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PG&E fee hike to cost CleanPowerSF $20M in one year, ‘slow down’ renewable energy projects

A fee hike from PG&E will cost San Francisco’s renewable energy program an additional $20 million over the next year and “slow down” construction of local green energy projects.

The impacts to CleanPowerSF, a community choice aggregation program allowed under state law, comes after the the California Public Utilities Commission voted last month to allow PG & E to increase the fee it charges their customers who leave to enroll in the renewable energy program.

To offset the fee increase and ensure existing and future CleanPowerSF customers have bills that “meet or beat” what PG&E charges, the San Francisco Public Utilities Commission plans to use the program’s reserve funds to provide a credit.

Barbara Hale, the San Francisco’s Public Utilities Commission’s assistant general manager for power, told the San Francisco Examiner that plan will cost $20 million over the next 12 months, beginning in January.

There are other impacts.

One of the hopes in launching CleanPowerSF was that it would help fund the construction of renewable energy projects within San Francisco, creating jobs and boost assets producing green energy.

Hale warned that the credit means “we won’t have as much money to do the more local creative build like we’ve been talking about.”

“We’re going to have to slow that down,” Hale said.

Hale will present a more detailed financing plan to offset the costs and the impacts it will have on CleanPowerSF to the SPFUC on Dec. 11. The program’s current budget is $155 million. The exact PG&E exit fee and generation rates won’t be known until January.

Despite the fee increase and impact to the program, the agency still intends to enroll 280,000 mostly residential accounts in April 2019.

The program, which provides energy from 43 percent renewable sources, currently serves 109,000 accounts since it launched in 2016 and has had an opt-out rate of 3.2 percent. That’s about 30 percent of electricity accounts citywide, comprising an average demand of 230 megawatts.

About 4,800 businesses and households have chosen to pay a higher rate to obtained the program’s 100 percent renewable energy service called SuperGreen. PG&E’s electricity comes from 33 percent renewable energy sources.

With April’s enrollment, CleanPowerSF is expected to expand to around 365,000 accounts with an average demand of 340 to 350 megawatts.

The City will continue to discuss the program with several larger commercial accounts such as server farms, in an effort to interest them in the program.

On Friday, the San Francisco Local Agency Formation Commission, on which members of the Board of Supervisors sit, will hear a briefing on ClearPowerSF.

Meanwhile, San Francisco and a group of other municipalities have filed an appeal with the CPUC seeking to overturn its decision.

Among the arguments made in the appeal of CPUC’s decision on the exit fee, known as the Power Charge Indifference Adjustment (PCIA), is that PG&E should have planned ahead and avoided cost impacts of departing customers. The fee is meant to cover the impacts on utilities like PG&E that have invested in the procurement of energy for customers.

“The utilities have, from the outset of CCA formation, continued to procure on behalf of CCA customers until the last possible moment such customers remain with bundled service, even when the utilities know or should have known that such customers were soon departing,” the appeal said, “The result is costs that could have been avoided and that cannot be attributed to CCA departing load.”

The CPUC has 90-days to decide whether to act, otherwise the vote stands. Afterwards, San Francisco could file a lawsuit.

 

PG&E fee hike to cost CleanPowerSF $20M in one year, ‘slow down’ renewable energy projects, by Joshua Sabatini, The San Francisco Examiner, November 27, 2018.

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.

SF to Expand CleanPowerSF Energy Load amid Strong Customer Demand

San Francisco plans to expand its renewable energy supply after more customers than expected chose the new power service over PG&E.

After being entangled in politics and the energy monopoly’s opposition for more than a decade, CleanPowerSF began serving its first customers 14 weeks ago.

City officials say the program has the lowest opt-out rate of any other community choice aggregation formed in the state. Longtime staunch supporters who long argued there was a demand for the program say it is the single most important effort The City can undertake to combat climate change.

To date, there are 7,400 customers enrolled in CleanPowerSF, of which 400 are residential properites.

The first auto-enrollments were in May. The next ones are expected in the fall for those in Districts 5 and 8, with notice to go out this month pending the expected approval of a contract with a renewable energy project.

The opt-out rate is so low that The City faced a choice of either scaling back the planned phase one enrollment plan this fall or increasing the program’s megawatts. Initially, the plan was to auto-enroll customers in May for 30 megawatts and then in the fall for 20 megawatts.

But if the agency stuck with that plan, it would exceed 50 megawatts. So last week, the San Francisco Public Utilities Commission was asked to approve increasing the megawatts from 50 to 75. The commission unanimously approved the increase and enrollment will proceed as initially planned.

The agency had projected a 20 percent opt-out rate. But as of Tuesday that opt-out rate was 1.8 percent, according to Barbara Hale, assistant general manager of the SFPUC’s power enterprise.

“There’s been a lot of interest in the program launching. Now that we are actually underway, we are seeing customers stay committed to it,” Hale told members of the Board of Supervisors during a Friday public meeting.

Customers are auto-enrolled to receive energy with a 35 percent renewable energy mix, greater than the 29 percent offered by PG&E. For a fee, customers can opt to receive 100 percent renewable energy under CleanPowerSF.

Customers can also voluntarily enroll. Hale said that as the program enters the second enrollment period, 633 power customers had voluntarily signed up to join the program by the Aug. 1 deadline.

Some program supporters didn’t want the agency to cap the megawatts at 75, but instead have the staff move as expeditiously as possible to expand it citywide — similar to planned rollouts of other such efforts.

Silicon Valley, for example, plans to launch a program in April 2017 and phase it in by October 2017.

Instead, agency officials said a “growth plan” on how to roll out the program citywide will be presented to the commission by the end of the year.

Harlan Kelly, general manager of the SFPUC, defended the pace of the roll out.

“If we go out to purchase power, and it’s so expensive, we have to take a pause,” Kelly told the commission last week. “We have to be measured, instead of just trying to roll it out just to roll it out. We made a promise that we will try to make this affordable.”

Hale said that on Sept. 13 the
commission will discuss how Go Solar, a solar installation incentive program, may be integrated into the program.

Currently, the renewable energy portfolio is derived from agency contracts with wind farms. Also being used is hydropower from Hetch Hetchy and natural gas.