SF’s city-run power program challenges state board’s decision to raise customer fees

The San Francisco Public Utilities Commission and other municipal power providers are challenging a controversial decision by state energy regulators to raise the fees customers pay when they switch from investor-owned utilities like Pacific Gas and Electric Co. to programs like CleanPowerSF.

Last month, the California Public Utilities Commission voted unanimously to tinker with an arcane but important formula that determines the size of so-called exit fees — permanent charges that show up on electricity bills of customers who enroll in government-run energy services.

After that decision, the SFPUC estimated that CleanPowerSF’s monthly costs could rise by around $5 per customer, but the agency stressed that cost predictions will remain highly uncertain until PG&E finalizes its rates next month.

However, the SFPUC, which runs CleanPowerSF, has said it will absorb the impact from the fee increase, so customers’ electric bills won’t actually rise as a result of the CPUC’s decision. But that still means the agency would be on the hook for an extra $11 million in exit-fee payments to PG&E between Jan. 1 and July 1 next year — unless, of course, the decision gets reversed.

Barbara Hale, SFPUC assistant general manager for power operations, said the agency believes regulators misapplied and overlooked portions of state law in ways that artificially inflate the exit fees for government-run energy programs.

The CPUC has until mid-February to decide whether it will grant the requests for another hearing. If the state board denies it, the SFPUC and other municipalities could take their case to court. Hale said the agency and its attorneys are waiting to make any decisions about taking legal action.

“Is it worth the investment? We’ll have to figure that out,” Hale said.

The CPUC did not respond to requests for comment Friday.

San Francisco’s utility agency contends that the added costs could seriously imperil its ability to grow CleanPowerSF over time. The agency is gradually enrolling the city in CleanPowerSF automatically, but customers can choose to opt out.

About 43 percent of the energy mix in the program’s baseline comes from renewable sources, and there’s also a 100 percent renewable option. A planned mass enrollment push next year aimed at signing up 280,000 new business and residential customers is still on track, despite the CPUC decision.

The fees that the CPUC voted to raise last month are meant to offset the costs that utility companies incurred to purchase long-term energy contracts and other investments. PG&E, for instance, has spent billions of dollars buying and generating renewable energy since the early 2000s.

As government-run programs like CleanPowerSF continue to mushroom across the state, PG&E and other utilities say the rate increases are essential to ensure that the costs of those prior investments don’t fall unfairly upon customers who choose to stay, or have no energy alternatives to turn to.

But the SFPUC — as well as CalCCA (CalCommunity Choice Aggregation), which lobbies on behalf of the state’s “community choice aggregation” local energy programs — contends that state regulators are mistakenly factoring costs into the fee formula that make PG&E’s and other utilities’ expenses seem greater than they really are.

“We have to say what they’re doing isn’t consistent with the law,” Hale said. The SFPUC made similar arguments prior to the regulators’ vote last month, so their petition for a rehearing could be a long shot.

“Many of us — members of the Legislature, mayors of large cities, environmental groups — we all asked the CPUC to take a more balanced approach, and the CPUC essentially ignored our concerns,” said state Sen. Scott Wiener, D-San Francisco, a longtime proponent of CleanPowerSF and similar programs.

Wiener said he and a “sizable group of senators and Assembly members” are in the early stages of discussions about a “legislative strategy” in 2019 aimed at ensuring that “CCAs can exist and function and grow and thrive.”

“I hope the CPUC takes this petition for a rehearing seriously,” he said.

Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa

SF’s city-run power program challenges state board’s decision to raise customer fees, by Dominic Fracassa, San Francisco Chronicle, November 23, 2018.

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