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SF to offer consumers a 100% green power option

2012 October 2

The City of San Francisco is entering into a five-year, $19.5 million contract managed by Shell Energy to bring more renewable energy to San Francisco residents, but the new contract does not have Mayor Ed Lee’s blessing. The Board of Supervisors passed the bill by an 8-3 “veto-proof” vote, and Mayor Lee left the legislation unsigned.

The new legislation will automatically enroll roughly half of 375,000 San Francisco residential customers into a green power purchase program, known as Clean Power SF. Residents will have five months to opt out of the program, which is set to raise electric bills for the average residential consumer by $10-20 a month. Mayor Lee is supportive of renewable energy, but he will not support the legislation because of the automatic opt-in, saying:

While I enthusiastically support expanding our clean energy resources in San Francisco, I continue to have serious concerns about enrolling San Franciscans into a program without their initial consent that coerces them to pay a premium for electric power from Shell Energy.

While Mayor Ed Lee opposes the program based on its automatic opt-in principle, San Francisco Public Utilities Commission General Manager Ed Harrington says the program is good bang for the buck on carbon reductions. He claims the $19.5 million program would reduce carbon emissions by almost 10 times the amount the city has to date with $93.2 million in spending on solar and other efforts.

So-called community choice aggregation (CCA) programs have gained more popularity across the U.S. in recent years, whereby local governments can effectively form their own utilities. Marin County began a CCA for renewable energy for its residents back in 2010. It offers 50% renewable energy at rates competitive with PG&E or 100% renewable energy for a premium rate.

According to Clean Power SF, legislation to allow CCAs was first approved in California back in 2002, and so it seems like this program has been many years in the making. There are a number of logistical challenges involved. First off, the CCA has to sign a service agreement with the incumbent utility (PG&E), as the CCA will only offer unique generation services, while continuing to use the utility’s wires for transmission and distribution. And since Clean Power SF is serious about purchasing 100% renewable energy, there is some tricky accounting involved, especially with intermittent renewable sources like wind and solar.

There are a number of options for purchasing the output from renewable sources. One option is to purchase Renewable Energy Credits (RECs). In a REC-only transaction, only the renewable attributes of the energy are bought, and not the renewable energy itself. RECs are traded widely throughout the U.S. as a compliance instrument for various state-level renewable portfolio standards. A second option is to purchase the RECs “bundled” with the energy. A third option is to buy the renewable energy “firmed and shaped” (see this CPUC presentation for formal definitions). Since wind and solar are intermittent, the energy has to be “firmed” with backup resources to supplement the output and ensure that it is meeting customer demand. When the intermittent sources are generating more than demand, the supplemental resources can be backed down, and this process is called “shaping”. The “firmed and shaped” have to equal out in order to prove 100% renewable power for a certain amount of customers.

According to my e-mail exchange with Clean Power SF, the contract will provide energy that is 85% firmed and shaped, 10% bundled, and 5% RECs-only transaction. Are you still with me? Good. You wouldn’t mind being automatically opt-ed in for that, right? Well, the truth is, this will lead to an additional demand for renewable energy above and beyond the state’s RPS requirements, so it’s a great thing for the sector and an empowering option – er opt-in – for consumers!

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