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Delusions of Power 

Is it smart to jump into the Bay Guardian's version of public power, without even studying whether it will save money?

Wednesday, Apr 4 2001
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Page 4 of 8

Such is the power of repetition that even the New York Times reported in January, "As the San Francisco Bay Guardian has noted in a series of articles, the city is violating the Raker Act requiring it to create a low cost public power system."

Here are the Raker Act realities, as pointed out by court documents, government officials, and private-sector experts: A resale contract between the city and PG&E violated the Raker Act from 1925 to 1940. The Supreme Court invalidated that contract. A new contract that met the dictates of the act was entered. The Supreme Court never ruled that the city must set up a public power distribution system. The court did note that the Raker Act requires that the city own and operate the Hetch Hetchy water and electrical system -- which it does. Neither the Raker Act nor the court prohibited PG&E, or anyone else, from selling non-Hetch-Hetchy-generated electricity in San Francisco.

In a telephone interview, Brugmann maintained his position that the city is violating the Raker Act, without presenting documentary evidence showing that this is so. He did, however, accuse SF Weekly "of standing with PG&E in the middle of an energy crisis."


As the California energy crisis deepens, San Francisco residents and city officials have become understandably interested in the possibilities of public power. There are, after all, many electric utilities across the country that are owned by municipalities. There is little doubt that many publicly owned utilities deliver electricity more cheaply than their private-sector counterparts. And even though the Raker Act does not mandate public power in San Francisco, the city clearly is allowed to pursue ownership of its electrical utility.

At the moment, the issue of public power in San Francisco is dominated by the LAFCO and its MUD proposal.

The MUD surfaced last spring when a lobbying group called Coalition for Lower Utility Bills -- A Project of San Franciscans for Sunshine collected 24,000 signatures on a petition that read in its entirety: "In the opinion of the petitioners, public interest or necessity demands the creation and maintenance of a municipal utility district with the same exterior boundaries as the City and County of San Francisco and the City of Brisbane." CLUB included Brisbane in the petition (against the wishes of the Brisbane City Council) because state law says that two public agencies must be involved when a MUD is formed.

In July, Board of Supervisors President Tom Ammiano proposed that the supervisors put the MUD petition to the voters for the November 2000 election. That plan fell apart in August, when a Superior Court judge ruled that the MUD could not be voted on until it was studied and approved by a San Francisco Local Agency Formation Commission; such a LAFCO was then formed by city supervisors.

LAFCOs are creatures of a state law called the Cortese-Knox Act, written in 1985 to regulate urban sprawl. Ordinarily, a LAFCO is called into being to study the environmental impact of annexing new territory to a city, or to create special governmental entities, including municipal utility districts, which are generally formed to acquire and operate utility services. After study, the commissioners are to decide whether to approve or disapprove the formation of a new district. In the case of a MUD formed to generate or distribute electricity, state law requires that the district's voters also be consulted.

In their haste to put a MUD on the November 2001 ballot, the LAFCO commissioners decided not to commission their own study of the financial feasibility of a MUD-based public power system, or to ask the California Public Utilities Commission to review the feasibility of the project -- a review that apparently is required by state law. Nor did the commissioners order an environmental impact report, also apparently required by state law. In fact, to get the MUD on the ballot, the commissioners had to find a way to circumvent the Cortese-Knox Act, because that law requires that the aforementioned studies be completed before the LAFCO approves a MUD and sends it to the voters. (It almost goes without saying that the LAFCO did not conduct a study of the alternatives to forming a MUD.)

On Nov. 16, 2000, CLUB attorney Angela Alioto wrote a letter to the LAFCO declaring, "The general provisions of Cortese-Knox pertaining to district formation do not apply to the formation of a MUD." Alioto, a former city supervisor who has no official position with the LAFCO and whose legal specialty is discrimination law, opined that the very state laws that authorized the creation of the LAFCO do not govern its activities. To justify putting the MUD proposal on the ballot before a feasibility study was done, Alioto advised the LAFCO to rely on an outdated set of laws written in 1951, 34 years before the legislation authorizing LAFCOs was passed to update and supersede the older laws.

Citing Alioto's opinion, Eisenberg and his colleagues agreed to support the creation of the MUD before studying its feasibility, and recommended that it be placed on the November ballot. The city attorney of Brisbane, a PG&E official, and lawyers representing the PG&E-funded campaign committee formed to oppose the MUD initiative all wrote letters protesting the recommendation as premature. They said that the LAFCO's action broke various state laws that require objective studies and public hearings before the matter can be put on the ballot.

A new San Francisco Board of Supervisors, dominated by progressives supported by the Bay Guardian, quickly voted to put the MUD proposition on the ballot, and to establish five MUD wards, with a director to be elected from each; one ward includes the city of Brisbane. The supervisors appropriated $754,250, with which the LAFCO is to employ an executive director, hire consultants, pay stipends to commissioners, and fund a limited "sphere of influence" study sometime in the future. (A sphere of influence study is neither an environmental impact study nor a feasibility study; it mainly defines the geographic boundaries of a new district.)

About The Author

Peter Byrne

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