Hetch Hetchy Power Debacle - Trails Section

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Vol. 17 No. 21	Final Edition

January 1, 2001
Hetch Hetchy Power Debacle
Continuing Yosemite Threat
Chronology by Tim Redmond
San Francisco Bay Guardian.

The Chronology:

1898: The private Spring Valley Water Co. has gained monopoly control of water service in San Francisco, but the limited rainfall runoff that feeds its tiny reservoir system can't possibly keep pace with the needs of a growing city. After crossing off 15 alternative sites, Mayor Phelan files in April 1902 for water rights on the Tuolumne River with money from his own pocket. City engineer Grunsky devises a plan to dam Hetch Hetchy Valley in Yosemite National Park and pump the water 200 miles to San Francisco. Although there were better sites for water, Hetch Hetchy Valley, a granite-walled canyon formed like a mammoth water tank, rising 2,500 feet above a flat meadow floor, was chosen because of its enormous potential to produce cheap electrical power. For the next decade, four different Interior secretaries seesaw back and forth on S.F. demands to use Hetch Hetchy Valley as a city reservoir.

April 18, 1906: A massive earthquake sets off a series of devastating fires that burn out of control. Firefighters are paralyzed when Spring Valley's cheaply built private water mains prove inadequate and critical hydrants go dry. Pressure mounts for a publicly owned water-distribution system.

1912: With Spring Valley's private water rates continuing to rise, and service as poor as ever, city officials press Congress to give San Francisco a radical and unprecedented federal grant: the right to construct a municipal water dam inside a national park. John Muir is furious, and rages: "Dam Hetch Hetchy? As well dam for water tanks the people's cathedrals and churches; for no holier temple has ever been consecrated to the heart of man." He has founded the Sierra Club to fight the proposal, and congressional preservationists line up against it.

1913: Rep. John Edward Raker from the state's third district, which includes Yosemite, breaks the impasse with a historic compromise. The Raker Act (HR-7207) would allow San Francisco to build its dam - but only on one condition: The dam must be used not only to store water but also to generate electric power, which must be sold directly to the citizens through a municipal power agency at the cheapest possible rates.

The Raker Act includes language requiring formally that San Francisco accept the grant, with all its conditions, before breaking ground on the dam. It states that if the city fails to live up to those conditions, the grant reverts to the federal government. The Board of Supervisors passes a resolution agreeing to abide by the terms of the law.

1923: Under the leadership of the brilliant engineer M.M. O'Shaughnessy, San Francisco builds a tremendous dam on the Tuolumne and an innovative, gravity-fed system of underground pipes that can carry the fresh mountain water under the Central Valley, the East Bay hills, and the Bay, and into the city's reservoirs. The Spring Valley franchise is revoked. City workers begin repairing old mains, laying new ones, and creating a municipal water department.

The city also builds a hydroelectric powerhouse at Moccasin Creek, where Hetch Hetchy water is diverted through giant turbine generators, and buys enough copper transmission wire to stretch from the Sierra to San Francisco. While the transmission lines are being built, the city agrees to sell the electricity from Moccasin to PG&E.In May 1923, the National Park Service gets wind of the deal and begins to investigate. The investigation concludes that the deal is illegal under the Raker Act, but the solicitor general of the Interior Department declines to take action, saying that the arrangement is only a temporary measure to avoid letting all that power go to waste while the city finishes building its own transmission lines and local distribution system.1925: Transmission lines are strung all the way to the South Bay, when suddenly the city announces that it has run out of money and can't do any more construction. The city's power line ends just a few hundred yards from a PG&E substation in Newark - which conveniently connects to a new high-voltage cable PG&E has just completed from Newark to San Francisco.On July 1, 1925, since the city lacks not only a final transmission line but the local facilities to distribute its own power, city officials agree, as another temporary measure, to sell the Hetch Hetchy electricity at wholesale rates to PG&E, which then sells it to local customers at retail. The city makes a few million dollars off the deal; PG&E makes a fortune.The remaining copper wire is stashed in a warehouse and eventually sold for scrap. Every supervisor who votes to approve the contract is thrown out of office in the next election.

1927: The supervisors place a general-obligation bond act on the city ballot to raise the money to buy the utility poles, wires, meters, and other equipment the city needs to set up a municipal power system.PG&E campaigns vigorously against the bond measure, claiming it will raise taxes. The Chamber of Commerce and most of the local newspapers follow the PG&E line. City officials make only a halfhearted effort to support the bonds. In the end, 52,215 vote in favor of the measure, and 50,727 against - but since the city charter requires a two-thirds majority for general-obligation bonds, the proposal fails.

1930: In September, Interior Secretary Wilbur writes to Mayor Rossi and asks what the city is doing to comply with the Raker Act. Rossi agrees to meet with Wilbur in December, and the two work out a three-year plan that will lead to San Francisco's creating its own public-power agency.The supervisors place another bond act on the ballot. PG&E spends the unprecedented sum of $21,153.71 on a successful campaign to defeat it. Rossi's three-year plan gathers dust.Ultimately, nine bond proposals will go before the San Francisco voters. PG&E will mount a high-priced campaign against every one, and with no effective leadership from city officials to promote the benefits of public power, every proposal will be defeated.

1933: President Roosevelt appoints Harold Ickes secretary of the interior. Ickes learns of the 1923 Park Service investigation into San Francisco's power sales to PG&E, and asks his solicitor general to look into the situation and see whether anything has changed.

Aug. 24, 1935: Ickes issues a detailed opinion concluding that the city's contract with PG&E is a clear violation of the Raker Act. He urges the city to revoke the contract and move with all dispatch to establish a municipal power system. Mayor Rossi acknowledges receipt of the ruling and tells Ickes he's referring the matter to the city's Public Utilities Commission.

March 9, 1937: After repeated warnings from Ickes, Rossi and the supervisors place a charter amendment on the ballot authorizing the city to sell $50 million in revenue bonds to establish a municipal power system. Unlike previous general-obligation bond measures, the revenue bonds will have no impact on local taxes and will be repaid entirely from public-power revenues. The measure once again fails - largely, Interior Solicitor General Frederic Kirgis concludes, "due ... to lack of support by the Mayor and his failure to campaign for it."On March 11, Ickes sends Rossi a cable giving the city 15 days to convince him it is serious about complying with the Raker Act. When no such assurance arrives, he instructs the U.S. attorney general to file suit. Rossi immediately sends a cable to Washington begging Ickes to delay legal action and asking for another conference. Ickes wires back that for two years he has "patiently tried to persuade San Francisco to obey the mandate in a law which it originally concurred in, but without success," and tells Rossi he sees no point in further discussion. "Apparently," Kirgis notes in a memo to Ickes, "the Mayor was completely bewildered and disconcerted by the knowledge of the fact that conferences and delays would no longer be the regular order of things."

April 11, 1938: Federal judge Michael J. Roche rules in favor of Ickes, concluding that San Francisco's contracts with PG&E violate the Raker Act's ban on sales of Hetch Hetchy power to a private corporation. The law states that in the case of any attempt by the city to "sell, assign, transfer or convey" Hetch Hetchy power to a private corporation, the grant "shall revert to the Government of the United States." Ickes, however, decides not to ask for a forfeiture ruling in the hope that San Francisco will accept the court's mandate and comply with the act. Roche issues an injunction forbidding the city to continue selling power to PG&E, but suspends enforcement for six months to give city officials time to come up with an alternative plan that the Interior secretary will find acceptable. Ickes announces that he's "ready to consider any proposals officials of San Francisco might have to offer."Instead, the city appeals. Rossi vows to fight all the way to the Supreme Court if necessary and says that "if worst comes to worst ... the city should move for amendment by Congress of the Raker Act."

Sept. 13, 1939: The 9th Circuit Court of Appeals overturns Roche's decision, concluding, as the city's attorneys have argued, that as long as the San Francisco voters refuse to approve a bond act for municipal distribution facilities, the city has no choice but to let PG&E act as its "agent" for the sale of electric power. Ickes instructs the Attorney General's Office to file an appeal with the U.S. Supreme Court.

April 22, 1940: The Supreme Court rules 8-1 in favor of Ickes and directs Judge Roche to reinstate his injunction. Justice Hugo Black, writing for the majority, unequivocally rejects the city's position. "Congress," he notes, "clearly intended to require - as a condition of its grant - sale and distribution of Hetch Hetchy power exclusively by San Francisco and municipal agencies directly to consumers in the belief that consumers would thus be afforded power at cheap rates in competition with private power companies, particularly Pacific Gas and Electric." Black dismisses the city's technical arguments in support of the 1925 contracts with a terse phrase: "Mere words and ingenuity of contractual expression, whatever their effect between the parties, cannot by description make possible a course of conduct forbidden by law."Black's opinion acknowledges that city voters have refused to put up the money for a municipal distribution system and admits that the courts have no right or authority to tell the citizens of San Francisco how to spend their money. However, he explains, Congress has every right to attach conditions to a grant of federal land - and if the city, for whatever reason, fails to live up to those conditions, the federal government has the right to revoke that grant. He quotes the comments of Sen. Walsh of Montana during the Raker Act debate: "We are making a grant of rights in the public lands to the city of San Francisco, and we may impose just exactly such conditions as we see fit, and San Francisco can take the grant with those conditions or it can let it alone."The ruling concludes that "the city accepted the grant by formal ordinance, assented to all the conditions ... and up to date has utilized the rights, privileges and benefits granted by Congress. Now the City seeks to retain the benefits of the Act while attacking the constitutionality of one of its important conditions."The Chronicle and Examiner both blast the decision, lampooning Ickes and congressman Frank Havenner, who supports public power, as tyrants determined to force their will on the people of San Francisco. Both papers run editorials asserting that the city is best served by continuing to sell its power to PG&E and that Ickes' position amounts to an attempt to take away the millions of dollars in annual revenue the city receives from the PG&E contracts. Only the San Francisco News reports the truth: Every other city that runs a municipal utility finds public power very lucrative, and the potential gains to San Francisco from complying with the Raker Act make the annual payments from PG&E look like bird seed.

May 6, 1940: A group of San Francisco businessmen, led by Chamber of Commerce president Walter Haas, announces plans to push Congress to amend the Raker Act and eliminate the city's public-power mandate. Rep. Richard Welch agrees to introduce the amendment, and Sen. Hiram Johnson agrees to support it. The Welch bill never even makes it out of committee.

May 21, 1940: Ickes meets with Mayor Rossi, City Attorney John O'Toole, Board of Supervisors president Warren Shannon, and Utilities Manager E.G. Cahill in Washington and warns that if they don't quickly come up with a plan to comply with the Raker Act, he'll move to revoke the grant and take over the dam. "You would be here on a much better footing," he tells them, "if the record of delay, evasion and double-crossing hadn't been what it has been on the part of officials of San Francisco."Cahill insists that PG&E "has seen the handwriting on the wall" and that something could be worked out, given time. "Yes," Ickes replies, "all you want is time until I'm out of office.... I have always believed that a man can be fooled once, but a man is a damn fool who allows himself to be fooled a second time, and this isn't only the second time."

July 23, 1940: Rossi, O'Toole, Shannon, and Cahill travel to Washington again for a second conference with Ickes. Cahill presents a new plan: The city, he suggests, can lease all of PG&E's local distribution facilities and hire the company's local sales, repair, and service staff for a flat annual fee. Then the city can use those facilities to sell Hetch Hetchy power. In the wake of the Supreme Court decision, Cahill says, PG&E has accepted the deal. He presents a copy of a draft lease contract signed by the company's president, J.V. Black.Ickes asks Cahill if the contract includes an option to purchase the facilities. Cahill says the company offered that option, but only at a cost that made the entire lease deal far too expensive to be feasible.Ickes studies the contract, and on July 25, he tells the city that he's willing to go along with a lease, but that the language of this deal still gives PG&E too much control over Hetch Hetchy power. The San Francisco officials promise to go back and renegotiate. If PG&E won't offer a better deal, Rossi promises, a new bond issue will go before the voters on the next possible ballot. Ickes agrees to ask Judge Roche to suspend his injunction again, to give the city a few more months.

April 1941: The city sends Ickes a new lease contract proposal. Ickes asks Leland Olds, chair of the Federal Power Commission, to review it; Olds concludes that it's a terrible deal. "It is clear that the proposed arrangement not only does not offer the city the advantages of public distribution of Hetch Hetchy power," he writes, "but may even have the effect of freezing high rates."

May 22, 1941: Ickes holds another conference with city officials and points out the problems with the lease contract. Rossi and O'Toole freely admit that it's not a good deal for the city and that it includes excessive charges and fees. They tell Ickes they submitted it anyway, because it was the best deal they could get from PG&E. When Ickes rejects the contract and threatens to enforce the injunction and begin steps to take back the dam, Rossi begs for another delay. He says that he's finally prepared to make the case to the voters in favor of a municipal buyout, and will try another bond act in November.Ickes agrees to ask Judge Roche to hold off another year, until the summer of 1942 - but only if Rossi and San Francisco's civic leaders promise to vocally support the bond act and campaign strongly for its passage. The Chronicle and Examiner immediately accuse Ickes of extortion and claim he's trying to "gag" civic organizations like the Chamber of Commerce and the Downtown Association. Both groups announce they'll oppose the bond act and organize a high-powered campaign committee to work for its defeat. Organized labor, on the other hand, comes out strongly in favor of the buyout plan. Nearly every union in town endorses it, and prominent labor lawyer George T. Davis signs on to chair the proÐpublic power campaign.Ickes travels to San Francisco to campaign for the bond act. When chamber officials try to meet with him, he reminds them how much money they've received from PG&E and tells them to take a hike.

November 1941: Just a few weeks before the bond election, PG&E announces a sweeping reduction in local electric rates. The Chronicle carries the story on the front page. The bond act goes down to defeat, under another avalanche of adverse publicity and PG&E money.Ickes informs Mayor Rossi that he has no choice but to begin moving to revoke San Francisco's Raker Act grant and take over the O'Shaunessy Dam at Hetch Hetchy Valley.

Dec. 7, 1941: Japanese airplanes attack Pearl Harbor in a stunning, predawn strike, thrusting the United States into World War II. The War Department quickly looks for ways to redirect the nation's electric power supplies to essential wartime industries.

March 1942: The War Production Board orders San Francisco to sell to the Defense Plant Corp. the entire output of the Hetch Hetchy power project for an aluminum-smelting factory that is under construction at Riverbank, near Modesto. Ickes approves the plan, citing the strategic importance of aluminum to the war effort. He also notes that the factory site will be close to the city's existing transmission lines, allowing the power to be carried directly from Hetch Hetchy to the factory without PG&E acting as middleman. Judge Roche suspends his injunction again, this time for the length of the contract between the city and the Defense Plant Corp.All further talk of enforcing the Raker Act is temporarily drowned out by the roar of the cannons and the hum of giant factories turning plowshares into swords.

June 1944: Financial problems and mismanagement bring production at the Riverbank aluminum plant to a virtual halt, and the War Department prepares to shut it down. Judge Roche prepares to reinstate his injunction, but San Francisco files a motion to once again suspend it while the city finds a new way to dispose of its public power. On June 26, Roche holds a hearing on the petition and chides city officials for their constant attempts to use delaying tactics to evade the law. He then agrees to continue the matter until August, when the city promises to come forward with another new plan.Arthur Goldschmidt, director of Interior's Power Division, warns Ickes that the "Hetch Hetchy problem [is] again rising in San Francisco."

August 1944: Mayor Roger Lapham sends Ickes an entirely new proposal. It calls for PG&E to deliver over its lines from Newark enough Hetch Hetchy electricity to supply all of San Francisco's municipal services - the Muni railway, the street lights, General Hospital, etc. That would amount to about 200 million kilowatt hours a year. In exchange, the city would allow the company to keep all the remaining output of the Hetch Hetchy project - about another 300 million kilowatt-hours a year - and sell that power to its own customers as it saw fit.Undersecretary Abe Fortas, filling in for the vacationing Ickes, rejects the proposal. An increasingly angry Judge Roche gives the city one more chance to come up with a better plan.

December 1944: Mayor Lapham writes to Ickes with the rough outlines of yet another proposed solution to the Hetch Hetchy "problem." This time, the city proposes to pay PG&E an annual "wheeling fee" for transmitting enough Hetch Hetchy power from Newark to San Francisco to supply the municipal service needs. The Turlock and Modesto irrigation districts, a pair of rapidly growing public-power agencies, would buy as much of the remaining power as it could handle, and resell it to their own customers. Ultimately, Lapham insisted, Modesto and Turlock would be able to purchase everything the city couldn't use. In the meantime, PG&E would buy any surplus, or "dump," power to avoid letting it go to waste.Ickes thanks Lapham for his letter, reminds him that a final, detailed plan is due by the end of the year, and warns that the Interior Department "will not participate in any evasion of the law, however complex or ingenious. I hope that your leadership will not, this time, have to waste time, energy and newsprint in the fruitless pastime of beating the devil around the PG&E bush."

January 1945: Ickes writes Mayor Lapham to inform him that the proposed Turlock-Modesto-PG&E contracts are not acceptable. "The proposed agreements," he notes, "do not carry out the intent of the Congress in the Raker Act, which was designed to bring City-owned power, over the City's transmission and distribution system, directly to the citizens of San Francisco." He agrees that selling the city's power to Turlock and Modesto, which are public agencies, might comply with the "letter" of the law. The big problem, as always, was the role of PG&E. He reminds Lapham that Judge Roche's final extension will expire on March 1.On Jan. 24, Lapham arrives in Washington and spends four days meeting with Undersecretary Fortas. With Ickes' approval, Fortas suggests an alternative plan: If Lapham would place a policy declaration on the next local ballot binding the city to acquiring its own power distribution system - and agree to campaign actively for the passage of that measure and a bond issue to carry it out - Ickes would support a congressional amendment suspending the prohibition on sales to PG&E for a period of five years.Lapham tells Fortas that he'd consider placing the policy measure on he ballot, but says he "could not at this time commit myself to an active campaign on behalf of the bond issue."

June 11, 1945: San Francisco modifies its power contracts again, slightly. This time, the city agrees to pay PG&E a wheeling fee for transmitting municipal power and agrees to provide Turlock and Modesto with as much additional power as they can buy. The surplus would be carried on PG&E's lines - again, at a fee - to a handful of major PG&E customers, including Permanente Metals and Permanente Cement, who would pay the city directly for the service. But only when Hetch Hetchy power generation was particularly high, and the needs of Turlock, Modesto, and Permanente were low, would any "dump" power be sold directly to PG&E, and even then, the amounts would be insignificant. The contracts would run until 1949.A frustrated Ickes concedes that, as a practical matter, he has limited options. The nation is in the midst of a severe postwar energy shortage, and if he were to take over the dam, no other federal agency would be in a position to use its power. He acknowledges that, under the circumstances, he can't find solid grounds to oppose the latest arrangement in court. But he notes that "the plan, while technically feasible, does not carry out full intent of the Raker Act" and warns that it "does not appear to assure substantial compliance with the Raker Act beyond 1949." He urges Judge Roche to maintain jurisdiction over the matter and says his department "would oppose present approval of the plan with respect to the years following 1949."He also insists that Modesto and Turlock sign agreements never to resell their Hetch Hetchy power to PG&E.

July 9, 1945: City Attorney Dion Holm appears before Roche to argue that the 1938 injunction - which is still in effect - is too strict, since it bans the city from ever selling any power to PG&E. Roche denies San Francisco's petition for suspension or amendment and orders that the injunction become final and permanent.

1946: President Truman fires Ickes, who has become increasingly bitter and unhappy with his job, and replaces him with Oscar Chapman.

November 1946: The General Accounting Office investigates the new Hetch Hetchy contracts, concludes that the sale of "dump power" to PG&E is probably illegal, and suggests that the federal government demand an accounting of all past sales to PG&E and take legal action to make the city repay its ill-gotten gains. The comptroller general forwards the GAO report to Chapman, who sits on it for two years.

January 1948: San Francisco files its annual report with the Interior Department, which reveals that more than 5.6 million kilowatt-hours of Hetch Hetchy electricity were sold to PG&E in 1947. Walter Seymour, director of Interior's Power Division, writes a memo to Chapman noting that "certainly, the sale of this amount of power to the Pacific Gas and Electric Company is a violation of the Raker Act." The memo goes on to state that the federal government could enforce the court injunction and block further PG&E sales, but "under the existing conditions of the shortage of power and the scarcity of fuel, it seems to me that an action which would result in the wastage of water power would be unwise."Soon, Seymour advises, the federal Central Valley Project will have completed a transmission line to Tracy and will be in a position to take over the Hetch Hetchy power output. Meanwhile, he concludes, "the distribution of energy beyond Newark ... will have to be made by the Pacific Gas and Electric Company, until the City builds a distribution system."

Dec. 22, 1948: After repeated memos from the Comptroller General's Office, Chapman directs Assistant Secretary Krug to respond to the 1946 General Accounting Office report. Krug concedes that the contracts appear to violate the Raker Act but says that, under the circumstances, "it would be inappropriate at this time to recommend to the Attorney General that he institute suit."

Feb. 9, 1950: The comptroller general writes to the Justice Department anyway, informing the attorney general that he disagrees with Interior's position. He suggests that "action should be instituted either (1) to enjoin further performance under the existing arrangement ... (2) to declare forfeit the rights of San Francisco under the Raker Act ... and (3) to recover ... the amount received by San Francisco under the illegal 1925 contract." The attorney general does nothing.

Aug. 28, 1950: San Francisco begins negotiating an extension of the 1945 contracts. Michael H. Strawn, commissioner of the Bureau of Reclamation, reviews the proposal and writes to Chapman to complain that Interior, in tacitly approving the city's actions, "in effect confesses and condones operations both outside the law and in contradiction to the strong public power policy that the Secretary of the Interior has followed in the same area in Reclamation matters." He suggests that, if the city won't provide its own distribution system, Chapman move to take control of Hetch Hetchy and transfer the power to the Central Valley Project, which has facilities that are "virtually complete" to handle the electricity.

Sept. 1, 1950: Ickes, still concerned about the issue, writes to Chapman with charges that San Francisco is continuing to violate the Raker Act and urges him to take action. Chapman responds that he is "fully cognizant of the fact that there has not been a strict compliance with the [law]." However, he notes: "Thus far, as you well know, the City and County of San Francisco has not been able, through the vote of the people of that political subdivision, to acquire the distribution system necessary to distribute all of the Hetch Hetchy power. Nor is there any agency of the federal government which is able to distribute this power."

1954: San Francisco approves a new set of contracts with PG&E and Turlock and Modesto, which will run for 33 years, until 1987.

1955: Rep. Clair Engle presents evidence to a congressional committee proving that Turlock and Modesto have been reselling Hetch Hetchy power to PG&E, violating the express agreement Ickes insisted on in 1945. Federal Power Commission figures compiled by Engle show that, between 1945 and 1953, more than 10 percent of the Hetch Hetchy power bought by Turlock and Modesto has been resold to PG&E. The Interior Department, which seems to have abandoned all interest in enforcing the Raker Act, pays no attention whatsoever.

1964: Joe Neilands, a biochemistry professor at UC Berkeley, joins a campaign against PG&E's plan to build a nuclear power plant at Bodega Bay. He runs into Frank Havenner, who tells him that the nuclear project is awful but that nothing compares to the PG&E Raker Act scandal. Neilands, who has never heard of the Raker Act, is intrigued. He calls James Carr, the new general manager of the San Francisco Public Utilities Commission, and asks when the city plans to enforce the 51-year-old law. Carr tells him that "it is premature to discuss municipal distribution of power in San Francisco."

1965: Neilands writes to Frank Barry, the Interior Department's solicitor general, who tells him that "we know of no means by which the U.S. can require the city to acquire the municipal distribution system."

1972: At the request of the San Francisco Neighborhood Legal Assistance Foundation, a group of pro bono CPAs called Accountants for the Public Interest conducts a study of the financial potential of public power in San Francisco. The accountants conclude that the city could clear $22 million a year, after all costs, by buying out PG&E's distribution system and running a municipal utility. The group urges the PUC and the Board of Supervisors to commission a full-scale, independent feasibility study. Not one supervisor is even willing to request a hearing on the matter.

1973: The San Francisco civil grand jury investigates the Raker Act scandal, concludes that the city is required to operate its own public-power system, and asserts that the contracts with Modesto, Turlock, and PG&E are "of questionable legality." The daily newspapers ignore the report, and it winds up gathering dust on a City Hall shelf.

1974: Attorney Richard Kaplan and neighborhood activist Charlie Starbuck file suit in federal court, charging that San Francisco is in violation of the Raker Act. A district judge throws it out of court, concluding that Starbuck, as plaintiff, has no standing to sue for enforcement of the Raker Act. By law, only the secretary of the interior and the San Francisco city attorney have the right to pursue that action. Kaplan and Starbuck appeal.

1977: The 9th Circuit Court of Appeals rejects the Starbuck and Kaplan case, confirming the lower court ruling that a San Francisco citizen lacks standing to sue. The appellate judges, however, make a point of stating that they don't find fault with Starbuck's factual claims. If anything, the ruling seems to continue the federal courts' record of agreeing that San Francisco is breaking the law.

1982: A citizen group called San Franciscans for Public Power puts an initiative on the ballot that would force the city to conduct a feasibility study on municipalizing PG&E. PG&E spends $680,000 - a local record - funding a misleading campaign headed by Mayor Dianne Feinstein to defeat the measure. Among the few prominent supporters of the public-power initiative is Assemblymember Art Agnos, who holds a press conference outside PG&E's headquarters to denounce the company's blatant attempt to "buy San Francisco's vote."

1983: Just weeks after the public-power initiative goes down to defeat, PG&E officials contact the City Attorney's Office to start renegotiating the power-sale contracts, which are due to expire in 1985. Talks begin in secret at PG&E headquarters, with lawyers from the company and the City Attorney's Office trying to hash out a new long-term agreement. PG&E wants to raise the rate it charges San Francisco for "wheeling" power along company lines and for "firming" service, which backs up the city's power supply when rainfall is low and the generators at the dam aren't producing at their optimal levels. Since the recent public-power measure has gone down to defeat, the city has no real leverage to use as a bargaining chip against PG&E. Facing the prospect of millions of extra dollars in PG&E fees, the city's negotiating team decides to raise the rate that San Francisco charges the Turlock and Modesto irrigation districts for Hetch Hetchy power.

September 1984: The general manager of the Turlock Irrigation District, Ernest Geddes, finds out what San Francisco and PG&E are up to, and asks Rep. Tony Coelho for help. Coelho, who has become one of the most powerful Californians in Congress, invokes the Raker Act: The city, he says, is supposed to sell power directly to the citizens at the lowest possible cost. Since San Francisco doesn't have a municipal utility of its own, he argues, that provision ought to apply to sales to Modesto and Turlock, which are public-power agencies. Just to be sure, he introduces a bill that would force San Francisco to sell Hetch Hetchy power to the irrigation districts at cost - in other words, for almost nothing.Mayor Feinstein realizes that the bill will probably pass and that the city will be in a bind. Unless the sales to the districts bring in fairly substantial revenues, it will be hard to defend the whole concept of "disposing" of Hetch Hetchy power outside the city, and new pressure for a municipal utility could emerge. A longtime ally of PG&E and a foe of public power, Feinstein quickly contacts Coelho and cuts a deal: Coelho agrees to withdraw the bill, but Feinstein has to promise to sell almost two-thirds of the Hetch Hetchy output to the districts, at favorable rates, every year until 2015. The city negotiators go back to the table to continue their talks with PG&E, with less leverage than ever.

May 1985: The City Attorney's Office briefs the Board of Supervisors in secret session on the outlines of the emerging power-sale deals and asks the board to approve "the basic principles" of a new set of 30-year contracts. The board votes 6-0, on roll call, to approve the deal, with no public discussion or debate, and to accept "interim" two-and-a-half-year contracts while final talks continue. The negotiators go back to work out the fine print.

June 1987: Staffers at the city's Public Utilities Commission and the City Attorney's Office argue in internal memos that PG&E is asking for completely unreasonable terms in the final contracts, fee hikes that would cost the city millions. The company refuses to compromise, and talks break down. Finally, Feinstein personally intervenes, meeting privately with PG&E chair Richard Clarke and hashing out a contract that nobody outside PG&E thinks is a good deal for the city. In essence, it requires the city to keep paying PG&E millions of dollars a year for "wheeling fees," guarantees Turlock and Modesto access to more than half the city's Hetch Hetchy power, and effectively sabotages any new attempt to create a municipal power system.

Fall 1987: Interior Secretary Donald Hodel becomes the latest federal official to threaten San Francisco with the loss of its Raker Act grant. He proposes to study tearing down the dam and restoring Hetch Hetchy Valley. The Sierra Club, among other environmental groups, strongly endorses the concept - after all, club members say, the city never kept its end of the 1913 deal. But Hodel never pursues the matter seriously, and it quickly dies.

1988: On New Year's Eve, the newly elected mayor, Art Agnos, is summoned to PG&E headquarters to meet with Dick Clarke, who tells him the facts of life: PG&E controls enough votes on the Board of Supervisors to block any effort at promoting public power. The contracts can't be changed and will never be stopped. And if Agnos doesn't want to play ball, PG&E will crush his political career.The city's budget analyst reports that the contracts are a bad deal and a violation of standard city procedures and takes the unusual step of recommending that the supervisors not approve the deal. A Guardian analysis shows that San Francisco is losing more than $150 million a year to PG&E by failing to comply with the Raker Act and establish a municipal utility.But the board votes 8-3 to go along with PG&E for another 37 and 1/2 years, and Agnos, the onetime public-power advocate who campaigned as an alternative to the pro-downtown politics of the Feinstein era, signs the contracts into law.Just a few weeks later, Agnos announces that the city's budget is facing a shortfall that could approach $100 million. He warns that services may be cut dramatically, that small businesses, Muni patrons, and kids who go to the zoo will have to pay higher prices to keep the city in the black.Not once does he mention PG&E.

Sept. 22, 1993: The City of Sanfrancisco loses millions of dollars a year by failing to bring its own Hetch Hetchy public power into the city. Worse yet, the city risks is losing the Hetch Hetchy watere supply by failing to comply with the federal Raker Act of 1913. It requires, in exchange for the right to dam the Hetch Hetchy Valley in Yosemite National Park, the city "shall develop and use power for the use of its people." Actually, the city's public-power agency, Hetch Hetchy Water and Power, supplies power to about 1,300 government entities, including the City Attorney's Office. But the rest of Hetch Hetchy's power gets dumped in Turlock and Modesto. No San Francisco residents or businesses benefit from the cheap power generated by the dam -- power that is rightfully theirs. Instead the city pays about $25 million annually to PG&E for the private utility to "wheel" (carry) power into San Francisco.

Jan. 12, 1994: The National Park Service announces plan to hand over the valuable Presidio electrical system to PG&E -- and then pay the company more than $12 million to take it. The entire deal violated federal bidding laws. Officials from the city public power agency, Hetch Hetchy Water and Power, show no interest in supplying power to the Presidio. In fact, Espinoza reports, Hetch Hetchy general manager Larry Klein told Park Service officials in 1992 that the department was not interested in running the system.

Jan. 31, 1994: The National Park Service negotiates the Presidio contract with PG&E, Supervisor Angela Alioto that alls on the San Francisco Public Utilities Commission to bid for the contract.

Feb. 16, 1994: Public-power advocates urge the city to bid for the Presidio's electrical system. But Anson Moran, general manager of the Public Utilities Commission shows his stripes when he tells the board's Select Committee on Base Closures that selling power to the Presidio could be "too political."

March 15, 1994: The National Park Service agrees to give San Francisco's public-power agency a chance to bid for the Presidio power contract (RFP) but releases a request for proposals that virtually guarantees PG&E will win; the RFP calls for the bidders to operate a system that PG&E has designed. The Park Service admits that the RFP was based in part on information provided by PG&E.

March 30, 1994: Despite his public statements that the PUC would prepare an "aggressive bid" for the Presidio contract, PUC chief Moran privately works to undermine the effort. In a confidential memo to Mayor Frank Jordan, obtained by the Bay Guardian, Moran urges Jordan to veto Alioto's resolution calling for public power at the Presidio.

April 1, 1994: Mayor Jordan vetoes Alioto's Presidio public-power bill. Alioto allies cry foul.

May 2, 1994: The Board of Supervisors unanimously overrides Jordan's veto and approves Alioto's resolution urging the city to bid for the takeover of the Presidio electrical system.

Aug. 4, 1994: In a major concession to public pressure, the historically PG&E-friendly PUC agrees to bid on a contract for the Presidio electrical system.

Aug. 8, 1994: Hetch Hetchy Water and Power submits its bid for the Presidio system, marking the first time the agency has ever competed with PG&E for a contract. But it fails to bring up the point that PG&E had no franchise agreement with the city to provide power there; it also fails to cite the Raker Act.

Sept. 29, 1994: Despite competitive bids by the city of San Francisco and two other bidders, the Park Service awards the power contract to PG&E.

Oct. 13, 1994: Under immense pressure from Alioto and public-power advocates, City Attorney Louise Renne files a protest with the General Accounting Office in Washington, D.C., to stop the Park Service from awarding the Presidio electrical contract to PG&E.

Oct. 31, 1994: The Board of Supervisors votes to raise the PG&E franchise fees from 0.5 percent to 2 percent of the utility's gross revenue for 1995, and then to 4 percent each year after that (a rate still below the national average and less than half of what some cities charge). The increase would bring more than $21 million yearly into the city's General Fund.It would also balance the high fees PG&E charges the city for wheeling Hetch Hetchy power: in 1994 PG&E paid the city $2.4 million in franchise fees for delivery of electricity, and the city paid PG&E about $25 million in fees for wheeling power into the city. PG&E refuses to pay the new rates. The City Attorney's Office does virtually nothing to enforce the board's legislation, claiming that PG&E has won a court injunction barring the increase. That, it turns out, is untrue: in June 1996, at a public hearing, Deputy City Attorney Michael Olsen admits to Alioto that no injunction had ever been issued.

Nov. 7, 1994: Reacting to the surge in public-power activism, Angela Alioto, as president of the Board of Supervisors, proposes a special committee to pursue ending PG&E's illegal monopoly in San Francisco and bringing cheap public power to residents. PG&E lobbies hard against the proposal, but Alioto succeeds in getting the board to narrowly approve the creation of the Select Committee on Municipal Public Power. Alioto notes that, at a time when the city was closing health clinics because of budget shortfalls, the potential revenue that could come from municipalization is too attractive to ignore.

Jan. 12, 1995: The Select Committee on Municipal Public Power votes to spend $150,000 on a preliminary study of whether the city should take over PG&E's distribution system.

Jan. 12, 1995:City Controller Ed Harrington announces that his office will perform the first audit of PG&E franchise-fee payments. Harrington defends the city's lack of prior enforcement by saying, "There are a variety of items in the administrative code that aren't being done by the city." The city's chief administrative officer, Rudy Nothenberg, is also required by the code to file reviews of PG&E compliance with the franchise agreement. But he writes in a letter to the board that he can't get involved in financial issues with PG&E because his wife works for the utility. The Bay Guardian later discloses that Nothenberg owned between $20,000 and $200,000 in PG&E stock.

Jan. 17, 1995: The Board of Supervisors votes 7 to 3 to ask Mayor Frank Jordan to spend $150,000 on a preliminary feasibility study. Jordan vows to fight the expenditure.

Jan. 20, 1995: Mayor Frank Jordan, whose reelection campaign will rely heavily on financial and political support from PG&E and its allies, writes a letter to the board indicating his plan to veto the supervisors' legislation requiring a feasibility study.

Feb. 15 1995: The General Accounting Office in Washington, D.C., dismisses City Attorney Renne's protest of the awarding of the Presidio contract to PG&E as "untimely" and upholds the Park Service's decision. In essence, the GAO rules that Renne's office missed the filing deadline for contract protests.

Feb. 17, 1995: City Controller Ed Harrington releases the first audit of PG&E's franchise-fee payments. In the audit, conducted only for 1991 through 1993, Harrington finds that PG&E owes the city $114,276 for using city streets to deliver electricity and gas to the Presidio for the period from Jan. 1, 1991, through Dec. 31, 1993. PG&E refuses to cooperate, declining to give the city documents that are key to determining if the utility is accurately and fairly calculating how much it owes in franchise fees.The audit also finds that in a random sampling of bills, PG&E overcharged local customers by a total of $514,130. On the advice of the City Attorney's Office, Harrington refuses to audit PG&E for the years prior to 1991 and also fails to go after fees owed on other military bases, including Hunters Point and Fort Mason, since 1939. His decision may have kept the city from collecting millions of dollars. Renne's office says it has no way of knowing how much the city is owed for the years 1939 to 1992.

.March 20, 1995: In a first real step toward complying with the Raker Act, the Board of Supervisors votes 8 to 2 to require the PUC to conduct a $150,000 preliminary feasibility study. The ordinance includes language stating that if any city officials try to block the study, they will be guilty of "official misconduct," which is grounds for removal from office

.April 5, 1995: The Board of Supervisors unanimously decides to urge the PUC to sue to overturn the Park Service's decision to give the Presidio contract to PG&E.

May 24, 1995: Without publicly announcing the move, City Attorney Louise Renne files suit against PG&E and the federal government in an attempt to overturn the Park Service's multimillion-dollar giveaway of the Presidio contract. The suit alleges that PG&E should have been disqualified because it had designed the system it then bid on. The city attempts to lay out how the Park Service rigged the bid for PG&E. Once again, both daily newspapers black out the story.

May 24, 1995: PG&E files suit in state court against San Francisco to block the city's attempt to collect millions of dollars in franchise fees the utility owes for delivering power to the Presidio. Public-power advocates call the suit a "preemptive strike." The city countersues in what Harrington says is a way for the city to collect on franchise fees owed on the Presidio since 1939. But the City Attorney's Office never attempts to use the suit to break the original 1939 franchise, although public-power advocates contend that PG&E's failure to pay franchise fees on the Presidio is grounds for ending the agreement..

July 17, 1995: Alioto outfoxes Jordan by replacing $150,000 (to cover the study) from $375,000 in proposed cuts to the PUC's budget.Dec. 19, 1995: The PUC terminates Strategic Energy Limited's contract. Hetch Hetchy general manager Larry Klein admits to making a "couple errors in judgment": namely, not telling the commission that two losing bidders had protested a disputed scoring process.January through March 1996: Alioto and public-power advocates have trouble getting the PUC to set up a technical review committee for the study that would include citizens interested in municipalization. In fact, Klein tries to put John Madden, the city's chief assistant controller, on the committee. Madden owns as much as $100,000 worth of PG&E stock and helped defeat a 1982 campaign for a feasibility study by providing an inflated, PG&E-generated figure for the purchase price of the distribution system. Renne even says at one point that creating such a committee would violate the city charter. Eventually the PUC relents, establishes the committee, and allows a representative of San Franciscans for Municipal Public Power to join it.

April 1, 1996: Alioto asks Renne for a review of the city attorney's long-standing position that the city's dispersal of Hetch Hetchy electricity is in technical compliance with the Raker Act. This is a key question: For decades, the City Attorney's Office has relied on a series of internal opinions that effectively trumpet the PG&E line that the Raker Act doesn't require public power in San Francisco. The Supreme Court has determined otherwise in clear language -- but because the city attorney is the only local official with the authority to enforce the Raker Act, the pro-PG&E opinions have been a roadblock. Alioto never gets a new opinion.

May 6, 1996: The technical review committee selects J.W. Wilson & Associates of Washington, D.C., a firm with 20 years of experience consulting with municipal systems, to perform the feasibility study. Wilson had done two feasibility studies -- in Gilbert, Ariz., and Page, Ariz. -- that led to successful municipalizations. Economic and Technical Analysis Group (ETAG), another bidder whose president said the firm's members had performed $1,000 worth of work for PG&E, was not chosen.

May 28, 1996: Under lobbying pressure from PG&E, three PUC commissioners -- Victor Makras, Dennis Normandy, and Marion Otsea -- award the contract to ETAG, despite protests by Wilson and public-power advocates. ETAG discloses to PUC staff that members of the firm have performed at least $140,000 worth of work for PG&E; instead of stressing that point, PUC staffer Larry Klein includes in the packet to the commissioners an article critical of Wilson. In September PG&E discloses to the San Francisco Ethics Commission that Sam Lauter and Larry Simi discussed the choice of contractor with those three commissioners during that time

June 10, 1996: The Board of Supervisors unanimously passes a resolution urging Mayor Willie Brown to urge the PUC to terminate the contract with ETAG and award the contract to Wilson. Brown takes no action on the resolution, thereby making it official board policy. The PUC ignores the legislation.

June 25, 1996: After discussing the matter in closed session, the PUC reconfirms its selection of ETAG. Commissioners do not formally respond to protests made by Wilson and San Franciscans for Municipal Public Power's Joel Ventresca, a member of the technical review committee.

Mid-August to October 1996: Klein informs Alioto that delivery of the preliminary feasibility study will be delayed until Jan. 15, 1997, about one week after Alioto will be forced by term limits to leave office. Klein says delays in the selection process, due to the protest of ETAG's selection, made it impossible for the firm to meet the deadline. Klein's move is illegal, as the Board of Supervisors must approve any changes to the ordinance, which requires delivery of the study by Oct. 30, 1996.Sept. 24, 1996: City Controller Ed Harrington releases an audit of PG&E franchise-fee payments for 1994 and 1995. He finds that PG&E owes the city $18,218 for using city streets to deliver electricity and gas to the Presidio for the period from Jan. 1, 1994, to Sept. 30, 1994.

Sept. 26, 1996: At a select committee meeting, Alioto makes another attempt to raise the yearly fees that PG&E pays for the right to transmit gas and electricity across city property. She proposes to raise the fee from 1 percent to 4 percent for natural gas and from 0.5 percent to 2 percent for electricity. The City Attorney's Office maintains that the franchise agreement cannot be changed.

Oct. 25, 1996: Judge Vaughn Walker decides the Presidio case in favor of the federal government and PG&E. The order is filed under seal, and the city does not object. By losing the case, the city loses a $50 million contract and a chance for a public-power beachhead.

Nov. 27, 1996: The select committee votes to call for a full feasibility study. Meanwhile, the Bay Guardian reveals that numerous community organizations -- such as the Mission Neighborhood Center and Kimochi -- receiving money from PG&E have written to supervisors asking that a full feasibility study be killed.

Dec. 11, 1996: Under pressure from PG&E, the budget committee's Barbara Kaufman and Tom Hsieh table Alioto's feasibility study. The move is unusual; it means that Alioto, the legislation's sponsor, cannot vote on the issue because under term limits she will be out of office. Alioto vows to take the study out of committee and put it to the full board for a vote.

Jan. 6, 1997: Alioto's last day in office. She brings the feasibility study up for a full vote Jan. 13.

Jan. 8, 1997: Newly minted president Barbara Kaufman kills the Select Committee on Municipal Public Power.

Jan. 13, 1997: Supervisors kill Alioto's feasibility study by an 8 to 2 vote. Leslie Katz, Jose Medina, and Leland Yee all break campaign pledges to the Bay Guardian to support the feasibility study and vote against the ordinance. Also voting for PG&E are Supervisors Amos Brown, Barbara Kaufman, Susan Leal, Mabel Teng, and Michael Yaki. Only Supervisors Tom Ammiano and Sue Bierman vote in favor.

Related News Story Links:

Earthquake Damage to the Spring Valley Water Company – 1906
Congressional Hetch Hetchy Hearings – 1908
“Hetch Hetchy Damming Scheme,” by John Muir -1908
“The Endangered Valley...,” by John Muir
Sierra Club Telegram to Congress Protesting Hetch Hetchy Bill – 1908
“ Help to Save the Famous Hetch-Hetchy Valley,” by John Muir – 1909
Raker Bill for Hetch Hetchy – 1913
Map of Spring Valley Water Co. Holdings
Largest Sprinkler System in the World
New PG&E-City Hetch Hetchy Woes
Damage to the Water Supply during the Earthquake
Windmill Pumps at Golden Gate Park
“Proposed Auxiliary Water Supply System...,” (1907)
High Pressure Water System for Fires Following Earthquake
Brief History of Greenberg Fire Hydrants
“Fire Department Water Supply,”
"Rock Slide at Yosemite National Park"
"Upper Yosemite Fall Landslide Sunday"
"Nature Section - Archives"
"Yosemite's Silent Spring"
"Rockfall Very Much Like 2.15 Earthquake May Have Had Human Cause!"
"Flumes - Archives"
"California Floods"
"Sierra Nevada Range Still Growing - Fast!"
"Economic Standing of Sequoia Trees"
"Signs of Global Warming"

      [Editor's note: The major governmental actions affecting Yosemite and the Sierra Nevada occurred during the Great Depression, 1929 to 1939. The federal government took over control of the state-proposed Central Valley Project.
     Construction of a portion of the federal project began in the 1930s, but the dams and aqueducts that constitute most of the project were not completed until the 1950s. The quest for water by the cities of San Francisco and Los Angeles had an immediate impact on the Sierra Nevada's streams at that time. Many histories exist of these two cities' attempts to gain control of Hetch-Hetchy Valley and the Tuolumne and Owens River water.
     While water for growing popu-lations was an important reason for seeking to use Hetch-Hetchy and the Owens River, both cities clearly wanted hydroelectric generation to be an important part of these de-velopments. It is often stated in historical accounts that San Francisco had other options. Surprising as it seems today, John Muir even suggested that Lake Tahoe, its shores denuded of timber and facing degradation of its water purity anyway, be given to San Francisco.
     In partial defense of San Francisco's actions, however, it is likely that even if San Francisco had not claimed Hetch-Hetchy, other urban centers would have pressed claims for it. As many observers of that time have pointed out, the climate of Califoria Progressive politics, a conservation ethic that stressed utilization of resources in service to the public interest was likely to prevail in any struggle for power.
     As a consequence of these circumstances, agency actions taken to assure a water supply for the city of San Francisco had devastating consequences on the Hetch-Hetchy-Tuolumne River system, leading to the eventual construction of the O'Shaughnessy Dam, the decimation of Hetch-Hetchy's forests, and the flooding of its verdant meadows.
    The accuracy of this Chronology has been verified by cross-checking with facts obtained from archives of the Fresno Republican Newpaper, The Sacrmento Bee Newspaper, The California Star Newspaper, The San Francisco Call Bulletin, Yosemite Nature Notes, The Yosemite Natural History Association, interviews with National Park Service officials, including Yosemite National Park Chief Natruralist, Bryan Harry (1961),The Library of Congress (1964), and documents on file in the Yosemite National Park Museum Library (1961-71), The National Archives (1993), and archives of The Century Magazine.]

Letter to the Editor

©1962, 2001 The Yosemite Valley News. All rights reserved.
Republished with permission.

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