Community Engagement

Calif. city supports customer ownership for PG&E

The city council of Davis, Calif., in December unanimously approved a resolution in support of transforming Pacific Gas and Electric into a customer-owned utility.

Davis, at least tangentially, had already lent its support to municipalization efforts that have arisen since PG&E declared bankruptcy in January in the wake of being implicated for causing deadly wildfires.

Davis Mayor Brett Lee was one of about two dozen city and county leaders who in November sent a letter to the California Public Utilities Commission that argued in favor of turning PG&E into a customer-owned utility.

And in August, the board of directors of Valley Clean Energy said it was studying the possibility of acquiring PG&E’s distribution facilities in its service territory, which includes Davis and other communities in Yolo County. The community choice aggregator’s board of directors includes two members of Davis’ city council.

Now, by approving the resolution, Davis’ city council officially registers its support of a takeover of PG&E. The city council wanted to make it clear that it was not just the mayor who was backing the idea, Lee said. “This firms up the city council’s support,” he said.

The resolution lays out several reasons for seeking to transform PG&E to customer ownership, including the “dystopia of alternating wildfires and blackouts that have displaced hundreds of thousands of residents, and disrupted the daily lives and livelihoods of millions more.”

The resolution cites PG&E’s chronic underinvestment in “basic maintenance and safety” and argues that a solution to the current crisis would require access to “tens of billions of dollars” in capital investment for upgrades and grid hardening and that a customer-owned utility would benefit from “dramatically lower capital costs” because it would not be obliged to pay federal taxes or dividends to shareholders, rendering it able to devote more resources to maintenance and improvements in infrastructure and service.

At this point, Davis would seem to have two options: get on board Valley Clean Energy’s bid to take over PG&E’s assets in its territory or participate in a wider transformation of the investor-owned utility.

Valley Clean Energy in October submitted a $300 million bid to purchase PG&E’s lines, poles and other distribution assets in Yolo County.

“Personally, I would like to see an entity created for all of California,” that is, a customer-owned utility that would take over PG&E’s Northern California territory, Lee said. PG&E’s bankruptcy opened a window for that transformation to take place, but it is only open “for a very short amount of time,” he said.

While an investor-owned utility can offer a successful model in many contexts, the growing crisis of wildfires and increasing frequency of large, multi-billion-dollar losses demands a more sustainable ownership model for the company’s operations, the resolution says, calling for the California Public Utilities Commission and the U.S. Bankruptcy Court to “fully consider a proposal to transform Pacific Gas & Electric into a customer-owned utility.”

Lee said that he hopes that the city council’s resolution will strengthen the political resolve of public officials to take action to do what is best for the state’s communities and ratepayers.