PG&E Rejects San Francisco's Offer to Buy the City's Electric Grid

PG&E has rejected a $2.5 billion offer from the city of San Francisco to buy the utility's local power lines.

In a letter to city officials, PG&E said the city’s offer was too low. The utility also said that the city underestimated substantial costs and, if PG&E sold the assets to the city, customers would see their rates rise.

"Our San Francisco-based facilities are not for sale and to do so would not be consistent with our charter to operate or our mission to serve Northern and Central California communities," said PG&E CEO and President Bill Johnson in the letter.

He went on to say that they "disagree with the suggestion that PG&E's San Francisco customers would be better served by another entity."

San Francisco made the offer to buy the lines in early September, but the city has been considering the purchase since the utility filed for Chapter 11 bankruptcy protection in January due to mounting liability for wildfires sparked by its equipment. The city has argued that it could provide safer, more reliable and more affordable service for its residents.

Mayor London Breed and San Francisco City Attorney Dennis Herrera said in a joint statement that they would continue to pursue the acquisition.

"We aren't surprised by PG&E's response so far. We're also not giving up," the statement said. "Now more than ever, it is clear that we must take back control of San Francisco's electric service and achieve energy independence."

Breed and Herrera went on to assert that PG&E’s assessment of the deal was "inconsistent with the comprehensive analysis the city and its financial advisors have done on our proposal."

PG&E's rejection of the offer comes just one day after the utility returned power to most of the Bay Area. The utility shut off power to more than 700,000 customers across Northern and Central California this past week.

State Sen. Scott Wiener, D-San Francisco, a proponent of a city-run utility, said PG&E simply doesn’t want a publicly owned utility in San Francisco.

"So this was expected, but it is certainly not the end of the process," Wiener said, adding that he's exploring state solutions for building local power lines.

At a press conference on Thursday evening, Gov. Gavin Newsom criticized the utility for not upgrading its infrastructure.

"What's happened is unacceptable," Newsom said. "It's happened because of neglect. It's happened because of decisions that were deferred, delayed or not made by the largest investor-owned utility in the state of California, one of the largest in the nation."

KQED's Holly McDede contributed to this post.