Customer ownership of PG&E urged
More than 100 elected officials support proposal for nonprofit cooperative
The legion of elected officials supporting a plan to turn beleaguered PG&E into a customerowned cooperative has grown fivefold with representatives from 58 cities and 10 counties now pledging support, San Jose Mayor Sam Liccardo announced Thursday.
Those officials include Oakland Mayor Libby Schaaf and supervisors from nine counties including Santa Clara, San Mateo, Alameda, Marin, Santa Cruz and Sonoma.
“I’m proud to stand with our growing coalition of 113 elected leaders — who together represent more than half of Californians served by PG& E — urging the company’s transformation to put the company’s days of underinvestment, mismanagement, and negligence far behind us,” Liccardo, who has been leading the effort, said in a statement.
Liccardo announced the cooperative proposal a month ago with support from 21 other mayors and the elected leaders of five counties.
The announcement came a few weeks after Pacific Gas and Electric blacked out hundreds of thousands of customers across the Bay Area and Northern California as part of an approved plan to avoid power equipment starting wildfires in dry, windy weather. Those outages sparked outrage from local officials and Gov. Gavin Newsom,
who complained they were poorly executed and needlessly widespread.
PG& E filed for bankruptcy reorganization in January as it faced mounting, multibillion- dollar liability claims for wildfires in recent years started by its electrical equipment, including many of the devastating Wine Country wildfires in 2017 and last year’s Camp Fire that destroyed the town of Paradise and killed 86 people.
A federal bankruptcy judge early next year is expected to consider competing reorganization plans for the state’s largest and most troubled utility, one from its shareholders and one from bondholders.
It is unclear whether the court would consider the mayors’ cooperative proposal. But Liccardo and the other officials appealed to the California Public Utilities Commission, which must sign off on PG& E’s bankruptcy exit plan, to push the cooperative as an alternative.
Some bankruptcy and industry experts have expressed skepticism the proposal to reinvent the state’s largest utility in such an unprecedented fashion would be considered a more viable solution to its financial and operational problems.
Backers have yet to file any paperwork to establish the proposed cooperative, name its directors or raise the capital necessary to put in a bid to be considered by the bankruptcy court. But Dan Richard, a former senior PG& E executive advising the San Jose mayor’s cooperative effort, said last month he’s confident the plan is feasible.
Backers say restructuring PG& E as a cooperative would give it access to lower- cost financing and allow it to avoid dividend and tax payments, making needed investments in grid upgrades cheaper for ratepayers.
But the cooperative structure, promoted during the Great Depression to electrify the nation’s rural areas, has not been done at the scale of PG&E, which serves 5.4 million electric customers across 70,000 square miles.
Not all cities and counties in PG&E’s vast service territory stretching from Bakersfield to the Oregon border are on board with the cooperative idea. Most conspicuous among them is San Francisco, which has sought to acquire PG& E’s transmission network and run it as a municipal utility. The San Francisco mayor’s office, however, said it does not consider the cooperative proposal “mutually exclusive” to its own plans.
With the exception of Humboldt County, the officials backing the cooperative proposal were not expressing formal support of the governments of the cities and counties they represent.
PG& E has rejected San Francisco’s grid purchase offer as insufficient, as well as the cooperative idea, stating that its “facilities are not for sale, and changing the structure of the company would not create a safer operation.”
Others, including those who support turning all or parts of PG& E into a government-run power utility like those serving Sacramento and Los Angeles, have questioned whether the cooperative structure, operating as a private nonprofit, would serve the public better.
To that end, Liccardo also announced a set of governing principles for the proposed cooperative, many of which would mirror open-meeting and public records access rules for public agencies.
Under the coalition’s guidelines, the cooperative would keep PG& E’s service area intact and maintain all of the utility’s labor contracts and independent power producers.
Governing board members would be nominated by a selection committee who will vet the candidates based on their relevant skill sets, including expertise with utilities, safety, cybersecurity or infrastructure, according to the plan.
Despite the cooperative’s nonprofit status, the customer- owned utility would operate as a public agency, adhering to public records and open meeting rules and prohibitions on organized political contributions, the principles state.
In addition, the principles state that all public safety power shutoffs would be based on best practices, with a “transparent decision- making structure, emphasis on coordination with local first responder and emergency service agencies, and highquality customer communication.”
“With these principles,” Liccardo said, “we’ve presented a framework for a viable customer- owned PG& E that will be transparent, accountable, and equitable.”