PUC approves changes to Clean Power SF rates and authorizes $150 million credit facility

The San Francisco Public Utilities Commission on a unanimous vote approved a package of changes to its Clean Power SF program that trims super-green premiums, simplifies net energy metering compensation and authorizes staff to finalize a major credit facility to support citywide expansion.

Barbara Hale, assistant general manager for Power, told commissioners the program is serving about 80,500 customer sites, with a 3.2 percent opt-out rate and about 4.1 percent of customers enrolled in the voluntary “super green” 100 percent renewable option. Hale said Clean Power SF is closing its wait list and preparing for a small enrollment in April and a large, citywide enrollment in July.

“The delegated authority that's described in that ordinance would include annual expenditure limitations and conditions imposed by the commission on the general manager,” Hale said of an ordinance before the Board of Supervisors that would give the commission limited authority to enter supply contracts; she said the ordinance was at the board for its second reading.

The commission approved programmatic changes to net energy metering intended to reduce administrative complexity. Hale said the utility will move to a single compensation rate for customers who export surplus solar energy: “We’re proposing to use just one compensation rate…which would be the average super green rate for all of the annual surplus energy.” She also said the default payment method for annual net-surplus compensation will change from a mailed check to a bill credit, with a check option retained on request, and that credit balances for new customers with less than 10 months of prior participation will be rolled forward for up to 10 months when they transition into Clean Power SF.

Deputy CFO Charles Pearl outlined the intra-year rate changes tied to that administrative update and to competition from utility programs. Pearl said the commission will reduce the residential super-green premium from 2 cents to 1.5 cents per kilowatt-hour and the commercial super-green premium from 1.4 cents to 1 cent, effective March 1. He estimated the annualized value of the change at roughly $137,000 and said program reserves are sufficient to cover the reduction.

Commissioners asked how the program would absorb the revenue reduction and how Clean Power SF will remain competitive with PG&E’s Solar Choice product. Pearl and Hale replied that the program has reserves to cover the near-term effect and that staff will fold these changes into the broader fiscal-year rate package to be reviewed during the budget process. Hale emphasized the program’s stated selling points beyond price: local reinvestment and customer responsiveness.

Public comment came from Jed Holtzman of 350 Bay Area, who said he supported the proposal but urged faster citywide roll-in of customers and accelerated local generation to reduce market exposure: “We really need that credit rating because the power enterprise doesn't wanna take the wait,” Holtzman said, urging the commission to press the CPUC and state legislature for favorable rules and to accelerate local build-out.

Votes at a glance - Item 10: Approved revised super-green rate premiums and proposed net energy metering modifications to take effect March 1, 2018 (motion carried). - Item 11: Approved the form of a credit agreement with JPMorgan Chase Bank (not to exceed $150,000,000) and authorized the general manager to negotiate and execute final terms, subject to Board of Supervisors approval (motion carried).

Credit facility details and commission concerns CFO Eric Sandler described the credit facility as a nonrecourse instrument to Clean Power SF revenues intended to provide letters of credit and working capital during program rollout. Staff presented a not-to-exceed facility amount of $150 million with a term described in discussion as three to five years. Sandler highlighted covenants in the proposed agreement: a rate-setting covenant tied to a 1.1 debt-service-coverage target (noting commission policy is 1.35), a default threshold at 1.05, and reserve targets that build on Clean Power SF business-practice policies (operating reserve of 90 days of expenses and a 15 percent rate-stabilization reserve). The agreement would dedicate a portion of excess revenues toward meeting reserve targets and includes scheduled tests in 2021–2022.

Commissioners asked whether the agreement or the related charter amendment for power bond authority would affect the program’s ability to finance local distribution or generation. Staff clarified that Clean Power SF has authority to issue revenue bonds for clean generation projects but currently lacks a credit rating; the proposed power charter amendment discussed elsewhere would broaden the power enterprise’s bonding authority to support distribution and other new facilities. Sandler said operating within the proposed covenants would help position Clean Power SF to seek a credit rating but provided no firm timeline.

What happens next The commission approved the rate and program changes and authorized staff to finalize the credit agreement. Staff will present related supply-contract authorizations and a portfolio assessment in a future meeting (staff cited February 13 and upcoming budget sessions); the credit agreement is subject to final negotiation and Board of Supervisors approval before execution. Public advocates urged the commission to consider how reserve requirements and covenant terms might affect the timeline for local-build investments and recommended further discussion of those trade-offs.