Initiative for renewable power in S.F. is stalling Lee's position criticized - PG&E relationship cited

Mayor Ed Lee, in several interviews, dismissed the idea that he was doing PG&E's bidding as "a little off base." "I look at PG&E like any other company in the city," Lee said. "I don't think I have any special relationship with them." . less Mayor Ed Lee, in several interviews, dismissed the idea that he was doing PG&E's bidding as "a little off base." "I look at PG&E like any other company in the city," Lee said. "I don't think I have ... more Photo: Russell Yip, The Chronicle Photo: Russell Yip, The Chronicle Image 1 of / 9 Caption Close Initiative for renewable power in S.F. is stalling 1 / 9 Back to Gallery

In his first month in office, Mayor Ed Lee assembled a team of energy experts to help San Francisco meet its ambitious goal of having all electricity in the city come from renewable sources by the end of 2020.

But over the past year, Lee has overseen the evisceration of a renewable power program that clean-energy advocates, analysts and that task force say is critical to San Francisco meeting its goal.

The mayor says his opposition centers on details of the proposed program. But critics, including some former high-level city officials, blame the mayor's position on an extraordinarily close relationship with officials at the state's largest utility.

They say Lee's efforts to undo the CleanPowerSF program is just one example of how he has put Pacific Gas and Electric Co.'s interests ahead of the public's.

That program would have ended the San Francisco-based utility's decades-long monopoly over the city's consumer power market by allowing residents to buy 100 percent renewable energy from a different company.

Lee maintains PG&E has no sway over him or his policies.

However, multiple city officials say that Lee's administration has consistently, and quietly, raised objections about legislation and policies that PG&E opposes. They also point to the utility's charitable giving to the city and some of Lee's pet projects as an example of how PG&E tries to exert its influence.

"I think the mayor is interested in justice for the planet just as long as it's business first - and his relationship with PG&E," said Supervisor John Avalos, a key City Hall supporter of the renewable energy program and political rival of Lee's.

"I believe what PG&E wants - to maintain their monopoly - is more important to him than taking action for the city and county," Avalos said.

PG&E insists that it has remained neutral in San Francisco's renewable energy fight, saying in an e-mailed statement: "We respect the energy choices that are available to our customers and cities."

Questionable relationship

Critics of Lee's relationship with PG&E extend from the political left to at least five current and former high-level city officials. In some cases, several of the sources said, that relationship appeared to be inappropriate. PG&E officials regularly went to the mayor's office when they were unhappy with city staff members, said the sources, who requested anonymity because of their relationship with the mayor.

"They were in his office all the time, meeting with either the mayor or his staff, and seemed to directly intervene in city decisions," said one official. "It isn't normal for most businesses in the city to always have meetings with the mayor."

Lee, in several interviews, dismissed the idea that he was doing PG&E's bidding as "a little off base."

"I look at PG&E like any other company in the city," Lee said. "I don't think I have any special relationship with them."

Lee's association with utility officials dates back at least to 2000, when he became head of the Department of Public Works. As city administrator from 2005 to 2011, Lee also regularly interacted with company officials.

In 2011, shortly after he was appointed mayor, Lee praised PG&E as "a great company that gets it" for its donation of $250,000 to help promote literacy and sports for underprivileged kids at a public elementary school.

The comments came two days after federal regulators said PG&E's shoddy safety practices made the utility to blame for a 2010 explosion in San Bruno that killed eight people and destroyed 38 homes. PG&E was indicted in April on 12 federal criminal counts related to that explosion.

At the time Lee was praising PG&E, the city of San Francisco, which generates its own hydropower through its Hetch Hetchy water system but relies on PG&E transmission lines to deliver it to the city, was also fighting with the utility on several issues that could cost ratepayers tens of millions of dollars.

A 2012 memo to the San Francisco Public Utilities Commission, which Lee was copied on, said PG&E was disputing the city's right to provide power to port properties, including tenants in the Ferry Building, and to Muni bus shelters. PG&E contends that under agreements with the city, it has the right to provide power to those locations. If PG&E were to provide power to those disputed properties, the memo states, the SFPUC would lose $8.4 million in annual revenue.

The utility was also fighting city efforts to provide power to two new development projects that could net the city $29.7 million a year.

Public safety cited

Additionally, the memo stated that the company "frequently miscommunicates the location and marking of its existing facilities," putting public safety at risk, and regularly refuses to relocate its facilities that are interfering with city projects.

"In some cases city departments, and ultimately taxpayers and ratepayers, have paid costs that should have been paid by PG&E just to prevent even more costly project delays," said the memo, written by the agency's assistant general manager for power, Barbara Hale.

The issues are still outstanding, although Lee and others have been trying to address them and are close to a resolution on some issues, said SFPUC spokesman Tyrone Jue.

On May 30, Lee did intervene in another dispute, writing a letter to PG&E President and CEO Anthony Earley Jr. about the utility driving new natural gas pipes directly into existing city sewer lines. He called it "an issue of public safety" and said the company hadn't been willing to "engage in a substantive manner."

Now the city is making progress, said Lee's spokeswoman, Christine Falvey, citing it as an example of the mayor holding PG&E accountable.

Still, Lee contends he doesn't meet with PG&E officials regularly, despite accounts to the contrary.

Documents obtained under a public records request show only four phone calls or meetings between Lee or his staff and PG&E officials since Lee became mayor. But that is not a full accounting of all his meetings and events with PG&E executives. Falvey said detailed meeting records were not regularly retained.

While it's not unusual for elected officials to have relationships with business executives, several current and former city officials described Lee as particularly close with PG&E's vice president of corporate affairs, Travis Kiyota.

The mayor's records indicate he rarely speaks to PG&E officials, but Kiyota, according to AsianWeek, quipped in 2013 at a Chinatown event that he is "programmed" to look at his cell phone for Lee's calls when there is a power outage. At that banquet to honor Kiyota, Lee presented the PG&E executive with a certificate praising his "outstanding service."

The event was listed in Lee's publicly available calendar as "Chinese Chamber of Commerce Dinner," with no mention of PG&E.

Charitable influence

Critics say the company doesn't exercise its influence only through personal relationships. The utility and its foundation give around $20 million a year in charitable contributions to nonprofits, community groups and others, including many in San Francisco - some that have strong ties to Lee.

Mindy Spratt, a spokeswoman for the consumer watchdog group The Utility Reform Network, said such donations "seem to come at a price."

"PG&E may appear to be an extremely generous company, but there is a price tag attached," she said. "What we have seen again and again at PG&E rate hearings is a parade of people representing organizations that receive money standing up and defending the company, saying that rate hikes are good for customers."

While PG&E employees contributed only $6,200 to Lee's mayoral campaign, a fraction of the $2 million he raised, the utility has consistently given generously to causes close to the mayor.

Last month, the utility gave $275,000 for the mayor's summer jobs program. PG&E is a "founding partner" of the program, which Lee started in 2012. The company gave $125,000 to it in each of the prior two years.

The Chinese Hospital Association, which is constructing a $160 million modern replacement for San Francisco's oldest independent community hospital, received $157,500 from 2010 through 2012.

During those years, PG&E also donated $35,500 to the Chinatown Community Development Center, a housing nonprofit with long-standing ties to Lee, and paid the Chinese Chamber of Commerce $59,000 in dues. The utility also handed out thousands of dollars during that time to a wide range of other city groups.

PG&E executive's response

PG&E declined to make Kiyota available for an interview, but he responded to e-mailed questions. He wrote that the donations were not an attempt to exert influence.

"We feel we have an obligation to the communities we serve," Kiyota wrote. "We have a long-standing history of supporting organizations that are focused on education, economic and community vitality, and the environment, and that is the sole purpose of our charitable contribution program."

Jason McDaniel, a political science professor at San Francisco State University, said there's no doubt corporations use charitable giving as a way to "build better relationships," and, in the case of a company criticized for incidents such as the San Bruno explosion, "as part of a public relations campaign."

That spending pales in comparison with the amount of money the company has put into political efforts aimed at killing community choice aggregation programs like CleanPowerSF.

In the five years prior to the blast, the company spent more than $55 million on political efforts opposing those programs, which allow cities and counties to bypass utilities by purchasing clean energy on the wholesale market and selling it directly to customers.

Dawn Weisz, executive officer for Marin's community choice aggregation program, Marin Clean Energy, said the utility vociferously fought that now successful program, largely through "closed-door meetings with decision makers where untrue information was being provided."

In San Francisco, critics see PG&E's influence in Lee's handling of the city's attempts at launching its own program. While the mayor claims he isn't trying to kill CleanPowerSF, his actions, and those of his appointees, indicate otherwise.

Many of Lee's criticisms of the $19.5 million program under consideration last year, which would have included $13.5 million in public funds for a roughly five-year renewable power contract with Shell Energy North America, were identical to those put forth by PG&E and its allies in Marin, Weisz said.

Lee objected to the lack of local job creation and paying millions to a Texas-based energy company. He also contended the program is not as green as proponents suggest because it initially would have relied heavily on renewable energy credits, tradable certificates that prove a wind farm, solar power plant or other facility produced a specific amount of electricity at a particular time.

Killing mention of program

The mayor also said he was concerned that residents would be automatically enrolled in a more expensive program and have to opt out if they didn't want their bills to go up, even though state law requires that such power programs be opt-out rather than opt-in.

Last year, Lee's office directed the city's Department of the Environment to delete mention of the CleanPowerSF program and PG&E's competitor program from the city's latest Climate Action Strategy, according to a Sept. 30 memo from Melanie Nutter, then the city's environment director.

In August, the San Francisco Public Utilities Commission, whose members are picked by the mayor, blocked implementation of the program despite a veto-proof majority of the city's Board of Supervisors supporting it.

Last month, Lee's administration said it planned to spend the $19.5 million reserved for the CleanPowerSF program to instead fund separate solar subsidies for property owners and help balance the budget.

Supervisors fought back and reached a compromise that will preserve around $7 million for CleanPowerSF and result in the SFPUC scheduling a meeting for Tuesday to discuss the program's future.

"There's an effort to kill public power," Avalos said. "There's a power and influence that PG&E has; it's part of pay-to-play politics. The mayor basically says, 'I don't want to upset the big companies for public power here in the city.' "