September 18, 2002



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Holy Hetch Hetchy!

The San Francisco Chronicle discovers the Raker Act scandal. Better late than never

By Rachel Brahinsky

Public power initiative Proposition D received a tremendous political boost this week when the San Francisco Chronicle ran a prominent front-page report Sept. 16 detailing the history of the Raker Act scandal and reported in a separate story that Prop. D had a 40 percent approval rating in a recent poll funded by downtown business interests.

What's more, Sup. Chris Daly told the Bay Guardian in an editorial interview last week that Sept. 17 he planned to call for hearings on the impact of Pacific Gas and Electric Co.'s high rates on small businesses and consumers, following up on our investigation that showed PG&E's soaring rates yank $620 million each year from the local economy (see "The $620 Million Shakedown," 9/4/02). Daly said he would schedule hearings before the Nov. 5 election.

The economic problems of private utilities is an issue that's still sparking national concern. The same day the Chronicle story was published, a Wall Street Journal report probed market manipulation tactics in the energy industry, further proving just how serious a mess private energy companies deliberately made of the California market in 2000. The report showed how market structures still are not in place to prevent a similar crisis from happening again, and it revealed exactly how PG&E's National Energy Group – its sister company – engineered a series of energy trades in November 2000 in order to triple the price of power.

Meanwhile Las Vegas, Portland, Ore., and the entire state of Montana, along with about 100 other communities nationwide, are looking at retaining local control of power purchases by establishing public power districts, according to the American Public Power Association. These would be modeled on the locally controlled California public utilities that insulated themselves from the energy crisis and retained lower rates and higher accountability than PG&E.

Ending the blackout?

The publication of the Chronicle story in particular seemed to hit a nerve Monday, coming after the paper's decades-long tradition of blacking out public power news and largely ignoring San Francisco's local energy crisis.

"I don't know if many of us ever expected to see a Hearst newspaper do something like this," Yes on D campaign spokesperson Ross Mirkarimi told us. "It's a story that's been told for several generations. We're just glad the Chronicle has finally told it."

The story – titled "City Spurned Mandate for Public Power" and published as the second installment of a two-part series by Chuck Finnie and Susan Sward on the water and power system – clearly explained how the federal government authorized San Francisco to build a dam for water and power in the Hetch Hetchy Valley of Yosemite National Park at the turn of the century. The 1913 Raker Act allowed the dam to be built (over the loud objections of environmentalists, led by John Muir) "on the condition that it provide inexpensive hydroelectric power to San Franciscans," the story says.

But over time, it explains, city leaders "sold much of that energy to other communities." The outcome, after a series of public power ballot measures was defeated by PG&E, is that the city has been placed in an "extraordinary energy bind," in which it manages its own hydropower network but was labeled as the state's most blackout-prone city in a California Energy Commission report last winter.

Among the Chron's findings: 49 percent of San Francisco's cheap hydropower is sold off to two Central Valley communities at rates that are 38 percent less than those charged by PG&E in San Francisco. The city, which currently depends on dirty power produced by the Hunters Point and Potrero Hill power plants for about a third of its energy needs, faces yet another energy crisis, with its power needs growing faster than can be met with the current system.

For Bay Guardian readers, little in the story was new. As the Chronicle said in a sidebar, the Bay Guardian first broke the story of the Raker Act scandal back in 1969.

"Of course, the paper should have gotten to it sooner," coauthor Finnie told us in an e-mail responding to our questions. "The timing of this series was just a function of two reporters showing the interest and being given the support and space to research and tell the story."

Still, the impact of the city's major daily paper taking on the story cannot be denied. "Whether it wants to or not," Prop. D coauthor Sup. Tom Ammiano said of the story, "it makes the case for public power."

At the same time, the downtown-funded poll, the Chron's Matier and Ross reported in their political column, showed Prop. D's popularity rising slightly, with 40 percent in favor and 40 percent opposed. "The poll is interesting because of who paid for it," Mirkarimi told us. Matier and Ross withheld the name of the organization that did the poll but said it was commissioned by "a group of business and development interests," which is likely to be the Committee on Jobs or a group affiliated with the San Francisco Chamber of Commerce.

"The fact that they subsidized a poll and showed us in a dead heat with 20 percent undecided is very interesting. And this was before the [Sept. 16] story," Mirkarimi said.

The Chronicle's truthful coverage of the city's power situation came just in time to combat some of the dramatic lies PG&E and co. are telling to kill Prop. D on their new Web site, On the site you can send an e-mail to the campaign, which is being run by P.R. firm Solem and Associates, or you can call them with your feedback at (415) 788-7788.

The Bay Guardian will be unpacking PG&E's lies for you in these pages and on our Web site ( in the coming weeks. The Yes on D campaign also has a site (, where many of PG&E's lies are dissected and explained.

This just in: We've been waiting for months for Mayor Willie Brown to take a position on Prop. D – and now he finally has. According to, the mayor is an endorser of the No on D campaign, along with Sen. Dianne Feinstein. We called the mayor to see why – even after the Chronicle ran its story, and after the mayor's energy adviser Ed Smeloff has said that Prop. D's passage would significantly speed up implementation of Smeloff's (and presumably the mayor's) energy plan – he's still refusing to back Prop. D. Brown's press aide P.J. Johnston did not respond to our call.

Bay Guardian editor and publisher Bruce B. Brugmann and associate publisher Jean Dibble are contributors to the Yes on D campaign. E-mail Rachel Brahinsky at