Dive Brief:

San Francisco offered Pacific Gas & Electric $2.5 billion for the portions of its grid that serve the city, a move toward separating from the bankrupt utility and setting up a municipal provider.

Mayor London Breed and City Attorney Dennis Herrera made the offer in a Friday letter to Pacific Gas & Electric. The utility is expected to file a reorganization plan with a federal bankruptcy court today.

City officials will reportedly meet with PG&E CEO Bill Johnson on Sept. 26, but the utility has not expressed an interest in selling. With much of PG&E's system facing wildfire threats, the city of San Francisco is one area with little risk.

Dive Insight:

PG&E has indicated it will work with the city, but also made clear it has reservations about a sale of its grid assets.

"We don't believe municipalization is in the best interests of our customers and stakeholders," the utility said in a statement. But it added, "we are committed to working with the City and will remain open to communication."

San Francisco has been trying to reduce its reliance on PG&E for two decades, and in May, the city's Public Utilities Commission released a report finding public ownership of the electric grid "has the potential for significant long-term benefits relative to investment costs and risks."

Any negotiations for San Francisco's electric wires would be complicated by the utility's ongoing bankruptcy. PG&E has committed to filing a plan of reorganization by the end of Sept. 9. Last week Bloomberg reported the filing is expected to include $14 billion in equity commitments, but did not include a figure regarding PG&E's wildfire liabilities.

PG&E's liabilities will be estimated by the U.S. District Court for the Northern District of California. Previously, the company said it could be on the hook for up to $30 billion related to California's deadly wildfires in 2017 and 2018.