Electricity Markets

FERC Sides with San Francisco in Dispute with Pacific Gas & Electric

The Federal Energy Regulatory Commission (FERC) recently issued an order in line with a January 2022 D.C. Circuit Court of Appeals ruling in San Francisco’s favor in a dispute with Pacific Gas & Electric (PG&E) over electricity connections, the city said on Oct. 21.

“The decision diminishes PG&E’s attempts to obstruct the City’s public power efforts and ensures that the City can continue to provide public power to broad categories of municipal customers that it has been serving since 1992,” the San Francisco Public Utilities Commission (SFPUC) said in a news release.

The types of municipal customers that were grandfathered in include city departments and agencies as well as related entities that serve a civic purpose like schools, museums, and public housing.

The U.S. Court of Appeals for the District of Columbia Circuit earlier this year sided with the SFPUC in a dispute with PG&E over electricity connections. In its opinion, the appeals court directed FERC to conduct further proceedings related to matters addressed in the decision.

“FERC’s decision makes clear that PG&E does not have monopoly control over San Francisco,” said Dennis Herrera, General Manager of the SFPUC. “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.”

Case Background

Despite clear authority under the Federal Power Act, PG&E has argued that San Francisco does not have the right to serve new public facilities with public power without building extremely expensive and unnecessary equipment, the city said.

“PG&E’s obstruction has cost the City more than $28 million since 2018 in additional equipment costs, delay costs, redesign costs, lost SFPUC revenue when projects are forced to become PG&E customers, and higher energy costs due to PG&E’s higher rates,” the city said.

San Francisco filed a series of administrative appeals with FERC asserting its authority under the Federal Power Act to serve certain categories of municipal customers without building unnecessary equipment.

FERC previously sided with PG&E in those appeals, but San Francisco appealed the decisions to the D.C. Circuit Court of Appeals.

In January 2022, the Court found in the City’s favor and overturned the previous FERC orders siding with PG&E. The court found that FERC’s previous orders on grandfathering, which limited the City’s ability to continue to serve many of the municipal customers it was serving in 1992, were “arbitrary and capricious.”

FERC’s ruling “is consistent with the Court’s opinion allowing San Francisco to provide affordable, public power to these categories of municipal customers,” the city said on Oct. 21.

The FERC order can be found here.