PG&E says it would cost San Francisco more than $20 billion to take over the utility's local electric grid, a figure nearly six times the $3.4 billion the city put on those assets in April. PG&E CEO Patti Poppe disclosed the estimate on Wednesday, Oct. 14, at a Climate One event at the Commonwealth Club in San Francisco. The utility must file its full analysis with the California Public Utilities Commission (CPUC) on Tuesday, Oct. 20.

The city asked the CPUC in 2021 to set the cost of buying the grid, and the regulator directed PG&E to submit its testimony by Oct. 20.

What's in PG&E's $20 billion

PG&E says its figure is in 2021 dollars and is more than the city's annual budget of nearly $17 billion. According to the company, the total includes three pieces:

  • Electric system assets: the fair market value of the poles, wires, substations and other infrastructure, plus PG&E's real property in the city.
  • Separation costs: the work to split San Francisco off from PG&E's integrated grid and keep serving customers outside the city, including building a new PG&E substation.
  • Severance damages: money PG&E says is needed so its remaining customers don't pick up costs San Francisco ratepayers now help cover, such as wildfire risk reduction, low-income assistance and energy efficiency programs.

PG&E argues the city's April offer is "well below market value," saying it assigns no value to about 2,000 PG&E real estate interests in the city, such as easements and licenses. The company adds that its estimate leaves out the "hundreds of millions of dollars" in start-up costs for a city-run electric company, and roughly $100 million a year in taxes and franchise fees PG&E pays San Francisco.

Poppe also said about 600 PG&E workers serve the city every day and would leave if San Francisco took over. "I don't think that's in San Francisco's best interest," she said, according to the company.

What the city says

The San Francisco Public Utilities Commission (SFPUC) values the assets at about $3.4 billion, based on expert testimony it updated in April. PG&E says that figure does not yet include any analysis of severance costs.

The SFPUC says buying the grid would not be paid for from the city budget or taxes. It would be financed with revenue bonds repaid through electric rates, which voters authorized when they passed Proposition A in June 2018 with 77% of the vote; those bonds also need approval from two-thirds of the Board of Supervisors. The agency already supplies more than 75% of the electricity used in San Francisco through Hetch Hetchy Power and CleanPowerSF, but PG&E owns the local wires. If the city goes ahead, the SFPUC says it would physically separate the systems, generally along the San Francisco–San Mateo County line.

Where the takeover effort stands

Support for public power at City Hall grew after December's blackout left large parts of the city without power. On Sept. 22, the Board of Supervisors unanimously upheld the final environmental impact report for the acquisition, rejecting PG&E's appeal and clearing a required step before the city can approve a purchase. City leaders have also asked the CPUC for a public probe of PG&E's performance after dozens of large outages this year (our earlier coverage).

Mayor Daniel Lurie has not taken a public position on a takeover. The Standard has reported he is skeptical of the effort but is not standing in the way.

Next up is PG&E's detailed testimony to the CPUC on Oct. 20, which will lay out how the utility reached its number.