Power struggle
City and PG&E battle over who will provide electricity to new Ferry Building businesses

By Matthew Hirsch

Pacific Gas and Electric Co. is trying to steal retail electricity customers from the city of San Francisco – a move that would cost the city money and undermine public power efforts.

The private utility wants the exclusive right to sell power to the new shops and restaurants that will open this summer at the renovated Ferry Building. But the city already provides power to the publicly owned building, through the Hetch Hetchy Department of Water and Power.

Although the amount of money at stake is fairly small, the principle is significant: PG&E and the city had a deal back in 1997 that allocated some Ferry Building customers to each, and now PG&E wants to go back on that deal, Ed Smeloff, assistant general manager of the San Francisco Public Utilities Commission, told the Bay Guardian.

Every retail customer the city serves provides evidence that San Francisco can effectively operate a public power system – something PG&E is desperately trying to avoid.

Cheap electricity generated by the city's Hetch Hetchy dam is used for municipal purposes, as well as for revenue when it's sold to the Modesto and Turlock irrigation districts. But the question of whether the city can sell power to private businesses within buildings it owns is more complicated.

Smeloff said this bid for Ferry Building customers is simply an attempt by PG&E to find additional ways to make money. It is also an example of how, in being forced into partnerships with PG&E, the public usually loses more than it gains.

Paul Fenn, director of the Oakland-based Local Power, noted that during the electricity deregulation proceedings in 1996, PG&E successfully demanded compensation for lost business, and now it's trying to take business away from the city while offering nothing in return.

"The San Francisco Ferry Building is a landmark building and is the essence of a public space," Smeloff said. "The city has every right to provide that building with Hetch Hetchy power."

But splitting customers at the Ferry Building with PG&E will be difficult unless the city replaces the building's sole electricity meter with meters on each stall, something Smeloff said would be expensive. Smeloff says the city is challenging PG&E's right to serve any electricity to the Ferry Building, and the case seems headed to arbitration where PG&E won a similar dispute last year.

PG&E challenged the city's electric service to Mel's Diner and Starbucks at Fifth and Mission Streets last year. The city claimed its right to those clients because their buildings were part of a larger parking structure that was, and still is, considered public space and is thus entitled to Hetch Hetchy power. But when PG&E took its case to arbitration, the company won.

PG&E representatives did not return calls by press time.

The current dispute may not affect new businesses in the Ferry Building right away, because the city is already charging PG&E rates. The city uses the additional revenues from these accounts to benefit the General Fund or other recipients of Hetch Hetchy power, such as the San Francisco Unified School District.

Unlike with PG&E, however, the city may also designate lower rates for its customers. Smeloff said the city is not legally tied to PG&E rates, and it may reduce rates at the Ferry Building to stimulate economic development there.

Future tenant Al Courschesne, owner of Frog Hollow Farm, told the Bay Guardian he is hoping for Hetch Hetchy power at rates lower than what PG&E charges when he moves into a new space in the Ferry Building next month. Courschesne's market, like many other shops soon to open in the building, will require a lot of electricity.

"Since the Port Authority is not even a private entity, why shouldn't they be served by a public agency on the electricity end of it," Courschesne said.

P.S. The public is invited to hear an update on the city's efforts to bring PG&E customers into a public power agency – centered on the much anticipated report on community aggregation from R. W. Beck – at the Local Agency Formation Commission meeting Fri/20, 10 a.m., City Hall, 1 Dr. Carlton B. Goodlett Place, Room 250, S.F.

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