Clean Energy Capital

News

CleanPowerSF tripling households served with municipal electricity

San Francisco Chronicle released the following article on February 14, 2019.

1.png
 

CleanPowerSF tripling households served with municipal electricity

SAN FRANCISCO -- More than 250,000 San Francisco homes and businesses are about to become customers of CleanPowerSF, the municipal electricity program operated by the San Francisco Public Utilities Commission.

In preparation for what will be the largest enrollment effort in the program’s history, the SFPUC began notifying residents and merchants this week that, by the spring, they’ll be receiving city-sourced electricity.

The SFPUC has been automatically switching portions of the city into CleanPowerSF since 2016, and the agency has about 111,000 customers. In the coming months, the SFPUC expects to more than triple that number, with a projected enrollment of 360,000 dwellings by the end of April. Just over 3 percent of customers opt out of the program, according to the SFPUC, electing to keep Pacific Gas & Electric Co. as their power provider.

Combined with the SFPUC’s Hetch Hetchy Power program, which uses greenhouse-gas-free energy primarily to power Muni vehicles and all the city-owned government buildings, the agency will be serving roughly 80 percent of San Francisco’s electricity demand by the end of April.

“This is a big deal,” said Barbara Hale, SFPUC assistant general manager in charge of power. “We’re in every neighborhood, every block of the city, serving CleanPowerSF power.”

In the coming months, CleanPowerSF’s expansion will overlap with deliberations that could shape the direction of the city’s energy future.

After PG&E’s bankruptcy seemed inevitable because of liabilities related to wildfires, Mayor London Breed instructed the SFPUC to start planning the city’s response to the utility’s insolvency and ensure that electricity flowed uninterrupted. One major part of that was determining whether the city could afford to buy PG&E’s infrastructure, which would allow San Francisco to have greater control over its energy needs.

“The success of our CleanPowerSF program shows the city knows how to deliver renewable energy for San Franciscans, and acquiring more assets to deliver that clean energy is a priority,” Breed said. “If there is an opportunity, we will take it.”

While CleanPowerSF procures the electricity, the program still relies on PG&E to distribute it, handle billing and address outages.

Hale said the SFPUC is crunching the numbers on whether it makes financial sense over the long-term to buy PG&E’s equipment — like underground transformers, and transmission lines and substations — and take over billing customers. The agency is also considering what kind of workforce it might need to hire if it became a fully independent electrical utility.

“We think about it as scaling up the services we already provide,” Hale said. “The meta-question we’re asking ourselves is: Can we provide reliable, safe, affordable electricity services ... and meet our financial metrics?”

San Franciscans pay an estimated $300 million annually for electricity services like transmission and distribution. That’s money that, if the SFPUC became fully independent, the city could invest in improving and building out its electrical system and toward meeting its clean-energy goals.

In addition to determining how much of the utility’s assets it could acquire, the SFPUC is also putting a price tag on repair and upkeep costs, as well as the costs of physically separating the assets it buys from the rest of PG&E’s distribution network.

“It’s a giant math equation,” Hale said.

Acquiring assets from PG&E would likely cost billions of dollars. But San Francisco voters approved a potential funding source in June when they passed Proposition A, a measure that allows the SFPUC to sell bonds to pay for clean-energy infrastructure, with the approval of the Board of Supervisors. Several board members, including Supervisors Hillary Ronen and Sandra Lee Fewer, have expressed interest in exploring what Ronen has called a “complete divorce” from PG&E.

For the SFPUC, fleshing out its role as an electrical utility provider would also mean maintaining infrastructure it wasn’t previously responsible for, said Frank Wolak, a Stanford economics professor who directs the university’s Program on Energy and Sustainable Development. The city would also likely be responsible for responding to power outages and other customer-service tasks it currently doesn’t address.

“You would literally have to hire trucks, workers, all of that, to be responsive when there are outages or repairs that have to be done — everything,” Wolak said. “More likely what would happen is ... the city would contract with PG&E to do those sorts of things.”

And just because the city might be prepared to buy the assets doesn’t mean PG&E will be ready to sell. Much of PG&E’s financial future is now in the hands of the bankruptcy court, which makes it hard to say whether the company would be in a position to shed assets.

“PG&E regularly evaluates the way the company is structured — strategically, operationally and financially — so that we are best positioned to operate efficiently and to provide safe and reliable service to our customers,” a PG&E spokesman said in an email.

Hale said the utility has signaled a willingness to hear offers, “and I think it’s fair to say that if SFPUC brings a credible offer to PG&E and their shareholders and their board, they’ll give it careful consideration.”

About San Francisco Public Utilities Commission

San Francisco Public Utilities Commission provides retail drinking water & wastewater services to the City of San Francisco, wholesale water to three Bay Area counties, green hydroelectric & solar power to Hetch Hetchy electricity customers, and power to the residents & businesses of San Francisco through the CleanPowerSF program. Its mission is to provide our customers with high quality, efficient and reliable water, power, and sewer services in a manner that is inclusive of environmental and community interests, and that sustains the resources entrusted to its care.

About CleanPowerSF

CleanPowerSF is San Francisco's Community Choice Aggregation (CCA) program. CleanPowerSF is a not-for-profit program operated by the San Francisco Public Utilities Commission (SFPUC) that works in partnership with PG&E to deliver cleaner energy to residents and businesses. CleanPowerSF purchases clean and renewable energy on behalf of its customers, which is then delivered through PG&E’s poles and wires. CleanPowerSF empowers San Francisco energy customers to reduce their carbon footprint while supporting local jobs, stable energy prices and new clean energy infrastructure.

----

Clean Energy Capital serves as Financial Advisor to San Francisco Public Utilities Commission.

David Moore