customer fund and reserve fund and appropriating 19.5 million of hetch hetchy bal to support the clean power aggregation program and placing 6 million appropriated for clean power sf sustainability services on budget and finance committee reserve pending detailed appropriation plans. mr. president, you wanted me to read item 17 as well? >> president chiu: yes please. >> clerk calvillo: item 17 resolution authorizing public utilities commission to launch clean power sf program approving local sustainability program for customers and authorizing general manager of the public utilities for a term of up to five years for services required to launch the clean power sf program. >> president chiu: supervisor campos. >> supervisor campos: thank you very much, mr. president. i'll be very brief. you know, the efforts to make community choice aggregation a

reality in san francisco have been going on for many years. i spoke to assembly member ammiano who reminded me that he's been working on these issues for 14 years. and so i want to simply, at some point, turn it over to the general manager of the public utilities commission, but i just want to make a couple of just acknowledgements. there have been many people who have been working on this program for the last number of years. and i want to begin today by acknowledging the work of the san francisco public utilities commission, in particular the general manager ed harrington, who has been, in the last, you know, over a year and a half, that i've been the chair of lafco, trying to make sure that we put together a program that tries to achieve the goals underlying community -- aggregation but does so in a fiscally responsible way and i think that he has struck the

right balance. i know that the program that is before you is not as ambitious and aggressive a program as many people wanted but i think that it's a program that at the end ensures success and viability and that's why i'm proud to support it. i thank the rest of the puc staff who put so many hours in the last three years in this program. i want to acknowledge the staff of the local agency formation commission and various commissioners including members of this board of supervisors who have served on lafco and of course we have here supervisor avalos, supervisor olague, supervisor mar, who are members of lafco. there are a number of people also who have, in the last few years, enacted legislation, including passing ordinances here at the board of supervisors, that have made cca a possibility and beginning with the father of cca in san francisco assembly member tom ammiano as well as state

senator mark leno, supervisor mirkarimi who chaired lafco for a number of years as well as former state senator carol mington. i want to acknowledge the work of the city attorney. the city attorney's office has put a number of hours to make sure this is a legally sound and defendable a program as we possibly can have so i want to thank teresa mueller, john soleil and members of her team. a special thanks to the advocates of community choice aggregation who over the years have rallied behind this effort which at the end of the day is really about providing consumers a choice making sure that ratepayers in san francisco have opportunity to not only have clean energy but to have a meaningful choice, to make sure that there are other players in the business of providing energy beyond the utility that has had a monopoly for so long. the last point that i want to make is that i want to

acknowledge that we have heard from members of the labor community, and specifically the labor council who have expressed some concerns around the fact that the contract that's before you involves shell oil company, and i don't know that any one of us who supports cca is in any way going to be here defending shell. but to the extent that shell, being in the picture, is an issue, that's an issue that's been a problem for quite some time because each and every one of us, by virtue of being a consumer and a customer of pg&e is actually in some respects getting energy from shell because pg&e isself is actually buying energy from shell. to the extent that's a concern i actually think cca provides an opportunity for us to get out of the business of doing business with shell. because it allows us, down the road, to create a build-out that

will enable the city and county of san francisco to create its own energy, generate its own energy. with that i wanted to given the general manager of the public utilities commission an opportunity to make some remarks, and again i want to thank mr. harrington. i have had the honor and the privilege to work with you in the last few years. and as far as i'm concerned you truly are the gold standard of what it means to be a public servant. and the fact that you have been involved i think gives this program the credibility that it needs. and so i want to thank you. mr. harrington. >> thank you very much. ed harrington general manager sf public utilities commission. i know we spent a lot of time last week in the budget committee. i was asked to give a brief overview to make sure you were aware of what was in the program.

i'm joined by barbara hale and todd rydstrom our cfo and assistant general manager for finance and business, if you have questions of any of us. i want to go through a quick introduction, what the city goals are, the key program components, what the liabilities may be and ratepayer impacts. san francisco has ambitious climate goals and so right now we're looking and saying we have a goal to achieve greenhouse -- electric system by 2030, reducing carbon emissions by 80% from 1990 levels. this program before you was a single program that has any chance to make a big dent in what's going on there. there's nothing in the horizon that has something like that. it has a mechanism affecting the climate change. i'm a renter. i'm not going to put solar on my roof but i can go out there, in my case, for $8 a month i will

be able to have clean green power. nothing i can do will approach that, incredibly efficiently. we're talking about doing it for 90,000 people and growing after that. the long-term goal is not to be buying power from shell. the long-term goal is to do our own generation, to control the assets and control the costs. that's how you start to do a good job for your citizens to make sure you have control of your rates and your cost. to put this in perspective, it's a bit busy, in the last few years, and going on to the next several years with the sunset solar, we're going to spend over $90 million and that $90 million will have an impact worth about 6900, 7,000 homes, reduction in greenhouse gases in san francisco. this program, where we're asking you to appropriate $19.5 million, six of it spent on things like energy conservation,

13 million hopefully never spent but held in abeyance, that will immediately have an impact for greenhouse reduction for 90,000 homes. there's nothing else that anyone's thought of with that dramatic impact for san francisco with such a small dollar amount, an efficient way of spending your money. key program components. choice, it is a choice -- i realize it's an opt out program but we will give people a choice and make sure they understand it. 30 megawatts to start, about 90,000 participants. 100% green. for every kilowatt hour of energy people consume an equivalent amount of renewable energy and put into the system. that does not mean there is an extension cord to a turning thing, wind turbine in the east bay. it means it's going into the bucket of power and we're taking that much out of the bucket of power. you can't check every molecule

but we're saying it's green, not just some fake thing. we're putting as much in when we take out. it doesn't mean hetchy produces, it means we put inasmuch as we take out. public-private partnership, this is not a takeover of pg&e. pg&e would still be the people who you call to get the service connected. if you have problems, they will be the ones to do something about it, they will do the energy billing and transmission distribution. we're just giving them better, greener power to use. electric suppliers -- shell energy for the first five years and noble america will do interaction with people, an on-site thing. mitigation of risk. we have done a lot of work to try to figure out how we can target this to the people who are most accepting of it and want to join this program. we're talking about going out and going after the first 90,000

people in the precincts of san francisco, that our poalg shows us want this the most. that means we affect the least number of people to get the best result out of it. opt out notices will be sent and we expect over half of those will stay with this program and not opt out. city appropriation, again 19.5 million, but a lot of that money is for other things we'd like not to just pay for it this program. there is some environmental incentives going to people who are in the program to give them incentive to be in the program. 2 million energy efficiency, 2 million growth seller and 2 million to start the work. that is again the big thing. if this was all the program was going to be, it would be good but not the program we want in san francisco. start date, if you pass this and it goes through the process we will be ready to start in the spring of next year. the opt out program, again,

that's the state law. that's the way it's supposed to work. we will give people two opt out notices before we start to deliver power, to opt out notices after we start giving power and after that they have the option of opting out. we have a rate of $5 as a processing fee or a departure fee if people leave the program after that. that, we've had discussions about is not important. we really don't want to catch people. we want it to be their choice. community outreach, clearly this is based on having a significant education effort to make sure that people, especially people that are monolingual non-english speaking know what they're in for. low income discount, while not required in the program we suggest the lower income discount extend to side two which is a 20% discount for low income customers. we have a million dollars of the money you've appropriated

already that we've set aside for this education in public education program. we're talking about paid media, multi-lingual television radio ads, newspapers, mail pieces, billboard advertising and that's the best way to get to communities in san francisco is through community based organization. we'll work through them to get to low income residents to make sure no one gets inadvertently caught in this and paid media will work hand in hand with volunteer door to door types of events and social media. there's been questions of liability. with any program there is some amount of risk. this is a risk that we believe is a reasonable risk for the city to take. what we're saying is that if the program is not working, and we decide to collapse it, and the price of renewable power goes down, so that shell would lose money by backing out -- if we

backed out of this our liability is capped at 15 million. given market conditions it seems highly unlikely the price of renewable power will be decreasing when everybody is mandated to buy more but there is a cap should something go wrong. if the program is successful and we decide as to kill it and once again shell loses money there is no cap on that but that is our choice to do and that would be to kill a successful program for no reason and lose money. the ratepayer aspects and financial aspects, most of the money as you can see is going to buy the power itself. that's the point of this but there are funds to make sure that we are paying pg&e for their work on this, and for marketing outreach education effort. and this shows you that about 43% of people in san francisco are what we call tier one, the

lowest users of power in san francisco. they would pay about $9.50 to be in this program. if you use more than that, tier 2, you're about $20 a month. so altogether, average-wise in the entire city the average people would be doing would be about $18 a month but again that's including a lot of high end people, along with the ones that are in that lower classification. and this schedule, again, pretty busy but what it shows is no matter what class you're in this would mean a rate increase on your total pg&e bill that typically would be in the neighborhood of 23%. and so if that's too much, don't choose this. if it works for you and the best way to be green, then choose it. that's the way it works. i would be happy to answer any questions you might have. >> president chiu: supervisor campos. >> supervisor campos: thank you, mr. president.

mr. harrington, thank you very much for your presentation. one of the things that has been floating around in the last day or so is this idea that, even though we've spent so many years working on this that somehow we should hold off and continue this, maybe we can get a better deal, maybe there are ways in which we can make this program better. my understanding, having deferred to the great work of the puc, is that this is as good a program as we're going to get, and that in terms of the -- the terms of this agreement that i don't necessarily see how a continuance makes this any better i'm wondering if you have any thoughts about that. >> sure, supervisor. obviously a continuance is a policy call. i understand that. the issues people have, like this is an opt out program, that is state law. a continuance will not change state law. if you're looking for us to try to find another vendor, been there, done that, several times. the only group that's available

is shell. the only group that was available to marine that made it work is shell. some day, some time, this may be different. but that is not in any near future. i am not telling you it is the perfect program, but i am tell you it's the only one that we believe is possible in any kind of near-term future. and i don't see how it changes. >> supervisor campos: thank you. >> president chiu: supervisor avalos. >> supervisor avalos: thank you, president chiu. i just want to voice my strong support for the clean power sf program and i want to thank general manager ed harrington and his staff, barbara hale, and others, for their great work. also, for the staff, for lafco, nancy miller, and jason freid for all the great work together, the sponsor of this work today, supervisor campos, who has picked up the baton from ross

mirkarimi, who picked it up from tom ammiano, for many, many years, this resolution, this appropriation, ordinance, have been in the making. and i'm very excited that we are here today to really put teeth to our goals on climate change. san francisco, as the general manager said, has ambitious goals around greenhouse gas emissions and reducing greenhouse gas emissions by the year 2012. we're actually supposed to be at 25% reduction in greenhouse gas emissions. actually that's by the year 2017 we're supposed to be at 25% reduction in greenhouse gas emissions. by 2025 we're supposed to be at 40% reduction and by 2050, 80%. as the general manager says there is no other program we have that's actually going to do the work to get there. and we are actually a city whose

population vastly understands that global warming is a reality, that climate change is a reality. and of that vast majority there's a portion, i believe, who are willing to pay a slightly higher rate for making sure that we are generating our electricity here for consumers in a clean way, in 100% renewable way. this is a huge investment for our future, for the city, but also a great example for other cities around california, and around the country and around the world about how we can really be proactive around preventing climate change. so i am really excited about supporting this work before us today. in 2010, pg&e spent $50 million to defeat -- to try and pass prop 16, and they were defeated by voters. voters who were clearly outspent, believed that prop 16

was trying to take away the possibilities of creating programs like green power sf, trying to take away programs like community choice aggregation and we were able to actually support the passage of the doorway opening for clean power sf by 68% of san franciscans who voted against prop 16. i think that's strong testament to where the feelings are of people in san francisco about clean power sf but we will be able to see truly what that is when we move forward with our phasing in of the program. it's not perfect, how it works, but we're constrained by state law. we have an opt out program. we also have opportunity for people to opt in. and that is something that i will proudly be doing with my family when it comes to it. you know, in future years, we're going to see, as we are able to phase in the program, moving away from the contract with shell. but we'll have revenue to be able to finance on, to actually

build our own renewable power system, little by little, in san francisco. as we do that, we will be creating jobs in this city. and i'm really proud to say that a lot of those jobs will be for local san francisco residents. i think this is a really remarkable vote we have here today. we are actually creating a new system for energy generation in san francisco, one that will not be controlled entirely by pg&e, but we will have the ability to create it ourselves. and the fact that we are making a choice in that happening means that every day san franciscans have the ability to really be part of that solution, to doing away with a monopoly here in the city. so i want to thank, again, my -- the people who work through the years to make this happen. and also want to put out strong words for support for the work of assemblyman tom ammiano who's

brought this vision to the city 14 years ago -- it probably probably 1998. thank you, tom. i want to say thank you to mr. harrington as well. when the person who was the controller for 17 years of san francisco tells us that a program is financially sound and has spent many years since being the controller being the general manager of the puc, telling us that a program is financially sound, i think it's worth noting and supporting. so, colleagues, i hope you can do the same. >> president chiu: supervisor kim. >> supervisor kim: thank you. i do want to thank both supervisors avalos and campos for your advocacy on this item. because of numerous issues mentioned there were questions that came up on budget committee. one is the most obvious that we are finally providing 100% renewable energy but with a company called shell. i know that makes people feel

uncomfortable and i certainly understand that discomfort. what i want to say is that years and years of work went into this, and i do really want to appreciate the efforts of the staff that brought this to us. there are a number of kind of outstanding issues that i think colleagues and i had a number of questions, particularly our most vulnerable customers and ratepayers. our low income commerce as well. we want to ensure that they are not caught in a program that they did not realize that they could opt out of. so i worked with a number of colleagues, who were very concerned about this issue, president chiu, supervisor cohen, supervisor mar, to come up with a series of amendments which we worked with the puc and the city attorney on, to add some additional protection for our most low income customers. i have a number of them. we have copies to share with all of our colleagues. but just to summarize through some of them, one is to make

sure that we are able to provide discounts for our low income consumers that commence rate with discounts typically provided with pg&e customers for their care customers. we also wanted to find ways of developing a funding mechanism, whether it's voluntary donations from other clean power sf customers or perhaps even the $5 fee for those that opt out later in the program that could be used to actually augment or subsidize the cost of the bills for our care customers. we also want to target the energy efficiency services and go solar incentive to our low income customers as well as reducing their bills because they will be first in line to take advantage of these programs that the puc would be going after. and then, second, we want to ensure that puc will exclude low income customers in the initial phase of the clean power sf program allowing additional time

for outreach and also for people to hear more about the program as they learn from customers that are already in the first phase. as i mentioned before we are directing puc to give priority to low income power sf customers for eent of energy frgs and undertake an aggressive outreach campaign to reach those customers. and we also wanted to actually extend the opt out period to at least six months. and that was some of the amendments that have come forward. i am certain that some of my other colleagues will want to speak to some of the amendments as well. thank you. >> president chiu: thank you. supervisor kim, i understand, has introduced a series of amendments that are supported by myself, supervisors cohen and mar. seconded by supervisor mar. why don't we hold that. i know there are other amendments that will also be offered.

supervisor chu. >> supervisor chu: i want to thank colleagues for their thoughts and comments. this item came before the budget and finance committee. we voted to send it out but it was a societ vote 3-1. i dissentd i -- dissented. two of the most important reasons were around the issue of opt out and around the issue of the reserves. in terms of the opt out, we know very much that this is a restriction that the state has put upon us with the enabling legislation and because of that we had to structure a program that has opt out provisions. however i thought there was ways potentially to strengthen the program and make sure we're not inadvertently capturing individuals who did not want to be in the program. the second has to do with the reserve. currently the way the program is structured the rates that are going to be charged to cca consumers does not necessarily cover the cost of reserves. there are a number of reserves in the program -- i think some

people think that it's a modest amount of money, that it is money that the city can affront but i think there is a policy choice to have people who choose to have a more expensive program, who choose to be greener, to also pay for the required reserves of the program. as you know, there is about $# million i$7million in the -- an5 million in a program that is currently in place and none is being carried by any of the cca customers. from my point of view i think there is nothing absolutely wrong about having a cca program but i think it could have been strengthened with stronger opt out provisions as well as ability to recover some of these reserve expenses through the program. so those are the reasons why i dissented in committee committee. i am offering amendments to the items before us to try to get closer to those components that i'm most concerned with. unfortunately i have to apologize to the sponsor and of course the department.

we were not able to circulate the amendments early enough to really get a thorough conversation so i apologize for that. i know sometimes here happen on the fly. so just wanting to re -- the conversation or some of the amendments and then to have i'm sure a very robust conversation about it. the amendment or the motion that i would be making is to add to page 5 the wording further resolve the initial phases of clean power sf will offer service only to those customers who have indicated desire to be included in the initial marketing of the program. i should mention that these are amendments that i'm making in conjunction with supervisor farrell here. the second would be another whereas clause, added to page 16, and these should be in front of you as well, whereas the sf puc have not commit to buy power from shell unless the commission determines that a quantity of customers sufficient to ensure the financial viability of the program has indicated desire to be included in the initial

marketing of the program. finally, to the ordinance, section 3, and the resolution, page 9, the sf puc will include in the clean power sf rates a component to begin recoveringy reserves required in the program in the contract period so customers of clean power sf will bear the cost of the program. again, in that phase in terms of the recovery of the reserves there is not an indication of the level but it is sending a message we would like the program to become sufficient over time. those are motions i'd like to make. i want to thank the puc staff and ed harrington. they've done a great job of shepherding a program through that they thought they could bring to the board and we simply have a few amendments and changes we'd like to suggest. thank you. >> clerk calvillo: to supervisor chu, the clerk's office does not have a copy of those amendments. hopefully your staff is bringing them to us. >> supervisor kim: we will do that. >> president chiu: is there a

second in seconded by supervisor farrell. and i wanted to ask, mr. harrington, have you had a chance to see these amendments? i think many of our colleagues would like to get your sense of a feedback on the various amendments, if you've had a chance. >> i received them a few minutes ago and had a chance to look quickly at them if you'd like a quick response. >> president chiu: yes. >> with regard to the one that says the clean power ratepayers will begin recovering the reserves required for the program since there is no specific requirement for how much that would be i think as we look at the raitsd w rates we ha chance to say let's see how far we can get in the four years. that makes sense so we can do it. the other one does cause quite a bit more heartburn. it sounds like what we're asking to do is start a program with opting in, hoping for the best, not knowing whether it's going to work. i don't know how i keep a contract with shell not knowing how much power they're going to