The real blackout SFBG News | January 24, 2001 | The real blackout While the statewide media has consumers hyperventilating over rolling blackouts and corporate bankruptcy, a burgeoning citizens' movement is pushing for a public takeover of the state's electric system – beginning with San Francisco. By Rachel Brahinsky IT'S BEEN FRONT -page news for months now: rolling blackouts, impending utility bankruptcy, and electricity rate hikes – and we're told it's all inevitable. A publicly funded bailout of the debt-racked utilities, we are told, is the only way to keep the lights on and the economy afloat. Everyone from President George W. Bush and Gov. Gray Davis on down concedes deregulation's failure, but so far the state has merely offered a corporate bailout. It's a solution that critics say is short-term and skirts the real issue: the need for a community-based approach to energy policy. But you won't hear any real discussion of this idea in the mainstream press, where rescuing Pacific Gas and Electric and Southern California Edison from bankruptcy is portrayed as the state's top policy priority. Call it a political blackout: press and politicians are largely ignoring the one solution proved to work – public power. Public control of energy is not a new idea: 2,000 cities nationwide deliver power through publicly managed systems that have eliminated the profit motive that has driven California to the current state of crisis. The entire state of Nebraska moves its juice through publicly controlled lines. Slowly and sporadically the concept of public power is entering the energy-crisis discourse. The California legislature, for instance, is considering a state takeover of PG's hydroelectric dams and may create a California Power Authority, which would enable the state to wrest some control of the electricity market back from the private energy companies. But so far there's been much more emphasis on public bailouts than on public control of energy – and there's a big difference between the two. Not everybody is buying the press's and pols' bill of goods. Surveys show Californians don't believe that the well-publicized power shortage is real (which it isn't – see "Deregulation FAQs" ), nor do they trust Davis's assertion that if the utilities go belly-up, we all follow close behind. But what this skeptical public has not been told is that there is – right now – a way out of this energy-industry meltdown. Already a growing statewide activist movement is calling for a fundamental rethinking of how electricity is made and sold. This includes moving toward better conservation programs, more reliance on green power sources, and community ownership of the poles and wires that carry electricity to people's homes. Publicly run, nonprofit power, advocates argue, will propel energy solutions that target citizen and environmental needs, instead of corporate bottom-line imperatives. The energy crisis has shown – even to doubters – that energy shouldn't be a commodity sold on the open market. Not only has it become an essential resource, it's also tailor-made for profiteering. "The fundamental change that we should be looking at is local and state ownership of utilities," Joel Ventresca, cochair of the San Francisco Coalition for Lower Utility Bills (CLUB), told us. "Are we going to have democratic control over an essential service? Or are we going to have autocratic market forces gouge consumers and harm the environment?" Locally, activists and several city supervisors are pushing for a municipal utility district, or MUD, a public agency that could compete with – or replace – PG for electric service in San Francisco and Brisbane. In at least four other California communities, residents are looking into municipalization as well, and consumers across the state are talking about taking control of the whole system from top to bottom. Advocates say that the benefits are straightforward: public utilities bring local control and a long track record of lower rates. According to the American Public Power Association, an industry advocacy group based in Washington, D.C., public power agencies charge an average of 30 percent less than privately held utilities. Nearly all public power communities have cheaper electricity than that provided by PG. This December customers of Sacramento's public power district paid nearly $20 less than PG ratepayers. Many utility districts are run by an elected board of directors, giving customers decision-making power on key issues. In Sacramento, when energy users wanted to sever their MUD's dependency on nukes, citizens put a measure on the ballot that forced the utility to decommission the Rancho Seco Nuclear Power plant. SMUD has since developed programs in solar and other renewable energy sources. That's the model that inspired local activists to form a MUD in San Francisco. The blackouts and price hikes are helping the cause. "People are really getting in on the ground level of power education," Angela Alioto, attorney for CLUB, told us. "They're seeing why returning to public power is something we should have done years ago." The coalition has spearheaded the campaign to form a MUD in the city for the past two years, and its members have been pushing for local control of the city's electric system since the late '60s. Last year the movement took off when citizens gathered 24,000 signatures backing a MUD ballot initiative. The Board of Supervisors is expected to put the question before voters next fall. If approved, the measure would bind San Francisco and Brisbane together in a district that, independent of city government, could use eminent domain to break PG's control of the local electric grid. By legally grabbing PG's facilities – everything from poles to wires – the MUD would put control over electricity in the hands of ratepayers. There's already a law on the books requiring this public control, but San Francisco has never complied with it. The federal Raker Act, passed in 1913, gave the city permission to build a hydroelectric dam in the Hetch Hetchy Valley of Yosemite National Park – on the condition that it be used to provide water and power to San Franciscans through a nonprofit, public power agency at the lowest possible rates. But the city sold much of that power down the river. Before the dam was built, PG and the city signed an agreement giving the corporation first rights to sell power to residents and businesses. While Hetch Hetchy water remains one of the city's civic treasures, most of its power is diverted to customers of two communities in the Central Valley. PG's exclusive franchise agreement with the city has assured it monopoly control. The 1996 deregulation law was supposed to break that monopoly by opening up the field of power generation. But because PG maintains control over distribution and charges a stiff delivery fee, it has been extremely difficult for small companies to break into the market. "Many people say to me, 'How could this have gone on for so long?' " Alioto said. "We're talking 80 years. L.A. has what we are going to create – but we already own it." Public ownership or public bailout? Under the microscope of Davis's special session on the power crisis, there have been a number of "public" power solutions proposed in the past few weeks – including Davis's own plan to spend $400 million in taxpayer money to buy power for PG and Southern California Edison. Consumer advocate Harvey Rosenfield is lobbying the state to stop the bailout and to establish a public power agency to watch out for consumer interests and force the utilities to either negotiate fair power contracts or have their assets seized. "The energy and utility companies sponsored deregulation and have now used it to bring California to its knees," he said. "Paying energy companies a ransom isn't going to solve the problem." There are other proposals on the table that seek to put control of energy resources in the hands of the state. State senator John Burton is proposing a statewide power agency to finance energy efficiency programs and new power plant development. In another twist on the public power idea, Democratic assemblymember Fred Keeley is suggesting that California take over PG's hydroelectric system – but consumer groups say the idea is fundamentally flawed. "I wouldn't even call this public power," Doug Heller of the Foundation for Taxpayer and Consumer Rights told us. "This is public payment. The reason this is being floated as an idea is as a way to get money to these utility companies to keep them solvent, so you're cloaking a bailout with a buyout." In San Francisco, too, for the first time in several years, there are competing public power ideas floating around city hall. Mayor Willie Brown, not typically a strong advocate for public takeovers of private enterprise, seems to be poised to take on the issue for himself. Brown told the New York Times last week that he is willing to consider the idea of municipalization. And this week he unveiled his pitch for California cities to create a joint power agency that could take over private power plants and sell electricity to residents and city agencies, the San Francisco Chronicle reported. However, mayoral spokesperson P.J. Johnston told us that the mayor has yet to take a position on the MUD proposal. The type of city-run utility Brown seems to be promoting may sound good, but consumers beware: it's not the same thing as an independent MUD. The key distinction is that MUDs are autonomous from city government, managed by an elected board of directors. In San Francisco, a MUD could be out of the mayor's political reach. It's within the mayor's reach, however, to help the city comply with the Raker Act. Until now he has refused to take on the thorny issue of enforcing the law by asking City Attorney Louise Renne to kick PG out of town. (The city attorney and the secretary of the interior are the only two positions with the authority to enforce the act.) And although Renne has filed a suit against power generators that names a PG affiliate as a defendant, Renne's office has never shown support for the MUD proposal that, advocates say, is a way to enforce the Raker Act. Los Angeles has it. Why don't we? There are already many well-established examples of public power systems throughout California. The Los Angeles Department of Water and Power, the state's largest public power agency, has insulated its customers from the blackouts and bill hikes of deregulation. While deregulated bills in San Diego tripled to as much as $138.50 last August, the average L.A. residential customer paid about $50 a month consistently all year. The utility has also reaped big cash windfalls for the city. Because it owns more than enough generation facilities to power Los Angeles, last year the utility transferred more than $115 million to the L.A. general fund, according to assistant general manager Henry Martinez. Additional profits are rolled into paying off debts. About a year ago the utility broke ground on a new program to improve efficiency and is expanding green power programs. "[You] have to do what L.A. has done, which is build power plants and invest in efficiency," Freeman told us. "Over time this will protect the consumer. I think public power is the biggest part of the answer [to the crisis]." Northern California is home to a number of public power districts that have had similar, if not as dramatic, success this year. Palo Alto, Alameda, Sacramento, and Lassen all have public power, and all of them charge less than PG. Even after a 10 percent rate hike this winter, Palo Alto's average price will be 30 percent less than PG. James Pope, director of Silicon Valley Power in Santa Clara, tells a typical story. "We have physical assets, we buy in long-term contracts, and we protect our customers. We don't make profits. The money stays here," he said. MUD victory near? These success stories have not been lost on the new Board of Supervisors. Sup. Tom Ammiano has done everything possible to move the MUD proposal forward, and several of the new supervisors included the issue in their campaign platforms. Sup. Matt Gonzalez told us that in addition to placing the MUD petition on the ballot, "we're also looking at the nuts and bolts of a revenue bond that could take over the distribution lines and could deal with the transmission of power from Newark to San Francisco." "I think for the first time it's caused a public that generally can't get interested in [electricity] to suddenly say, 'Wait a minute, how did we get here?' And there's suddenly a much more informed discourse around questions of [municipalization], so I think it's a tremendous opportunity for advocates of public power to finally have a victory in San Francisco," Gonzalez said. Even in the statehouse, where the concept is usually given short shrift, public power is gaining support. At press time, Assemblymember Kevin Shelley had become the first Bay Area state representative to embrace the MUD proposal. Assemblymember Carole Migden still hasn't taken a stance but told us she's introducing a bill to give cities first rights to sell power to residents. We've also tried to reach our other representatives to see if they will now support the San Francisco MUD. We faxed questions to Sen. Dianne Feinstein, Sen. Barbara Boxer, Rep. Tom Lantos, Rep. Nancy Pelosi, and state senator Jackie Speier. None of them responded. A dam in a national park Far up in the Sierra, on the northern edge of the Yosemite National Park, the Hetch Hetchy Dam towers 430 feet high. Built in 1923, the dam came with a unique mandate that remains unfulfilled. From the mass of concrete pours water from the Hetch Hetchy Reservoir, producing between 200 and 400 megawatts of electricity every hour, about 20 to 40 percent of what San Francisco Public Utilities Commission assistant general manager Larry Klein estimates the entire city typically uses. ("That's an estimate. Only PG can tell you, and they won't even tell us," Klein said.) Some of the electricity is used for city agencies. But at least half of the dam's cheap public power is promised, through long-term contracts signed in 1988, to customers of two public power districts in the Central Valley. The rest is carried along transmission lines owned by PG, which charges a stiff "wheeling" fee for the service. But with new leadership on the Board of Supervisors, this could be a watershed year for public power in the city. Gonzalez introduced a resolution Monday to investigate breaking the Central Valley contracts (see "Budget Drain"). And advocates say the MUD petition offers the city its first real chance to reclaim its power from PG. The issue has motivated a broadening political movement, including consumer and environmental activists, Green Party members, and other groups. At a teach-in on the issue a few weeks ago, Alioto summed up the movement's motivations. "We've had the dam for 80 years. We've had power all this time. And it's been denied to us," she said. "It's time to bring our power back." [http://www.sfbg.com/searchit.html]