Did we do it again or did we do it again! We said in this very space on a couple occasions that San Francisco could be a buyer of Pacific Bankrupt Gas & Electric’s assets, well the city has hired a prominent investment banker from Jefferies LLC to assist in exploring buying the assets. When you hired a firm like Jefferies you are very serious. The fee’s charged by this prestigious firm are so high a credit card company would be jealous.
While nothing is final, I would say the assets the City wants are as good as sold since PG&E needs cash to pay off its fire liabilities in both the Bay Area and “Paradise”.
The San Francisco Public Utilities Commission said on Tuesday it has hired an adviser to explore the potential acquisition of PG&E Corp’s distribution assets, sending shares of the power company up 2.6% at $18.37.
San Francisco city hires adviser to explore potential acquisition of PG&E assets
San Francisco has hired Jefferies LLC as buy-side financial adviser, the utilities commission’s Press Secretary Will Reisman told Reuters in an e-mail statement.
In some ways this makes sense. The City can keep the rates cheap as it won’t have to subsidize rural areas. The lines are almost entirely underground so fire liability is essentially nil. The City desires to be greenhouse gas free in the near future, so I guess it reduces fossil fuel reliance.
Bloggers note: What fossil fuel plants are left here? However the burning question is how will they generate power? In a post Enron era would you really want to rely on an out of area producer? A jilted PG&E who you bought the assets on the cheap from? Sun? Water? Wind? Waves? Biomass?
I guess being able to sell the masses on lower rates and “transparency” makes sense in some ways but I don’t see the end game here. Additionally as discussed here, the infrastructure is very old, outdated and more saliently what exactly does the City think its purchasing? Wires and pipes underground are very easy to maintain, you just ignore them until there is an issue, but how old are these pipes and wires and are we sure we know where they are buried? What if the “big one” finally happens? Is this really the liability I would want to take on as a city? Well I suppose if you want lower rates.
I guess Rahm Emanuel was onto something when he said, “Never let a good crisis go to waste”, but I just don’t see this penciling out.
In a way I feel bad for the ratepayers in San Francisco. While SMUD may not be perfect, I wouldn’t want any PG&E assets within a 90 mile radius of my house.
“The Chief”
