San Francisco officials see an opportunity to reduce power delivery costs while also taking control of their energy mix with significant changes on the horizon for PG&E.
The report considers three scenarios, including: “limited independence,” targeted investment to grow independence somewhat and the acquisition of PG&E’s assets for “full independence.”
The city’s desire to exercise control over electric service to improve reliability, affordability, and sustainability, coupled with PG&E’s financial uncertainty would provide an opportunity to expand public power for full independence and remove the cost and resource burdens of reliance on PG&E, the report concludes.
The report does not develop specific cost estimates but says that the cost of acquiring these assets is likely in the range of a few billion dollars, based on an estimate of the current, unrecovered investment of the utility in the city’s distribution facilities.
PG&E officials have previously stated that they are open to a range of new management and corporate structures that state regulators and lawmakers are considering. However, the company was cautious in responding to the report from San Francisco.
The report says PG&E’s cooperation with the city to serve its facilities has “diminished over time,” while federal open access laws provided the city a right to access the utility’s distribution services.
The utility said it was “committed to working with the City and remained open to communication on this issue.”
PG&E said, “We look forward to reviewing the analysis of the City and appreciate the open and transparent dialog on the subject being held by the City.” “We all agree on the importance of continuing to serve clean, affordable and reliable energy to San Francisco citizens.”
Starting in the 2000s, San Francisco addressed its concerns to the Federal Energy Regulatory Commission, as PG&E sought to repeal its agreements with San Francisco and unreasonably withhold tariffed distribution service from the City. Continued reliance on PG&E’s purchasing distribution service has become increasingly untenable and unnecessarily expensive.
There are also concerns that the power content of PG&E does not move away from natural gas quickly enough. Public power options provided by the city provide 100 percent emission-free energy through community aggregator CleanPowerSF and Hetch Hetchy Power, which serves city agencies.
San Francisco “should not tolerate unnecessary obstacles” in meeting its energy goals, the reports read, while recent wildfire tragedies and the financial position of PG&E raise serious concerns about the safe and reliable delivery of essential services to businesses and residents of San Francisco.
While San Francisco has been increasing its power independence for years, the process of reducing reliance on PG&E’s distribution system began in 1997, when the PUC assumed responsibility for the Treasure and Yerba Buena Islands electrical service. Most recently, in 2016, CleanPowerSF launched a 100% clean energy option for city residents.
In a letter to San Francisco Mayor London Breed, SFPUC General Manager Harlan Kelly Jr. said the commission would continue studying its options.
“The next phase of the analysis will go deeper,” he said, including examining the impact of acquiring PG&E distribution assets on affordability, safety, reliability, workforce, environmental justice, neighborhood revitalization, and community engagement.
“This analysis will also include the impact on other ratepayers throughout San Francisco’s departure from the larger PG&E system,” Kelly Jr. Wrote.