FOR MOST PEOPLE involved, it seemed like the iron was still hot: with Pacific Gas and Electric Co. and Enron in bankruptcy, Republicans in Washington, D.C., threatening to further deregulate the power business, and headlines indicating California could face yet another energy crisis, a new public power initiative seemed like a logical move. Across San Francisco's ideological spectrum there was general agreement that local control of energy could help the city finally deal with its dirty laundry: the polluting Hunter's Point power plant that's been poisoning low-income residents for years.

But in the end it didn't happen. Proposition D, the public power measure, went down by a margin of more than 14,000 votes, a worse defeat than the November 2001 margin of just 514. Foes of the measure have already tried to capitalize on the loss. The San Francisco Examiner ran a column Nov. 11 declaring the issue dead; PG&E's other allies are likely to do the same.

That sort of logic ignores the other side of the story. Given the odds – with PG&E spending more than $2.2 million to kill Prop. D – the coalition that pushed the measure to earn 46 percent of the vote in a low-turnout election proved that there is strong and consistent interest in the issue. Still, the question remains: Why, in a year of awareness about corporate crimes, would a populist measure designed to remove corporate control over energy fail?

There were several key factors:

• The campaign started at city hall, not with the grassroots. Last year's campaign, which came within a whisker of victory, was the outgrowth of a grassroots effort that started years in advance of the election, with a signature-gathering campaign followed by city hall hearings and negotiation with organized labor. This time around, Sup. Tom Ammiano and his aide Brad Benson were calling the shots – and some in the public power camp felt they had to fight to get a measure activists could support.

• The campaign couldn't get going until late summer. Ammiano's office moved slowly on crafting the new measure, and Prop. D wasn't fully developed until very close to the ballot deadline. So activists had nothing to organize or raise money around.

• The campaign to rebuild the Hetch Hetchy water system was severed from public power – a fact that may have helped PG&E by sending mixed messages to the electorate about the city's ability to run utilities.

• Public power supporters had no city studies to counter PG&E's lies. The Local Agency Formation Commission never commissioned a full study of the advantages of public power, so there wasn't any authoritative evidence to counter PG&E's bloated cost estimates.

• There wasn't enough money to counter PG&E's blitz. "Public power will always have the support of 45 to 47 percent of the electorate," Ross Mirkarimi, Yes on D campaign director, told us. "In order to bring home that winning difference you're going to need a budget of at least $150,000 to $200,000. You can't fight otherwise against a giant corporation." Mirkarimi's pro-Prop. D effort had only $50,000 (including $15,000 from Clint Reilly, $9,599 from Bay Guardian editor and publisher Bruce B. Brugmann and associate publisher Jean Dibble, $5,000 from Carole Migden, and $4,800 from Angela Alioto), plus $20,000 in free ad space in the Bay Guardian. And with so many other measures on the ballot, progressives' energies and funds were divided.

Crafting public power lite

After 2001's Propositions F and I narrowly lost at the polls, public power supporters asked Ammiano – who had been the issue's main proponent on the San Francisco Board of Supervisors – to carry another measure, similar to Prop. F, which would have amended the City Charter to grant the city full rights to operate and own its power system. Ammiano agreed to do it. But then months passed.

Eventually, Ammiano called a series of private meetings in City Hall to bring together advocates to craft the new measure. In the meantime his office was in contact with the San Francisco Planning and Urban Research Association, a pro-downtown think tank funded in part by PG&E. He told us at the time that he hoped to "reduce opposition."

With that in mind, Ammiano came up with a proposal (with the help of Sup. Sophie Maxwell) that many said was too weak – it wouldn't have given the city the right to take over PG&E's wires and poles.

Supporters of the softer measure said they wanted to take an incremental approach to public power. Their logic: because it wouldn't focus on energy distribution, the utility's core remaining business under deregulation, PG&E wouldn't oppose the measure.

At the last minute Sup. Matt Gonzalez amended the measure to include moderate acquisition language (see "Public Power OK'd for November Vote," 7/24/02).

Some say that was the measure's fatal flaw. "It was lost when Matt Gonzalez amended it," Ed Smeloff, power policy manager for the San Francisco Public Utilities Commission and an appointee of the mayor, told us.

Gonzalez disagrees. "I doubt that we really could have called Prop. D a success if it had passed without that language," he said. "I think the fault lies with the continued opposition by politicians that are in PG&E's pocket – Willie Brown, Dianne Feinstein, people like that."

To say PG&E wouldn't have opposed the measure would be totally naive. Need proof? Just last month, at a hearing of the Board of Supervisors, the City Attorney's Office reported that it's fending off a move by PG&E to steal some commercial customers located at the Fifth and Mission Streets parking garage, which is owned by the city. "PG&E is disputing [the city's Hetch Hetchy power department's right to serve] Mel's Diner and Asia Chinese Restaurant and Starbucks," deputy city attorney Theresa Mueller told us at the time (see "Supervisors Call for Rate Hike Study," 10/23/02).

If PG&E can't tolerate allowing the city to power just one Mel's Diner franchise, what reason is there to believe the company wouldn't fight like hell to stop any public power measure – no matter how soft?

There's also an important technical point: While PG&E is currently limited to distributing electricity, by January of next year the utility will be back in the business of procuring electricity for consumers. The decision to give back that control to PG&E was in the works months ago; PG&E clearly would have defended its right to run that part of the business (and that's the only part that would have been threatened by the "public power lite" measure).

Other challenges

Last year's public power effort benefited from strong support from the San Francisco Labor Council. But PG&E's employees' union, the International Brotherhood of Electrical Workers Local 1245, walked out of the council over that endorsement, and public power foes began arguing that labor's traditional solidarity was being harmed by the split. So though the council endorsed public power this year, it did so with far less money and institutional support.

There also was the problem of campaigning for public control of energy while a ballot measure highlighting the city's problems with managing the water system – Proposition A, the Hetch Hetchy water bond – was on the ballot. It didn't help that Prop. A's biggest backers, the San Francisco Chamber of Commerce, opposed Prop. D. The chamber's opposition came despite the clear linkages between the measures, fueling suspicion about the aims of Prop. A proponents.

Political consultant Jack Davis, who worked on the No on A campaign, told the Bay Guardian there are links between the Prop. A camp and PG&E. He said this week that PG&E governmental affairs representative Lester Olmstead-Rose called him to say that PG&E wanted to help cover Yes on A's campaign debt.

"Lester said they wanted to do so since the Chamber has been so supportive of PG&E over the last two years but didn't want to piss off rental property owners, hotels and restaurants," Davis wrote in a Nov. 11 e-mail to the Bay Guardian's Brugmann. Davis said Olmstead-Rose wanted to ask him first because Davis represents those groups.

Olmstead-Rose said, "We have never offered to retire the campaign debt," but wouldn't comment on whether he had approached Davis about the idea.

Another handicap for pro-Prop. D campaigners was the lack of a feasibility study. Without any clear numbers, PG&E was able to claim that the system would cost as much as $1.4 billion with no credible opposition. That's almost certainly too high. But a study could have shown that even with PG&E's high price, a public power agency could buy the system, incorporate more green power than PG&E has, and still reduce rates by 20 percent (see "MUD Money," 10/10/01). LAFCO had already hired top public power consultant R.W. Beck to do a preliminary study. It should have paid Beck to do the next step.

Without those figures, public power strategists needed a lot of help from prominent supporters to get out progressive voters. This was a tough challenge, particularly because the campaign started so late – it wasn't clear what the measure would look like until the end of July. Meanwhile, PG&E had continued to line up opposition.

Even so, supporters say they won't drop the issue. "My own preference would be to come back next year and try again," Gonzalez said.

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