PG&E takeover proposals heat up, but some caution of unintended consequences
The political heat has been turned up at the state level on the increasingly contentious debate over California’s possible takeover of Pacific Gas & Electric (PG&E), after a California lawmaker announced a new bill that would get the ball rolling on turning the state’s largest investor-owned utility into a publicly owned entity to be known as the Northern California Energy Utility District.
The latest activity out of Sacramento follows Gov. Gavin Newsom’s public campaign to have the state take over PG&E, or at least be given an expanded role in its operations and strategy.
Casey DeMoss, co-director of Americans for Common Sense Energy Policies, is among the growing number of energy industry analysts who don’t see the morphing of PG&E into the Northern California Energy Utility District in the same optimistic light as takeover proponents; essentially the idea that the money saved by cutting Wall Street out of the equation would pay to upgrade the grid against wildfires and greatly expand renewable power capacity while also keeping a lid on customer rates and protecting PG&E’s workforce, particularly its strong unions.
“The devil is in the details, and this is a company and system that is 115 years old,” said DeMoss, who cautioned that negotiating a sale price alone would be an intense and lengthy task that would keep lawyers, financiers, and public officials busy for a long time before it even landed on the desk of regulators. “What is the company worth right now and what assets would transfer to whom,” she told Daily Energy Insider. “It certainly would wind up at FERC and that’s if you kept it all together.”
Despite the challenge of any transformation of PG&E, the state moved forward this month with potential key changes to the legal landscape that would allow the state to take over PG&E and also potentially expand the use of residential rooftop solar panels as sources of electricity.
Meanwhile, state Sen. Scott Weiner (D-San Francisco) introduced legislation that if enacted would order the California Power Authority to begin buying up shares of PG&E and converting the company into the Northern California Energy Utility District.
The measure followed a separate bill introduced by Weiner earlier this winter that would ban utilities statewide from charging distributed energy resources (DER) an access fee to place power generated from small-scale solar and storage projects onto the grid. Weiner called the fees “anti-competitive behavior” at a time when climate change required a full-court press toward the goal of 100 percent carbon-free electricity.
Weiner said in a written statement: “It’s time for a new start: a utility-focused not on Wall Street and shareholder profits, but rather on safety, reliability, affordability, and ratepayers. Public ownership of PG&E will allow California to hit the refresh button and create a utility-focused in the public interest.”
Weiner’s bill was quickly countered by the International Brotherhood of Electrical Workers (IBEW), who reiterated their opposition to the takeover on grounds that included the loss of pensions and the projected loss of $1.1 billion in state and local taxes paid annually by PG&E.
The union also raised an unintended consequence from proposals to phase out natural gas as a residential fuel in California.
“Not only would it lead to more job loss for our members, but any attempt to rush the process and dismantle the gas infrastructure too quickly could have devastating consequences,” the union said. “Additionally, it would result in huge rate increases to low-income customers at the end of the gas line who cannot afford electrification.”
The union also argued that a public takeover was effectively a type of deregulation, where a publicly owned utility would not be regulated by the California Public Utilities Commission and therefore could choose not to invest in infrastructure upgrades like grid safety and reliability that are critical to protecting against wildfires.
The issues raised by the IBEW could be important factors in the PG&E debate, and should be examined under a microscope before California jumps into a thorny takeover process that could have unintended consequences, especially when it comes to electrification.
“That means that the utility is going to become more important than ever,” DeMoss said. “You need a utility that can make all of these things happen.”
