San Francisco Seeks to Acquire PG&E Grid Amid $13.9B Valuation Dispute

This roundup covers San Francisco's effort to establish a public power system. San Francisco wants to acquire Pacific Gas & Electric's electricity grid within the city and supply residents directly. PG&E provided the utility's first valuation on Tuesday, seven years after San Francisco initially offered to buy the grid. PG&E valued the assets at $13.9 billion, roughly quadruple the city's $3.4 billion estimate from April. PG&E says San Francisco should pay an additional $8.6 billion for separating the grid and preventing rate increases for customers outside the city. Those estimates would put the total expense of establishing public power above San Francisco's entire annual budget.

PG&E told the California Public Utilities Commission in Tuesday's testimony that the utility would not voluntarily sell the assets. PG&E CEO Patti Poppe said government ownership would not be the right outcome for the utility's San Francisco customers. San Francisco Board of Supervisors President Rafael Mandelman said PG&E has an incentive to inflate the assets' value. Mandelman said many city leaders have long considered PG&E unreliable, and recent outages have reinforced that assessment. Mandelman described municipal ownership as the city's only available option.

Mayor Daniel Lurie has spoken less publicly about the public ownership campaign that Lurie inherited. A Lurie spokesperson said PG&E had repeatedly failed San Francisco residents. The spokesperson said Lurie's administration was pursuing accountability and keeping every option available while the commission considers the case.

California law permits cities to request a commission valuation of utility property. San Francisco made that request in 2021. PG&E submitted the utility's estimate after five years of exchanges in the proceeding. San Francisco and PG&E will continue presenting arguments before the commission determines a fair price. The commission said last year that a final decision was planned for the first quarter of 2027. Energy leaders throughout California are watching how the commission develops the valuation method.

The Utility Reform Network Executive Director Mark Toney expressed concern that remaining PG&E customers would absorb more grid maintenance costs, particularly wildfire expenses. PG&E distributes wildfire costs, including underground power lines, across the utility's entire customer base regardless of where the work occurs. The Public Advocates Office said California customers of investor-owned utilities paid $9 billion in wildfire-related charges through electricity bills in 2024. The commission's ratepayer watchdog predicts that total will double by 2028. A large city with limited wildfire exposure leaving PG&E could concentrate those expenses among fewer customers and potentially increase bills. Toney wants the commission's valuation to prevent any transfer of costs to remaining customers. Avoiding such transfers could substantially increase San Francisco's acquisition price. Toney said the decision and the valuation method would establish a model for future public power proposals, including efforts other California cities are considering.

Commission President John Reynolds declined during a June interview to address the San Francisco proceeding specifically. Reynolds said allowing municipal ownership to eliminate customers' fair share of wildfire safety costs would create significant social and policy consequences for California. Reynolds emphasized that the state's electricity system seeks to ensure access for everyone. Reynolds questioned whether only customers who are expensive to serve should bear those costs.

San Francisco's effort could reshape Northern California's electricity system and encourage public power campaigns nationally, or discourage other large cities from challenging utilities. American Public Power Association Senior Vice President Ursula Schryver said a successful acquisition would concern investor-owned utilities by demonstrating that a large city can establish public power. Investor-owned utilities supply most electricity customers in the United States. Public providers serve about 2,000 communities, including Los Angeles and Sacramento. Schryver said recent successful municipal ownership campaigns have mostly involved smaller communities because utilities spend heavily to retain large customer populations. San Diego, Milwaukee and Ann Arbor are among the cities currently considering replacing local utility providers.