A group of local elected officials sent a letter to state regulators urging them to consider transforming PG&E, northern California’s controversial investor-owned utility, into a public nonprofit.

In the letter, the 27 leaders, including the mayors of Sonoma, Petaluma, Windsor and Cotati, urge regulators at the California Public Utilities Commission and Governor Gavin Newsom, argue that the two “Wall Street titans” fighting over PG&E’s remains in bankruptcy county will not serve the long-term interests of Californians.

In short, the letter argues that Californians will be better served by a public, nonprofit utility than one owned by a private company with a profit motive.

“A customer-owned PG&E will better focus its scarce dollars on long-neglected maintenance, repairs, and capital upgrade, and mitigating some part of the substantial upward pressure on rates,” the letter states.

Amy Harrington, mayor of Sonoma and a board member of Sonoma Clean Power, said she signed the letter after several years dealing with PG&E officials in her dual roles.

“Dealing with PG&E both at the city level, where we want to know exactly what’s going to be turned off is almost impossible … and then dealing with PG&E [at Sonoma Clean Power] trying to make sure ratepayers aren’t overcharged is also almost impossible,” Harrington said. “They just don’t have any real incentive to provide information to anyone.”

Except for nominal oversight from the CPUC, “They don’t answer to anyone, not really,” Harrington added.

PG&E pushed back on the letter in a statement to the New York Times yesterday.

“We remain firmly convinced that a government or customer takeover is not the optimal solution that will address the challenges and serve the long-run interests of all customers in the communities we serve,” Jennifer Robison, a PG&E representative, told the paper.

Harrington says the letter is just a first step. In the future, cities, counties and agencies like Sonoma Clean Power may send additional letters endorsing the model outlined in the letter.

For now, Harrington hopes the letter will help start a conversation about the potential benefits of a publicly-owned utility.

“The fundamental question is who should own these assets? Should it be a for-profit corporation or a nonprofit?” Harrington said.

The signatories in the North Bay so far are:
Cotati Mayor John Dell’Osso
Petaluma Mayor Teresa Barrett
Sonoma Mayor Amy Harrington
Windsor Mayor Dominic Foppoli
Marin County Board of Supervisors Chair Kate Sears

The full letter is available here.

Fresh off the heels of a successful and sweeping response to the massive Kincade Fire and widespread PG&E power shut-offs last week, the Sonoma County Board of Supervisors Tuesday will decide whether or not to move forward on a proposed ballot measure to fund emergency preparation and response efforts for future disasters.

If passed by a two-thirds margin on March 3, 2020, the proposed ballot measure would levy a half-cent countywide sales tax on to fund a variety of fire fighting and disaster preparedness projects.

The measure was in the works long before the Kincade Fire struck. The supervisors earmarked $500,000 in the fiscal year 2019-2020 budget to fund a political campaign to pass a sales tax measure to fund fire preparedness. On Tuesday, they’ll likely decide to move forward with the campaign.

The sales tax revenue, which is expected to total $51 million per year across the county, would be split among the numerous firefighting departments around the county.

The bulk of the new revenue—approximately $41 million per year – would go towards a variety of prevention and preparedness projects. These would include hiring 200 additional firefighters, the installation of hi-low sirens on all emergency vehicles, and increased vegetation management efforts intended to cut down on the risk of fires starting or spreading as easily.

Roughly $6.8 million each year—13.25 percent of the total revenue—would be earmarked for new equipment and facilities for city and fire district departments around the county.

Additionally, 5.5 percent of the funds each year – roughly $2.8 million – would be set aside to recruit and retain firefighters in some of the county’s smaller districts, including the Gold Ridge and Rancho Adobe fire protection districts.

At an emergency meeting at Rohnert Park’s City Hall, the Sonoma County Board of Supervisors unanimously approved an infusing of cash and declared a local emergency on Thursday morning.

The meeting, which lasted just over two hours, was fundamentally one of the comparisons. Supervisors and emergency responders spoke about the differences between the 2017 wildfires and the current Kincade Fire.

Fundamentally, the response to the current was much more effective, despite the massive size of the fire and force of the winds spurring it on. As of Thursday morning, the Kincade Fire is 60 percent contained, according to Jonathan Cox, a CAL FIRE representative.

“The 2017 fires were like this horrific, apocalyptic nightmare and this fire was more like a bad dream when at some point in that dream, you realize you can change the script…” Supervisor Shirlee Zane said. “As awful as a fire always is, that we have some control over it.”

The supervisors unanimously passed motions to declare a local state of emergency and set aside $2.5 million to fund immediate responses to the Kincade Fire.

During her closing comments, Supervisor Lynda Hopkins also compared the response of public agencies to the Kincade Fire with the response of PG&E, the much-criticized, investor-owned utility which shut off electricity and gas service to hundreds of thousands of customers across California as part of its Public Safety Power Shutoff program.

Successful Response

Members of the CAL FIRE team said that response to the incident was remarkably successful compared to the October 2017 wildfires that tore through multiple North Bay counties destroying thousands of homes.

Although the Kincade Fire has burned over 75,000 acres, there have been no fatalities so far and far fewer damaged or destroyed buildings.

Two firefighters were hospitalized for fire-related injuries. One is still receiving care in a Sacramento hospital, the other has been released.

“This has to be one of the complex incidents in my career and in California history. To have a major wildlands fire, three separate… weather events [and] challenges we faced,” Jeffery Veik, a CAL FIRE division chief.

Federal Disaster Declaration Unlikely

Unlike the 2017 fires, the Kincade Fire is unlikely to qualify for a major president disaster declaration, which would allow for individual financial aid from the federal government, according to Christopher Godley, the county’s emergency manager.
In order to qualify, the county would need to prove that there was an excess of $54 million of damages to public infrastructure. Currently, that seems unlikely, according to Godley.

“We’re not there, to be quite honest,” Godley said.

Godley said the county has already applied for $479,000 in state funding and expects to apply for more.

PG&E Criticized

Supervisor Lynda Hopkins, who represents western Sonoma County, chastised the utility for its apparent lack of communications capability during the disaster.

“I hope that after the dust settles that we can hold our corporations as accountable as we held government in 2017. These widespread power outages create critical life stage concerns,” Hopkins said towards the close of the meeting.

Hopkins added that she was forwarded to the county-funded 211 help-line when she called the utility’s public service phone number with questions about when gas service would be restored in Sebastopol.

“It should not be that for-profit corporations get to privatize the profits and then socialize the costs [of emergency response phone lines],” Hopkins said.

Richard Hadley, a government relations representative for PG&E, did not have an immediate response to Hopkins’ question about gas service but said he would stay in touch with the supervisor throughout the day.

Earlier, Hadley had said that the utility’s emergency response director has estimated that service will be turned on later today for some parts of the county.

Approximately 500 additional utility workers from Southern California and Nevada have been rushing to the county to assist with line inspections as the utility continues to turn gas and electricity service back on, according to Hadley.

“They should be at work now,” Hadley said as the meeting wound down.

PQ: Assemblymember Marc Levine announced a plan to increase oversight of the utility by creating legislation to install a “responsible adult in the room to right PG&E’s wrongs.”

Once again, PG&E’s impact on the public has brought it a massive amount of negative attention.

On Monday, as the Kincade Fire continued to rage, the investor-owned utility’s stock price tumbled. A weekend of fire, widespread power shut offs and the evacuation of approximately 185,000 North Bay residents, many from Sonoma County, is the latest debacle for the bankrupt utility and its customers.

Approximately 960,000 customers across the state, including hundreds of thousands in the North Bay, sat without power due to a widespread Public Safety Power Shutoff instituted by the utility.

In recent weeks, state politicians, including Gov. Gavin Newsom, have been more inclined to publicly criticize the state’s largest utility while Wall Street players continue to consider whether they’re interested in purchasing the utility.

But this week has already brought multiple competing proposals by California lawmakers to drastically change the future of the utility.

Adult in the Room

On Monday, Assemblymember Marc Levine, whose district covers Marin County and the southern half of Sonoma County, announced a plan to increase oversight of the utility by creating legislation to install a “responsible adult in the room to right PG&E’s wrongs.”

Under Levine’s legislation, which he plans to introduce in January 2020 when the state legislature returns, the California Public Utilities Commission would create a test to determine whether a Public Administrator should be appointed to oversee PG&E.

The CPUC’s test would include “an analysis of PG&E’s financial health, the reliability of the utility’s infrastructure and its safety record,” according to a statement from Levine’s office.

“The Public Administrator would be authorized to work with PG&E leadership and make decisions necessary to restore critical infrastructure, ensure that proper safety protocols are followed and increase public confidence in the utility,” according to the statement

Although the scope and powers of the role have not yet been fully defined, the Public Administrator would be something like that of an emergency manager appointed when a school board declares bankruptcy, Levine said in an interview with the Bohemian.

The Public Administrator would remain in place until PG&E reached requirements of the test created by the CPUC. If the utility failed to meet the CPUC’s requirements again sometime down the road, another Public Administrator could be appointed, Levine says.

Wall Street Brawl

Still, with two massive power shutoffs in October and that start of several fires over the weekend that may have been tied to PG&E’s equipment, the legislature’s January session seems like a long way off.

Meanwhile, financial interests appear ready to take over the bankrupt utility’s assets. In PG&E’s bankruptcy proceedings two groups of financial interests are battling over the chance to takeover the utility’s remains.

One group of bondholders, led by Elliot Management, known as an “activist investor” for its habit of using its stake in companies to push for management changes, has been clashing with major stockholders in the utility.

Now Berkshire Hathaway, an investment fund owned by Warren Buffett, may be in the running as well.

California Gov. Gavin Newsom is reportedly supportive of the idea of Berkshire Hathaway buying the utility, according to a report from Bloomberg News.

“We would love to see that interest materialize, and in a more proactive, public effort,” Newsom told the business publication. “That would be encouraging to see. They are one of the few that are in a position to make a significant run at this.

Levine was not as interested, saying that Buffett’s firm, nor any other investor would not single handedly save Californians from “years of misplaced priorities” by PG&E’s management team. Furthermore, Berkshire Hathaway has a track record of investing in dirty energy sources, including coal. In a state focused on reducing its impact on the climate, that is a cause for concern.

“Buffett’s utilities are some of the dirtiest in the country,” Levine said.

Woody Hastings, an energy program manager at The Climate Center, a Santa Rosa nonprofit which advocated for the creation of Marin Clean Energy and Sonoma Clean Power, agencies that purchase their own mixture of power but still rely on PG&E’s lines to distribute it, called the governor’s reported endorsement of a possible Berkshire buyout “totally inappropriate.”

(DISCLOSURE: This reporter completed an unpaid internship at The Climate Center in the summer of 2013.)

In April, Buffett told CNBC, a business news channel, that reports that Berkshire Hathaway was interested in buying PG&E were “100 percent not true.” He has yet to comment on the Bloomberg report over the weekend.

Still, after a disastrous weekend for the utility and its customers, some analysts were speculating about whether any private bidders will still be interested.

PG&E has acknowledged that its equipment may have been involved in starting the Kincade Fire in Sonoma County on Friday and another fire in Contra Costa County.

On Monday afternoon, stock prices for PG&E Corporation, the publicly traded company that owns the utility, hit $3.80 per share, a new low.

Prior to the October 2017 fires, the company’s stock price briefly topped $70 per share in September 2017. The price has fallen with each successive debacle ever since. In January, the stock hit $6.36, then a historic low, when the utility announced bankruptcy.

Jared Ellias, a bankruptcy law expert at the UC Hastings College of Law, told the Sacramento Bee that the situation may be more volatile than the private investment players may have expected.

“Whether it’s turning the power off, or not turning the power off, PG&E can’t do anything right,” Ellias told the Bee. “That’s a much riskier investment than any of these guys thought.”

Meanwhile, a CitiGroup analyst told the bank’s investors that “the probability of a zero equity value continues to increase,” according to a MarketWatch report on Monday.

Still, the Sacramento Bee reported on Sunday that “a source close to the [PG&E] bondholders” said the group was still interested in bidding on the utility.

Watershed Moment

On Tuesday morning, U.S. Congressman Ro Khanna announced his support for a public takeover of PG&E.

“PG&E has been a disaster. When you have a state that has Apple, Google, and Tesla in it, there’s no excuse for not getting power to our people,” Khanna, who represents San Jose and nearby cities, said in a statement. “I’m calling on Gov. Newsom to support turning PG&E into a customer owned utility. We need to have more municipal public utilities providing energy.”

While the push and pull between those calling for a public takeover of the utility and those advocating for continued private ownership has been going on for over 100 years, the current moment may be historic, according to Hastings, the Climate Center energy analyst.

“PG&E is hugely vulnerable. This is a watershed moment,” Hastings, the energy analyst, said on Monday.

In the near-term, PG&E’s dangerous infrastructure needs to be replaced with modern equipment, including local electrical grids, energy storage infrastructure and production capacity, Hastings says.

“Every penny needs to be reinvested into making safety improvements, developing a 21st Century system, and combating climate change,” Hastings said.

In Hasting’s personal view, public ownership of some sort could help achieve those goals. Although existing publicly owned utilities in the state may not be perfect, they are designed to be responsive to people, not profit, Hastings says.

Gov. Newsom reportedly does not support a public buyout, and North Bay lawmakers appear to be somewhere in between.

On Oct. 18, State Senator Mike McGuire, who represent much of the North Coast, released a statement hinting at the need for bold action.

“PG&E has become too big and has failed us too many times. All options need to be on the table – including breaking up the utility,” McGuire said in the statement. His office did not respond to a request for comment about a public buyout of the utility.

On Monday, State Senator Bill Dodd, who represents parts of Napa and Sonoma counties, told the San Francisco Chronicle that he was “intrigued” by the idea of making the utility into a public cooperative, a model proposed by the Mayor of San Jose.

Levine said Monday that he does not currently support a public buyout of the utility. PG&E’s aging infrastructure, including 90-year-old transmission lines in Marin County, would constitute a “massive liability” for anyone, public or private, who buys the utility, Levine says.

Levine also said that San Francisco’s recent offer to purchase PG&E’s infrastructure within the city would have amounted to an effort to “cherry pick the best infrastructure and easiest lines to repair.”

The city’s $2.5 billion offer, which PG&E rejected in mid October, could increase the burden on other PG&E ratepayers, Levine says.

Dodd is also opposed to the idea of cities like San Francisco buying chunks of PG&E’s grid, according to the Chronicle.

Instead, Levine said Monday that someone acting in his proposed Public Advocate role could help PG&E “refocus its priorities on safety and increase needed public confidence in this essential public utility service.”

Levine’s “adult in the room” would be in a position to guide PG&E to reinvest any shareholder profits into much-needed infrastructure improvements, according to Levine.