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PG&E’s $22.5B estimate for a San Francisco takeover includes billions in severance
PG&E says buying its San Francisco electric system would cost $22.5 billion, far above the city’s earlier $3.4 billion valuation. City officials dispute the utility’s figure as state regulators begin assessing the assets and related costs.
PG&E told California regulators Tuesday that transferring its San Francisco electric system to public ownership would cost $22.5 billion, a figure that includes billions of dollars in severance and separation expenses. City officials challenged the estimate, and the California Public Utilities Commission is weighing the competing valuations.
The utility’s filing assigns $13.9 billion to electric and property assets in the city, $7.6 billion to business-severance damages and $1 billion to physical separation costs. San Francisco’s earlier estimate put the value of the assets at about $3.4 billion, based on fair market value, according to the city’s filing.
City Attorney David Chiu said PG&E, which has a financial interest in retaining its system, should not determine the final price. “There’s a process to determine the true cost,” Chiu said, adding that city officials consider the utility’s estimate inflated. State Sen. Scott Wiener, a San Francisco Democrat who sponsored legislation to help the city pursue a municipal utility, called the proposed severance costs unprecedented.
PG&E argues the city’s valuation leaves out roughly 2,000 real estate interests and fails to account for the high construction costs of San Francisco’s underground distribution network. CEO Patti Poppe said a government takeover would not make financial sense for customers, citing the company’s experience operating the city’s complex electric system.
The dispute comes as city officials consider a public takeover amid repeated service problems. San Francisco has experienced 40 large-scale blackouts since a major outage last December left more than 100,000 residents without power, according to Chiu. Officials have also urged state regulators to investigate outages, fires linked to PG&E equipment and delayed infrastructure work.
The city began the valuation process in 2021 by petitioning the CPUC, which will determine the value of PG&E’s assets. Nancy Hayden Crowley, a spokesperson for the San Francisco Public Utilities Commission, said the city is reviewing PG&E’s filing and wants an impartial assessment. She noted that PG&E’s entire system is valued at $60 billion and that San Francisco accounts for about 5% of its electricity demand.
Stanford researcher Michael Wara said neither side’s figure captures every cost. San Francisco would need to build its own billing and meter-management services, he said, and the total transition cost is likely between the two estimates. But if the purchase price rises much above $3.4 billion, Wara said, the city may no longer save money for residents. The CPUC had previously anticipated a final asset valuation in 2027, though the process could take longer.