Ordinance grants the SF Public Utilities Commission the first right of refusal to provide clean, hydroelectric Hetch Hetchy power to new public and private developments, which will increase clean energy distribution and allow for enhanced infrastructure investment for the nearly $900 million in capital needs
San Francisco, CA - Today the Board of Supervisors unanimously approved Supervisor Wiener's legislation to increase the electric customer base for San Francisco's Public Utilities Commission by granting the PUC the right of first refusal to provide hydroelectric, greenhouse gas free power to private developments. An expanded PUC customer base will bring more clean hydroelectric power to San Francisco residents and businesses and generate significantly more revenue to fund neglected infrastructure and capital needs, including the city's streetlight system and the system that brings hydroelectric power from Hetch Hetchy to San Francisco.
The legislation is co-sponsored by Supervisor London Breed, and has been endorsed by the San Francisco League of Conservation Voters and the San Francisco Sierra Club. The Land Use and Economic Development Committee unanimously approved the legislation on Monday.
The legislation will grant the PUC's Power Enterprise - which currently delivers hydroelectric power to municipal agencies such as Muni, San Francisco International Airport, fire and police stations, libraries, and San Francisco General Hospital - the first right of refusal to sell power, at retail, to new public and private projects, including any new City developments, redevelopment projects, projects on public land or funded by public funds, and, for the first time, new private development projects seeking City approvals.
"This legislation is an important step toward a more sustainable future for San Francisco," said Supervisor Wiener. "Now the PUC can provide Hetch Hetchy clean power - which is 100% greenhouse gas free - to more San Franciscans, allowing us to expand our use of clean power, while also generating more revenue for streetlights and other infrastructure needs. What we achieved today is a win for our environment and our city."
"The Sierra Club applauds this legislation to strengthen San Francisco's public power system," said John Rizzo, Political Chair of the San Francisco Sierra Club. "Expanding the use of Hetch Hetchy power achieves one of the Sierra Club's top priorities of promoting clean, renewable energy for a more sustainable community."
This expansion of the PUC's power customer base will lead to more clean energy use and much-needed revenues to fund key infrastructure needs. Currently, the PUC Power Enterprise does not have a large enough retail customer base to generate resources to maintain its infrastructure, including streetlights. The PUC currently sells its Hetch Hetchy hydroelectric power at a subsidized rate to municipal departments and then sells the significant remaining generated power on the wholesale market outside of San Francisco.
By contrast, Supervisor Wiener and Breed's legislation will allow the PUC Power Enterprise to sell its clean energy to San Francisco retail customers, instead of on the wholesale market. Because retail power rates are 3-4 times higher than wholesale rates, the PUC will earn significantly higher revenue. For every 10 megawatts of new customers the PUC serves, net revenues increase by $4 million. So, for example, if the Power Enterprise were to expand its retail service by 100 megawatts, that would increase revenues by $40 million. Given the significant development occurring in San Francisco, 100 megawatts is attainable. The Transbay Transit Center alone - a governmental retail power customer that recently agreed to purchase its power from the PUC - will purchase between 4 and 8 megawatts per year, generating revenue between $1.6 million and $3.2 million annually for the PUC.
This additional revenue will help address the PUC's $882 million in capital needs. This need includes both up-country infrastructure, like Mountain Tunnel ($627 million in capital needs), and in-city infrastructure, like streetlights (over $160 million in capital needs, including LED conversion.) For years, PUC has been spending around $250,000 a year to maintain its 25,000 streetlights. The general unit cost to replace or install a new street light is $30,000, and the cost to replace or install streets lights on one block (about six lights) is $180,000. Under pressure from Supervisor Wiener, the agency recently increased that amount for the coming fiscal year, but the investment is still inadequate to ensure a fully functional and reliable system.
For nearly a century, the PUC has provided 100% clean power and other electric services to City Departments at low rates that save the General Fund up to $50 million per year over PG&E rates. Recently, the PUC has added new customers, including the Transbay Transit Center and Hunters Point Shipyard. The PUC's rates are similar to or lower than PG&E's rates. This legislation will accelerate the PUC's effort to add customers and address its infrastructure needs.
The legislation will also further the City's statutory goal of having a greenhouse-gas-free electric system by 2030. Hetch Hetchy Power is 100% greenhouse gas free, and by selling that power to more San Francisco customers, we will move closer to that goal. As the PUC diverts it's hydroelectric power away from the wholesale market toward San Francisco retail customers, wholesale purchasers will have to find other sources of clean energy to meet clean energy mandates, thus stimulating the production of more clean energy to meet that demand.