Photo Credits: KATHERINE FRANKS / AGGIE
Over two dozen CA reps. urge company to transition to publicly owned entity in letter
Davis Mayor Brett Lee was one of over two dozen California representatives, including 21 other mayors, who signed a Nov. 4 letter addressed to the California Public Utilities Commission (CPUC) and Calif. Governor Gavin Newsom. The letter called for the replacement of the Pacific Gas and Electric Company (PG&E) with a customer-owned entity.
The coalition of local leaders’ appeal came on the heels of multiple controversies surrounding the utility company that provides power to many of California’s major cities, including Davis. PG&E declared bankruptcy last January, after accumulating $30 billion in liabilities when the company’s equipment was connected to wildfires, according to The New York Times. In October, PG&E shut off power during high-risk weather conditions, affecting millions of people and generating widespread social media backlash among customers, the Times reported.
The letter, posted online by KQED and other outlets, supports a proposal spearheaded by Mayor Sam Liccardo of San Jose that the utility giant, emerging from bankruptcy proceedings, be replaced by a customer-owned or public power utility.
“Based on a foundation currently in the Public Utilities Code, we will propose transforming PG&E into a mutual benefit corporation — in essence, a cooperative owned by its customers,” the letter reads.
Lee, along with Yolo Supervisor Don Saylor and Sacramento Mayor Darrell Steinberg, was among the county and city leaders who signed the letter. The coalition of local officials outlined its “serious concerns” regarding how bankruptcy restructures the process of the utility company. PG&E is undergoing the process of working with the CPUC to reorganize in accordance with state bankruptcy code, which — according to the letter — requires that the company propose a model that is “feasible, financially stable enterprise, [and] able to perform its functions for the long-term”.
Mayor Lee said that he signed the letter because he felt PG&E has, for many years, failed to prioritize the utility needs of its customers over its shareholders.
“It’s important [that] California has a safe, reliable source of power, and — as demonstrated over the past decade or so — PG&E has not demonstrated that their priority is the provision of safe and dependable power for our communities,” Lee said. “As an investor-owned utility, their main obligation is to their investors, not to people they serve. As a private business entity, they depend on customers, but their ultimate obligation is to shareholders — and I think that doesn’t make sense for California. ”
The coalition’s letter echoes a similar sentiment, saying that PG&E’s actions represent a betrayal of public trust by privileging shareholder interests.
“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 letter reads. “It is time to pass control of the company from geographically distant investors to its customers.”
Lee said that PG&E’s decision to cut power to millions of customers only bolstered the argument for the transition to a publicly owned utility.
“The blackouts came after our desire to take back control over the power system,” Lee said. “But if anyone needed any proof — if they were skeptical about why we would want a municipality running the power system or why we would want the state of California running the power system — the blackouts coming shortly thereafter, I would think would be proof to many that the ideas were at least worth considering.”
Representatives of PG&E, however, have pushed back against calls for cooperative ownership. In a statement forwarded to The Sacramento Bee and other outlets, the company resisted any suggestions of a transition from a private corporation to a publicly-owned entity.
“We remain firmly convinced that a government or customer takeover is not the optimal solution that will address the challenges and serve the long-run interests of all customers in the communities we serve,” the statement read. “We remain focused on fairly resolving wildfire claims and exiting the Chapter 11 process as quickly as possible. PG&E is committed to working with all stakeholders to make the necessary changes moving forward to build a stronger and safer PG&E and be the company our customers and communities want and deserve.”
During a press conference in late October, Newsom said that he would consider a state takeover of PG&E if the company failed to pull itself out of bankruptcy by June 2020, according to CNN.
“PG&E as we know it may or may not be able to figure this out,” Newsom said. “If they cannot, we are not going to sit around and be passive. If Pacific Gas and Electric is unable to secure its own fate and future […] then the state will prepare itself as backup for a scenario where we do that job for them.”
Written by: Tim Lalonde — firstname.lastname@example.org