Up against PG&E
Public power advocates say corporate crime scandals will help fall campaign

By Rachel Brahinsky

A Pacific Gas and Electric Corp. subsidiary's bond rating is downgraded to junk, and its stock price sinks by more than 30 percent. The New York Times reports Enron-style accounting by the Mirant Corp., which may have overstated $253 million in assets and liabilities last year. News of corporate scandals throughout the energy industry and beyond leaves investors and customers concerned and disillusioned.

All told, it's a terrible time to be a private energy company.

That, public power advocates say, will be a central plank in their campaign for a November ballot initiative, which was launched last week at an organizing meeting of San Franciscans for Public Power. Paired with the anger locals feel about the environmental health problems tied to San Francisco's privately owned power plants, the focus on corporate crime could prove to be a successful strategy for the group, which is asking voters to approve the measure Nov. 5.

"PG&E is a company that cannot be trusted and that doesn't deserve to manage our power system," SFPP spokesperson Ross Mirkarimi said.

The measure would give the city the ability to develop energy-generation resources sufficient to close PG&E's Hunters Point power plant and could help stop Mirant from expanding its Potrero Hill plant. It would also give preference to projects that provide economic development opportunities for local residents while developing new city-run power schemes. And it would give the city the right to run the local power grid and would reform the long-stagnant San Francisco Public Utilities Commission.

Already, PG&E's propaganda machine has begun to spin. The company's arguments against public power are summarized in a flyer put out by San Franciscans Against the Blank Check, a front group for the company that's managed by lobbying firm Solem and Associates (see "Power Boost," 7/31/02).

The focus of the PG&E effort so far is to claim that public power is expensive; it's a strategy that was also used in the last public power campaign. "Becoming an electric utility would increase our utility bills," the flyer reads. It notes that the federal subsidies that helped public utilities in the past are no longer available and suggests a new public agency would face the same wild market as everyone else.

What's left out? A whole lot.

There's the example of the Long Island Power Authority in New York, which has cut rates 20 percent since it was created four years ago, saving customers an estimated $2.1 billion. (A 2002 study of San Francisco's energy options by consulting firm R.W. Beck shows that most public power cities enjoy rates averaging 20 percent less than those offered by private power companies.)

And there's also the way the local power measure was written – with many safeguards, including the provision that the new power authority could not take over PG&E's grid unless it could show that paying off that purchase would not increase rates above PG&E's. Significantly, the measure also would give the new agency the ability to build and use its own power plants, which would protect it from market turbulence. Eventually, a new San Francisco power agency might also elect to independently control its service area, which would help prevent blackouts related to problems on the rest of the state power grid.

Power alerts: A key hearing is coming up on Assemblymember Carole Migden's "community choice" bill, which would be key to the financial success of a new public power agency. At press time the hearing was scheduled for Mon/12, 9:30 a.m., at the State Capitol Building, 1315 10th St., Sacramento, but check www.local.org or call (510) 451-1727 for updates, as well as background information.

Also, the San Francisco Local Agency Formation Commission will hold a hearing on its Energy Services Study Thurs/15, 9 a.m., City Hall, Room 263, 1 Dr. Carlton B. Goodlett Place, S.F. (415) 554-7702.

Media notes: In an Aug. 2 story by Christian Berthelsen on PG&E's credit problems, the San Francisco Chronicle continued to black out public power, failing to mention the local effort to compete with the company. The San Francisco Examiner bettered its competitor by interviewing local power experts and by raising the question of whether the credit situation could affect the campaign.

E-mail Rachel Brahinsky at rachel@sfbg.com.