In testimony filed with state regulators Tuesday, the utility laid out its case against a public power takeover, setting up a monthslong valuation fight that will help determine whether San Francisco can afford its own electric system.
By Staff Reporter
Pacific Gas and Electric told California regulators on Tuesday that it would cost San Francisco $22.5 billion to take over the utility’s electric grid in the city, a figure more than six times the $3.4 billion the city put on the same assets in April.
The number, contained in a 1,164-page filing with the California Public Utilities Commission reported by The San Francisco Standard, is the utility’s formal opening position in a valuation proceeding the city started in 2021. It is higher than the “more than $20 billion” estimate that PG&E’s chief executive, Patti Poppe, previewed last week at a Climate One event at the Commonwealth Club, and it exceeds the city’s entire annual budget of roughly $17 billion.
“A government takeover of our grid is not the right solution for our San Francisco customers,” Ms. Poppe said in a statement quoted by The Standard. “And now our filing shows that a takeover doesn’t make financial sense for customers.”
How PG&E reached its number
The largest piece of the gap is the value of the physical system itself. PG&E put the fair market value of its San Francisco assets at about $13.9 billion, according to The Standard’s account of the filing, compared with the city’s $3.4 billion.
The utility argued that the city assigned no value to more than 2,000 easements, licenses and other land-use rights, a choice PG&E said reduced the city’s valuation by more than $1.7 billion. It also contended that the city underestimated the cost of rebuilding underground infrastructure, using about $247 per foot for underground conduit when, PG&E said, comparable projects have cost nearly $1,000 per foot.
The rest of the figure is what PG&E calls severance damages: about $8.6 billion. Roughly $7.6 billion of that is “business severance,” money the utility says it would need to keep costs from shifting to its remaining customers. PG&E argues that the expense of statewide programs such as wildfire mitigation and grid reliability stays largely fixed even if it loses about 400,000 San Francisco customers, who help pay for those programs under rates that are kept roughly equal across its territory.
The remaining $1 billion or so covers physically separating the city’s system from PG&E’s network. The city’s proposal includes PG&E’s Martin Substation in Daly City, which also serves customers outside San Francisco, and PG&E says the city would have to pay for a replacement substation and other facilities on the Peninsula.
“Separating the subject assets in and serving electric customers in San Francisco is tantamount to carving a hole in the middle of PG&E’s integrated grid,” Carla Peterman, PG&E’s president, wrote in the filing, according to The Standard.
The city’s position
City officials have rejected PG&E’s numbers. After Ms. Poppe’s preview last week, City Attorney David Chiu said, in remarks reported by The Standard, that “PG&E has not provided any information to back up their absurdly inflated number, but we look forward to learning more through the CPUC valuation process.” Mr. Chiu has also said the city would likely rehire many of the PG&E workers who serve San Francisco, according to NBC Bay Area.
Nancy Crowley, a spokesperson for the San Francisco Public Utilities Commission, which would run a city-owned system, told The Standard that PG&E’s entire electric system is worth about $60 billion and that San Francisco represents “about 5% of PG&E’s electricity system demand.” PG&E has said the two estimates are “not an apples-to-apples comparison” because the city’s April figure did not yet include severance costs.
Mayor Daniel Lurie has kept his distance. He told The Standard last week that “all options are on the table” and that he was “not happy with the performance of PG&E right now,” but said the matter “still needs to go through a lot of process.”
Why the fight has reignited
The renewed push follows a Dec. 20 outage that left about a third of the city without power, some residents for days. The city says there have been 40 outages since. PG&E, for its part, says it recorded 23 percent fewer outage minutes in the first half of this year than in 2025, has spent $3 billion in San Francisco over the past decade and plans to invest nearly $2 billion more over the next five years.
PG&E also notes that its estimate leaves out the city’s start-up costs for a new utility and the roughly $100 million a year in taxes and franchise fees the company pays the city. Ms. Poppe has said about 600 PG&E employees serve San Francisco and that they would be reassigned elsewhere if the city took over.
San Francisco has pursued public power at least 10 times over the past century, including eight failed bond measures between 1927 and 1941 and two failed ballot measures in 2001. During PG&E’s 2019 bankruptcy, the city offered $2.5 billion for the grid; the utility declined.
What happens next
The valuation case is a precursor, not a sale. According to the S.F.P.U.C., as cited by The Standard, the city has until Feb. 22 to respond to PG&E’s testimony, and PG&E can reply by March 24, with evidentiary hearings possible in the spring or summer.
Any forced purchase would require eminent domain, which in San Francisco needs a two-thirds vote of the Board of Supervisors, and, absent a negotiated deal, a lawsuit in which the city would have to prove necessity and pay fair market value plus damages. Advocates say the city could finance a purchase with revenue bonds repaid from electric bills.
For San Francisco ratepayers, the gap between $3.4 billion and $22.5 billion is the central question. Supporters of public power argue that a city-run utility would be cheaper for customers; the higher the price, the more debt a city purchase would carry. The commission’s eventual valuation, and any court fight that follows, will decide which picture is closer to the truth, and whether San Francisco’s century-old public power ambition becomes anything more than that.
