$3.4 Billion Gamble: SF’s Power Grab Could Slam Ratepayers
A Multi-Billion Dollar Bet With Unknown Costs
City’s bid to seize infrastructure collides with rising costs—and a public left holding the bill.
• • • • • • • • • May 2026 • • • • • • • • •
Recently San Francisco has effectively offered $3.4 billion for PG&E’s local electrical facilities. This is in furtherance of taking over control of distributing electricity within the city. SFPUC would then take charge. Previously, $2.5 billion had been offered, but that was some years ago. In constant dollar terms, the recent offer is a bit more than a 5% increase. PG&E says the offer is billions too low. Its number will come in October. PG&E claims that SF’s proposal is not in customers’ interests, and electricity would be too expensive.
State administrative law judges will decide on a number based on the testimony of the parties’ experts. Suppose $4 billion. Suppose further an interest or borrowing rate of 4.5%, and that there are 400,000 accounts in San Francisco. (These are made-up figures and may be off.) That comes to $150 per month per account. Now, some portion of what you pay today under PG&E is return on equity or investment. That unknown should be credited (subtracted) from the $150 monthly add.
Rates will continue to rise at a pace far above inflation until San Franciscans organize and make themselves a force.”
Promises of Equity—But At What Price?
There are other supposed benefits of a takeover. The City has resolved that it is of utmost importance to promote equity, inclusion, environmental justice, and community benefits. Takeover would enable SF to “invest in its infrastructure and provide high-quality programs and services in a way that prioritizes community involvement and engagement.”
Perhaps these soft benefits will be realized. But balancing these are risks. San Francisco hopes to induce experienced PG&E employees to work for the city. No doubt rich inducements will be offered. If, as seems likely, the city comes up somewhat short, consultants will likely be hired to bridge the gap. There’s another expense. And consultants have a way of making themselves indispensable—for a long, long time.
One can only hope that a rational analysis of the cost of the takeover precedes the final decision. The matter is politically charged, “righteous vs evil.” A regrettable decision seems all too possible.
* * *
Ratepayers Already Reeling: Water and Sewer Bills Surge
Water and sewer rates are going up. Your bill will be more than one-quarter (25%) higher in just 14 months. If your bill is $200, it’ll be $250 for the same water use (and more for single family homes as the new stormwater charge is phased in). SFPUC expenses are rising—fast. Capital expenses (construction) most of all.
From Competitive Bidding to Insider Contracts
In years past, public agencies published plans and specifications for desired public work. Contractors bid. The low bidder was engaged. The aim of this was to obtain the lowest cost for the work, and to be fair to all bidders. These days this method of contracting for water and sewer public works is gone. Too stressful. Disputes arose. Public employees switched to a more congenial method—or, really, set of methods.
Work, especially large works, ends up going to a few trusted and familiar firms. The public servants who manage are happy, as are the firms which get the contracts. Large contracts can double and more in dollars over the course of their performance. The loser: the ratepayer.
Oversight in Name Only?
The five commissioners that oversee the SFPUC (water sewer power) theoretically protect the ratepayer, but in fact they almost always do what the staff proposes. At the recent rate hearing numerous citizens registered their objections to such big increases to rates. Not one commissioner sided with the protestors.
Commissioners are treated well by SFPUC, are cultivated, one might say. Mountain retreats are only one perk. Rates will continue to rise at a pace far above inflation until San Franciscans organize and make themselves a force.
Steve Lawrence is a Westside resident and SF Public Utility Commission stalwart. Feedback: lawrence@westsideobserver.com
May 2026
