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LAFCO hears Clean Power SF update; CPUC'9s PCIA ruling could raise costs for customers
Summary
San Francisco LAFCO received a Clean Power SF enrollment and outreach briefing and an update on an October CPUC decision affecting the PCIA exit fee. Staff estimated the decision could cost Clean Power SF customers an additional $40—50 million a year if unmitigated and outlined legal and portfolio options.
San Francisco Local Agency Formation Commission received an update on Clean Power SF on Oct. 19, 2018, including enrollment, outreach and regulatory developments after an Oct. 11 California Public Utilities Commission decision on the power charge indifference adjustment (PCIA).
Michael Himes, director of Clean Power SF at the San Francisco Public Utilities Commission, said October'9s enrollment added roughly 1,600 customers and the program now serves about 109,000 accounts with a cumulative opt-out rate of 3.1% and a "super green" upgrade rate of 3.6% (about 3,800 customers). Himes told commissioners the CPUC voted unanimously to adopt an alternate PCIA methodology and "we estimate that existing Clean Power SF customers could pay $40 to $50,000,000 more per year" if no mitigation is taken.
The PCIA is a fee that appears on Community Choice Aggregation customers'9 bills to recover above-market costs of generation commitments PG&E entered into before customers switched to CCAs. Himes said the CPUC decision adopted a methodological change and that rates will be set later in a separate proceeding, with an update to rates expected in early November.
Why it matters: Himes warned that, in a worst-case scenario, the decision could increase program costs materially (he said the estimate equates to roughly 25% of Clean Power SF'9s forecasted revenue for the next fiscal year) and could force the program to consider delaying planned residential enrollment or changing its power-supply strategy.
What staff proposed and the next steps: Himes said all mitigation options were on the table. Those included seeking rehearing at the CPUC (an application for rehearing is due within 30 calendar days of the decision), pursuing litigation or legislative remedies over the longer term, and near-term cost-mitigation measures such as altering the power-supply portfolio toward lower-cost product categories (including more category-2 or category-3 renewable products or short-term hydro purchases) or pausing increases to renewable content to limit near-term expense. He also said the PCIA proceeding has a phase 2 that could examine securitization or market mechanisms to improve transparency and allocation of costs.
Commissioners pressed staff on timing and options. Himes said a final operational decision on whether to proceed with the planned April 2019 residential enrollment must be made by early January because of regulatory notice and operational lead times; he said the November rate update could change the outlook and that Clean Power SF would coordinate with CalCCA partners on recourse options.
Public reaction and context: Commissioners expressed concern and asked whether changes would take effect while litigation or rehearing proceedings are pending; Himes said he believed the rate changes would go into effect unless a court or CPUC ordered an injunction and pledged to confirm the implementation timing. Himes emphasized uncertainty in the short term but reiterated that staff would focus on options within their control, including procurement and enrollment-scope choices.
The commission took no formal action on the PCIA update; staff said they would return with additional analysis as rate forecasts and regulatory steps evolve.
