Jan. 27—San Francisco has taken a step forward in a legal battle with Pacific Gas and Electric Co. over the city's claim that the utility has forced numerous projects schools, libraries, recreational and housing developments — to obtain huge and costly equipment to handle unneeded amounts of electricity.
The city claims PG&E has required new or renovated projects in San Francisco to acquire such equipment, increasing their costs and delaying their reopening, unless they decide to obtain electricity directly from the utility rather than from San Francisco's Public Utilities Commission. The SFPUC owns the rights to power generated from the Hetch Hetchy Reservoir in Tuolumne County, but uses PG&E lines for transmission to customers in the city.
The Federal Energy Regulatory Commission ruled in 2020 that PG&E was entitled to decide that concerns about safety and reliability justified its requirements for equipment and transmission. But on Tuesday, the U.S. Court of Appeals in Washington, D.C., said FERC had failed to provide a reasonable basis for its decision, and ordered the commission to reconsider.
"More than a century ago, Congress authorized the Hetch Hetchy System not only to provide San Francisco with a source of cheap power but also to ensure competition in its retail power market," Judge Judith Rogers wrote in the 3-0 ruling.
She said the federal commission had shown a "troubling pattern of inattentiveness to potential anti-competitive effects of PG&E's administration" of its San Francisco power-transmission program, which requires the commission to make sure that the utility's practices affecting wholesale rates are "just and reasonable."
Although the court rejected FERC's reasons for deferring to PG&E, it did not order the commission to find the utility's actions illegal. The commission issued its decision during President Donald Trump's administration but defended it in court after President Biden took office. Four of the five current commissioners — two Democrats and two Republicans — were appointed by Trump, and the fifth is a Democrat appointed by Biden.
"This ruling recognizes that PG&E has spent years obstructing San Francisco's efforts to power our own municipal services using our own clean power," City Attorney David Chiu said in a statement. "The court requires FERC to ensure PG&E's rules are actually needed for safety and reliability so that PG&E cannot use its monopoly to derail San Francisco's efforts to provide affordable, public power."
Dennis Herrera, chairman of the San Francisco PUC, said the ruling "underscores why we should own our local electric distribution network rather than be subject to the whims of PG&E."
James Noonan, a spokesperson for PG&E, said in a statement that its power supply system, on file with the federal agency, makes service "available to eligible wholesale customers like the San Francisco Public Utilities Commission, and is intended to help achieve PG&E's mission in a way that is fair to all." He said the utility was reviewing the court's ruling.
The SFPUC says it pays PG&E about $20 million a year to transmit electricity to various facilities supplying services for the city and its residents. The dispute involves projects that, according to the city commission, PG&E has refused to connect unless they agree to pay excessive costs for unneeded electric equipment.
In 2018, city officials said 16 projects had been subjected to delays and overcharges, including the Randall Museum, a children's educational space in Corona Heights, which opened two yeas behind schedule with $1 million in unexpected costs. Plans to expand a community room at the Ping Yuen affordable housing project in Chinatown were scrapped to leave room for equipment required by PG&E, officials said. They said renovations at the Balboa Pool were delayed by 13 months at a cost of $800,000.
As of last September, the SFPUC said, 68 local projects were being delayed because of the utility's practices. A Board of Supervisors committee has scheduled a hearing next Monday on the issue.
In its complaint to the federal agency, San Francisco said PG&E was not imposing the same equipment requirements or charges on its own customers and was using its policies to pressure the city's clients to obtain their supplies directly from the utility. The court said in its ruling that FERC had not explained why San Francisco should be treated differently than other PG&E customers.
Bob Egelko is a San Francisco Chronicle staff writer. Email: firstname.lastname@example.org Twitter: @BobEgelko
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