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?

In their haste to put a MUD on the November 2001 ballot, the LAFCO commissioners decided not to commission their own study of the financial feasibility of a MUD-based public power system, or to ask the California Public Utilities Commission to review the feasibility of the project -- a review that apparently is required by state law. Nor did the commissioners order an environmental impact report, also apparently required by state law. In fact, to get the MUD on the ballot, the commissioners had to find a way to circumvent the Cortese-Knox Act, because that law requires that the aforementioned studies be completed before the LAFCO approves a MUD and sends it to the voters. (It almost goes without saying that the LAFCO did not conduct a study of the alternatives to forming a MUD.)

On Nov. 16, 2000, CLUB attorney Angela Alioto wrote a letter to the LAFCO declaring, "The general provisions of Cortese-Knox pertaining to district formation do not apply to the formation of a MUD." Alioto, a former city supervisor who has no official position with the LAFCO and whose legal specialty is discrimination law, opined that the very state laws that authorized the creation of the LAFCO do not govern its activities. To justify putting the MUD proposal on the ballot before a feasibility study was done, Alioto advised the LAFCO to rely on an outdated set of laws written in 1951, 34 years before the legislation authorizing LAFCOs was passed to update and supersede the older laws.

Citing Alioto's opinion, Eisenberg and his colleagues agreed to support the creation of the MUD before studying its feasibility, and recommended that it be placed on the November ballot. The city attorney of Brisbane, a PG&E official, and lawyers representing the PG&E-funded campaign committee formed to oppose the MUD initiative all wrote letters protesting the recommendation as premature. They said that the LAFCO's action broke various state laws that require objective studies and public hearings before the matter can be put on the ballot.

A new San Francisco Board of Supervisors, dominated by progressives supported by the Bay Guardian, quickly voted to put the MUD proposition on the ballot, and to establish five MUD wards, with a director to be elected from each; one ward includes the city of Brisbane. The supervisors appropriated $754,250, with which the LAFCO is to employ an executive director, hire consultants, pay stipends to commissioners, and fund a limited "sphere of influence" study sometime in the future. (A sphere of influence study is neither an environmental impact study nor a feasibility study; it mainly defines the geographic boundaries of a new district.)

In an odd twist, the municipal utility district voters will consider in November is not specifically charged with running a public power system. Whether by design or ignorance, this MUD would have the authority to take over every utility service in the city, including telephone, water, power, sewage, garbage, and the Municipal Railway. If approved, the MUD could, as far as utilities are concerned, be a government in parallel with the city. And if the MUD is approved, its supporters will owe a debt of gratitude to the San Francisco Bay Guardian, which has backed the CLUB public power campaign committee with some $67,000 of loans and free or discounted advertising, campaign reports on file at the San Francisco Ethics Commission say.


The American Public Power Association is a national trade association that represents 2,000 municipal electric utilities serving 40 million consumers. It sets the industry standards for public power providers. The trade group has drawn up common-sense guidelines for a feasibility study that municipalities considering the creation of publicly owned utilities could commission. The group says such a study would:

- Identify the city's electric load;

- Project costs and revenues;

- Identify wholesale power suppliers;

- Evaluate and appraise the existing distribution system;

- Evaluate financing alternatives;

- Estimate annual costs of operation and maintenance; and

- Evaluate support from business, community, and political leaders.

The San Francisco LAFCO has not drawn up guidelines for doing a feasibility study, much less commissioned one.

But even without the basic information a feasibility study would provide -- in a recent presentation to a citizen's group, Eisenberg, the LAFCO chairman, admitted he did not know how much electricity San Francisco uses -- public power advocates propose to meet most of the city's electricity requirements with Hetch Hetchy-generated power.

Although the LAFCO is refusing to study the cost of municipalizing San Francisco's electric utility, during the past decade or so studies of the city's electric load needs and projections of costs related to municipalization have been performed several times: by city-hired consultants; by a team of utility company engineers and city and state officials; and by graduate students at the University of California. These studies, public documents, and interviews with a half-dozen experts who favor public power make it clear that: the Hetch Hetchy system can provide nowhere near the amount of power needed by San Francisco; taking over power supply and delivery for San Francisco would be both expensive and risky; and the city's existing electric delivery system has reliability problems that would be costly to fix.

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