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SFPUC describes $19 million launch plan and liability trade-offs for Clean Power SF CCA
Summary
SFPUC staff told the San Francisco LAFCO that launching Clean Power SF would require roughly $19 million in reserves and termination-security funds, including a $15 million make-whole escrow for a Shell Energy contract; staff warned the city's liability could be uncapped if it chose to terminate a healthy program.
San Francisco Local Agency Formation Commission Chair David Campos on Sept. 23 heard an SFPUC presentation laying out financial terms and risks tied to launching Clean Power SF, the city's planned Community Choice Aggregation program.
Barbara Hale, assistant general manager for power at the San Francisco Public Utilities Commission, said SFPUC negotiators have reached agreement in principle with Shell Energy North America on a termination-payment concept and estimated an initial appropriation of about $19,000,000 to launch the program. That total includes a proposed $15,000,000 escrow intended as a make-whole security to cover Shell's unrecoverable losses if the city defaulted and the contract were terminated within the early years of the deal, plus roughly $4,000,000 of additional reserves to mitigate program risk.
Hale emphasized how the financial exposure depends on circumstances: if the program's business model fails and Shell cannot resell obligated power, the escrow would cap city liability at about $15,000,000; but if the program is…
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