Modesto mayor among those calling for a ‘customer-owned’ PG&E
A coalition of mayors and county supervisors, including Modesto Mayor Ted Brandvold, sent a letter Tuesday to the California Public Utilities Commission and Gov. Gavin Newsom urging them to consider transforming Pacific Gas & Electric Co. from an investor-owned corporation into a customer-owned utility.
“A customer-owned utility can operate without the burdens of paying dividends to shareholders, and exempt from federal taxation. As a result, a cooperative financial structure will save ratepayers many billions of dollars in financing costs over this next decade,” reads the letter, which was first reported by The Wall Street Journal.
Stockton Mayor Michael Tubbs and Sacramento Mayor Darryl Steinberg also signed the letter, along with about two dozen other public officials.
While most of Stanislaus County gets its electricity from the Modesto and Turlock irrigation districts, the letter is signed by other mayors and county supervisors who lead communities in PG&E territory. PG&E provides gas service to most Stanislaus County residents.
The change in structure would raise capital from a broad pool of debt financing in greater amounts and at a lower cost than an investor-owned company, the letter said. PG&E needs tens of billions of dollars over the next decade for system hardening, wildfire protection and cyber security, the letter said.
Any takeover would require approval from the PUC and the bankruptcy court — and wouldn’t be cheap.
PG&E’s investors have proposed a plan that would inject close to $40 billion in new debt and equity to pay old wildfire claims and pull the utility out of bankruptcy. A separate group, led by PG&E’s major bondholders, mounted a competing plan to seize ownership of the company.
PG&E issued a statement Tuesday brushing aside the letter — as it has with previous efforts mounted by the city of San Francisco and others to take over parts of the utility’s grid. They include the South San Joaquin Irrigation District, which seeks to be the power retailer in Ripon, Escalon and nearby areas.
“We are aware of proposals by various government agencies to acquire PG&E assets or to convert parts of the company to what is being described as a mutualized entity. We study and analyze each proposal. However, PG&E’s facilities are not for sale, and changing the structure of the company would not create a safer operation.
“We remain firmly convinced that a government or customer takeover is not the optimal solution that will address the challenges and serve the long-run interests of all customers in the communities we serve. We remain focused on fairly resolving wildfire claims and exiting the Chapter 11 process as quickly as possible. PG&E is committed to working with all stakeholders to make the necessary changes moving forward to build a stronger and safer PG&E and be the company our customers and communities want and deserve.”
Some experts say a government takeover isn’t necessarily a cure-all for PG&E’s troubles.
Already driven into bankruptcy by billions in wildfire damages, PG&E blacked out hundreds of thousands of homes four times last month as high winds kicked up but apparently couldn’t prevent new fires from igniting even as the lights went out.
A faulty transformer line has been linked to the Kincade Fire in Sonoma County, which destroyed hundreds of buildings and prompted 180,000 residents to evacuate. Four smaller fires in the East Bay in recent days may have been caused by PG&E’s equipment.
Newsom has reacted with scorn to PG&E Chief Executive Bill Johnson’s prediction that it could take 10 years for PG&E to “harden” its electrical equipment against future disasters. The governor said he wants his newly appointed “energy czar,” Ana Matasantos, to explore a dramatic restructuring of the company, including partial takeovers by local governments. As a last resort, Newsom said he would consider the state trying to buy the entire company.
This story was originally published November 5, 2019 at 4:56 PM.
