Evan DuCharme/Special to The S.F. ExaminerStudents attend a Hack Reactor session in downtown San Francisco on a recent afternoon. The coding school accepts one student for every 30 applicants.

San Francisco lawsuits against PG&E target unpaid fees, sewer drilling, construction projects

PG&E might owe San Francisco millions of dollars for underpaying for the right to deliver power and gas, drilling holes through city-owned sewer lines and refusing to move utilities in the way of city construction projects, according to lawsuits filed by City Attorney Dennis Herrera.

The lawsuits were filed in March, court records show, and the two parties are due in court in September.

Under terms of the 1939 franchise agreement signed between PG&E and the Board of Supervisors — which, for $200,000, gave the utility the right to use power and gas lines on public property “in perpetuity” — PG&E owes fees of one-half percent of the value of all electricity and gas sold in San Francisco.

The utility, which has a monopoly on power and gas delivery in San Francisco, also is supposed to be responsible for moving utility boxes, light poles and other PG&E-owned infrastructure built in the public right of way when they block city construction projects.

PG&E violated its agreement by underpaying franchise fees, and also has repeatedly refused to move utilities or failed to tell The City where they are, costing millions and forcing San Francisco to cancel contracts when utilities are discovered, the lawsuits allege.

In 2009, PG&E informed The City that it had underpaid franchise fees from 2005 to 2008. That means there is the possibility of millions more in unpaid fees for other prior years.

PG&E sold $1.766 billion worth of gas and electricity to San Francisco customers in 2009 and 2010, and it paid The City $8.3 million for the privilege.

Under city law, PG&E owes penalties of 1.5 percent on any underpaid franchise fees.

A PG&E spokesman said the company is “working” with San Francisco to resolve the lawsuits but could not comment further, citing pending litigation.

PG&E digs gas lines using a method that drills holes directly through city-owned sewer lines that connect homes and businesses to the sewer mains. The utility drills without knowing where the connecting lines — called laterals — are, the suit alleges.

This has, to date, cost San Francisco $1.2 million in repairs — and there are possibly “thousands” more instances of the damaging drilling, the lawsuits allege.

PG&E is supposed to inform The City before construction projects begin if the utility's infrastructure is in the way. San Francisco has had to modify or cancel construction that's underway when previously unknown PG&E infrastructure was discovered.

For instance, repairs to the North Shore Force Main were halted in April 2010 when PG&E-owned utilities were discovered. The contract had to be canceled after $1.4 million already had been spent.

That sewer line then failed twice in 2012, forcing $4.8 million worth of emergency repairs that would not have been needed if the original work had been completed, the lawsuits allege.

PG&E also declined to pay to move light poles in the way of the Central Subway, the new San Francisco Public Utilities Commission building and the new North Beach Library, according to the lawsuits.

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