Federal commission rules against PG&E in energy distribution dispute with San Francisco
SAN FRANCISCO -- A federal energy oversight commission has sided with the city of San Francisco in its claims that PG&E has obstructed and delayed city energy projects by requiring them to build unnecessary, expensive equipment.
For decades, the San Francisco Public Utilities Commission (SFPUC) has provided public power to city departments, schools, museums, public housing and other city customers.
Though it uses PG&E power lines to distribute energy, the SFPUC ultimately owns the power from the Hetch Hetchy Reservoir -- a decision made a century ago to prevent a monopoly and ensure the city has a cheap source of power.
The city filed a series of administrative appeals under the Federal Power Act after PG&E allegedly demanded new projects in San Francisco to install new, expensive electrical equipment that would add to construction time, unless they switch energy service providers to the company.
Court filings state that since 2018, PG&E's obstruction efforts have cost the city over $28 million in additional equipment costs, delay and redesign fees, lost SFPUC revenue and higher energy rates.
The Federal Energy Regulatory Commission ruled on Monday that San Francisco's city customers that have been served since 1992 are entitled to grandfathered service, meaning cheaper rates of energy.
The decision backs a January 2022 appellate court ruling, in which judges from the U.S. Court of Appeals for the D.C. Circuit ordered the FERC to reconsider the case after the commission initially sided with PG&E. The court found that FERC's previous decisions were "arbitrary and capricious," and sent the case back for reconsideration.
In a joint statement, City Attorney David Chiu and SFPUC general manager Dennis Herrera said the commission's decision prevents PG&E from eliminating competition and ultimately derailing the city's efforts to provide affordable power.
"This victory would not be possible without the doggedness of our hardworking attorneys and former City Attorney Dennis Herrera and his staff at the SFPUC," Chiu said in a statement.
Herrera added that the decision prevents PG&E from having monopoly control over San Francisco. He said his department is more determined than ever to reach full public power for the entire city, and hold PG&E responsible for their "ongoing obstruction."
"This ruling upholds the city's rights as a local power provider and protects our ability to serve the electricity customers we have served for decades," Herrera said in a statement.
A PG&E spokesperson said that despite the overturn, FERC's ruling does not change how PG&E currently services San Francisco residents or the SFPUC. They said the utility has already made changes to its tariff in 2021 to simplify wholesale distribution service and remove any preferential treatment "to ensure that all PG&E utility customers, including the SFPUC, are treated fairly and equally."
"This approach also aligns with best practices across the utility industry, and levels the playing field and brings parity to all PG&E's wholesale customers," the PG&E spokesperson said.
"The SFPUC and CleanPowerSF remain free, as they always have been, to continue to serve power generated by Hetchy Hetchy or procured by San Francisco to broad categories of municipal customers that the SFPUC has been serving since 1992 or that CleanPowerSF has been serving since its start nearly a decade ago," the spokesperson said.