Supes slam PG&E for ‘extortionary’ demands delaying public projects

Dozens of public projects have suffered delays and cost increases as a result of unfair practices by PG&E, according to a new city report.

The Board of Supervisors Public Safety and Neighborhood Services Committee had harsh words Thursday for the public utility, which has recently filed for bankruptcy, accusing PG&E of “extortionary practices” and “truly disgusting behavior,” during a hearing on the report from the San Francisco Public Utilities Commission.

As the SFPUC looks to power more sites using its own hydroelectric power from Hetch Hetchy Reservoir, it is running into conflict with PG&E, which is making what The City says are unreasonable demands to allow the use of its infrastructure to transmit the power.

These demands are causing delays and cost increases to affordable housing projects, public pools, health clinics and schools.

The most recent report from the SFPUC listed 53 public projects impacted by PG&E, with direct costs to the projects of at least $4.6 million, plus the loss of SFPUC revenue from what the customers would have been paying them for power of at least $3.6 million.

The delays also resulted in the generation of 5.7 million pounds of carbon monoxide that could have been avoided by using SFPUC’s cleaner energy, the report found.

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Among the projects that suffered the greatest cost impact was the Balboa Pool renovation project, where a dispute with PG&E lasted for about 19 months and added $1.2 million to the project.

“Many swim programs were cancelled due to the project delay. The delay had a domino effect on [Recreation and Park Department’s] plans to renovate a group of community pools,” the report said.

Among the affordable housing projects impacted were 200 units at 838 Pacific Ave., the North Ping Yuen project. The dispute lasted from September 2016 to May 2018 and added $240,000 in costs related “to redesign and delay.”

Erin Carson, of the Mayor’s Office of Housing, said for two affordable housing projects, disputes could result in $250,000 in extra costs and “we potentially lose commercial or services space or housing. It’s just a waste.”

The report also notes that The City has been waiting over a year for PG&E to turn power back on at a Corona Heights Park restroom after utility workers “accidentally cut the cable to a restroom during construction of the Randall Museum,” a nearby site where a dispute over power infrastructure also delayed work.

The ongoing disputes center mostly around whether a secondary level of service is required at the site or a primary level of service. Primary is more expensive and requires more equipment, which can cost $500,000, compared to secondary, which can cost $50,000, according an updated complaint against PG&E filed by City Attorney Dennis Herrera last month with the Federal Energy Regulatory Commission.

The City contends PG&E is needlessly requiring the primary service level, given the sites’ actual power demands.

“The difference between primary and secondary service is significant and usually requires a redesign of both the electric service and other aspects of the project,” said Barbara Hale, SFPUC’s assistant general manager of power, in the filing. “Primary facilities cost substantially more and take up more space.”

SEE RELATED: Breed calls for public power study in wake of PG&E bankruptcy announcement

Supervisor Hillary Ronen is calling attention to the impacts of PG&E’s practices at a time when she is also backing public power. She has, through a resolution adopted by the board last year, required the San Francisco Public Utilities Commission to provide quarterly reports about the city-funded projects impacted.

Pointing to the impacts, she said that was “why Supervisor [Aaron] Peskin and I are fighting so hard to take over the infrastructure here in San Francisco, because if we are no longer dependent on PG&E to deliver energy to these projects we don’t have to play these games, and we don’t have to delay these critical city services and infrastructure.”

Mayor London Breed directed the SFPUC last month to provide analysis within three months of transitioning to public power.

In a Feb. 14 letter to Ronen, who invited PG&E to the hearing, Jess Brown, director of PG&E’s San Francisco Division, declined to attend, citing the FERC complaint.

“We assure you that PG&E takes the concerns raised by the City’s complaint seriously and we are committed to continue working closely with the City and the SFPUC to find common ground and to work through our disputes,” Brown wrote. “We both share the common goal of continuing to serve the citizens of San Francisco, clean, affordable, and reliable energy.”

Hale said that the agency and PG&E do meet regularly to work out the issues by project, but often times PG&E doesn’t show up.

“We have meetings scheduled that are bi-weekly,” Hale said. “We have actually only been able to meet four times during this reporting period. Typically PG&E notifies us the day before that they are unable to join us for various reasons.”

If things were slow before, the recent bankruptcy filing could only exacerbate the matter.

“The prospect of having to take any possible resolution on the 53 projects individually to the bankruptcy court tells me that we don’t have good prospect for more expeditious treatment,” Hale said.

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