SFPUC details CCA plan, finance questions and risk triggers ahead of proposed 2012 launch

San Francisco Public Utilities Commission staff on Tuesday outlined next steps and financial assumptions for the city's proposed Community Choice Aggregation (CCA), emphasizing policy tradeoffs and several contingency triggers before any final contract would be signed.

Mike Campbell, director of the PUC's CCA program, said staff intends to phase the program to reduce risk, targeting an initial 75,000 customers (roughly 30 megawatts of average load) offering a 100 percent renewable product and aiming to launch in mid‑2012. "We're talking about mitigating some of the risk by phasing the program with an initial target of 75,000 customers," Campbell said.

Why it matters: the presentation set out how the first phase would be funded and what would happen if the program underperforms. Staff said the city would need an appropriation in the neighborhood of $19.5 million to start the 30 MW phase; of that amount about $15 million would be held in an escrow‑style account to reassure a wholesale counterparty (Shell) that the city could meet certain obligations. Campbell described the escrow as protection in the limited circumstance the program terminated because it could not cover liabilities: "That $15,000,000 out of the $19 would be put in an escrow type account."

Rates and scale: staff said indicative pricing rolled into pro forma models produces an average residential rate of roughly $0.11 per kilowatt‑hour (an estimated monthly premium of about $7 for many customers). Campbell summarized the range: "When we roll that into pro forma, we see that allows our average rate to generate our residential customers that we're offering it to would be at $0.11." Scaling the program down to a 20 MW initial phase (about 50,000 accounts) would modestly raise the estimated product price — staff estimated roughly 11.2 cents vs. 11.0 cents for the larger start — with fixed marketing and overhead effects largely absorbed as variable costs.

Outstanding fiscal constraints: CFO Todd Reistrom told commissioners the Hetch Hetchy (hedge) fund faces structural pressure and that, absent new revenue, the fund balance could be stressed in coming years. Reistrom illustrated tradeoffs: small rate increases (a one‑cent increase) would produce about $4.6 million annually; larger increases or bonding could be used to shore up capital but would be politically difficult.

Licensing and bond risk: the CPUC performance bond requirement remains unsettled and is being litigated at the CPUC. Staff said the final bond methodology could materially affect the program's required cash or security posting and recommended contingency triggers before authorizing a contract signing.

Public input and local build‑out: members of the public and advocacy groups urged accelerating a joint LAFCO–PUC meeting and prioritizing a local build‑out of renewable generation to improve the program's long‑term economics and create local jobs. One commenter pressed for a compressed timeline, arguing a local build‑out would help lower future costs and create employment, while others warned a higher monthly premium would be burdensome for low‑income customers.

Next steps: commissioners asked staff to pursue a joint meeting (LAFCO, PUC and Board of Supervisors), to brief the rate fairness board, and to continue negotiating the term sheet with Shell while maintaining clear triggers (affordable CPUC bond method, market price band, appropriation) before any general manager signature. The commission agreed to pursue an October meeting window and asked staff to prepare further financial detail for subsequent decisions.

The commission did not take a final authorization to sign a CCA supply contract at this meeting; staff said any authorization would include specific triggers and would return for further PUC action once the outstanding bond and price questions were resolved.