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Dead Mud Walking 

A ballot measure that would create a Municipal Utility District has so many legal flaws, it's all but DOA. In fact, passing the measure might delay the advent of public power here for years.

Wednesday, Oct 10 2001
Energy consultant Emmitt James Simpson stood alone in front of the dais at San Francisco City Hall late last month, trying to save his $90,000 contract. Simpson had been hired in August to study the feasibility of public ownership of San Francisco's electric utility and to write an objective report on his findings. Staring down at the hapless consultant were his bosses, Neil Eisenberg and Jake McGoldrick, members of the Local Area Formation Commission, an entity charged with exploring public power options in the city.

Simpson began by apologizing for the poor quality of the draft report he had turned in a few days before. "It was a mishmash," Simpson admitted. "I submitted garbage." He handed his bosses a stack of documents: another draft. He assured them that this version was more competent than the previous ones. "It's not something to be ashamed of," said Simpson softly.

Barely glancing at the paperwork, Eisenberg, the LAFCO chairman, informed Simpson that his services were no longer required, and that he should hand in his bill. Simpson, who charges $150 an hour, agreed to do so. "I am 90 percent done," he said, implying that he would settle for $81,000.

It is unclear how much Simpson might eventually be paid for his work, and Eisenberg, who is running for city attorney in November on a pro-public power platform, characterizes the Simpson hiring and firing as a "glitch" in the movement to turn San Francisco and Brisbane into a single Municipal Utility District that would, among other things, control electrical distribution here. But when it comes to credibility and efficiency of the MUD movement, the bungled contract seems less the exception and more the rule.

The issue of whether or not to set up a MUD comes before local voters on Nov. 6. The LAFCO, composed of Eisenberg and members of the Board of Supervisors, is charged by state law with deciding whether or not a MUD is cost-effective before the matter goes to the voters. In one of its most significant acts, the LAFCO board hired Simpson -- a fervent, public supporter of creating a San Francisco MUD -- to provide an "impartial" evaluation of the risks and benefits of letting a MUD take over San Francisco's electric grid.

But it wasn't just his previously avowed support of the MUD -- Simpson had testified before the LAFCO itself in favor of public power in San Francisco -- that should have given the commission pause. Gloria Young, executive director of the LAFCO and clerk of the San Francisco Board of Supervisors, says she advised Eisenberg and McGoldrick not to hire Simpson because she had reviewed his study proposal and, in her opinion, it didn't meet the LAFCO's needs. The commissioners hired him anyway.

After checking up on Simpson's progress in mid-September, Young reported to the LAFCO board in this way: "There is significant information missing ... several statements ... lack any substance or coherency. ... [N]umerous unsubstantiated statements and conclusions, and the overall tone of the analysis, strongly suggest a lack of objectivity." On Sept. 18, Young formally recommended that the LAFCO fire Simpson, and he was eventually discharged.

Before a consultant is hired to replace him, the LAFCO commissioners might consider doing a simple background check on their job applicants. In May 1991, Emmitt James Simpson was convicted in Lassen County of defrauding the Lassen Municipal Utility District. According to court records, Simpson billed the Lassen MUD for work that he did not perform. As punishment, Simpson was put on probation for one year and ordered to pay $3,889 in restitution.

Simpson says he did not disclose this conviction to the LAFCO, nor was he asked about his record. Eisenberg says he was not aware of Simpson's conviction, and that it is not part of his job to do background checks.

The two public power measures on the November ballot would create two very different public power agencies. Measure I establishes a San Francisco-Brisbane Municipal Utility District, which would be operated by a five-member board of directors, also to be elected on Nov. 6. Once created, a MUD would have the authority to take over not just the local electric utility, currently run by the Pacific Gas & Electric Co., but also the water, sewer, telecommunications, gas, and garbage collection utilities. The MUD would be a separate governmental entity, funded by consumer payments for electricity and taxes. Proponents of the MUD have made it clear they would like the agency to seize the distribution lines of PG&E, and perhaps some in-city power plants, and create a MUD-owned utility that would provide electricity to San Franciscans. To date, almost no details on the cost or other impacts of such moves have been put forward.

Proposition F is a charter amendment, sponsored by Tom Ammiano, president of the Board of Supervisors. It would create a Municipal Water and Power Agency meant to replace the Public Utilities Commission and its members, who are appointed by the mayor, with a seven-member elected board. Like the MUD, the agency would be able to use the power of eminent domain to compel the sale of PG&E's citywide electrical facilities. (That system, which engineering studies describe as antiquated and in need of expensive improvements, would probably be priced, as is, at more than $1 billion.)

In the wake of this year's energy crisis, the possibility of creating an agency to take over electric distribution (and, perhaps, generation) has gained great currency; pro-MUD coverage, for example, repeatedly fills the pages of the San Francisco Bay Guardian, an alternative weekly that has dwelled on the public power issue for decades and has publicly acknowledged a bias in favor of forming a MUD. But the Guardian -- and, for that matter, the city's daily news organizations, which have provided far less reportage on the issue -- has largely ignored apparently serious legal defects in both public power proposals. In fact, if it passes, the MUD is likely to be dead on arrival because of its legal deficiencies. And if it passes, it may very well drag Proposition F into the legal abyss with it; an attorney retained by PG&E says that legislative language meant to resolve control of public power if both measures win in November actually links Prop. F to the legally suspect MUD measure, making a protracted legal challenge to both likely.

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Peter Byrne


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