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.

To date, the LAFCO has not corrected these alleged defects.

Although they have avoided speaking about it publicly, MUD proponents clearly are worried about lawsuits. Should the November MUD fail at the ballot box or be tied up with legal challenges, the LAFCO plans to put what it calls a "Shadow MUD" on the ballot in March 2002. The Shadow MUD is identical to the November MUD, except in technical details that ostensibly cure a few of the objections listed by PG&E.

Political consultant Jim Ross, who does anti-MUD lobbying on behalf of AT&T Corp. and Pacific Bell Corp., puts it bluntly: "If the MUD passes, the utility companies will tie it up in court for the next 10 years."

Actually, legal action has already come to the MUD-formers.

Jim Sutton, a lawyer working for the Coalition for Affordable Public Services, a PG&E-funded campaign committee created to oppose public power, has filed a lawsuit in San Francisco Superior Court on behalf of Winchell Hayward, a city resident, against the LAFCO. The lawsuit claims that the LAFCO hired Simpson, the consultant who produced the "garbage" report, because he is biased in favor of the MUD, and that the hiring therefore constitutes an illegal use of public money.

"This is a bald-faced attempt to promote the passage of the MUD measure with public funds, and constitutes unlawful interference by LAFCO and its members with the democratic election process," Sutton claims. He says he is proceeding with the lawsuit -- despite Simpson's termination -- because Eisenberg has ordered Young to hire another energy consultant to finish Simpson's study. Sutton fears that the revamped report will also be biased and will become pro-MUD campaign propaganda.

And that's just PG&E's opening shot.

At some point over the last year, LAFCO member Tom Ammiano, who is also the president of the Board of Supervisors, apparently realized that the MUD would be born on death row. Working with a team of deputy city attorneys, Ammiano invented the Municipal Water and Power Agency.

Unlike the MUD, which is vague in form, the shape of the water and power agency is spelled out in the charter amendment. Ammiano's agency would subsume the apparatus of the city's Public Utilities Commission, which operates our water and sewage systems, as well as the municipal hydroelectric generators at Hetch Hetchy reservoir in Yosemite National Park. It could issue hundreds of millions of dollars in revenue bonds without needing approval by the Board of Supervisors or the voters, as is now required. The superagency would be able to set utility rates -- which could be priced above or below prevailing rates -- without needing approval by the supervisors, as is now required. The agency's board members would have to answer to the voters every four years.

The core supporters for both public power measures are firmly in the "progressive left" of San Francisco politics, and generally can be seen as allies; for that matter, the Municipal Water and Power Agency and the MUD are billed by public power campaigners, including Ammiano, as "companion" measures. But it seems likely that the electoral success of the legally suspect MUD would in fact threaten the viability of a Municipal Water and Power Agency.

That is to say: What will most likely happen if both Measure I and Proposition F win in November?

The language of the charter amendment speaks to the possibility of both measures passing. In that case, the MUD board would meet next summer with the board of the Municipal Water and Power Agency to decide which of the two organizations "is better equipped to deliver cost-effective electric utility service to residents and businesses within the shortest period of time." The charter amendment does not specify any criteria for making this decision. (City officials who participated in drafting the charter amendment say that a previous version specified the criteria by which the two bodies would determine which one is "better." At Ammiano's behest, the criteria were eliminated.)

The Municipal Water and Power Agency has several natural advantages in the contest for who gets to run the electric bureaucracy. The MUD will not control a penny until it sells revenue bonds; because it would take over the city's existing Public Utilities Commission, the new water and power agency would automatically control hundreds of millions of dollars a year in operating and capital funds. It would possess 1,000 employees and independent contractors, as well as in-house expertise in running an electrical utility.

If the two elected boards agree that the MUD can be in charge of providing electricity to consumers, then the water and power agency will continue to do exactly what the PUC does now: operate the drinking water and sewage systems and the Hetch Hetchy municipal electric power system. Presumably, the MUD would then move to take over PG&E's distribution system and, perhaps, the PG&E- and Mirant Corp.-owned power plants in the southeast sector of the city. San Francisco would have two public power companies, producing and distributing electricity in a cooperative or competitive way, and seeking to use many of the same financial, technical, and infrastructure resources.

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