Dead Mud Walking

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.

Should both measures win, and the politicians on the two boards be unable to agree upon which body gets to run the electricity monopoly, the MUD wins by default, according to language contained in the charter amendment. The district then has until 2004 to meet all of the legal requirements necessary for it to become an electric utility, which includes producing environmental and cost feasibility studies and gaining voter approval to sell bonds. If the MUD fails to do so, the agency board has the option to take over the electricity mandate, or it can decide to leave the MUD alone.

Because of language contained in the charter amendment, the legal fates of the MUD and the water and power agency are intertwined.

If the MUD passes and the charter amendment loses, public power in San Francisco will almost certainly be sentenced to years of litigation. (In addition to the many apparent legal defects related to the MUD, an obvious source of prolonged litigation will be the debate over the exact value of the electrical system in the event of an attempted seizure by the MUD or the water and power agency.)

If the MUD and the charter amendment pass, the private electric utilities will very likely sue both, alleging, with no small amount of evidence in their favor, that the two measures are joined at the hip by the charter amendment, and are simply different aspects of a common, illegal act. (For that matter, the city and the MUD could sue each other if they fail to reach an agreement.)

"We are concerned that if both public power measures pass, we will be in uncharted territory," says Sutton, the lawyer for the anti-MUD campaign committee. "The only way it can be resolved is by going to court."

Even if the MUD loses the election and the water and power agency wins, the Shadow MUD will probably be put on next spring's ballot, perhaps upstaging the agency, and almost certainly generating its own litigious enemies.

Jerry Jordan is the executive director of the California Municipal Utilities Association, based in Sacramento. His association represents the collective interest of the state's 31 public power agencies and two electricity MUDs. Jordan is familiar with San Francisco's public power wars. "It's much simpler to create a city-owned utility, because there is a synergy with existing resources," he says.

By way of example, Jordan points out that PG&E lawsuits held up the Sacramento MUD for 23 years after it was approved by ballot measure in 1923. "It is hard to create a MUD," Jordan observes tactfully.

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Although you'd scarcely know it from news coverage to date, public power experts say that it is not necessary to create a MUD, nor a new water and power agency, to set up a public power system in San Francisco.

One of those experts, Theresa Mueller, a deputy city attorney with a national reputation as an expert in electric utility law, worked for several years as a staff attorney for The Utility Reform Network (TURN), a government watchdog organization. Mueller says the Board of Supervisors, using its existing powers, could set up a public power-retailing agency within 30 days, and such an agency would likely have no problem selling voter-approved revenue bonds to finance the purchase of PG&E's physical system.