San Francisco Offers To Buy PG&E Electric Grid In The City For $2.5 Billion


Publish Date:
September 8, 2019
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San Francisco city officials are offering to purchase PG&E’s electrical grid in the city for $2.5 billion, according to a letter sent to the utility on Friday by Mayor London Breed and City Attorney Dennis Herrera.

The city has been considering a purchase since the utility filed for Chapter 11 bankruptcy in January as it faced mounting liability for wildfires sparked by its equipment. City officials are arguing that San Francisco could provide power that is more affordable, more reliable and safer than PG&E does in the city.

According to Michael Wara, an energy policy researcher at Stanford University, private energy companies hardly ever voluntarily sell their infrastructure to municipalities. More often, municipalities will forcibly take over the infrastructure by exerting eminent domain, and then pay the utility for it.

“Sacramento decided to condemn the wires and have a municipal utility,” Wara said. “The fight though occurs over how much to pay for those wires in Sacramento’s case. I believe there was more than two decades of litigation over the conditions and the compensation for condemning the wires.”

Even if PG&E agrees to sell to San Francisco, Wara said the process could drag out the utility’s bankruptcy proceedings because the sale would have to be final in order for the bankruptcy to be resolved. It could also delay payouts to victims of wildfires started by PG&E equipment.

“San Francisco has no wildfire risk obviously and other areas have a lot of it,” Wara said. “So if you remove the customers that don’t create that risk you’re going to maybe raise costs for other customers. I’m not saying that’s certain, but it’s possible.”

Additionally, San Francisco is such a huge part of PG&E’s customer base, according to Wara, the utility might not be a viable company without it.

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