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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 7 of 8

For her part, Parks would prefer for the city to take over local distribution wires -- "for control," she says -- but, she notes, that move does not require the creation of a MUD. The Board of Supervisors could seize the PG&E wires in a condemnation process and, under one scenario, lease them back to the utility to pay off the acquisition cost. Or, because Hetch Hetchy Water and Power is already a municipal utility, its scope could be expanded through a city charter amendment to serve all of the city's electric energy needs; that service might, or might not, involve purchase of electric lines.

In fact, most public power experts interviewed for this article say that aggregation and gradual municipalization, overseen by the Board of Supervisors, would carry far less expense and risk than expropriation of PG&E's infrastructure by a MUD. But such alternatives have drawn the wrath of the those who are adamantly pushing a municipal utility district as a solution to San Francisco's energy problems. After Supervisor Tony Hall suggested studying the possibility of establishing a city-run utility two months ago, both the Bay Guardian and Eisenberg accused Hall of being a pawn of PG&E.


In 1995, the San Francisco Board of Supervisors hired an energy consulting firm to evaluate the feasibility of taking over PG&E's distribution system. The San Francisco Bay Guardian objected to the selection of this particular consultant, claiming that the company had performed work for PG&E and, therefore, had a conflict of interest. The Guardian said that the city should have hired the firm of J.W. Wilson & Associates. Indeed, Wilson, an economist specializing in electric utility matters, has impressive public power credentials, including service on several federal and state regulatory commissions during the past quarter-century.

In an interview for this article, Wilson directly refuted the claim, trumpeted by the Bay Guardian for more than 30 years, that the city of San Francisco is violating the Raker Act, and that the act requires the city to have a public power system. "The Raker Act," Wilson said, "does not require San Francisco to municipalize its electrical system. I looked into it a few years ago. The Raker Act would permit San Francisco to provide municipal service, but I am not aware of anything in the Raker Act that mandates municipalization; quite the contrary. The act does not say that there has to be a municipal utility district that serves all of San Francisco's electricity customers. Aggregation would be a good idea; any community can do it."

Interviews with a score of public power experts and lawyers -- as well as a comprehensive investigation by the United States Department of the Interior a decade ago -- make it clear that the Raker Act does not require San Francisco to operate a citywide system of public power, and the city is not selling Hetch Hetchy electricity to private companies for resale.

These same public power professionals, who are not tied to private utility companies or San Francisco politics, say that the law and common sense dictate that a comprehensive feasibility study of costs and engineering realities should be done before a MUD, or any other form of public power, is put to the voters, or instituted in San Francisco.

Stu Wilson is the assistant executive director of the California Municipal Utilities Association, which protects the interests of publicly owned utilities. He says the simplest option for municipalizing electricity in San Francisco is to do it through existing city departments and the Board of Supervisors, rather than creating a new government such as a MUD. He suggests that aggregation is a good first step toward expanding public power; a MUD is not needed to do that. He questions the prudence of putting the MUD on the ballot before studying it.

On Monday, Supervisor Gavin Newsom circulated a draft amendment to the city charter, meant for inclusion on the November ballot. Newsom's proposed amendment, compiled with help from the City Attorney's Office, would replace the city Public Utilities Commission with a Power and Water Authority that would have a board of directors composed of four elected and five appointed members. If approved by voters, the authority board would be expected to quickly commission a public power feasibility study. The authority would also be governed by the Sunshine Ordinance, according to the draft amendment, which was not expected to come before the Board of Supervisors for official action immediately.

Although cautioning that it would be difficult to do a meaningful study of municipalization while California's electricity crisis rages, the experts agree that, if a publicly owned power system is the goal, creating a MUD is not the only, or necessarily the best, way for San Francisco to achieve it. They note that a MUD will probably take many years to put in place and most likely be significantly more expensive and cumbersome than a municipal utility governed by the city's existing administrative structure, which already buys electricity in bulk on behalf of Hetch Hetchy's customers.

Not every San Franciscan, of course, acknowledges such expert views.


On a cold, rainy night in North Beach, a dozen neighbors gathered at a preschool to hear Supervisor Aaron Peskin introduce Neil Eisenberg, chairman of San Francisco's Local Agency Formation Commission. Peskin sprinkled his introduction with some not-too-subtle caveats. "The MUD may not be the best possible vehicle for public power," he said. "It has problems with legal viability, cost, and how long it will take to put in place." He talked briefly about alternatives, before yielding the floor to the LAFCO chairman.

Eisenberg rose slowly. "We can no longer afford to debate this issue," he said. "Aaron's 'alternatives' are a pipe dream."

During the next few minutes, Eisenberg told the audience that the public power movement intends to seize all of PG&E's San Francisco system. He said that Hetch Hetchy's turbines can meet most of San Francisco's electrical demand; that rates will fall 10 percent under an electric system run by a municipal utility district; and that a MUD will make hundreds of millions in profits each year. He provided no documentary evidence for these assertions.

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Peter Byrne

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