October 16, 2002

By Tim Redmond

BY NOW, the questions – and answers – ought to be clear and obvious:

Why does a city that owns its own hydroelectric power project still pay some of the highest electric rates in the country to a private utility?

Why does the only city in the United States that is required under federal law to operate a public power system still allow Pacific Gas and Electric Co. to operate a private monopoly in town?

How can the city trust its energy future to a company that has a horrible environmental record, a stack of criminal convictions, and a long history of political sleaze? How can anyone trust a company that shuttled billions of dollars out of town to affiliated corporations before filing for bankruptcy – while it's failed to make even the minimum investments needed to maintain the local electrical infrastructure, and thus is responsible for severe blackouts and ongoing threats to the safety of everyone in town?

How can the city continue to allow PG&E to poison entire neighborhoods with its pollution-spewing power plant when there are safer, cleaner, cheaper alternatives?

How can city business leaders continue to support PG&E when the evidence is clear that the private utility has sucked millions of dollars ($620 million in the past five years) out of the local economy, prolonging the recession and slowing any hope of recovery?

How is it possible that San Francisco still doesn't have public power?

• • •

Look around town and you'll see PG&E's last, best hope for convincing the voters to stand with the company in bankruptcy court and continue to cast their lot with private power. The slogan goes like this:

"Too risky, too costly."

The message: Proposition D, the public power measure on the November ballot, will put the city in jeopardy and harm ratepayers. That's an old political trick (if you repeat a lie often enough, people start to believe it), and despite the fact that it can't pay its creditors, PG&E is spending millions of dollars to tell its lies in San Francisco. And why not? It's worked before: nine times since the 1930s, the city has voted on bond acts that would have created a public power system – and every time, PG&E has used its money and political clout to defeat them.

Every time, it's been the same sort of campaign of lies. Time and time again, PG&E has tried to confuse the voters about the nature of the bonds, saying the sales would raise taxes. (Actually, revenue bonds are paid for out of the money the city makes by selling electricity, not by higher taxes.) PG&E has attempted to argue that the city isn't capable of running an electric utility (even though 2,200 cities all over the nation run electric utilities, more efficiently than PG&E does). PG&E has used its campaign cash and lobbying sway to line up powerful politicians, labor unions, and community groups.

And ever since William Randolph Hearst turned around and abandoned his pro-public power position in the 1930s, PG&E has managed to line up the major news media.

Phil Burton, the late, legendary congressional representative from San Francisco, used to say that you can't get anything done in this town without the San Francisco Chronicle and organized labor. Since World War II, PG&E has had the Chronicle and labor behind it, and nothing has been done to end the company's illegal private monopoly.

But the world has gone around a few times since Burton's day, and PG&E is no longer the power broker it used to be. That's partially the company's fault: PG&E led the fight for deregulation, and the result – blackouts, high rates, terrible service – has convinced even the Central Labor Council to shift its allegiance and become a strong backer of public power.

But the emergence of public power into the center of the local political agenda is, by almost any account, due largely to the fact that one local newspaper never gave up the fight.

• • •

When Bruce B. Brugmann and Jean Dibble started the Bay Guardian back in 1966, they'd never heard of the Raker Act.

They knew all about public power – Bruce came from Rock Rapids, Iowa, a town of about 2,800 where the electricity came from the "light plant," Rock Rapids Public Utilities, which has always kept its rates lower than the private electric companies in other parts of the state. Jean came from Bennet, Neb. – a state in which all electric power is public.

But when Joe Neilands, a biochemistry professor at UC Berkeley, contacted Bruce back in 1969 with the story of how San Francisco was violating a federal law that required the city to operate a public power agency, that PG&E was in effect stealing millions of dollars a year from residents and businesses by forcing them to buy high-priced power from an illegal monopoly, Bruce was (like any good editor) a bit skeptical. Why, he wondered, is this guy bringing what sounds like a gigantic scandal to a struggling little "fortnightly" paper with a circulation of 15,000? Why, he asked Neilands, has nobody else has ever done this story? How come it isn't in the Chronicle?

Neilands's response: PG&E has bought off or corrupted all the big papers. The Bay Guardian is our only hope.

The story – "How PG&E Steals S.F.'s Cheap Power" – ran March 27, 1969, and launched a political and journalistic campaign that has defined the Bay Guardian as a unique and critical voice in San Francisco. Year after year, as the dailies blacked out the story and PG&E did everything in its power to ridicule and dismiss the Bay Guardian, Bruce, and public power, the little paper stuck to the story.

Thirty-three years later, the Bay Guardian isn't a little paper anymore. It's an independent weekly with some 700,000 loyal readers and tremendous influence in local politics, a leader in the national growth of the alternative press. And because it's an independent paper, PG&E has been unable to slow it down.

And finally this year – after hundreds of Bay Guardian stories and editorials pointing out how the biggest daily in town was in league with PG&E – the San Francisco Chronicle did a major story on the Raker Act scandal. We are, Bruce likes to say, the most vindicated paper in America.

• • •

At this point there's just no evidence left in PG&E's favor.

Let's start with the money, since PG&E continues to say public power would be too "costly" and since it will be throwing out huge numbers (like $1 billion) over the next few weeks in an effort to scare the voters.

Here's the truth: There's almost no way San Francisco could take over PG&E's San Francisco system and not offer cheaper rates and better service. Forget the fact that cities all over the country, and all over California, already do that (see "Public Power Is Cheaper" chart). Forget the fact that PG&E is in bankruptcy, has been siphoning money out of town for years (see "PG&E: The Evil Empire," page 18), and is only going to keep raising rates. Just look at the numbers.

That's what we did last year (see www.sfbg.com/News/anniversary.html). We took the worst-case scenario (PG&E fights a takeover tooth and nail and wins a favorable court ruling, forcing the city to pay close to $1 billion to buy out its lines, poles, and meters) – and found that the city could still cut rates by 10 percent. Is that a fantasy? Not at all. The public Long Island Power Authority had to assume responsibility for more than $1 billion in debt (from a nuclear power plant) when it took over the private Long Island Lighting Company five years ago – and LIPA has cut rates by 20 percent and pumped $2 billion into the economies of Nassau and Suffolk Counties, lowering the unemployment rate by three percentage points and helping the region pull out of the recession. (And that's according to Irwin Kellner, a conservative economist, and George Pataki, the Republican governor of New York.)

In fact, as we reported six weeks ago (see "The $620 Million Shakedown," 9/4/02), PG&E's high rates are pulling $620 million out of the local economy – and cheaper public power would give businesses and residential customers millions of dollars in new discretionary income, creating jobs, generating tax revenues, and generally helping a battered local economy.

What would it mean to the average customer? Well, based on PG&E sales figures compiled by the city controller and on U.S. census data, the average household spends about $49 a month on electricity. That's gone up 28 percent in just the past two years. If a public power agency could cut rates by 20 percent, you'd save $117.60 a year. With about 320,000 households in the city, that's about $37 million more in cash floating around in consumers' pockets.

"Too risky"? Take a look at the chart on page 18. Don Ray, one of the nation's top investigative reporters, analyzed PG&E's corporate structure for us and discovered that the utility has set up a dizzying array of corporate entities designed to suck your money out of San Francisco and send it to profit centers in places like Australia and Malaysia. The company can't keep the lights on here because there's no money to maintain an adequate staff of qualified repair workers or to invest in rebuilding the crumbling local infrastructure.

People are dying of respiratory illnesses in Hunters Point because PG&E's dirty power plant isn't up to modern environmental standards. A state report says San Francisco is the city most at risk for more blackouts because there's only one power line into town. Restaurants are going out of business because they can't get PG&E to hook up their power. Builders are taking their lives in their hands to do their own electrical connections because they can't get a PG&E worker to come out and do it.

And the cash that would pay to fix those problems is all going out of town.

The lies will continue – that's PG&E's political game. But fewer and fewer people are buying it.

Burton sat for years on the congressional subcommittee with jurisdiction over the Raker Act, and he never did a thing to enforce it. When we asked him why, a few years before he died, he told us he "didn't want to take a pratfall." But if he were alive today, it's a safe bet he'd be doing what his brother, John, is doing, and what most of the supervisors are doing, and what every political group with any integrity left in town is doing. He'd be voting yes on Prop. D.

Because after all these years, the truth is out – and there's no way for PG&E to contain it anymore.

task force:

The Bay Guardian's 36th Anniversary Task Force: Savannah Blackwell, Rachel Brahinsky, Bruce. B. Brugmann, David Moisl, Shadi Rahimi, Desiree Evans, Don Ray, and Tim Redmond.

For more stories on PG&E and public power – and a detailed chronology of the Raker Act scandal – go to http://www.sfbg.com/News/pgande.

The big rate hike

June 2001 rate hike for residential customers (cost, in cents per kilowatt-hour)

Before June 1, 2001 14.3

After the June 1, 2001, rate hike 22.1

June 2001 rate hike for commercial customers (cost, in cents per kilowatt-hour)

Before June 1, 2001 12.2

After the June 1, 2001, rate hike 16.7

Residential rates for households using 500 kwh each month are 20 percent to 51 percent less than PG&E's. And commercial rates for small businesses using 1,000 kwh monthly range from 29 percent to 54 percent less than PG&E's.
So next time you run into one of PG&E's black and red billboards full of lies — the ones that are plastered all over town as part of the company's $1 million (and rising) campaign to beat back public power — remember this: people in Palo Alto, just 30 miles south of San Francisco, spend half what you do for power, and their lights still go on every day.