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PUC outlines settlement with PG&E that the city says will cut annual charges by about $4 million; committee to finish legal questions in closed session
Summary
The San Francisco Public Utilities Commission told the Budget & Finance Committee a proposed amended interconnection agreement with PG&E would cap distribution charges, remove certain withdrawal fees and enact AB 2573 implementation language. The item was continued to closed session for legal and negotiation details.
The San Francisco Public Utilities Commission on Tuesday told the Budget and Finance Committee that a proposed settlement with Pacific Gas and Electric Company would reduce the city's annual interconnection charges from "a little over $16,000,000" to about $12,000,000, roughly $4 million in annual savings.
Barbara Hale, assistant general manager for power at the PUC, said the amended interconnection agreement replaces a 1987 contract and secures several protections for the city: a fixed distribution-rate component that increases by no more than 3% per year; elimination of certain withdrawal charges related to the city's energy "bank"; implementing language for AB 2573 to allow renewable power generated at one city facility to be credited against another; and a dispute-resolution process that requires staff-level and executive-level negotiation before arbitration.
Hale said the agreement preserves the city's right to pursue community choice aggregation and does not automatically terminate the interconnection agreement should the city seek full municipalization. She told the committee the settlement reduces litigation risk and improves certainty around distribution and transmission costs.
Committee members pressed the PUC about negotiation tradeoffs and what the city failed to obtain; Hale said the PUC sought broader municipal-load definitions and expanded transmission rights but PG&E would not agree to those terms. She added the city’s countersuit at the Federal Energy Regulatory Commission contributed leverage during talks.
Hale outlined operational implications: the agreement caps the amount of energy the city can bank, which limits PG&E's exposure but requires the city to be more selective about when it banks versus sells power in the CAISO market. She said the power enterprise will assess budget and staffing needs to manage more active scheduling and market participation, and noted the agreement runs through 2015, after which the city must plan for replacement services currently provided by PG&E.
Chair Supervisor Aaron Peskin said some negotiation and legal-strategy details should be discussed in closed session because they could affect litigation and settlement strategy. The committee heard the PUC’s open-session overview and then agreed to continue the item one week and consider it in closed session for additional questions.
