Field Heads for MUD Finish Line

By Susan Dyer Reynolds

Two very different initiatives on the November ballot seek to do the same thing: boot Pacific Gas & Electric out of San Francisco and establish a public power agency in its place.

The most visible difference between Proposition F and Measure I is that Prop. F would create a Water and Power Agency under local law, while Measure I would establish a Municipal Utility District (MUD) governed by state law. However, there are many other differences between the two potential agencies and, according to opponents, neither one addresses the biggest issue in San Francisco's energy crisis: power generation.

The MUD would incorporate the borders of San Francisco and Brisbane (it is necessary to have two cities participating to create a MUD) and would be operated by a five-member board of directors, also to be elected on Nov. 6. The MUD would have the authority not only to take over local electricity, but also other utilities, including water, gas, sewer service, telecommunications and garbage collection. It would be funded by consumers, in the form of electricity payments and taxes, and it would likely take over PG&E's distribution lines to provide power to the City.

Prop. F, on the other hand, is a charter amendment sponsored by Tom Ammiano, president of the SF Board of Supervisors, and intended to create a Municipal Water and Power Agency that would replace the Public Utilities Commission (PUC) and its members, who are appointed by the mayor.

Prop. F would install a seven-member board of directors, elected by district; however, all PUC employees would be transferred to the new agency. Further, if the agency acquired PG&E, procedures would be set in place to allow PG&E workers to become City employees.

Proponents of Prop. F say that it is a "companion" to Measure I. However, if voters were to approve both, a process would begin to establish whether the power agency or the MUD would provide power to San Francisco's residents and businesses. Opponents say the passage of both F and I would create two independently elected, confused bodies with overlapping duties, and they fear this could set into motion years of legal challenges and red tape with little hope of resolution.

At a community meeting held Oct. 16 at the Richmond Police Station, MUD candidate Joel Ventresca and Coalition for Affordable Public Services representative Frank Gallagher squared-off on the issues. Ventresca, currently co-chair of the SF Coalition for Lower Utility Bills, quickly pointed out that Gallagher's organization is backed, in part, by PG&E, something that Gallagher admitted up front. Still, Gallagher passionately spoke out against both F and I, saying that neither one addressed the most important issue: power generation.

According to Gallagher, the downsides of the public power plans include "tremendous start-up costs that could total more than $1 billion when San Francisco is facing a budget deficit for the first time in ages."

"You don't get more power and you don't get cheaper power - you just take over PG&E's wires, polls and substations - and you get two new bureaucracies. Both are risky, costly and won't solve the problem," Gallagher said.

Ventresca countered that, while start-up costs are high, rates go down in the long run. "It's about getting a better deal for consumers," he said.

"Start-up in Long Island was costly, but rates went down 16 percent. Public power is superior - with PG&E, we face rolling black-outs, corruption, rate-payer bail-outs and a fossil and nuclear power-based future," Ventresca said. He cited Los Angeles, Sacramento, Palo Alto and other California cities that currently run on public power and, on average, have had a rate decrease of 18 percent.

Gallagher laughed, "These places have energy independence, but most of them aren't MUDs. In fact, L.A. has had public power for more than 100 years and it is a city department, not a MUD. The bottom line is San Francisco doesn't have generation facilities. It's going to cost a lot of money. This will be the largest bond package in San Francisco history."

Further marring the MUD measure, Gallagher mentioned, is the controversy over energy consultant Emmitt Simpson, hired in August by the Local Area Formation Commission (LAFCO) to study the feasibility of public power ownership and to write an unbiased report on his findings, all for a fee of just under $100,000.

LAFCO claimed to be unhappy with Simpson's work and dismissed him when he was nearly finished with his report; however, a simple background check would have saved them the trouble (and the money) by revealing Simpson's checkered past regarding MUDs. In May of 1991, Simpson was indicted on 11 felony counts and convicted in Lassen County of fraud, including billing the Lassen MUD for work he did not perform.

The fact that Simpson's feasibility study for San Francisco's MUD was never completed prompted Gallagher to say emphatically, "So, Measure I is on the ballot, but we have no studies on feasibility, environmental impact or cost. They are basically asking for a blank check."

In his final rebuttal, Ventresca pointed out that the MUD would be independent from San Francisco's government.

"We won't have 600 mayoral assistants running around," he said, "And you know who wants the blank check? PG&E, with their bankruptcy."

The most vehement opponent to Prop. F and Measure I is PG&E, fearful of losing its power monopoly in the City.

According to opponents, neither initiative addresses the real solution, increasing the amount of power available to city residents, and both would require that the City purchase electricity on the open market.

Those in favor of public power point out that MUDs and similar agencies do not have to pay investor dividends or executive salaries, are exempt from taxes, and can borrow capital improvement funds at cheaper rates.

Supporters also say that, on average, public power entities contribute more than twice the local government revenue that private utility companies contribute, with part of the revenue going to the general fund so there is no loss from the taxes paid to the City by PG&E, which totaled $27 million last year.

Legal pundits claim that, if passed, both Prop F and Measure I have serious problems that could bog them down in court for years to come. As well, both measures would likely be hauled into court by PG&E over the value of its assets, which public power advocates say are worth $300 to $500 million - a far cry from the $1 billion or more that PG&E considers fair.