Opening the books
City study would finally place a price tag on public power

By Matthew Hirsch

Within a year San Francisco city officials could learn one of Pacific Gas and Electric Co.'s biggest trade secrets – the value of its local electric system – and could have concrete evidence of the cost of running a public power system.

The Local Agency Formation Commission is beginning the process of conducting a public power feasibility study, and the results could undercut PG&E's last effective political argument against a city takeover of the local utility and provide a powerful new spur to the municipalization movement.

Following a recommendation by Sacramento-based energy consulting firm R.W. Beck, LAFCo voted Feb. 20 to move forward with a detailed appraisal of PG&E's system, requesting city funds to get started later this year. Sup. Tony Hall cast the only vote against the study.

"Everybody has been talking about it for decades," Sup. Tom Ammiano said before the vote. "I think it's time."

The commission requested funding from the San Francisco Board of Supervisors that could pay about half the cost of the appraisal ($300,000). LAFCo could then either spread the expense over two years or partner with another agency to complete the study sooner. Michael Bell, client services director for R.W. Beck, estimates the study will take six months to complete.

Last October R.W. Beck released a preliminary report valuing PG&E's electricity transmission and distribution system between $600 million and $1.4 billion. The report also concluded that purchasing the utility's electric system could increase annual city revenues by $245 million (see "Report Pushes Public Power," 10/8/03). PG&E spokesperson Matt Lonner responded with the assertion that the findings in the R.W. Beck report were "grossly misleading."

Besides Hall, LAFCo members were interested enough in the R.W. Beck report to continue with a detailed appraisal, which will produce a more precise value of PG&E's assets. Sup. Matt Gonzalez, chair of LAFCo, said the absence of this information undermined San Francisco's recent efforts to municipalize the PG&E system.

"The problem that at least I've seen in my short history in elected office is that when this is ever proposed, the primary argument you hear is 'Hey, we can't even go down this path, because there hasn't been a detailed appraisal done ... and the cost-benefit analysis isn't thorough enough,' " Gonzalez told the commission.

This year, however, LAFCo is planning to move ahead on the appraisal, and it's likely the budget request will be approved as well. Sup. Chris Daly, chair of the Board of Supervisors' Budget Committee, told LAFCo Feb. 20, in a written correspondence, that he is interested in working with the commission to fund the appraisal this year.

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