For decades, Pacific Gas & Electric (PG&E) has been the sole provider of electricity to Foster City. However, a look back at our city’s history reveals a period of significant consideration, led by forward-thinking individuals, regarding the feasibility of establishing an independent, municipally-owned electric distribution system. As Foster City residents today navigate the complexities and often unpredictable nature of PG&E rates, it’s valuable to reflect on this past initiative and understand the rationale behind the potential for energy independence.

While the sources provided primarily focus on the feasibility studies conducted in the early to mid-1970s, they offer crucial insights into the motivations and potential benefits that drove Foster City’s leadership to explore alternatives to PG&E. These historical documents, including reports from Slinger and Associates, Sverdrup & Parcel, Bache & Co., and legal opinions, highlight a proactive approach by the City Council and staff to secure the best possible future for its citizens.

A Look Back: The Feasibility of Municipal Ownership

In 1971, the City of Foster City retained the consulting engineering firm of Slinger and Associates, Inc., to study the feasibility of acquiring the electric distribution system from PG&E within city boundaries. Simultaneously, Sverdrup & Parcel and Associates, Inc., was tasked with reviewing this report. These studies, along with financial analysis by Bache & Co. and legal considerations, provide a comprehensive picture of the potential for Foster City to control its own electric distribution.

The core driver behind this exploration was the potential for considerable financial gain to the City and taxpayers. Both Slinger and Associates and Sverdrup & Parcel projected a positive and increasing net operating income for the City under municipal ownership. Slinger and Associates estimated approximately $5 million available for the General Fund from 1975 to 1980, while Sverdrup & Parcel projected net operating income rising from $570,700 in 1975 to $1,317,660 in 1980. Bache & Co.’s financial analysis, based on various bond scenarios, also indicated consistent positive annual net income after covering all expenses and debt service.

These projections were based on several key assumptions, many of which underscored the unique position of Foster City:

• Utilizing Existing PG&E Rates: Revenue projections assumed the application of current PG&E retail rates to projected energy consumption, with no increase to City consumers considered during the study period This meant that any operational efficiencies or savings would directly benefit the City and potentially its residents.
  
• A Self-Contained System: Unlike many other municipalities, Foster City’s electric distribution system was largely self-contained within its boundaries, connected to PG&E’s main system by only a couple of supply lines. This eliminated the complex and costly issue of severing crisscrossing lines, making acquisition more feasible and avoiding potential severance damages.
  
• Developer Contributions: A significant aspect was the investment made by Foster City developers in the underground distribution system. They provided substructure facilities like manholes and conduits and contributed to PG&E to cover the higher costs of underground versus overhead systems. The legal counsel suggested that the City should not have to pay for these donated facilities again in a condemnation proceeding, potentially reducing the acquisition cost.
  
• Conservative Financial Planning: The feasibility studies employed conservative assumptions, such as a high 6-1/2% interest rate for bond financing. (financial consultants believed a lower rate was likely), and included the impact of a potential 22% wholesale power rate increase requested by PG&E. Even under these “worst-case” scenarios, the acquisition was deemed economically viable.

The City Engineer’s recommendations in 1973 strongly advised informing citizens that acquisition would result in a considerable financial gain. The report also envisioned the system being managed by the City Department of Public Works, aligning it with existing successful municipal operations.

Echoes in Today’s Concerns

While the historical context differs from the present day, the fundamental questions of cost, control, and benefit to the community remain relevant. Foster City residents today are undoubtedly aware of the fluctuations and increasing costs associated with PG&E rates. News headlines frequently highlight PG&E’s financial challenges, infrastructure needs, and the resulting impact on customer bills.

In this context, the foresight of Foster City’s leaders in the 1970s to explore alternatives takes on new significance. Their proactive approach to understanding the feasibility of energy independence stemmed from a desire to secure a more stable and potentially more affordable energy future for the city. The potential for net operating income to benefit the General Fund, as highlighted in the historical studies, could have provided the city with greater financial flexibility to fund essential services or even reduce property taxes. Furthermore, the possibility of the City controlling its own rates offered the potential to directly benefit residents.

A Legacy of Proactive Leadership

The detailed feasibility studies and legal considerations from the 1970s demonstrate a commitment by Foster City’s leadership to thoroughly investigate all options for the betterment of the community. The unique characteristics of Foster City’s electric infrastructure, a testament to the early vision of its planners, played a crucial role in making municipal ownership a serious consideration.

While the sources do not indicate that the acquisition ultimately moved forward, the historical record serves as a reminder of Foster City’s proactive and forward-thinking approach to crucial civic matters. As we navigate the current energy landscape and its associated costs, understanding this chapter in our city’s history provides valuable context and underscores the enduring importance of exploring solutions that prioritize the well-being and financial stability of Foster City and its residents. The questions raised and the analyses conducted decades ago may still hold lessons as we look towards the future of energy provision in our community.