Dive Brief:

The mayor of San Jose, California, has proposed turning Pacific Gas & Electric into the nation's largest cooperative electric utility through a coordinated buyout among California cities and counties under the utility's service, according to The Wall Street Journal.

PG&E's future lies with the bankruptcy court, as the company is going through Chapter 11 reorganization, but state regulators have final approval of the plan. Supporters of buying out the utility could take their proposal to the California Public Utilities Commission, which has grown increasingly frustrated with the utility's practices.

Utility officials on Monday rebuffed San Jose's offer, saying its f acilities "are not for sale," in a statement. San Francisco previously offered PG&E $2.5 billion for the portions of its grid that serve the city, and was met with a similar response.

Dive Insight:

With PG&E in bankruptcy and the state roiled by a massive power shutoff earlier this month, some cities are looking for systemic change.

PG&E is developing a plan to emerge from bankruptcy, and a group of creditors and wildfire victims have floated their own proposal. But both San Francisco's and San Jose's visions include public ownership rather than shareholders.

"This is a crisis begging for a better solution than what PG&E customers see being considered today," San Jose Mayor Sam Liccardo told the Journal.

But PG&E has made clear that it is not interested in selling portions of its system. Officials from San Francisco and the utility met Sept. 26 to discuss a possible deal, but PG&E declined in an Oct. 7 letter.

"Our financing strategy to emerge from bankruptcy does not envision selling off company assets," PG&E CEO Bill Johnson wrote to city officials. "We believe we can resolve and fairly fund all claims and other items through conventional financial markets."

Johnson also said San Francisco's $2.5 billion offer was "significantly below the fair-market value" of the assets, and the deal would "unfairly pass a large amount of costs" to remaining customers.

"If we ever do consider such sales, we have a duty to obtain the highest and best value for these assets," Johnson wrote.

PG&E's reorganization proposal includes $34.4 billion in debt financing to support its plan, and a total of $17.9 billion to pay wildfire claims. The competing stakeholder plan that would inject $29.2 billion of new money into the utility in exchange for control of the company and new debt. That proposal includes $14.5 billion to pay fire victims and $11 billion for insurance subrogation claims.

PG&E has faced criticism for its decision to shut off power to 700,000 accounts beginning Oct. 9, ultimately impacting more than 2 million customers, in an a effort to reduce the risks its system could spark a wildfire. And another shutoff may be looming.

The Public Safety Power Shutoff (PSPS) program is designed as a last resort in times of high winds and dry, hot conditions that pose a higher fire risk. The utility has raised the potential for a PSPS on Monday citing "gusty winds and dry conditions" expected for Wednesday and Thursday.