San Francisco's ambitious clean-power program moves toward approval
"We're not going to be able to [start building] unless we have the customer base to begin with," Campos pointed out. "I have a different perspective in terms of why it's important to move forward," he acknowledged, but said he was looking forward to a "healthy debate" at the board.
For all its complications, CleanPowerSF is a quintessential example of that progressive adage "think globally, act locally." In early November, the International Energy Agency issued a warning calling for dramatic changes in power generation. With so many coal-fired power plants under construction worldwide, the agency noted, the opportunity to avert the worst impacts of global climate change will have passed completely by 2017.
ULTRA GREEN, FOR A FEE
San Franciscans will be able to reduce personal energy usage and perhaps shed some consumer guilt by participating in the CCA program. Under the plan, Shell will purchase electricity from carbon-free sources and sell it to the SFPUC for distribution to CleanPowerSF customers. The shift will green the power mix on the grid while sending market signals that the demand for renewable power is on the rise.
At the start of the program, which the SFPUC pegs as July or August of 2012, up to 270,000 residential customers will be automatically enrolled. Targeted customers will also receive notices asking them to choose whether to stay with the program, or opt out and continue receiving power from PG&E.
Exact rates won't be hammered down until February or March of 2012, but preliminary estimates suggest most customers will pay roughly $7 a month more for the green power, though a few (those who use a lot of electricity) could wind up paying as much as $50 more.
The price tag could prove to be a tough sell, even in affluent San Francisco. "We've done extensive market research," explained Sheehan. "And we have taken into account PG&E's opposition campaign," an all-but-guaranteed response to the program which the utility giant unleashed in full force when neighboring Marin County undertook its own CCA.
Based on the research, "We are forecasting a two-thirds opt-out rate," Sheehan explained. Initially, this means only around 10 percent of San Francisco residents — a population likely limited to those in higher income brackets — are expected to enroll. From there, new rounds of enrollment and opt-out noticing would follow.
The draft contract includes a $19.5 million appropriation, which includes operating reserves plus a $15 million escrow account. That's the maximum payout Shell could receive if the city terminated the contract before the agreed-upon date and left the company stuck with unused power.
"It's one way of showing we have some skin in the game," Sheehan explained. Shell would only be eligible for $15 million at the start of the 4.5 year contract, he added, and even then it would only take effect if Shell was forced to sell the excess power at a lower price than it paid.
The Shell contract cannot go into effect until several steps have been accomplished. First, the board must give its stamp of approval for the contract and the $19.5 million appropriation. The SFPUC must then finalize program rates.
The SFPUC is also awaiting a ruling from the California Public Utilities Commission (CPUC) determining a bond amount required for all CCA programs. The bond is "kind of a mechanism to make PG&E whole, if in the very unlikely circumstance, this program would cease," and PG&E had to absorb all CCA customers immediately, Sheehan explained. He said a ruling is expected in February.
The plan to offer ultra green power at a higher price is a departure from the original program goals, which were to offer greener-than-average power at or below PG&E electricity rates. That concept was jettisoned after SFPUC staff determined the objective wouldn't pencil out in the short term.