Power struggles

Activists say Labor Council's opposition to CleanPowerSF could be a blessing in disguise


rebecca@sfbg.com, steve@sfbg.com

Opposition from the San Francisco Labor Council scuttled the San Francisco Public Utility Commission's plans to approve CleanPowerSF on July 9. But activists supporting the renewable energy program actually welcomed that new roadblock, saying it could trigger a more robust rollout of renewable energy projects that they've been seeking all along.

"It gives us leverage," Eric Brooks, an organizer with Our City who has pushed the SFPUC to adopt a more aggressive CleanPowerSF, told us. "They're insisting on local union jobs and California union jobs, and we're glad they said that."

Brooks said labor's insistence on union job guarantees places the SFPUC under renewed pressure to implement a more aggressive buildout of local energy projects, from building retrofits to wind power generation facilities.

The SFPUC has already come under attack for the program because Shell Energy was the sole bidder to do the initial energy purchases. International Brotherhood of Electrical Workers Local 1245, which represents PG&E workers, has used the Shell contract as ammunition in a campaign against CleanPowerSF.

Shell's involvement also helped IBEW persuade the Labor Council to oppose the project, despite its longstanding support for community choice aggregation, the model for pooling customers into renewable power programs on which CleanPowerSF is based.

"The Labor Council is for community choice aggregation, we just don't like how the players have shaped up," Tim Paulson, the council's executive director, told us. "It really makes us hold our nose that Shell Oil is going to have a role ... one of the worst labor law violators in the world."

While the council's May 13 resolution criticizes Shell, it also expresses support for renewable energy generation in the city to "help San Francisco meet its climate action goals."

Brooks and other progressive activists share labor's disdain for Shell. They're trying to limit its involvement to merely purchasing the first 20 megawatts of power so CleanPowerSF can get underway with enough customers.

The SFPUC should then take over on power purchases, Brooks says, and start issuing revenue bonds against the CleanPowerSF customer base to build green power projects. New research by consultant Local Power shows CleanPowerSF could create 1,500 local jobs per year for 10 years.

Brooks also doesn't like Shell's involvement, but he said it was an acceptable means to the end, which was being able to roll out a CCA program that was competitive enough on price with PG&E that at least 80 percent of its targeted customer base would not choose to opt out, the level he believes they need to fund the buildout, which would bring prices down even more.

When we left a message for Local 1245 spokesperson Hunter Stern to ask whether the union would support CleanPowerSF if it guaranteed more union jobs, he referred questions to Paulson, who wouldn't go beyond his initial statements.

"If it wasn't for PG&E's pressure, Local 1245 probably wouldn't be doing this," Brooks said of the union's aggressive campaign against CleanPowerSF.

Representatives from the San Francisco Public Utilities Commission told the Guardian that the agency intends to pursue a buildout of green power infrastructure, although CleanPowerSF director Kim Malcolm says only a few million dollars a year will initially be invested in renewable and efficiency projects.

"That line item is one of the reasons why the advocates are pretty much unanimously supporting this program," SFPUC spokesperson Charles Sheehan noted. "We listened to them. They wanted a lower rate, they wanted dedicated money for local buildout."


I predict this will be a damp squid. Even given the inexplicable decision to make customers opt out of "clean" power rather than opt in, the extra cost of this jamboree will put consumers off.

And meanwhile I see that PG&E are claiming that 60% of their power is sustainable, leaving the rationale for this endeavor moot.

SF voters have always rejected public power because we don't trust the city to run anything successfully. Presumably they think that Shell can do a better job and here we just see the usual factions squabbling. Nothing ever really changes.

Posted by anon on Jul. 17, 2013 @ 12:00 am

Would you rather put money in the pockets of the Dutch Shell Oil Company, or to PG&E, which has it's offices in San Francisco, employee hundreds, if not thousands of people in San Francisco?
There is no requirement to build any infrastructure for Green energy. This won't result in any more green energy sources. This is a knee-jerk reaction to BIG BAD PG&E, and the misguided efforts of those who hate PG&E so much that they would get in bed with BIGGER BADDER Dutch Shell Oil Company - one of the worst violators of the environment in the entire world.

Posted by Richmondman on Jul. 17, 2013 @ 12:33 pm

Actually, though Kim Malcolm is an excellent CleanPowerSF director, she is quite off on one key number cited in her comments. The recent Local Power study which shows 1500 jobs per year for the next ten years, will -not- in fact spend $1 billion in just a few years.

Instead the program will spend, one year at a time, over the next -ten- years, successive, separate approvals, each year, of only around $100 million per year. This is much more manageable than the $1 billion all at once that Ms Malcolm is erroneously assuming.

Posted by Eric Brooks on Jul. 17, 2013 @ 4:35 pm

Either way, where does it come from?

Posted by Guest on Jul. 19, 2013 @ 6:30 am

Around 100 million per year (actually an average of about half that in the first few start up years).

The funds will come from revenue bonds based on the income and savings that will be generated from solar, wind, efficiency and other similar installations.

These revenue bonds will not require increased taxes or higher rates because the installations they fund will produce their own revenues from the sale of the new clean energy that will be produced, and through sharing of customer savings from efficiency measures with the program.

Posted by Eric Brooks on Jul. 19, 2013 @ 10:11 am

My question is this. Who is on the hook for the cost if that revenue does not happen? Simple question.

Posted by Guest on Jul. 19, 2013 @ 10:30 am

You are misunderstanding the revenue bond process for a project like this. The way it willwork is:

1) A plan will made to build a given set of clean energy installations at a given cost.

2) Projections will be made as to how much energy revenue and savings those installations will likely produce over time, and how long it will take via those revenues and savings to pay back the installation costs.

3) The plan and the financing assumptions will then be presented to financiers and if the financiers believe the plans will work, and the revenue and payback assumptions make sense, then they will finance the installations. If financiers don't go for the plan and say it is not certain enough, planners will simply go back to the drawing board and revise the plan.

So, nothing will actually get built until the planners can show convincingly that the financing makes sense. Therefore no one is on the hook for anything, until financiers take their own risk to fund a program that they have confidence in.

Posted by Eric Brooks on Jul. 19, 2013 @ 9:11 pm

What if the investment is made based on revenue bonds and then the revenue doesn't happen?

Who pays then?

Posted by Guest on Jul. 22, 2013 @ 11:44 am

First, you are forgetting the original point that this revenue bond financing will happen in very small yearly phases. In the first few years, just a few tens of millions per year will be spent. So if the first phase doesn't perform as expected, the following phases can be reassessed and redesigned.

But more importantly, you need to understand that renewable energy and efficiency project financing is extremely secure. Because renewables and efficiency essentially bring in decades of free energy and savings after their initial up front cost is paid off, it is incredibly unlikely that the expected revenues won't happen.

CleanPowerSF is being designed so that the cost to customers of that clean energy will be competitive with PG&E rates. Since competitively priced electricity will definitely be bought by customers, we know that the program's revenues will be secure.

So, because of the step by step phased installations, and the very secure nature of renewables investment, a failure of CleanPowerSF to make expected revenues would be as close to impossible as it gets.

Posted by Eric Brooks on Jul. 23, 2013 @ 9:33 am

It is the financiers who provide the bond financing, who will take any risk that their investment might not pay off.

That's how investment works.

Posted by Eric Brooks on Jul. 23, 2013 @ 9:37 am

Taxpayers are on the hook for up to $19M if not enough people choose to switch to Dutch Shell Oil Company from San Francisco-based PG&E.

Posted by Richmondman on Jul. 22, 2013 @ 10:43 am

Firstly, I hate Shell. But I also am a stickler and hate inaccurate or misleading statements. If SFPUC's contract with Shell Energy North America (SENA) amounts to, say, $19 million, then we are simply agreeing to purchase $19 million worth of 100% California-certified renewable energy from them. This does not leave taxpayers "on the hook" more than with any other contract signed by any public agency.

Since it is looking like the final rates for the program may only add around 10% to PG&E's dirty energy price (~$5 on a $40 bill) and come in lower than PG&E's own green program (once they get that together), there will be more than enough folks signing up to purchase this power. I saw that surveys have been done on this using absurdly high rates, and a ton of people were still interested in participating. At $5 a month, participation should be substantial.

And I hope that all those residents participating push the PUC to do a strong local renewable build-out and ensure this is the only contract with SENA or their brethren that we need to sign.

Posted by jed on Jul. 25, 2013 @ 10:22 am

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