to support and help finance the public power campaign.

That support came at a cost: the International Brotherhood of Electrical Workers, Local 1245, which represents PG&E workers, withdrew from the Labor Council in protest. This year leaders have called for renewed unity and have refused to support a full-fledged public power measure to satisfy IBEW and the Building and Construction Trades Council, which is politically allied with IBEW.

Gonzalez and Ammiano both confirmed that there can't be any further amendments or new alternatives offered at this point, although it's still possible that public power foes will try to kill both measures.

"It's very exciting," Mirkarimi told us. "I feel like we have won a major policy battle, but my ultimate concern is how we are going to win the all-out campaign." P.S. Continuing its tradition of ignoring news of public power developments, the Hearst-owned San Francisco Chronicle and its Web site, SfGate, declined to cover the story Tuesday morning, although a Chron reporter was present at the hearing. For details on a key public power meeting Wed/17, see Alerts, page 16. E-mail Rachel Brahinsky at rachel@sfbg.com.