San Francisco’s ambitious effort to sign a deal with an energy provider to compete directly with PG&E has failed for a second time in the past year, forcing The City to scale back its plans for public power.
This week, San Francisco Public Utilities Commission officials revealed that the four companies that submitted bids to run The City’s energy program, known as CleanPowerSF, "failed to meet minimum qualifications and minimum proposal requirements."
Those in the power business were asked to come up with proposals that would provide 51 percent renewable energy at prices that meet or beat PG&E rates and build new renewable-energy resources, all with little financial risk to San Francisco.
But SFPUC officials said the bids did not demonstrate how CleanPowerSF would offer comparable or better rates than PG&E.
It was the latest setback for the energy program, which city officials have been trying to implement since 2007.
"We’ve been struggling with ‘How do you make this happen?’" SFPUC General Manager Ed Harrington said.
A previous attempt at launching CleanPowerSF led to negotiations with one power provider, Power Choice, but talks fell apart in June over energy prices and the company’s request of a $400 million loan from The City. San Francisco officials had been rushing to sign a deal before the June election because PG&E had placed a measure on the ballot, Proposition 16, that would have made it nearly impossible for municipalities to go into the power business. It failed.
The City is not totally abandoning its efforts to enter the power business. The SFPUC will now try to negotiate an agreement modeled off Marin’s community choice aggregation program.
"The Marin model is the only model functioning," said Barbara Hale, the SFPUC’s senior power official. "It has been proven to be commercially feasible."
On Tuesday, the SFPUC authorized Harrington to begin negotiations with energy providers for a Marin-style agreement.
Hallmarks of that model include phasing in customers over time instead of all at once, as The City had planned, and offering different green-energy mixtures with tiered pricing. Also, Marin’s model was launched based on buying energy in the power market and reselling it to customers, without requiring new renewable-energy projects such as wind or solar.
Eric Brooks, a local Green Party representative, said there had been "some heated backroom debates" with SFPUC staff in the past several days about the best way to move forward, but in the end the proposal is "something that we are comfortable with."
Entering the energy field
Key dates in The City’s history of trying to start public power:
September 2002: State Legislature passes AB 117, enabling community choice aggregation programs
June 2007: Mayor signs law setting goals of CCA, including providing 51 percent renewable energy to customers by 2017; program is later dubbed CleanPowerSF
November 2009: City issues initial request for proposals to run CleanPowerSF
December 2009: San Francisco Public Utilities Commission receives five bids
June 2010: PG&E-backed Proposition 16 placed on ballot, would require a two-thirds vote for municipalities to establish a CCA; it fails
June 2010: Talks fall through with top bidder, Power Choice LLC, to set up CleanPowerSF
August 2010: Second request for proposals issued
November 2010: SFPUC receives four bids — Constellation Energy, Noble Americas, Power Choice, Shell North America
Feb. 8: SFPUC declares bids failed to meet minimum qualifications
Feb. 8: SFPUC authorizes General Manager Ed Harrington to negotiate with companies on agreement modeled on Marin’s power program