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Committee backs PUC proposal to create $90 million commercial paper facility for power enterprise
Summary
The Budget & Finance Committee forwarded a resolution authorizing the Public Utilities Commission to establish a commercial paper program for the power enterprise (up to $90 million for power; program features Bank of America backstop and dealer agreements), citing near‑term capital needs of about $70 million and an estimated all‑in borrowing rate near 1%.
The Budget & Finance Committee on Nov. 4 reviewed and forwarded to the full Board a resolution to authorize a new commercial paper program within the San Francisco Public Utilities Commission’s power enterprise. Charles Pearl, deputy chief financial officer, told the committee the program is intended to provide short‑term, bridge financing between larger revenue bond sales and would support capital projects for generation, transmission and distribution in the city’s retail electric service areas. He said the power enterprise has identified about $750 million in power‑related capital needs overall and an approximate $70 million need in the current fiscal year; the authorization sought for the power commercial paper facility is $90 million.
Pearl explained the structure includes a bank facility to backstop the paper and dealer agreements for market placement; Bank of America was selected as the most responsible bidder in the bank RFP. He told supervisors that the department expects a low all‑in borrowing cost, currently just under 1%, and noted estimated fees and 3‑year terms for agreements with one‑year extension options. Mr. Rose’s office reviewed the report and recommended approval, observing that although the draft resolution allowed interest up to 12%, the expected borrowing cost would be roughly 1% all‑in.
Supervisor Katie Tang moved to forward the authorization to the full Board with a positive recommendation; the motion was taken without objection.
Quote from hearing: “What this item does is it creates a third program within the PUC to finance our capital projects in between our larger revenue bond sales,” Charles Pearl said, summarizing the purpose of the commercial paper authorization.
Next steps: The committee forwarded the resolution to the full Board for consideration on the Nov. 17 agenda.
