PG&E is already gone
 	 		 		
PG&E is already gone | October 24, 2001 | SFBG News
 		 		 		 		
by paul fenn 
						
ON NOV. 6, San Franciscans will decide whether the city should 
take over electricity service from a bankrupt Pacific Gas and 
Electric Co. While PG-funded front groups spend millions of 
dollars warning voters that public power is "too costly" and "too 
risky," it is important not to forget that PG effectively left 
San Francisco for Bethesda, Md., several years ago and is 
currently pushing a liquidation plan that will deliver dramatic 
rate increases to residents and businesses when the state's rate 
caps are lifted this coming March.
 						
PG as we know it is no longer, and there is no turning back the 
clock. San Franciscans are faced with choosing between two PG 
takeover options: either the city takes the utility system under 
local control by passing Measure I and Proposition F, or an 
unregulated out-of-state energy company will soon take it over in 
bankruptcy court.
 						
It is critical that voters understand that PG itself is currently 
proposing a liquidation of its assets in bankruptcy court. PG's 
executives are now proposing to sell off all of its remaining 
power plants in California to unregulated energy companies, 
leaving only a shell of the nation's once-largest electric 
utility behind. This means that all of the power sold to San 
Franciscans will come from the volatile spot market and dubious 
contracts with unregulated power companies. Come March 2002, when 
the state's rate caps are lifted for the first time since 
deregulation began in 1996, San Francisco residents and 
businesses will be in for a shock.
 						
PG's proposal to sell its remaining power plants is a very grim 
prospect indeed, because these power plants, currently under 
state regulation, were the principal factor preventing energy 
prices from spiraling out of control last summer. Because the 
price of power from these plants was fixed by regulation, the 
wild price fluctuations from the unregulated power companies were 
partially absorbed.
 						
Realizing the importance of keeping these plants under price 
regulation, the California legislature passed a law prohibiting 
the sale of regulated power plants to unregulated companies last 
spring. PG executives now claim, however, that the federal 
bankruptcy court's decision will preempt state law and that there 
is nothing we can do about it.
 						
In the years following deregulation, PG collected $8 billion in 
extra bailout charges from its customers, created a new holding 
company, PG Corp., and transferred $5.3 billion from California 
residents and businesses to a new unregulated PG affiliate, the 
National Energy Group, based in Bethesda.
 						
With California's money in its pockets, PG Corp.'s National 
Energy Group first undertook the largest utility acquisition in 
U.S. history, purchasing all of the power plants of the New 
England Electric System in Massachusetts. It went on the purchase 
30 power plants in 10 states. Today PG Corp.'s Bethesda-based 
National Energy Group is a highly profitable, $1 billion-a-year 
company. Meanwhile, PG is bankrupt. Go figure.
 						
After transferring the money to Bethesda but before PG declared 
bankruptcy, PG Corp. quietly secured an order from the Federal 
Energy Regulatory Commission to separate its corporate assets and 
those of the National Energy Group from the ailing PG. Then PG 
declared bankruptcy.
 						
Now PG proposes that what remains of the old utility be 
liquidated, that state regulation be eliminated, and that the 
same FERC that approved the previous deal be entrusted henceforth 
with protecting San Franciscans. Get the message?
 						
That's why I say PG left San Francisco years ago. Get over it, 
and make a decision on Nov. 6. Choose between local control and 
an out-of-state corporate takeover. There is no turning back, 
only a choice between two very different futures. 
						
Paul Fenn is director of Local Power and author of both Carole 
Migden's Community Choice bill, A.B. 9xx (recently vetoed by Gov. 
Gray Davis) and Sup. Tom Ammiano's proposed solar power measure, 
which appears on the November ballot as Proposition H. He can be 
reached at paulfenn@local.org [paulfenn@local.org] .
 						
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