San Francisco is exploring the possibility of purchasing the Pacific Gas and Electric Co. electric distribution lines that serve the city and county where the embattled utility is based, Mayor London Breed and City Attorney Dennis Herrera said in a letter to top executives at parent company PG&E Corp.
Citing media reports of a possible offer in the works, Breed and Herrera sent the letter "to underscore the seriousness of our purpose and facilitate lines of communication going forward," they said.
The letter comes as Pacific Gas and Electric, or PG&E, and its parent company consider their still undisclosed restructuring plans through a joint Chapter 11 bankruptcy process launched in January and related to billions of dollars in potential liabilities for devastating wildfires that have been linked to PG&E power lines.
"The analysis the city is undertaking will enable us to make an initial determination whether such an acquisition is feasible, including whether it would benefit city taxpayers and electric consumers, produce a fair price to PG&E's employees and its ratepayers outside of San Francisco," the officials said in the letter, dated March 14.
The city officials said they are working with the San Francisco Board of Supervisors and the California Public Utilities Commission on a feasibility study. If the results are promising, San Francisco will make a formal offer "within the coming months as part of the bankruptcy process," they said.
The San Francisco Public Utilities Commission already supplies power to the city's municipal operations from a series of hydroelectric power plants within its Hetch Hetchy Power System, as well as 20 solar facilities on city property. San Francisco also has begun taking over power procurement for retail customers of PG&E through a new supplier called CleanPowerSF, which launched in 2016 through California's multiplying community choice aggregation model.
In a March 14 filing with the U.S. Bankruptcy Court of Northern California, PG&E listed $24.7 billion in total liabilities and $61 billion in assets. The utility, California's largest, has indicated its liabilities related to 2017 and 2018 wildfires in Northern California could exceed $30 billion. Actual claim amounts, however, remain "undetermined," the utility said.
While PG&E appears to be solvent based on the assets and liabilities listed, "there is still much uncertainty regarding the amount of these undetermined claims," CreditSights analysts wrote in a March 18 note to clients.