SFPUC approves Clean Power SF launch steps amid worries over PG&E exit fee

The San Francisco Public Utilities Commission voted to advance key steps for Clean Power SF, a city‑run community choice aggregation program, while warning that a proposed increase in PG&E’s Power Charge Indifference Adjustment (PCIA) could erode early program margins.

Staff said the business plan remained intact so long as Clean Power SF can offer generation rates at or below PG&E’s; if the California Public Utilities Commission adopts PG&E’s proposed PCIA increase on Dec. 17, the program would lose an estimated $8.4 million in revenues over its first five years and would require adjustments to reserves or phasing. ‘‘If we can’t deliver the program equal or less than PG&E, we will have to pause,’’ told the Commission (staff presentation).

The Commission approved a package of actions including (a) a resolution urging the CPUC to reject PG&E’s proposed PCIA increase, (b) amendments to business practices and phasing policy reducing an introductory marketing discount to 0.25 percent, (c) authorization for an additional $4 million working‑capital loan to support launch, and (d) approval of a standby letter of credit and associated agreements with JPMorgan Chase to backstop power‑purchase contracts.

Staff described the LOC as a standard credit enhancement: RFP responses indicated a not‑to‑exceed credit facility then modeled at $40 million, although current contracting assumptions produce a lower modeled termination exposure near $23–25 million. If a counterparty were to draw the LOC for an early termination, the bank’s payment would convert to a seven‑year term loan repaid at the Power Enterprise’s lowest lien priority. Eric Sandler (Assistant General Manager of Business Services) summarized the stress test: under a conservative, no‑mitigation scenario the Power Enterprise’s fund balance would decline but debt‑service tests would still hold; staff presented a menu of mitigations including using reserves, deferring capital projects, refinancing, or modest rate adjustments.

Staff also reported a supplier price refresh that reduced projected supply costs, partially offsetting the PCIA risk, and asked the Commission to permit slower funding of a rate‑stabilization reserve so the program could move forward while preserving operating reserves.

Public commenters from environmental and community groups urged the Commission to approve the package and to press the CPUC and state legislators on PCIA methodology. Jed Holtzman of 3.50 Bay Area called the PCIA “essentially corporate welfare,” urging the city to resist the increase. Several speakers emphasized the program’s potential climate benefits and urged launch momentum.

The Commission adopted the staff‑proposed resolutions and related agreements for Items 18–21, with the adopted rate redline calling for a 0.25 percent discount relative to comparable PG&E generation rates as the initial marketing differential. The actions authorize staff to finalize supply confirmations and proceed with program launch tests in January, subject to the January PG&E rate and PCIA filings and the program’s financial tests.

The Commission directed staff to continue outreach to state regulators and legislators on the PCIA calculation and to return with any additional recommended legislative measures if needed. The Commission also asked staff to provide the stress‑test analysis and to continue refining contract terms (including termination caps and collateral arrangements).