Mayor Gavin Newsom called a meeting with Pacific Gas and Electric Co. president Thomas King in July to let the utility chief know that the city intended to pursue public power projects on Treasure Island and Hunters Point.
“It was just to tell him that we’re going to do it,” Newsom spokesperson Peter Ragone said of the meeting. “The mayor thought it was a gentlemanly thing to do.”
King used the occasion to start an aggressive new offensive — and to preview PG&E’s latest political strategy.
In an Aug. 10 letter to Newsom, King promised not to fight the city’s plans in court and pledged to develop a better relationship with the city.
“We know that it was in this spirit of cooperation that you approached us last month, and we want to foster this spirit and forge an even stronger partnership in efforts to protect our environment in the years ahead. That’s why I wanted to respond to your questions and suggestions — and to share with you some ideas of my own,” King wrote, listing one of those ideas as helping the city develop energy from tidal power at the mouth of the bay, which Newsom had recently announced a desire to pursue.
The day after PG&E wrote the letter, Newsom and San Francisco Public Utilities Commission (SFPUC) head Susan Leal announced the city’s intention to supply public power, mostly from clean solar and hydroelectric sources, to the redevelopment project on Parcel A of the former Hunters Point Naval Shipyard, where the politically connected Lennar Corp. (which is also part of the team with the rights to build on Treasure Island) has the contract to build 1,600 new homes.
“What we want to provide is a green community at a rate that meets or beats PG&E,” Leal told the Guardian, noting the history of environmental injustices that have been heaped on the southeast part of town. “We’re very excited about what’s going on at Hunters Point. . . . It’s important that the city do the right thing for that community.”
And just as PG&E was pledging cooperation, it aggressively set out to undermine the city’s plans with competing bids and continued its fiercely adversarial posture in another half-dozen realms in which it must work with the city, battles that have cost San Franciscans millions of dollars.
“This is a competitive world and this is fair game, don’t you think?” PG&E spokesperson Darlene Chiu — who used to be Newsom’s deputy press secretary — told us of company efforts to subvert the public power projects.
Last month PG&E also hired away SFPUC commission secretary Mary Jung, who had been privy to closed-session discussions about various city strategies for dealing with PG&E. Jung, who did not return a call for comment, was required to sign a confidentiality agreement and threatened with criminal charges if she spills city secrets, although city officials acknowledge that would be difficult to prove.
PG&E has also launched a high-profile public relations offensive designed to repackage the utility as a clean and green crusader against global warming and a supporter of community programs such as the mayor’s pet project, SF Connect, to which it contributed $25,000 last month.
“The company has a long and continuing history of fighting against the city rather than working with the city on issues involving municipal power, improved reliability, connecting city facilities, and protecting ratepayers,” Matt Dorsey, a spokesperson for City Attorney Dennis Herrera, told us. “If PG&E wants to demonstrate its good corporate citizenship, it can start by changing the nature of its relationship with the city.”
If anyone from the Bay Area needs a reminder about the big money, bare-knuckle approach PG&E uses when its interests are threatened, they need only look up the road to what’s happening in Sacramento and Yolo counties.
PG&E has so far spent more than $10 million fighting Propositions H and I in Yolo County and Measure L in Sacramento County, which together would allow the Sacramento Municipal Utility District (SMUD) to annex more than 70,000 customers in Davis and surrounding communities.
The PG&E effort has saturated mailboxes and the airwaves with messages that inflate the cost of taking over its transmission lines, imply threats of a drawn-out legal battle, and make bold claims of its being an environmentally friendly utility (for example, including nuclear power in its calculations of how “green” PG&E is).
“They’re trying to spread fear and confusion,” Davis-based public power advocate Dan Berman told us. “A new thing comes out every day. But we keep citing the message of lower rates and better service.”
In fact, SMUD has rates that are about 30 percent lower than PG&E’s and a power portfolio that includes significantly more energy from renewable sources than PG&E uses. Even King’s claim that PG&E is “the leading solar utility in the county, having hooked up more than 12,000 solar-generating customers” is misleading. The number is large because PG&E has the largest customer base in the country, but the solar rebates were state mandated and SMUD inspired and come from ratepayer surcharges.
Still, PG&E justifies its aggressive campaign in Yolo County in terms of warding off a hostile takeover of its customers. For residents there and new customers in San Francisco that the SFPUC wants to serve, PG&E’s Chiu repeats the mantra that “we have an obligation to provide services.”
Yet critics of the company say the campaign is about more than just holding on to those customers. Right now more than a dozen California communities are pushing for public power, most involving community choice aggregation (CCA) — which allows cities to buy power on behalf of citizens, potentially bypassing PG&E.
“That’s one of the reasons they’re pulling out all the stops in Davis, because if this goes through, it will embolden other communities,” Barbara George of Women’s Energy Matters told us.
San Francisco was an early city to pursue CCA, but plans to implement it have moved slowly, and now other communities — including Marin County and the cities of Oakland and Berkeley — are even further along.
“San Francisco is way behind in community choice,” George said. “The mayor is giving PG&E a lot of time to put out its claims to be green in order to fight this.”
Part of that push involves a slick 16-page mailer sent out in August by “The New PG&E” outlining “a proposal for an unprecedented and far-reaching partnership with the city of San Francisco to create the cleanest and greenest city in the nation.”
Sup. Ross Mirkarimi — a longtime public power advocate — is skeptical. “I welcome it, but I don’t buy it,” he said. “Their desire to work with us is typically predicated on the receding of our efforts to pursue public power.”
In fact, King seemed to say as much in his letter to Newsom when he wrote, “We see the investment of time, money and political capital in the public power fight as a distraction from the real need — providing clean, reliable and safe power to San Francisco.”
Chiu denied that there is a quid pro quo here, saying, “It is our intent to help San Francisco become clean and green, whether or not it comes with the city’s blessing.”
Yet Leal said the company seems more interested in stopping public power than going green. Rather than trying to undermine the city’s plans for the area, she questioned, “Why don’t they have the rest of Hunters Point, which are already their customers, be a green community?”
COMPETING WITH PG&E
Lennar is expected to announce in the next week or two whether it will go with public power or PG&E at Hunters Point. “No final decision has been made at this point,” Lennar spokesperson Jason Barnett told us.
Yet it didn’t have to be this way. Lennar’s redevelopment project is being subsidized with public funds that could have been conditioned on public power. Even as late as Oct. 17, when the San Francisco Redevelopment Board agreed to change Lennar’s contract to let the company out of building rental units, public power could have been part of the trade-off. Agency chief Marcia Rosen did not return Guardian calls asking why the public agency didn’t take advantage of this leverage.
For her part, Leal said, “I’m not afraid of competition.” It was a point echoed by Ragone, who said Newsom believes the city shouldn’t be afraid to compete with PG&E on Hunters Point or Treasure Island or to stop a PG&E bid to help develop clean tidal power.
But Mirkarimi doesn’t necessary agree. “Why do they have that right?” he asked, arguing the city shouldn’t let PG&E take control of new energy resources or customers who should be served by public power. “The tentacles of PG&E haven’t receded any less at City Hall and we should always be on our guard.”
Leal and Ragone each acknowledged that competing with PG&E isn’t always a fair fight. After all, in addition to having the resources of nearly 10 million customers paying some of the highest rates in the country, PG&E is also alleged in a lawsuit by the city to have absconded with $4.6 billion in ratepayer money during its 2002 bankruptcy, in what Herrera called “an elaborate corporate shell game.” On Oct. 2, the US Supreme Court denied review of a Ninth Circuit Court of Appeal ruling favoring the city, sending the case back to the trial court to determine just how much PG&E owes ratepayers.
That is just one of several ongoing legal actions between the city and PG&E, including conflicts over the city’s right to power municipal buildings, PG&E’s hindrance of city efforts to create more solar sites, and battles over the interconnection agreement that sets various charges that the city must pay to use PG&E lines.
MONEY IN ACTION
A good example of PG&E tactics occurred during the July 26 meeting of the Metropolitan Transportation Commission, which is overseeing work on the Bay Bridge. As part of that work, a power cable going to Treasure Island needed to be moved, but the Treasure Island Development Authority didn’t have the $3.4 million to do it.
So PG&E executive Kevin Dasso showed up at the MTC meeting with a check made out for that amount, offering to pay for the new cable and thus control the power line through which the SFPUC intends to provide public power to the 10,000 residents who will ultimately live on the island.
“This deal with Treasure Island was really egregious. They came in like a game show host and held up a check to try to stop this baby step toward public power on Treasure Island,” said Sup. Tom Ammiano, who also sits on the MTC board. “It shows PG&E is not asleep at the wheel by any means, and anybody who’s elected is going to need to stay vigilant.”
Ammiano was able to persuade the MTC to loan TIDA the money and preserve the city’s public power option. PG&E officials are blunt about their intentions. Chiu said, “We both want to provide power to Treasure Island.” So officials note the importance of being vigilant when it comes to PG&E.
“There will be other meetings where PG&E will wave around $3.4 million checks,” Leal said. “And at some of those meetings, we won’t be there to stop them.”
So public power advocates are concerned that public officials are letting PG&E rehabilitate its public image. Newsom has recently shared the stage with PG&E executives at a green building conference in San Francisco and the Treasure Island ceremony where Gov. Arnold Schwarzenegger signed the landmark global warming measure that PG&E long opposed before ultimately supporting. Ragone said neither these events nor PG&E’s contribution to SF Connect nor his direct dealings with King indicate any softening of Newsom’s support for public power.
“We’re going to do what’s in the best interests of the city of San Francisco,” Ragone said. “This is the first mayor to support public power, and that hasn’t changed at all.” SFBG
To see the letter from King to Newsom and other documents related to this story, go to www.sfbg.com.