Politics & Government

How Close is Hercules Municipal Utility to Being Sold?

"We don't believe that we should be in the utility business," Hercules City Manager Steve Duran said Thursday.

Hercules is on its way toward cutting loose an anchor that has dragged down the city's finances for more than a decade.

The sale of Hercules Municipal Utility, approved by voters last year, is on its way toward completion and should be ready for a city council approval by May, Hercules City Manager Steve Duran said Thursday.

"The utility, for us, loses money and so our goal is to get enough money to get rid of the bond debt and to have, in this case, PG&E take over and run it," Duran said by phone.

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The city is currently negotiating the "asset purchase agreement" to sell the small electrical utility to PG&E, he said. The council in January selected PG&E as a buyer.

"PG&E does already provide electric services [in Hercules]," PG&E spokeswoman Nicole Liebelt said Thursday. "It does make sense that PG&E would be a reasonable option [to buy the Hercules Municipal Utility]."

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Duran declined to comment on the price the city hopes to get for the utility, but said it will likely be enough to pay off the city's remaining bond debt and not much else.

"The city's not going to net much out of the whole deal, but right now it's a drain on our resources," he said, noting staff time required to keep the small utility up and running. The city currently employs two electricians as well as staff who handle billing and questions from residents.

The California Public Utilities Commission will have to approve any deal between the city and PG&E. While that approval is pending, the Hercules Municipal Utility will continue to provide power to its 800 or 900 customers and the city will continue to make payments on its bond debt.

Duran said the city is counting on that process taking no longer than one year.

"We've got enough bond money to be able to do that for that period," he said. "After that we wouldn't have the capital to make those payments."

Current Hercules Municipal Utility customers will likely see their electric bills drop once PG&E takes over; PG&E's rates are cheaper for residential customers, Duran said.

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