Electricity Markets

Valley Clean Energy board makes $300 mil offer for PG&E assets

The board of Valley Clean Energy, a California community choice aggregator, has submitted a $300 million bid to purchase Pacific Gas & Electric’s lines, poles and other electricity distribution assets within Yolo County, Calif.

The purchase would enable the creation of a locally owned and operated public utility that the board has concluded would result in a more successful, efficient and safe electricity system, Valley Clean Energy said on Oct. 19.

Following the announcement this summer of its intent to examine the purchase of local PG&E assets, and after months of study and review with expert consultants, the Valley Clean Energy board of directors submitted a non-binding offer on Oct. 18 to purchase PG&E’s assets.

Valley Clean Energy’s offer would ultimately be subject to approval by the federal court handling the PG&E bankruptcy case.

Valley Clean Energy is a public agency that currently purchases electricity under a joint powers agreement for the cities of Woodland and Davis and unincorporated Yolo County, but relies on PG&E’s distribution system to bring that power to its customers.

Purchase of the local PG&E power poles and lines would allow for the creation of a Yolo County-based public utility similar in nature to those found in Lodi, Roseville, Sacramento (SMUD) and other communities across the state, Valley Clean Energy noted.

“Circumstances surrounding PG&E’s January bankruptcy filing have created this unique opportunity to reimagine a more successful, efficient and safe electricity system in Yolo County and other areas of PG&E’s service territory,” Valley Clean Energy said.

Valley Clean Energy said that PG&E’s bankruptcy protection filing in January 2019 “created an opportunity for community choice energy agencies such as Valley Clean Energy, along with other public agencies, to determine whether a ‘public power’ electric service approach might provide greater control, benefits and safeguards to California communities.”

The decision to pursue acquisition of PG&E’s electric distribution assets is not unique to Valley Clean Energy, it noted.

The city of San Francisco announced a $2.5 billion offer last month for PG&E’s infrastructure within its geographic boundaries.

San Francisco Mayor London Breed and San Francisco City Attorney Dennis Herrera outlined the proposal in a Sept. 6 letter that was sent to Johnson and Andrew Vesey, CEO and President of PG&E.

PG&E earlier this month rejected the offer from the City of San Francisco. In an Oct. 7 letter to Breed and Herrera, Johnson wrote, “Although we appreciate the effort San Francisco undertook to prepare its offer, we must decline to accept it.”

“We aren’t surprised by PG&E’s response so far,” Breed and Herrera said. “We’re also not giving up. Now more than ever, it is clear that we must take back control of San Francisco’s electric service and achieve energy independence.”

Meanwhile, on Sept. 3, the South San Joaquin Irrigation District — a water agency in the heart of the state’s agricultural region that tried to buy PG&E distribution facilities in 2006 and 2016 — formally renewed its offer to purchase PG&E distribution system assets as part of the current bankruptcy proceeding.

And on Thursday, Oct. 17, San Jose Mayor Sam Liccardo announced his proposal to investigate the formation of a public utility for his city in the wake of the recent PG&E power shutoffs.

“While the cost and responsibility of operating and upgrading an electrical distribution system is significant, many proven examples indicate that public ownership of power facilities is practical. A total of 54 public power utilities currently serve almost one-third of Californians,” Valley Clean Energy said.

Valley Clean Energy procures power for more than 150,000 residential and commercial electricity customers in Woodland, Davis and unincorporated Yolo County. However, customers currently pay PG&E for the distribution of that power to their homes and businesses using the infrastructure Valley Clean Energy has now offered to acquire.

“Having full control over both electricity distribution and generation can help achieve Valley Clean Energy’s stated goals of providing cost-competitive clean energy, product choice, increased energy efficiency and price stability,” the CCA said.

The PG&E bankruptcy process does not have a specific timeline but is expected to conclude in 2020. In the meantime, using other existing publicly owned utilities as models, the Valley Clean Energy board will consider possible agency structure, operational and financing options, the CCA said.