San Francisco Measures Pose Threat to Beleaguered PG&E;

Pacific Gas & Electric Co., already in bankruptcy, would find itself stripped of 365,000 customers and subjected to a hostile takeover under a pair of public power initiatives that supporters say will bring more reliable electricity at reasonable rates. Its headquarters here could become just another downtown customer of a new utility run by the city and county of San Francisco.

PG&E; Corp., the parent of the utility, has spent more than $1 million on ad campaigns to make sure that none of this happens and that Measure I and Proposition F go down to defeat at the polls Tuesday.

Although they have been heavily outspent, at least 10 to 1, supporters of the two measures have built a broad coalition of environmental groups, organized labor and much of the city’s political establishment, with notable exceptions, such as Mayor Willie Brown and U.S. Sen. Dianne Feinstein.

Measure I would establish a municipal utility district for San Francisco and nearby Brisbane and would create an elected board of directors who would decide whether to take over PG&E;’s transmission, distribution and the limited generation here. Proposition F would create a water and power agency in San Francisco and a board with similar powers.

Two prominent advocates of public power--state Senate leader John Burton (D-San Francisco) and Board of Supervisors President Tom Ammiano--took to the City Hall steps Friday for a news conference with state energy czar S. David Freeman. “San Francisco needs to develop a more diversified package of power plants and energy conservation programs that will ensure future reliability of electric service in San Francisco at reasonable prices,” Freeman said.

Freeman, chairman of the new California Consumer Power and Conservation Financing Authority and former head of the Los Angeles Department of Water and Power, stopped short of endorsing the ballot measures but said the state Power Authority could assist a public power agency in San Francisco by selling it low-cost electricity produced by new efficient plants financed by the authority.

The measures have serious ramifications for PG&E;, which serves 4.7 million electrical customers in Northern and Central California and which filed for Chapter 11 protection from creditors in April. Experts say a successful municipal utility vote in San Francisco could encourage other cities to try similar moves to insulate themselves against volatility in power costs.

PG&E; Corp.’s campaign against the measures was joined by businesses, including telecommunications companies, who fear they might become targets of municipal takeovers.

The ad campaign, said PG&E; spokeswoman Jennifer Ramp, “is only prudent for any company when facing hostile takeover. . . . It’s getting the word out that these two measures do not present a solution to the problems we are facing in the energy crisis today--a lack of power and very expensive power.”

Supporters say consumers are better off having control of their own nonprofit utility district and not having to pay for dividends that go to PG&E; shareholders. “Los Angeles, Sacramento and Palo Alto have done it, and San Francisco can do it too,” Ammiano said.

“It’s time to make San Franciscans’ energy supply more reliable.”

Jon Kaufman, campaign manager for the PG&E-sponsored; Coalition for Affordable Public Services, said conditions today are a far cry from those faced when DWP and the Sacramento Municipal Utility District were formed decades ago.

“The government was selling surplus power, building dams, generating electricity and giving it to municipal utilities at low costs . . . that were passed on to customers,” Kaufman said. “There is no more surplus power. Now a municipal utility formed in 2002 will have to do what the state does--go out and buy power and pay what the market will bear.”

To take over for PG&E;, San Francisco first would have to acquire PG&E;’s local transmission and distribution facilities, and there is likely to be a legal dispute over that. The company has placed the value at about $1 billion, while the city and others peg it hundreds of millions of dollars less.

Voters also will decide whether to adopt two other measures that address energy shortages--but PG&E; supports them. Proposition B would provide $100 million in revenue bonds for solar and wind power for government use. Proposition H would allow county supervisors to issue revenue bonds to finance solar energy projects for residential and commercial buildings.

Another ballot item, Measure D, would grant voters the right to accept or reject any city construction plans that would fill in more than 100 acres of San Francisco Bay. Supporters say passage would protect the environmental health of the bay, while critics say it would slow plans to expand San Francisco International Airport along the bay front and hurt tourism.