San Francisco Issues $2.5 Billion Offer Letter for Purchase of PG&E Assets

Last week, the City and County of San Francisco submitted a $2.5 billion offer letter to Pacific Gas and Electric Company (PG&E) for purchase of the company’s electricity assets in San Francisco. The offer letter was the result of an eight-month process, which began in January when Mayor London N. Breed directed the SFPUC to conduct an analysis on the feasibility of purchasing PG&E, following the company’s announcement that it would be pursuing bankruptcy protection.

The SFPUC and its advisors arrived at the $2.5 billion after investing substantial time and effort to conduct an initial analysis of a potential transaction. The analysis included industry-accepted practices for valuing utility assets and the revenue-earning potential of those assets. The study determined that the $2.5 billion offer is a fair, equitable and competitive package that will contribute financial stability to PG&E and put San Francisco on the path toward energy independence.

In May, the SFPUC released a preliminary study on public power options for San Francisco, and a path toward full independence was recommended. According to the analysis, that option would provide strong and long‐term cost savings, timely and cost‐efficient modernization of the electrical grid while meeting the City’s priorities on affordability, clean energy, safety, reliability, workforce development and equity.

San Francisco Issues $2.5 Billion Offer Letter for Purchase of PG&E Assets.

If the City is successful in purchasing the PG&E assets, the SFPUC would oversee all electricity operations in San Francisco. For more than a century, the City has been delivering 100 percent greenhouse gas free hydroelectricity to municipal institutions, and combined with the businesses and residents served by CleanPowerSF, the SFPUC is currently responsible for meeting about 80 percent of the electricity demand in San Francisco.

This year, CleanPowerSF completed it last and largest major enrollment. More than 375,000 businesses and residents are enrolled in the renewable energy program, which provides cleaner energy alternatives to the programs offered by PG&E. Along with providing cleaner energy, the program is also cheaper, with residents saving a collective $3.5 million since the program launched in 2016. Earlier this year, nearly 70 percent of respondents indicated support for the SFPUC taking over public power operations in San Francisco, citing cleaner energy options and affordability as reasons for their support.

The City is prepared to begin immediate negotiations with PG&E, which is expected to announce details of their bankruptcy-mandated reorganization plans on September 9. Once those details have been released, the City will follow up with additional information that demonstrates how its proposal would enhance the company’s reorganizations plan.

San Francisco Issues $2.5 Billion Offer Letter for Purchase of PG&E Assets.