Attorneys for the cities of San Francisco and San Jose asked the California Public Utilities Commission at an Oct. 23 prehearing conference to remain open to alternate options for reorganizing Pacific Gas & Electric—including the possibility of municipalization.
The prehearing conference was conducted as part of a proceeding launched by the commission on Sept. 26, in which it will review proposals filed in the bankruptcy court to restructure the utility. There are two current reorganization plans on file for PG&E—one by the utility itself, as well as a competing plan submitted by its bondholders and endorsed by a committee of wildfire victims.
In Oct. 18 comments and at the prehearing conference, Suzy Hong, deputy city attorney for San Francisco, said the CPUC's investigation into PG&E's safety culture has left open the option of municipalizing the utility. Municipalization has been publicly supported by Gov. Gavin Newsom, and its consideration is "inextricably linked to the reorganization of PG&E," Hong said. She added that the CPUC's order instituting investigation had also indicated that the agency would be open to multiple plans, which could include municipalizing PG&E.
This view was echoed by Luisa Elkins, senior deputy city attorney for San Jose, who urged the agency to ensure that the proceeding is flexible enough to accommodate future plans for PG&E.
"There are too many uncertainties in the bankruptcy proceeding at this time and no solutions should be ruled out," she said.
In September, San Francisco Mayor London Breed and City Attorney Dennis Herrera made a bid to purchase PG&E's electric distribution and transmission infrastructure within city limits for $2.5 billion. In the letter, they said their analysis indicated the sale would only have "modest impacts" on PG&E's remaining customers.
In joint comments filed with the CPUC on Oct. 18, the cities said that neither PG&E's nor the bondholders' plan can ensure that the reorganized PG&E will not have issues with safety and reliability. San Francisco's offer, they said, would maximize the value of the utility's infrastructure, and provide it with a cash infusion along with requiring more equity financing. The offer would also allow PG&E to take on less debt, they said.
"Importantly, San Francisco's acquisition would result in a real restructuring of PG&E, something not provided in either of the proposed plans. In providing distribution service to customers, San Francisco would be intensely focused on providing safe, reliable, affordable service to its constituents," the attorneys said.
PG&E attorney Henry Weissmann urged the commission to disallow parties to turn the proceeding into "a vehicle to advance their interests." Responding specifically to the suggestion of municipalization, he said it was not clear to him what the cities wanted the commission to do about it.
"Our position is that PG&E doesn't need to sell assets to municipalities in order to finance its plan of reorganization," he said, adding, "We don't think that should be part of the scope of this proceeding."