Over 20 cities Join San Jose Mayor Liccardo in Calling for Customer-Owned PG&E

San Jose Mayor Sam Liccardo is leading a coalition of local government leaders in a push to transform PG&E into a customer-owned utility.

The mayors of Sunnyvale, Oakland, Sacramento and about 20 other cities have joined Liccardo in urging the California Public Utilities Commission (CPUC) to restructure the bankrupt PG&E from an investor-led company to one that’s customer-owned.

“There’s no question that in whatever form this company comes out of bankruptcy, ratepayers are paying more,” Liccardo said at a press conference earlier this week. “We know that because we see the size of the debts and liabilities. The question is: are you going to be paying more for the same broken investor-owned utility that will be controlled by an out-of-state hedge fund seeking to maximize profit … and leave the carcass for taxpayers and ratepayers to pick up?”

The mayor acknowledges that the process would be a tremendous undertaking, as PG&E estimates it needs to invest tens of billions of dollars to upgrade its aging infrastructure. But Liccardo said a customer-owned utility would be cheaper to operate because, as a not-for-profit entity, it would enjoy exemptions from federal tax. Plus, it wouldn’t need to pay dividends to shareholders, allowing the utility to divert resources on maintaining and repairing old transmission lines.

Over 900 utility cooperatives exist across the nation, most of them in rural areas deemed unprofitable to serve by investor-owned utilities. Utility cooperatives either invest their profits in its infrastructure or distribute them to members.

“I'd like to believe that if it was customer-owned, it won't be contemplating $11 million in bonuses to corporate executives in the year it went bankrupt,” Liccardo said. (A judge ultimately rejected the utility’s planned bonuses).

The mayor estimated that his proposal would save the public $14 billion.

Liccardo said he wouldn’t want elected officials to serve on the ratepayer-owned utility’s board of directors; the governance of the proposed customer-owned entity has yet to be decided. However, the mayor added, “it needs to be run like a business.”

“Certainly it needs to be efficient and invest ratepayer dollars effectively,” he said. “That means it should not be a political animal.”

Since Gov. Gavin Newsom signed AB 1054 in July, PG&E must exit bankruptcy by June 30, 2020. CPUC is reviewing two proposals to restructure to utilities. But the city-led coalition criticized the proposals up for consideration, saying in a letter to the CPUC that  “both vie for ultimate control, and both reflect a short-term desire to maximize financial gain for their proponents.”

Major lenders proposed a $30 billion plan that would set aside $18 million for customer claims from the 2017 and 2018 wildfires and rebrand PG&E as Golden State Power Light and Gas Company. The coalition of city leaders, however, slammed the pitch as the “product of distressed asset bondholders.”

Meanwhile, PG&E put forward a proposal to pay a $1 billion legal settlement by raising up to $14 billion of equity financing and compensate wildfire victims with an amount that doesn’t exceed $8.5 billion. Again, the coalition denounced the proposal because it would allow hedge funds to continue to finance the utility’s operations.

“To the extent that the public continues to believe that a profit motive has dominated PG&E’s decision making, the enterprise will never regain the trust of its customers, its regulators, and public policy-makers,” the coalition wrote to the CPUC. “It is time to pass control of the company from geographically distant investors to its customers.”

Echoing Newsom’s declaration that PG&E should become a “completely re-imagined company,” the coalition expressed hopes of restoring public confidence by turning it into a collectively owned organization.

Since the utility’s power shutoff left millions of Californians in the dark last month, state leaders have implemented a series of initiatives trying to rein in PG&E’s abuses and failures. Newsom recently announced plans to allocate $75 million of state funding to reimburse cities’ for the power shutoffs, with $500,000 going to San Jose.

Meanwhile, Santa Clara County will explore options to repay costs incurred from the power outages. In addition to calling for a ratepayer-owned PG&E, Liccardo also announced that San Jose will explore investment in micro-grids and energy storage.

Nicholas Chan is a journalist who covers politics, culture and current events in Silicon Valley. Follow him on Twitter at @nicholaschanhk.

29 Comments

  1. > In addition to calling for a ratepayer-owned PG&E, Liccardo also announced that San Jose will explore investment in micro-grids and energy storage.

    If Smiling Sam really wanted to be an investment banker, why didn’t he go to work on Wall Street?

    If he doesn’t like fixing potholes, he should have told voters before he ran for office.

    • San Jose Mayor “Stinky” Sam Liccardo cannot even fix the Air Conditioning System at City Hall…..I have heard war stories from the 18th floor and same with the Council Chambers… So now he wants to go into the Power Business??? hahahahahahahahaha….. woooooooow….what a bunch of Muppet’s running the show.

      Let’s focus on the humanitarian disaster on our streets before we get in over our head going into the power biz.

  2. PG&E’s deferring maintenance for decades to the benefit of its investors has caused considerable damage in NorCal. But complicit in the problem is the CPUC which has utterly failed in its oversight of PG&E, yet we hear nothing about how it has abandoned its role and become a rubber stamp for PG&E. Newsome needs to fire everyone on the CPUC and replace them with members who will protect the public, not PG&E’s executives.
    Every year the midwest is battered by winds over 100 mph. Every year the Gulf Coast And the eastern seaboard are battered by hurricanes with 100+mph winds. In 2017 alone there were two category 5 hurricanes with steady winds at 180 mph, and a category 4 hurricane. Their equipment held up. Yet PG&E equipment can’t handle a mere 80 Mph winds.
    A number of PG&E execs and managers need to go to prison over this.

    • > PG&E’s deferring maintenance for decades to the benefit of its investors has caused considerable damage in NorCal.

      My understanding is that PG&E is a regulated privately owned utility and is GUARANTEED an eight percent rate of return by regulators. Utilities require gobs of money and investors lend money to them based on their assured return and very low risk.

      If politicians start monkeying with PG&E’s rate of return, Wall Street investors will slam the lending window shut and ZILLIONS and ZILLIONS of widows and orphans will suffer.

      Sacramento politicians ALSO like to use PG&E as a conscript army of social workers. Anything that politicians can remotely associate with “power generation and delivery” (e.g. “forest management”, windmills, etc.) will be thrown in the lap of PG&E, which will gladly spend money on it AND be reimbursed through utility rates approved be the politically motivated CPUC.

      PG&E is probably not a great operation, but compared to the alternatives (politician owned utilities, or voter owned utilities) its probably the LEAST BAD of a bunch of bad alternatives.

      • SJ outside the bubble wrote:
        >My understanding is that PG&E is a regulated privately owned utility and is GUARANTEED an eight percent rate of >return by regulators. Utilities require gobs of money and investors lend money to them based on their assured return >and very low risk.

        So you’re suggesting that this has worked well for us so far? Has their profit motive resulted in excellent customer service and reliable power delivery without causing wildfires?

        I would argue that a utility is infrastructure which should be government owned. The things it connects to and distributes power between should be privately owned. Just as airports are owned and operated by the government, but the airlines and their airplanes are privately owned and operated. Infrastructure should be operated with a goal of public safety, not profit. That way, if maintenance has to be done, it is done. Even if it results in the agency operating at a loss. It would be taxpayer funded. We can’t tolerate companies making decisions like that when it affects public safety.

        California now requires, starting in 2020, that all newly built homes must be powered by solar. I would require also that they are grid independent. They should still be connected to the grid as backup, but if the grid is taken down for maintenance or is damaged by a storm, the home should run off solar and batteries.That would be good because it would reduce load on the grid.

  3. Sam Liccardo is echoing our thoughts as ratepayers. The City of Santa Clara residents pay much less for their electrical rates due to the city owning their own utilities including Garbage. It is time for San Jose to become independent of PG&E. If other cities wish to jump on the wagon then I say all the better. We are currently being held hostage by a criminal terrorist enterprise and by people who live thousands of miles from here. They could care less about our quality of life as long as they prosper. We are all paying with the smoke in the air we breathe as well as the the lack of services we receive. Go Sam, great idea to co-op our utilities.

    • > Go Sam, great idea to co-op our utilities.

      BRUCE:

      You need to spend more time in line at the DMV, or trying to get the public school district to answer the phone, or getting a permit to cut down a tree or build a birdbath.

      Politicians make promises. They don’t know how to run anything. That’s why they’re always campaigning for the next job before they have to explain their screw ups in their current job.

      • > Politicians make promises. They don’t know how to run anything.

        Hey bubble, you and I agree on something! The Cheeto in Chief is a politician and he can’t run anything, especially the United States government. For once, you’re right.

        • Trump in his first term, has already accomplished more than Barack Hussein Soetoro in two terms. And while I don’t agree with everything Trump says or does necessarily, I know he is patriotic and loves this nation (the same can’t be said for Barry or the Clintons or the Bushes, who should probably all be in prison).

          But as to my earlier comment/reply: Yes it was a bit rambling, but your reply illustrated my point perfectly, about the ignorance of the left. U.N. Agenda 21 isn’t some crazy right-wing conspiracy theory. It is an International Treaty and actual document anyone can read, and has been in the force of law (through legislation passed at the Federal, State, and local levels) for more than 2 decades. A [minor] example of it, is California Assembly Bill 117, which allowed for “Community Choice Aggregation” (Community Choice Energy).

          The authoritarian part of it (and there are a few), is that you are forced into the CCA without your consent; into a contract you didn’t sign, if you were even aware of it (I was not), only to have to take action to “Opt Out” later if you don’t want to be. In my case, $180 was stolen by the CCA (and/or PG&E), and then when I looked at my bill to see why, I opted out (of course). There was this 3rd party company listed with whom I had never contracted for anything.

          Though I had researched Agenda 21 a little previously, that debacle made me research more. The Wikipedia entry is an intentional fabrication and falsification. And if you edit the Wikipedia article to change “non-binding” to “binding with the force of law” some Communist will revert your edit. It has also been being implemented through Councils of Government (like ABAG), and city and county planning agencies (among other groups) bypassing Democratic Constitutional Representative Government to spend our tax dollars however they want (without the consent, vote, or will of the people).

          However they want, has for the most part been wasteful, useless, and ineffective. And we are seeing the results in Santa Cruz County, Marin County, and essentially every county in the Bay Area; Sometimes in ways you would not possibly imagine could happen in America (which remove our property rights, constitutional protections, and in rare cases land taken by “eminent domain”. But these cases (of my neighbors) led me to discover people like John Anthony, Dr. Michael Coffman, Tom DeWesse, Rosa Koire, Ileana Johnson Paugh, and many others (search their names on YouTube with “Agenda 21”)

    • You are absolutely right, Bruce. Investors don’t care about anything other than making the next quarter’s numbers. To hell with people being able to keep their power running, or their internet connection alive and neutral. There are some things that we can’t trust the wall street types to manage because if you let them have their way, they are like a cancer that will gobble everything up until the host (ie, mankind and the earth herself) dies.

      That’s where regulation comes in, to make sure things don’t run amok. I trust my fellow citizens enough to let them survey the landscape and come up with, and implement, ideas that will allow all of us and our children to live another day.

      Anyone that talks smack about how government here in the US, or here in the bay area, is corrupt or inept is really talking about their neighbors. Our government is BY the people, and that’s all of us, so watch what you say.

      • Recuerdo, “All Politics is Local”, Tip O’Neil.

        Now I am on my way to Twitter as I heard a Nunes Cow is playing havoc with someone named Devin.

        As always we can count on El Bubble to defend the indefensible, PG&E. Go figure.

        • > Recuerdo, “All Politics is Local”, Tip O’Neil.

          HA HA HA !

          This is funny.

          If progressives really believed that “politics is local”, they wouldn’t be globalists.

          But they can’t be bothered with tiny little local issues like potholes, They’re too important for that. They’ve got to save the whole G*dd*mn PLANET, don’t you know.

  4. Please take care of the homeless epidemic first which is impacting our quality of life more

  5. “I’d like to believe that if it was customer-owned, it won’t be contemplating $11 million in bonuses to corporate executives in the year it went bankrupt,” Liccardo said.

    As a taxpayer I’d like to believe that if PG&E was “customer-owned” (translation: “politician-run”), it would be more efficient than a company run by businessmen and women.

    Remember when the same arguments were being made when public transportation service was run by a company that won the contract with the the lowest bid? They said if the gov’t ran public transportation, everything would be better than ever… but then reality happened.

    So now we have VTA, a money sink if there ever was one. It’s constantly operating in the red, as anyone with half a brain should expect when public transportation is run by political appointees with little to no prior experience in running a business.

    If PG&E is taken over by the government, the same problems will occur. Operating costs will necessarily skyrocket, because Big Labor will be a co-manager.

    Just like VTA, all PG&E employees below management level will be paid at the highest possible (AKA: “prevailing”) union rate. Management will automatically cave in to union demands, because their thousands of workers are also voters — something that PG&E can ignore, since it isn’t being run by pols.

    And the ‘New PG&E’ management will either be the same kind of experience-free appointees we enjoy with VTA — or the former PG&E managers and directors will be paid as much or more than PG&E pays them now.

    Priorities will be shifted. Without market discipline or credible regulation, costs will escalate. A reliable electricity supply will no longer be a top priority. And what will become of the regulators? If there are problems now, what will happen when politicians appoint both management and its oversight?

    PG&E’s new management won’t answer to the public, instead it will kowtow to its political masters. And no one will take the blame for the inevitable cost overruns or spotty service, because politicians always have ready made excuses for every problem.

    There are other compelling arguments against putting our electricity supply in the hands of government drones who are immune from the current criticism of PG&E.

    But the best argument to demolish Liccardo’s “customer owned” PG&E scam requires just 3 letters… VTA.

    • The City of Santa Clara has been running its own electric utility since the advent of electric power. How do you explain this in light of your statement. It has its own natural gas plant and generates a third of its power within the city limits. In fact I believe Santa Clara had the very first power plant in The West starting in 1896. For more info on a first rate city owned utility go to: http://santaclaraca.gov/Home/ShowDocument?id=8614

      Smokey, you must be able to reconcile facts, instead of hiding behind fictitious names and spreading false information.

      • > How do you explain this in light of your statement.

        Does Santa Clara let trees and underbrush overwhelm its transmission lines and distribution network and burst into flame on dry, windy days?

        • I’m not a fan of Liccardo, but this idea (which is probably not original from him), is not a bad one; If it’s implemented correctly (which doesn’t mean a CCA/CCE communist public private partnership like entity). Making it a non-profit would save money. To my knowledge, Silicon Valley Power is run well and provides good service at lower rates. What I don’t like is the entire fallacy of CCAs and CCE being imposed upon us in an Authoritarian/Communist style Agenda 21/ICLEI mandate (where their promises and facts, are lies, mistruths, and deception. And that’s why they all used the same tactic of forcing everyone into (Auto Opt-In/forced Opt-Out) contracts without their knowledge or consent (in many cases).

          Now that I realize it, Smiling Sam, wants to use the power of his office to push everyone into that direction for his own political gain (CCAs/CCE and the fallacy of man-made Global Warming and “Clean/Green” Energy which at this point is totally unsustainable and isn’t clean/green/renewable). The technology (and energy density in so-called renewables) isn’t there yet, and won’t be for 50 to 100 years or more. These technologies are always subsidized with our tax dollars because they are not self sustaining (let alone clean) and they never generate a profit (ROI).

          But the politicians get lobbied, and massive kickbacks, job offers, and other selfish and career perks to facilitate these public private partnerships (which is ultimately theft of our tax dollars given to a chosen few contractors and developers who give the bribes and kickbacks to the politicians). That’s why when we have a massive traffic problem and road maintenance issues (where we need new roads and more traffic lanes, they are building walking paths and bike lanes (and CA HSR).

          The real problem with all these complex issues is that people are ignorant. And they allow their feelings, emotions, and human nature (such as environmentalism and wanting to have a “low carbon footprint” and be good stewards of the Environment), to ignore common sense, rational deductive reasoning and thought process, while taking authoritarian actions for everyone based on ignorance (without doing their due diligence research/study). This gives other powerful people in high places, the ability to use psychology [and other tools] to manipulate them. And this is the problem precisely with liberalism (so-called [false] progressivism). It is little different from Communism/ Socialism/ Marxism in it’s mentality.

          This coming to you from a former Democrat (now Libertarian who votes Republican). But the issue with PG&E is that it simply has too large a service territory, poor management, and not enough revenue/profits, to do proper maintenance on all it’s infrastructure. PG&E is an ICLEI member, and the Executive Management has been in bed with the entire U.N. Agenda 21/ Al Gore/ Rothschild/ Rockefeller/ Maurice Strong since its inception. But with the CPUC in bed with PG&E Execs, good luck to cities or counties forcing the CPUC to give up regulatory control over the largest utility in America. Authoritarian liberals/leftists seek power and control, and they rarely ever yield it willingly. This will take an act of the California Legislature if it ever materializes (which it won’t). Liccardo has about as much chance of this actually happening as bringing the A’s or HSR to SJ.

          • A libertarian repub bringing up “Agenda 21”. I _thought_ that your rambling and wandering post didn’t make a lot of sense. I’m walking away not knowing what your point is.

          • > A libertarian repub bringing up “Agenda 21”. I _thought_ that your rambling and wandering post didn’t make a lot of sense. I’m walking away not knowing what your point is.

            SCCrezzy:

            Here’s your chance. Explain what “Agenda 21” is and why San Jose, California, and the United States of America will be a better place.

            Will “Agenda 21” be good for women and minorities?

            Will “Agenda 21” be good for white people? Will any white supremacists benefit?

            Will “Agenda 21″ be good for LGBTQxyz”?

            Will “Agenda 21” help Trump get reelected?

            Will “Agenda 21” help Eric Swalwell Beto O’Rourke become president?

            URGENT! WE NEED ANSWERS!

          • Or how about this…

            Q: What is Agenda 21?
            A: Yet another crazy right-wing conspiracy theory. There’s a whole stack of them in the back.

  6. CA politicians desperately want to take over PGE so they can turn it into another vote-buying, union-run entitlement program. No one making less than $x/year, will be required to pay for utilities and the shortfall will be passed on to the rest of us. Mark my words…

  7. This action needs to go to the voters and I personally do not think the cities are qualified to make this decision. The devil is in the details and not one politician has discussed the details like the cost, where will the employees who do the work come from since some of this work is dangerous, and much more questions. Many politicians are criticizing PG&E but they really need to concentrate on issues like our schools, roads, homeless, mental health and clean cities. A good example is Oakland where they have allowed the homeless everywhere without being able to provide support. This holds true for San Jose where we do not have enough workers to maintain our parks or streets. We do not have enough police and many of our neighborhoods need traffic calming because of our rate of growth,. Politicians like to point fingers but really need to look at the problems they were elected to fix before trying to take on more responsibilities.

  8. > Q: What is Agenda 21?
    > A: Yet another crazy right-wing conspiracy theory. There’s a whole stack of them in the back.

    Wow. They must be coating the blue pills with cannabis flavored chocolate.

    You’re only supposed to take one pill at a time, SCCrezzy.

  9. > Q: What is Agenda 21?

    > A: Yet another crazy right-wing conspiracy theory. There’s a whole stack of them in the back.

    Well, there’s a REAL Wikipedia entry on Agenda 21, so it must be real.

    > Agenda 21 is a non-binding action plan of the United Nations with regard to sustainable development.
    , , ,

    > “Anti-Agenda 21 conspiracy theories have circulated in the U.S. Some Tea Party movement activists and others promoted the notion that Agenda 21 was part of a UN plot to deny property rights, undermine U.S. sovereignty, or force citizens to move to cities.. . . Activists believed that the non-binding UN resolution was “the linchpin in a plot to subjugate humanity under an eco-totalitarian regime.”
    . . .

    > Agenda 21 fears have played a role in opposition to local government’s efforts to promote resource and land conservation, build bike lanes, and construct hubs for public transportation.

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