#United States #San Francisco #Oakland #Pacific Gas #electric grid

PG&E Outlines Costs of Potential Grid Takeover by San Francisco

In a significant response to the City and County of San Francisco's (CCSF) petition, Pacific Gas and Electric Company (PG&E) presented a detailed testimony to California regulators, arguing against what it perceives as the undervaluation of its electric distribution assets. This submission highlights that the estimated financial burden for the city would surge up to a staggering $22.5 billion in association with the proposed governmental takeover of the utility's grid.

Understanding the Cost Breakdown

PG&E's testimony goes beyond merely presenting numbers; it lays out specific components that contribute to the overall cost. While CCSF's earlier filing stated the fair-market value of the grid at around $3.4 billion, PG&E claims that the true valuation should include both the market value of the assets and additional expenses linked to the separation of the grid from PG&E’s extensive system. This finding reveals a stark contrast, estimating PG&E's San Francisco assets to be around $13.9 billion—with further claims of $7.6 billion required for business severance damages and another $1 billion for physically separating the grid.

CEO Patti Poppe of PG&E expressed concerns over the potential takeover stating, "A government takeover of our grid is not the right solution for our San Francisco customers." He emphasized the confidence in PG&E’s decades of expertise in managing the intricacies of San Francisco's electric system and highlighted that CCSF's proposed costs did not accurately reflect the implications for its customers.

Financial Implications for San Francisco

If San Francisco were to proceed with this takeover, PG&E outlined a hypothetical burden that could amount to approximately $53,000 per electric account based on the estimated total costs divided over the 420,000 electric accounts in the area. While not directly representing customer bills, it does signal a substantial long-term financial responsibility that San Francisco residents would bear.

Patti Poppe stressed the impact on statewide energy initiatives, particularly how a shift in utility services would affect funding for programs designed for wildfire risk reduction, energy efficiency and support for low-income households. The potential transfer could shift financial burdens from San Francisco residents to those in other areas serviced by PG&E.

CCSF’s Underestimation Concerns

PG&E's analysis not only disputes the valuation offered by CCSF but also underscores several areas in which it believes the city underestimated the costs related to its distribution system. For instance, CCSF's filing did not assign any value to PG&E's more than 2,000 real estate interests in the city, while also neglecting to consider the complexities and heightened costs associated with the city's underground infrastructure. These oversights could lead to significant challenges down the line if the transfer were to proceed.

Operational Costs in Focus

CCSF would encounter several operational costs in its bid for takeover, including the need to construct a replacement PGE substation in San Mateo County and establish a service center for remaining customers outside the city limits. These changes would necessitate extensive efforts in permitting, project management, and potential disruptions to service—underscoring the complexity of the transfer process.

Moreover, neither PG&E nor CCSF have accounted for the significant startup costs associated with forming a new city-run electric company, which includes hiring a skilled workforce. Additionally, CCSF would forfeit substantial revenue generated by PG&E, which contributes upwards of $100 million annually from tax and franchise fee payments—crucial for funding public services like fire and police departments.

PG&E’s Commitment to Reliability

Contextually, PG&E noted its decade-long investment of approximately $3 billion in reliability upgrades along with plans for another $2 billion over the next five years to enhance the electric grid. For instance, in 2026 alone, PG&E is dedicating $370 million towards reliability upgrades within San Francisco, demonstrating its ongoing commitment to the community it serves. Projects this year include updating underground cables and improving substations—actions aimed to ensure a reliable electricity supply for its customers.

Patti Poppe concluded, stating, "My coworkers and I love serving San Francisco. We intend to meet the expectations of its residents, and any takeover risks jeopardizing that commitment." The stakes are undoubtedly high as discussions continue over the future of San Francisco's electric grid.