Hetch Hetchy valley is in Yosemite National Park, about 190 miles east of San Francisco in the Sierra Nevada Mountains.

In 1902, ex-Mayor James Phelan of San Francisco filed a claim with the federal government for the water from the Tuolomne River, which would be gathered by damming the mouth of the Hetch Hetchy Valley. Initial opposition came from the lightly populated eastern Central Valley where there were two irrigation districts in Modesto and Turlock with their own eyes on the Tuolomne River watershed.

The most outspoken opposition to San Francisco's plans came, however, from the nascent preservation movement, led in this case by the famous John Muir. "Dam Hetch Hetchy! As well dam for water-tanks the people's cathedrals and churches, for no holier temple has ever been consecrated by the heart of man." said John Muir.

Meanwhile, Mayor Phelan considered the project essential to save the city from "monopoly and microbes."

The federal Right of Way Act of 1901 provided the legal basis for the city to acquire rights to national park land, but the then-Secretary of the Interior Ethan Allen Hitchcock refused to give SF a permit, preferring to protect Yosemite's natural wonders. The plan languished throughout the first decade of the century, in part due to the corrupt regime of the Union Labor Party under Boss Abe Ruef, which attempted to strike a deal with the Bay Cities Water Company in exchange for a million dollar bribe.

When Ruef and the ULP were exposed and put on trial soon after the earthquake of 1906, the water issue re-emerged in the glaring national spotlight that followed the spectacular destruction and fire. Hetch Hetchy proponents were quick to use the conflagration as proof of the necessity of new water supplies for San Francisco

Echoing contemporary struggles over the environment, President Theodore Roosevelt's early initiatives in parkland creation and wildnerness preservation were under attack. By 1908 Roosevelt's Interior Secretary James R. Garfield reversed the earlier order, and issued a limited permit for the Hetch Hetchy project, in part to quiet critics who thought public resources should be developed rather than locked away.

The Sierra Club, still in its infancy, found itself divided over the Hetch Hetchy proposal with a strong proponent in one of its founders, Warren Olney. John Muir rallied other groups, such as the Appalachian Mountain Club and the Saturday Walking Club in Chicago, to oppose the plan, but lacking the active participation of California conservationists, the campaign was unable to derail the project. In January 1910, the City held a bond referendum in which voters approved a $45 million bond to build the first phase of Hetch Hetchy, but rejected a $35 million bond to buy out the Spring Valley Water Company's facilities.

The arguments of the preservationists were focused on saving Hetch Hetchy Valley for public use. The arguments presented by the City and its paid engineers and lobbyists were also focused on public use, but instead of arguing for public recreational uses, they argued for a grand water-and-power system to supply water and electricity to San Francisco and the entire Bay Area for decades to come. Given the era and the prevailing pro-development values (hardly changed to this day, after all), it is not surprising that the congressional committees created to analyze the controversy opted to allow the city to build the Hetch Hetchy dam.

President Woodrow Wilson signed the Raker Act on December 19, 1913. Section 6 of the Raker Act forbade the sale of electrical power generated from Hetch Hetchy "to any corporation or individual, except a municipality or a municipal water district or irrigation district..." such as a private utility. This section had been inserted to gain the support of utilitarian conservationists like Nebraska's Senator Norris, who did not want PG&E to monopolize water and power development in the Hetch Hetch Valley.

M.M. O'Shaugnessy oversaw the gradual construction of the network of dams, reservoirs, tunnels, and powerhouses to deliver water and power to SF. In 1923, San Francisco revoked Spring Valley Water Company's franchise and began rebuilding the water mains and plumbing for the citizens of San Francisco. A hydroelectric powerhouse was built and enough copper wire purchased to stretch from the Sierras to San Francisco.

In 1925, it was abruptly announced that San Francisco had run out of money and could not complete the power lines into the city. The city's line ended a few hundred yards from PG&E's Newark substation on the eastern side of the south bay, conveniently close to PG&E's just-completed high-voltage delivery cable from Newark to SF.

Part 2: PG&E and the Raker Act

President Woodrow Wilson signed the Raker Act on December 19, 1913. Section 6 of the Raker Act forbade the sale of electrical power generated from Hetch Hetchy "to any corporation or individual, except a municipality or a municipal water district or irrigation district..." such as a private utility. This section had been inserted to gain the support of utilitarian conservationists like Nebraska's Senator Norris, who did not want PG&E to monopolize water and power development in the Hetch Hetch Valley.

By the early 1920s, a hydroelectric powerhouse was built and enough copper wire was purchased to stretch from the Sierras to San Francisco. In 1925, it was abruptly announced that San Francisco had run out of money and could not complete the power lines into the city. The city's line ended a few hundred yards from PG&E's Newark substation on the eastern side of the south bay, conveniently close to PG&E's just-completed high-voltage delivery cable from Newark to SF.

PG&E had already been purchasing Hetch Hetchy power from the city, ostensibly as a temporary arrangement pending the completion of San Francisco's own power system. A National Park Service investigation determined that the sale of power was illegal under the Raker Act, but the Interior Department refused to take action on the grounds that it was only a temporary arrangement.

In late October 1934, the system finally brought water into the city, but its power transmission lines never reached beyond PG&E's Newark substation. PG&E accepted the Hetch Hetchy power and delivered an equal amount of power into the city on its own distribution system, under a contract concluded in 1925.

This arrangement was in direct violation of Section 6 of the Raker Act. Yet San Francisco voters rejected eight bond issues between 1927 and 1941 which would have built a municipally-owned power system and obeyed the law. The 1927 vote, after little campaigning or support from Mayor "Sunny Jim" Rolph or the supervisors, was 52,215 in favor, 50,727 against, not the 2/3 majority required for general-obligation bonds. PG&E is said to have spent over $200,000 to defeat these bond issues, including the unprecedented sum of $21,153.71 to defeat the 1930 3-year plan worked out between Mayor Angelo Rossi and the Interior Department to municipalize San Francisco power.

Invariably the local media took the PG&E line that municipalizing power would amount to an unfair, forced tax on the citizens of San Francisco and that a city-run utility would lead to disaster and higher prices. All evidence by independent analysts indicate the opposite, that municipally-owned utilities generate enormous cash surpluses and provide good service.

Also in 1934, the New Deal Secretary of the Interior Harold Ickes filed suit to compel San Francisco to obey the Raker Act. The City argued that PG&E was its "agent" and it was not selling power to PG&E, but the U.S. Supreme Court upheld Ickes' suit in April 1940, by a 8-1 vote. Justice Hugo Black, writing for the majority, categorically rejected San Francisco arguments in favor of power sales to PG&E.

San Francisco proposed a bond issue to acquire PG&E's facilities, but once again the voters turned it down. Just a few weeks before the November 1941 bond election, PG&E announced sweeping reductions in local electricity rates. The Chronicle carried the story on the front page and the bond act went down to defeat.

Interior Secretary Ickes informed Mayor Rossi that he had no choice and began moving to revoke San Francisco's Raker Act grant and take over the Hetch Hetchy Dam, but a month later Pearl Harbor changed everything.

Near the end of WWII, SF stopped supplying Hetch Hetchy power to a war-time aluminum plant and a federal court gave the city six months to comply with the Raker Act. By July 1945 a strange compromise had been achieved, in which SF contracted with PG&E to sell Hetch Hetchy energy to the Modesto and Turlock irrigation districts and also took two industrial customers from PG&E. When Ickes allowed a temporary authorization for this deal, the illegal arrangement whereby San Francisco had been allowing the privately owned Pacific Gas & Electric Company (the U.S.'s largest utility, headquartered in, where else, San Francisco!) to sell electricity and gas to San Francisco residents at prices up to four times what it might be if it were publicly owned and distributed, was given a de facto endorsement by the Federal Government, in spite of the law and the U.S. Supreme Court!

By 1948, San Francisco was selling over 5 million kilowatt hours a year to PG&E. The story goes on but was soon forgotten by local citizens as the pro-PG&E newspapers completely ignored the ongoing scandal.

In 1964 a UC Berkeley biochemistry professor Joe Neilands, active in the (ultimately successful) effort to stop PG&E from building a nuclear power plant at Bodega Bay, stumbled across the Raker Act story. He wrote to the Interior Department and received bland assurances that there is nothing to be done. When he published his story in the San Francisco Bay Guardian in 1969, the saga re-emerged as a scandal in San Francisco politics, but continued to be systematically ignored by the local daily press and political establishment.

In 1973 the civil grand jury concluded that the city is required to operate its own public-power system, and that the city's contracts with Modesto, Turlock and PG&E are of "questionable legality." The grand jury's report was never publicized and disappeared into the bureaucracy.

In 1984, then-Mayor Dianne Feinstein concluded deals with the Modesto and Turlock irrigation districts, selling them Hetch Hetchy power through the year 2015 at close to cost. She was convinced to do this by Congressman Tony Coelho (who resigned under a cloud during the S&L crisis of the late 1980s), who had threatened to re-open the Raker Act scandal in a congressional committee, which could possibly lead to the Federal government seizing the dam and its power and revenue. Feinstein eventually concluded a deal (on extremely favorable terms for PG&E) to continue paying the private utility millions of dollars a year in "wheeling fees" to deliver power to SF residents, and wherein the utility continues to sell power to SF residents at inflated rates to provide guaranteed profits to its shareholders.

In 1988, just-elected Mayor Art Agnos was summoned to PG&E headquarters to meet with Chairman Dick Clarke and was told that PG&E controlled enough votes on the Board of Supervisors to block any attempts to void the deals it has forced on the city. Agnos faced a $20 million budget deficit, but never spoke publicly about the possibility of getting that money from PG&E or public power. Instead he slashed services and the budget, leading ultimately to his ouster in the next election by his former police chief, Frank Jordan.

In 1994, as the Army's Presidio base was about to be handed over to the National Park Service, a new scandal erupted when it was revealed by the Bay Guardian that PG&E had convinced the Park Service planners (influenced by the corporate-sponsored Presidio Council) to pay PG&E up to $11 million to take over the publicly-owned, albeit run down and obsolete, electrical distribution system on the Presidio, and then run it as part of their profitable monopoly utility business.

In 1996 a liberal Board of Supervisors established a select committee on Municipal public power, which in turn commissioned a feasibility study on the costs and benefits of municipalizing PG&E. Once again, PG&E managed to control the process, ensuring that a consultancy with long ties to the utility would conduct the test. Although the Bay Guardian and supporters managed to cast a cloud over the study, the Supervisors' committee itself was eliminated by the newly-elected president of the Board of Supervisors, Barbara Kaufmann, at the beginning of 1997. Again, San Francisco's legal responsibility to sell wholesale power to its citizens was derailed by the powerful manipulations of the largest privately owned utility in the U.S.