By Matthew Hirsch

A proposal for San Francisco to compete with Pacific Gas and Electric Co. and provide local electric service won a key recommendation from the Local Agency Formation Commission (LAFCo) May 13.

The vote came as Mayor Gavin Newsom expressed strong interest in the plan. It now goes to the Board of Supervisors.

Under the plan, called community-choice aggregation (CCA), the city would buy wholesale electricity and sell it over PG&E's distribution system to San Francisco residents and businesses. That would give the city more control over the cost and reliability of electric service and more say over how much renewable energy is included in the city's mix.

The Local Agency Formation Commission gave the nod to citizen activist Paul Fenn's CCA proposal after weighing separate reports from Fenn and the San Francisco Public Utilities Commission. LAFCo chair and city supervisor Ross Mirkarimi, who for weeks had been trying to merge the two reports, blasted the SFPUC for leaving out specific details about how to achieve energy goals the supervisors have already settled on, such as aggressive development of solar and wind power.

"The proposal that you put forward I look at as not a plan but a study, and I feel like you're now asking the Board of Supervisors to fill in the blanks on the study," Mirkarimi told SFPUC energy chief Barbara Hale.

And in a May 10 letter to SFPUC general manager Susan Leal, Newsom also indicated that the SFPUC appears to be striding too slowly on CCA. He asked Leal for "an expedited analysis of CCA by the SFPUC."

"I urge that this analysis be completed in a timely manner, and if CCA is determined to be a fiscally responsible, consumer-oriented policy, I urge that it be implemented," Newsom wrote.

Before voting on Fenn's plan, LAFCo added a series of amendments to address issues raised by the SFPUC. The amendments include commitments to use long-term savings from CCA to offset the start-up costs, to limit the solar-building requirement if too many customers stay with PG&E, and to switch over to full-blown public power if it's approved by the voters.

With those assurances, Sups. Tom Ammiano, Jake McGoldrick, and Mirkarimi voted to move CCA forward with a positive recommendation. LAFCo commissioner Hope Schmeltzer voted no.

But the split was more over the level of urgency than anybody's desire to abandon the move toward CCA. Schmeltzer said she was concerned about the financial risk of filing a plan with the California Public Utilities Commission (CPUC) without a guarantee that the city can procure power from an entity other than PG&E.

That was one of the issues raised by Hale, who said filing a CCA plan doesn't guarantee lower exit fees, especially because PG&E, thanks to CCA, is already planning to buy less power.

The exit fees are charges CCA customers will have to pay when they leave PG&E service, to offset the cost of power PG&E already purchased for those customers. The exit fees, which are set by the CPUC, are expected to increase as soon as PG&E signs new long-term energy contracts.

It's unclear exactly when PG&E will sign those contracts, but activists hope the city will have its CCA plan in place before then so it's not assessed higher exit fees. Higher exit fees could ruin CCA: if enough customers opt out of CCA service to stick with PG&E, energy costs would go up for everybody else.

"I don't want to sabotage this plan [and] make it less sellable simply because we think the longer we wait, the more polished of a plan we get," Mirkarimi said. "Why wait if we can move something in now? My concern is [that by waiting], we are gambling with a higher cost that makes community-choice aggregation very untenable."

The next LAFCo hearing, including a discussion of the PG&E franchise fee, which was held over from the May 13 meeting, is scheduled for June 10, and as of press time the Board of Supervisors had not yet scheduled a hearing for community-choice aggregation.

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