$25 million plan to keep CleanPowerSF bills stable

The San Francisco Public Utilities Commission is moving ahead with a plan to absorb an estimated $25 million in added fees that would otherwise fall on the agency’s CleanPowerSF energy customers next year.

On Tuesday, the commission unanimously approved a proposal to offset the fees with an automatic subsidy, protecting CleanPowerSF’s roughly 115,000 residential and commercial customers from higher energy bills.

Since October, SFPUC officials had vowed to shield CleanPowerSF’s customers from potential rate increases. That’s when energy regulators at the California Public Utilities Commission handed down a controversial decision to raise the so-called “exit fees” that customers pay when they switch from investor-owned utilities like Pacific Gas and Electric Co. to government-run power programs like CleanPowerSF.

The SFPUC is automatically enrolling large portions of San Francisco in CleanPowerSF, though customers can opt out of the program and choose to stay with PG&E. Just over 3 percent of customers have elected to do so since the program began enrolling customers in 2016, according to the agency’s data. The SFPUC is still on track to enroll an additional 280,000 accounts next April.

Absorbing the increased fees represents one way for CleanPowerSF to stay competitive with PG&E’s electricity rates, creating an incentive for customers to utilize the program’s greener energy mix. But over time, SFPUC officials have expressed concern that the added fees will slow the agency’s ability to invest in more job-creating green energy projects in San Francisco, which CleanPowerSF’s revenues were intended to help fund.

Without the SFPUC’s subsidies, the average residential customer’s energy bill would rise by around 4 percent. Costs would be substantially higher for commercial and industrial customers, however.

The fees that the state PUC raised in October are meant to offset the costs that utility companies incurred to purchase long-term energy contracts and other investments. PG&E, for instance, has spent billions buying and generating renewable energy since the early 2000s.

As government-run programs like CleanPowerSF continue to sprout up across the state, PG&E and other utilities say the rate increases are essential to ensure that the costs of those earlier investments don’t fall unfairly upon customers who choose to stay with the company or have no energy alternatives to turn to.

Last month, the SFPUC and other municipal power providers asked the state PUC for a rehearing on the exit fees. The state PUC has until February to decide whether to take the issue up again. After that, the city could choose to sue over the raised fees.

The SFPUC, as well as other operators and proponents of local power programs, contend that state regulators are mistakenly factoring costs into the fee formula that make PG&E and other utilities’ expenses seem greater than they really are.

Commissioner Francesca Vietor told staffers Tuesday that she wanted to highlight that the SFPUC was absorbing the costs “because we believe so strongly in this program and in the environment.”

The SFPUC won’t have an exact projection of the costs of the subsidy or any changes to CleanPowerSF’s rates until PG&E sets its own rates for next year. SFPUC officials expect that to be finalized at the beginning of next year. Because of that, the commission also voted to give SFPUC General Manager Harlan Kelly the authority to tweak CleanPowerSF’s rates once PG&E’s rates have been worked out.