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California mayors back plan to make PG&E a cooperative

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Frustrated with wildfires and intentional blackouts caused by Pacific Gas & Electric, more than two dozen California mayors and county leaders are calling for a customer-owned power company to replace the giant utility.

In a letter delivered Tuesday to the California Public Utilities Commission, the local officials — including the mayors of Petaluma, Windsor, Sonoma and Cotati — embraced a proposal by Mayor Sam Liccardo of San Jose to create a cooperative that would use their collective resources to take over the utility.

PG&E, which filed for bankruptcy protection in January after accumulating an estimated $30 billion in liabilities from wildfires caused by its equipment, is widely expected to emerge with a different structure. Any bankruptcy plan requiring a rate increase is subject to approval by the utilities commission.

“The commission must do more than approve a plan — any plan — merely so that the bankruptcy can be concluded,” the government officials stated in the letter. “This situation requires a full and comprehensive effort to chart a sustainable course for the future of PG&E, one that will serve the interests of its customers, and position the company to meet the challenges we will face from a changing climate.”

PG&E said it was aware of proposals to change the utility to a customer-owned or public power utility but said it expected to emerge from bankruptcy as a strong and effective company.

“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,” Jennifer Robison, a PG&E spokeswoman, said in an email.

Sonoma Mayor Amy Harrington, who signed the letter, said the move could boost spending on improving PG&E’s technology toward a goal of generally “not setting things on fire.

“Just economically, if the profits were not going into huge salaries and dividends but were being invested into lower rates and improvements to infrastructure, that would improve the system,” she said, such as “a massive program of undergrounding wires, for one.”

Cotati Mayor John Dell’Osso said his decision to sign the letter wasn’t out of bad feelings related to PG&E’s recent widespread power outages but was motivated by a desire to answer questions about PG&E’s ability to improve its systems.

“It wasn’t something out of angst, that’s not why I’m doing it,” he said. “I just think it’s really time that we have a serious discussion.”

Calls for alternatives to PG&E’s existing structure have grown louder over the last month, after the utility intentionally blacked out millions of customers — some without warning — to prevent wildfires as fierce winds swept through Northern and Central California, elevating the fire hazard in hot, dry conditions. Some customers lost power for as long as a week during multiple blackouts.

Despite the blackout strategy, PG&E’s equipment has been identified as the possible cause of at least five different wildfires last month, including the Kincade fire, which has burned nearly 80,000 acres in the Sonoma County wine region and damaged or destroyed more than 400 structures.

“There’s a strong response among the local leaders that I speak with that their communities are fed up,” Liccardo said. “They believe PG&E needs to be transformed into a company that is more responsive and more responsible.”

In addition to Liccardo’s proposal, San Francisco has offered to buy parts of the PG&E’s system that serve that city.

But remaking PG&E will not be easy. The company is the largest investor-owned utility in any single state, with more than 15 million electric and natural-gas customers.

Its bankruptcy case, the second in the last two decades, involves tens of billions of dollars in claims from wildfire victims, insurers and public entities. Bondholders and investors have fought to control the company’s future shape.

But the financial reorganization has been compounded by other legal troubles. The company is still on probation from a felony conviction over a 2010 gas-pipeline explosion, and state fire investigators have referred some 2017 wildfire cases for consideration of criminal charges.

In their letter to state regulators, the local government leaders said converting PG&E’s ownership from shareholders to customers could be part of any bankruptcy resolution. They urged the governor and state lawmakers to back their plan.

Mayor Darrell Steinberg of Sacramento said Tuesday that he had signed on to the letter “in solidarity with my fellow mayors.” Sacramento runs one of the state’s municipal utilities along with the Los Angeles Department of Water and Power, the largest in the country.

Steinberg said the Sacramento Municipal Utility District, which provides electricity in areas connected to PG&E’s territory, had not had the kinds of problems that PG&E has encountered.

He said not having the profit motive that drives the private utility appeared to be a significant factor.

”There’s a singular mission to provide safe, reliable and cost-effective electricity services,” Steinberg said. “We’re not fighting between shareholders and ratepayers.”

Still, the officials said they recognized that it would cost billions of dollars more to improve an electric system that many see as woefully neglected, no matter how the utility is structured.

“We’re not delusional about the challenges here,” Liccardo said.

Last week Gov. Gavin Newsom named an “energy czar” to develop what he termed a backup plan in case the bankruptcy process does not produce a satisfactory approach to improving PG&E’s operations.

“PG&E as we know it cannot persist and continue,” Newsom said last week. “It has to be completely transformed. There will be a new entity. It will be re-imagined.”

Press Democrat Staff Writer Will Schmitt contributed to this report.

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