Lawmakers explore options for restructuring PG&E

Embattled utility Pacific Gas and Electric has until June 30 to resolve its bankruptcy case.  The result will likely mean a restructuring, at least a new look for PG&E.  That may not be enough change for some local leaders who are fed up with public safety power shutoffs and what they call “decades of negligence.”  "By creating a customer owned utility, we'll first be able to align the financial interest of the company with the public interest and second we'll be able to create a company that has access to capital markets that will be critically needed for this utility to get back on its feet,” said San Jose Mayor Sam Liccardo.

Mayor Liccardo is leading the charge to make PG&E a community-owned utility. The mayors of more than 20 cities and a handful of county supervisors from across PG&E’s service area signed a letter urging state regulators to consider the option. Oakland Mayor Libby Schaaf is among them. “We're asking that before the bankruptcy court moves forward that we have the opportunity to really explore a customer-owned utility,” said Mayor Schaaf. “Let's take the profit motivation out of it.

The popular idea would take some serious work. In addition to the billions of dollars it would take to shore up infrastructure, the plan would require approval from state regulators and getting the utility to buy into the plan. “The incumbent utility is not typically a willing seller,” said Ursula Schryver, vice president of education and customer programs for the American Public Power Association.  “They want to keep their customers so they tend to drag out the process and fight the process with communication efforts, legal battles, to drag it out and make it as expensive as possible.”

The APPA provides support for more than 2,000 community-owned electric utilities in the country.  Schryver says one of the benefits of public power is getting to invest revenue into what the community wants, whether that’s reliability, sustainability, or lower rates. “Really it comes down to local decision making, providing the services that are most important to the community, rather than the need to provide resources, like money to stockholders,” said Schryver.

Another idea that APPA can help communities with, is for individual cities to buy out local power lines from the utility. San Francisco recently offered PG&E $2.5 billion but it was turned down. One city that knows what it’s like to split from a private utility is Winter Park, Florida.  Fed up with unreliability and outages, the city bought out their section for $43 million after an ugly fight with the private utility and an overwhelming vote in favor of splitting.  City officials say there were growing pains, but more than a decade later, believe it’s not only more reliable, but cheaper. “I’m really grateful that we had a commission with that strong of a backbone, and that much foresight, because it’s been great for the city of Winter Park,” said Randy Knight, the city manager for Winter Park.

But, as mentioned before, the transition took work. The city spent millions on infrastructure and undergrounding of lines, which was a promise during the campaign.  “We felt we could get them all underground, in 20 to 30 years,” said Knight.  “We’re 14 years in and we’re about 7 years away from having all the power lines underground, that was our commitment. Our first few years we were just trying to repair all the lines that kept going out.”

Important to note, there are 14,000 electric customers in Winter Park, PG&E has 5.4 million total, according to its website. PG&E CEO Bill Johnson was asked during a recent state senate oversight hearing about breaking up. “I’m open to any response that serves the needs the best of the people of northern California,” said Johnson. “I do work for the shareholders at the moment, let’s not kid ourselves about that, I actually think keeping PG&E as an integrated, different company is the best way to serve the people of the region.

There’s no question, lawmakers and customers alike are looking for answers and change when it comes to keeping the lights on.  Whatever becomes of PG&E, it’s clear, it will take a lot of work. “It’s certainly not for the faint of heart, but the biggest thing is, do it for the right reasons, it’s a community decision, and what does your community want to get out of it,” said Knight.

In a filing with the CPUC earlier this year, PG&E said splitting its gas and electric divisions could improve safety, but could also raise rates due to infrastructure, insurance and other reasons.