Union Challenges City’s $2.5 Billion Bid for PG&E

The political stars aligned, but union says not so fast.
by J.D. Morris, San Francisco Chronicle | September 30, 2019 AT 3:02 AM

(TNS) - San Francisco’s $2.5 billion plan to take over local Pacific Gas and Electric Co. power lines has unanimous support from the city’s top elected leaders — a rare political feat for such an ambitious and expensive endeavor.

But a powerful union opposes any transfer, saying it will hurt workers.

Mayor London Breed, City Attorney Dennis Herrera and the Board of Supervisors are all backing the idea. Breed and Herrera made the formal offer to PG&E in a letter three weeks ago, which they followed up on during a meeting with PG&E chief Bill Johnson Thursday, and the supervisors have unanimously supported the move.

Supervisor Hillary Ronen, who has championed the prospect of San Francisco buying PG&E electric equipment, said it was “very unusual” to have the mayor, supervisors, city attorney and city utilities commission “all 100% aligned on this issue.”

“I can’t tell you another time that that has happened. Nothing comes to mind,” she said. “And the reason for that is ... becoming independent from PG&E makes all the sense in the world.”

Not to leaders of IBEW Local 1245, though. PG&E’s largest union is staunchly opposed and has worked publicly and privately to undermine San Francisco’s efforts.

The powerful organized labor group, which represents 12,000 PG&E employees, has created a website, sfprioritycheck.com, that criticizes the notion of San Francisco forming the state’s third-largest government-owned electric utility.

Behind the scenes, IBEW has spoken to a group of bondholders who are trying to take over PG&E as it emerges from bankruptcy protection, said Tom Dalzell, the union’s business manager.

“Everything they’ve said to me dismisses it as a bad idea,” Dalzell said.

The bondholder group and a committee of wildfire victims are trying to advance their own plan to reorganize PG&E and resolve the company’s bankruptcy. A term sheet outlining the plan says that, if it’s implemented in its current form, PG&E would not sell “and will oppose any attempt to municipalize” any part of its “operating business or assets” for five years. A spokesman for the bondholders had no comment.

Dalzell said the union represents workers at both government-run and investor-owned utilities.

“There are great public utilities and there are great investor-owned utilities,” he said. “We don’t favor one or the other. We favor competence.”

The union does, however, oppose changes from one form of utility to another. Its concerns center on potential disruptions to employee pensions and other contractual rights.

IBEW leadership appears to have very little appetite for San Francisco’s plans: Dalzell would not rule out the possibility of taking legal action if the city continues trying to buy PG&E electric equipment.

Still, city officials are trying to work with the union. Breed and Herrera’s offer letter stressed that the city would recruit PG&E employees, provide “stable careers with appealing wages and benefits” and honor successor provisions in the company’s collective bargaining agreements.

“San Francisco is a labor city. We have a unionized workforce,” said Barbara Hale, assistant general manager in charge of power at the San Francisco Public Utilities Commission. “I don’t really think we have any problem there.”

Supervisor Ronen said she understands the union’s concerns and takes them seriously. And although supervisors have approved the offer to PG&E, that is not the same as actually signing off on a much more detailed plan to take over the utility, she said.

“I certainly wouldn’t approve a plan that didn’t keep workers whole,” Ronen said.

It’s not clear if Breed and Herrera’s meeting Thursday with Johnson, CEO of the utility’s parent company PG&E Corp., will have any impact on the San Francisco offer. Jeff Cretan, the mayor’s spokesman, said the meeting covered “a range of issues, including the city’s offer.” Harlan Kelly, the general manager of the city utilities commission, was also present, Cretan said.

PG&E spokesman Paul Doherty said in an email that the meeting was “planned long before the city of San Francisco made its formal offer to purchase PG&E assets within city and county limits.” He said the meeting was designed as an opportunity for Johnson, who took the reins of the company in May, to talk with Breed about “the many ways that PG&E and the city of San Francisco can work together.”

“PG&E will be responding with a formal, written response to the city’s purchase offer,” Doherty said in the email. He couldn’t say exactly when that response would come.

PG&E has opposed efforts to encroach on its service territory in the past. After Breed and Herrera sent their offer letter, PG&E said it did not think a government takeover was “in the best interests of our customers and stakeholders,” though the company left the door open to future conversation.

AB1054, a state wildfire law passed in July, would make it harder for the city to buy PG&E equipment because it increases the regulatory oversight required for such a deal. But another bill, SB550, tries to solve that problem by pushing those regulatory provisions into 2021.

That would be good news for San Francisco, because the city wants its offer approved as part of PG&E’s plan to exit bankruptcy protection. And AB1054 requires PG&E to resolve its bankruptcy case by June in order to access a new fund that would protect it from future wildfire costs.

SB550, carried by state Sen. Jerry Hill, D-San Mateo, has passed both chambers of the Legislature. Gov. Gavin Newsom has not yet acted on the bill.

©2019 the San Francisco Chronicle. Distributed by Tribune Content Agency, LLC.