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SF's PG&E acquisition makes political – and financial – sense



It has been, my former colleague Savannah Blackwell reminds me, 50 years (and a few months) since the Bay Guardian first published a story by UC Berkeley biochemistry professor Joe Neilands that revealed how Pacific Gas and Electric Company – in the clear federal law violation – stole cheap public power from San Francisco.

(You can find a copy of the story here, you just have to scroll through a bunch of stuff to get to it.)

Almost everyone agrees that it's time for SF to take over PG & E's facilities [19659004] And now the city is finally moving to buy out PG&E and bring clean, renewable power – at lower prices – to the residents and businesses of the city.

It has taken two bankruptcies, many fires and a long record of usage errors in meeting clean energy goals. There have been generations of dubious mayors and mentors who cared more about PG & E's political power than the city's needs.

But now the tool has fallen so far that it has no more allies at the town hall – and the numbers are so clear that the matter of taking over the tool is out of debate.

For $ 2.5 billion, the city would end up paying around $ 125 million a year to cover its bonds. Sales revenue will be around $ 700 million a year at PG & E's current prices. There is enough annual revenue to rebuild the infrastructure and finance many renewable energy production plants.

IBEW, which has been an opponent of public power and has been supporting PG&E for years, has already started a campaign against the acquisition. is that the city has too many priorities other than spending money to buy the tool.

But the argument doesn't add up: If the city earns more than half a billion dollars a year on additional revenue from operating its own tools, it could spend money on a wide range of services. And IBEW's argument that SF would lose $ 20 million a year in tax from PG&E is almost foolish considering the revenues available from public power.

IBEW is concerned about its members' pensions – and that is a real question. But again: The current city proposal would ensure that all SF's PG&E workers get city jobs on the same pay scale, and it is entirely possible to do them all throughout the pension. I don't see how the city would have done anything that made union workers worse. And there is no need; half a billion a year – that's $ 5 billion over ten years – covers many pension liabilities.

It is quite possible that a San Francisco acquisition will make it harder for the remaining parts of PG&E to become stable again – San Francisco is by far the most profitable part of the system. (It costs a lot more to run wires and read meters in more rural areas.)

But today, the total market value of PG&E is about $ 8 billion. For a bankrupt company, $ 2.5 billion for a small part of the system (PG&E serves 16 million customers and only about 1 million are in SF) may seem like a good deal to a judge and creditors.

And I could certainly argue that PG&E no longer functions as an investor-owned tool. Breaking up the company and selling it to government agencies can serve both the creditors and the public.

Nearly 100 years after Congress asked San Francisco to create a public power system, and 50 years after the scandal went public, progress has been made.


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