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.

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 andthe 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.


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.

A public power utility set up by the supervisors and the Public Utilities Commission could do everything that Ammiano's proposed agency, or the MUD, could do, including buying and selling wholesale and retail energy. And because this type of public power arrangement simply expands existing city programs and activities, it would be far less susceptible to successful court challenge than Ammiano's proposed water and power agency or the Bay Guardian's Holy Grail, the MUD.

Why, then, is a basically pro-public power Board of Supervisors not taking this path?

In the summer of 2000, the Coalition to Lower Utility Bills submitted a petition to form a MUD to the Board of Supervisors. It was signed by 24,000 residents of San Francisco and Brisbane. MUD supporters chose this circuitous grass-roots route to the ballot -- which required the formation of the LAFCO -- because a majority of city supervisors were, at that time, opposed to public power.

But then the political winds shifted sharply. A crop of "progressive," pro-MUD supervisors was elected to office last fall, making the political strategy of promoting the MUD through citizen petition no longer necessary. After all, the supervisors have the authority to create a public power system themselves.

Instead of taking this relatively painless road to public power, the supervisors voted to put both the MUD and Ammiano's charter amendment on the same ballot, apparently for political reasons. If the supervisors created a power-retailing agency, it would be part of the city's executive branch, which means that the archfoe of the current board majority, Mayor Willie Brown, would have control.

Rather than give control of public power to Brown, the supervisors have opted to let voters decide between two ballot measures, without clarifying how many votes it will take for the MUD to pass, or what criteria will be used to choose between the MUD and the water and power agency if they both pass.

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