CITY ATTORNEY DENNIS Herrera, who's positioning himself as the first person to hold that job in 90 years who's willing to openly advocate for a municipal electric utility, summed up the state of Pacific Gas and Electric Co.'s bankruptcy bailout very nicely in an op-ed piece in the Dec. 19 San Francisco Chronicle: "If ever an event in our history made a convincing demand for the necessity of public power, it's the PG&E bailout approved by the California Public Utilities Commission Thursday."

The CPUC, in a cave-in of gargantuan proportions, agreed to stick PG&E's ratepayers with a tab of as much as $8 billion over the next nine years. The decision followed one of the great sellouts of California political history: as Matthew Hirsch reports on page 16, the Utility Reform Network, which claims to fight for consumer rights, signed off on the deal – and will now collect some $1 million in legal fees as part of the settlement.

The impact of the bailout will be immediate and lasting. Power rates for at least the next decade will soar, far above what consumers in other nearby states (and even in southern California) pay. The ultimate impact on the region, according to a methodology developed by economist Irwin Kellner of Hofstra University in Long Island, could reach $40 billion.

That's money out of the pockets of residents and businesses, money that could have generated a lot of tax revenue for struggling local governments, money that could have been a boost to the region's recession-battered economy. Instead, that money will be sucked out of the area altogether and wind up in the coffers of PG&E's Maryland-based parent corporation, which is investing its cash in ventures from Hermiston, Ore., to Jacksonville, Fla., and from Calgary, Canada, to Labuan, Malaysia (see "PG&E: The Evil Empire," 10/16/02).

But San Francisco doesn't have to go along with that plan. Cities that generate their own power and sell it to residents and businesses won't get stuck with high PG&E rates. Neither will cities that buy power in bulk on the open market – although PG&E still owns generating plants and sells power, there are plenty of other sources out there, including federal and state power projects.

As Herrera points out, the City Charter specifically states that "when public convenience and necessity demand ... public utilities shall gradually be acquired and ultimately owned by the city and county." In fact, San Francisco is the only city in the nation that has a legal mandate to operate a public power system, enshrined in the Raker Act of 1913 and confirmed by a 1940 U.S. Supreme Court decision.

Over and over again, at least 15 times since the 1920s, San Francisco activists have tried to enforce the Raker Act and take over PG&E's local system, but the giant utility and its political allies (who included, until now, every city attorney and almost every mayor) have always spent huge amounts of money to shoot down the idea. The last time, in 2002, came down to about 500 votes, with PG&E narrowly winning after a series of irregularities including ballots being moved mysteriously out of City Hall to a waterfront pier and ballot-box tops found floating in the bay.

The battle was already heating up again this fall: several of the leading mayoral candidates talked about it repeatedly on the stump. (Even mayor-elect Gavin Newsom gave lip service to public power when he agreed to let Angela Alioto, who finished third in the November election after campaigning in part as the champion of municipal utilities, play a role in his administration.)

But the CPUC's decision – and Herrera's dramatic move to push public power as the alternative – immediately vaults the issue to the top of the political agenda. Herrera, who is a relative political centrist, has taken an important step to make public power a mainstream issue, and as city attorney he has an influential role in the debate. No matter what approach the city takes to move forward on public power, PG&E will fight it both politically and in the courts, and the importance of having the city's chief legal officer on the side of the public interest can't be overstated.

The next crucial step is for the San Francisco Board of Supervisors to begin holding hearings on all the possible options for taking control of the city's energy future. Sup. Chris Daly has already asked Herrera for an opinion on what legally can be pursued, both at the board level and at the ballot box, and every aspect of that opinion that doesn't concern confidential legal strategy should be released to the public so the discussion can begin in earnest.

Public power advocates need to being meeting on their own to consider whether to push the issue at City Hall (and force Mayor Newsom to take a stand, for or against the public interest), or to look at another ballot initiative (which is, of course, a costly and difficult move, since PG&E will no doubt spend millions again to defeat it). There are clearly some small and not-so-small steps the city can immediately begin to take (community aggregation, a limited, step-by-step build-out of a local distribution system, construction of city-owned renewable energy resources, etc.). There are more dramatic steps (condemning and seizing PG&E's local infrastructure) that will take longer to implement.

In the end the bottom line has to be this: San Francisco needs to get out from under PG&E entirely and create a full-scale city-owned electricity generation and distribution system consistent with the intent of the Raker Act. That may not happen tomorrow – but there's no reason not to start now, with every possible step in the right direction.

The blackout last weekend, in which a third of San Francisco lost power, including many downtown businesses who were hammered on one of the biggest shopping days of the year, only adds to the evidence that PG&E can't and won't provide a reliable electricity system for one of the world's great cities. Herrera deserves tremendous credit for framing the choice: residents and businesses can pay crushingly high electricity bills, damaging the local economy and taking billions of dollars out of town, or the city can replace PG&E with a reliable, affordable municipal utility.