In 2001, the City of Hercules, California, a community of approximately 24,000 people located about 20 miles east of San Francisco, established the Hercules Municipal Utility (HUM). The newly formed utility sought to buy wholesale power to sell it to Hercules customers at a rate below those offered by Pacific Gas and Electric Company (PG&E), while also generating incremental revenue for the city. When the strategy did not work out as planned for either HMU or its customers, the city decided that the only viable option going forward was to sell the utility.
DWT began representing the City in late 2012 assisting in the solicitation for bids. The City needed to attract a sufficiently high sales price to avoid facing a likely default and bankruptcy filing. In January 2013, PG&E offered to purchase HMU for $9.5 million – just enough for the City of Hercules to complete the transaction. The City and PG&E negotiated for several months, executing an asset purchase agreement in May 2013.
In addition to helping the City of Hercules, DWT has assisted clients with closing the asset sale transactions and acquiring regulatory approvals for both of the other two sales of California energy utilities that have occurred in the last five years within California.