Delusions of Power

Is it smart to jump into the Bay Guardian's version of public power, without even studying whether it will save money?

At the same meeting, the commissioners also agreed to use an "informal" process of choosing the winners of $500,000 of contracts the LAFCO will soon let, meaning the LAFCO will not advertise "Requests for Proposals" as city and state agencies do, in hopes of ensuring that all who are qualified to compete for government work have the chance to apply. Rather, the commissioners will hire consultants from lists that the LAFCO itself draws up. In the end, the consultants who are hired may also be exempted, at the discretion of the chairman, from complying with financial disclosure requirements set out in the state's Conflict of Interest Code.

The LAFCO's moves to limit public scrutiny and relax controls on its contracting processes may well be technically legal. Neil Eisenberg says, for example, that the LAFCO, as a state-chartered entity, can operate legally under the Brown Act. Still, these moves run counter to years, and even decades, of advocacy for strict adherence to open government laws by the group's commissioners, and by the Bay Guardian. (In its account of the meeting, the Guardian did not mention the LAFCO's votes on the Sunshine Ordinance and contracting procedures.)

As the LAFCO has been working the edges of open government law, its commissioners and supporters have also been campaigning to gain voter approval for a public power MUD. That campaign -- which generally portrays PG&E as an enemy, and a publicly owned electric utility as an obviously worthy goal -- owes much to arguments repeated for years in the pages of the Bay Guardian. Those pro-public power arguments have gained at least some currency recently as a statewide crisis spawned by California's ill-planned jump into energy deregulation has caused semiregular blackouts and electric rate hikes.

Many of the arguments made by supporters of a municipal utility district to take over San Francisco's electric service are, however, based on demonstrably false premises.

Consider, for example, the Raker Act, a federal law the Bay Guardianhas visited so often, and at such length, as to become a San Francisco in-joke. MUD proponents -- particularly and vehemently the Bay Guardian-- claim, and claim again, that San Francisco has been violating the Raker Act for decades. These proponents contend the act, which governs use of electricity generated by city-owned powerhouses at the Hetch Hetchy reservoir in Yosemite National Park, requires San Francisco to be served only by a publicly owned electrical system. Failure to have a public power system, MUD proponents insist, is evidence of the octopuslike grip that Pacific Gas & Electric Co. has upon San Francisco's city government.

But the plain language of the Raker Act itself and experts who are familiar with the act (and have no stake in city politics) all agree: The city of San Francisco is not in violation of the Raker Act. Indeed, the Raker Act places restrictions on what San Francisco may and may not do with electricity generated via the Hetch Hetchy system. But the act simply does not require the city to expropriate private utilities, or to create a publicly owned utility to serve citizens with electrical power.

Then again, proponents contend that if voters choose to create it, a MUD could largely meet the energy needs of San Francisco citizens with cheap power produced by the city-owned hydroelectric plants at Hetch Hetchy. But engineering reports from Hetch Hetchy and other government studies show that, in a best-case scenario, Hetch Hetchy can produce just a third of the city's electric needs. A more probable case analysis puts Hetch Hetchy's share of city power needs in the 10 percent range. In either case, a MUD would need to build enormously expensive new plants inside the city limits, or to purchase huge amounts of electric power on California's volatile power market, to meet basic city needs.

Finally and most important, MUD supporters promise that the district would not only be able to reduce local electricity rates if it took over electric delivery from PG&E, but would also generate an annual profit of some $200 million for the city. But the claims of lower electric rates and huge profits are based, apparently, on belief and ideology, rather than reason and study.

The fact of the matter is that the Local Agency Formation Commission, created specifically to explore the feasibility of an electric municipal utility district here, has resolutely refused -- in contradiction to state law -- to conduct a financial feasibility study that would discover the costs and risks of a MUD-based public electric utility and, also, explore alternatives.

The absence of such a study means that the MUD's sponsors cannot tell you what a MUD would cost to operate, what electric rates it would have to charge, whether those rates would be more or less than what is now paid, how much financial risk consumers and taxpayers would assume in regard to a public power system, or even if such a system could keep San Francisco reliably supplied with electricity. Without such a feasibility study, it is impossible to make even a reasonable guess about whether consumers would be better off with a private-sector electric utility, a MUD-based public power system, or another method of having the government provide citizens with electrical service.

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