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San Francisco bids $3.4 billion for PG&E's city grid; utility asks $20 billion

San Francisco bids $3.4 billion for PG&E's city grid; utility asks $20 billion

Money Moves San Francisco, CA local

Seven years after the city's first $2.5 billion offer, state regulators must pick a price for a municipal power grid

Yesterday: SF faces bid deadline; PG&E counters at $20 billion

Overview

Updated Yesterday

San Francisco has until today to submit its bid for PG&E's electric grid inside city limits. The city values the assets at $3.4 billion; the utility's counter is $20 billion, a figure City Attorney David Chiu calls "absurdly inflated." State regulators will pick the price.

The California Public Utilities Commission proceeding is the deciding step in a takeover effort nearly a decade old. Win, and San Francisco owns and runs its own power grid, replacing a utility that has served it for more than 120 years. Lose, and PG&E keeps its monopoly in the city.

Why it matters

A state-set price decides whether San Francisco can own its power grid. The city says $3.4 billion; PG&E says $20 billion.

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Key Indicators

$3.4 billion
San Francisco's valuation of PG&E's city grid
Filed with CPUC; based on an investment banking range of $3.1-$3.6 billion.
$20 billion
PG&E's counter asking price
Reported as the utility's figure; Chiu calls it "absurdly inflated."
≈6x
How much more PG&E asks than the city offers
The roughly $16.6 billion gap between the two valuations.
$2.5 billion
City's two rejected offers (2019 and 2020)
PG&E dismissed both as too low; the city then turned to the CPUC.

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People Involved

Organizations Involved

Timeline

2019 October 2026

6 events Latest: Yesterday
Tap a bar to jump to that date
  1. SF faces bid deadline; PG&E counters at $20 billion

    Latest Deadline

    Deadline for San Francisco's bid; city offers $3.4 billion, PG&E counters at $20 billion.

  2. City files $3.4 billion valuation

    Filing

    City files $3.4 billion valuation with CPUC, meeting the April deadline for its final offer.

  3. Supervisors hold hearing on PG&E reliability

    Hearing

    Board of Supervisors hearing presses PG&E; CEO Sumeet Singh testifies over outages.

  4. Mission substation fire blackouts San Francisco

    Incident

    Mission substation circuit breaker fire cuts San Francisco power for three holiday days.

  5. PG&E rejects a second offer

    Negotiation

    PG&E rejects a second $2.5 billion city offer.

  6. San Francisco makes its first purchase offer

    Offer

    San Francisco offers PG&E $2.5 billion for its city power grid; PG&E rejects.

Scenarios

1

CPUC sets a price the city can afford; San Francisco buys the grid

Possible Resolves by Q2 2028

Discussed by: San Francisco city officials, including City Attorney David Chiu and SFPUC's Dennis Herrera

The commission's proposed decision lands near the city's $3.1-$3.6 billion valuation. The Board of Supervisors and voters fund the purchase with bonds; SFPUC takes over operations, ending PG&E's century-plus presence in the city.

2

The price lands high and San Francisco drops the takeover

Possible Resolves by Q2 2028

Discussed by: PG&E and consultant Mark Ellis

The commission sets a value near PG&E's figure or loads the price with severance costs a city can't bond for. Supervisors conclude a purchase would raise rates, and the city withdraws its petition, leaving PG&E in place.

3

Negotiated settlement lands between the two asking prices

Unlikely Resolves by End of 2027

Discussed by: Regulatory observers and energy market analysts

Facing a drawn-out proceeding, the two sides settle on a price in between, perhaps several billion dollars, with PG&E selling and the city financing it. The CPUC then ratifies the negotiated transfer.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

1946

Sacramento Municipal Utility District (1946)

Voters in Sacramento approved creating a municipal utility to buy PG&E's electric system in their city. The district, SMUD, took over local power service.

Then

Sacramento replaced PG&E with a locally elected public utility.

Now

SMUD has run its own grid for nearly 80 years, one of the largest public utilities in the country.

Why this matters now

It is the clearest precedent for San Francisco's goal: a city in PG&E's own service territory that successfully municipalized its grid.

2011-2020

Boulder, Colorado municipalization (2011-2020)

Boulder voters approved creating a city-owned utility to replace Xcel Energy, aiming for more local control and cleaner power. The effort ground on for years through feasibility studies and lawsuits as cost estimates climbed.

Then

In 2020, voters approved a settlement with Xcel, abandoning municipalization and keeping the utility.

Now

Boulder's decade of studies and legal fights ended with no transfer of assets, a cautionary example of costs and delays.

Why this matters now

It shows how a municipalization drive can stall on price, the risk San Francisco faces if the state valuation lands near PG&E's figure.

Sources

(4)