AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT Power Enterprise AGENDA NO. 11
MEETING DATE April 25, 2023
Authorize Memorandum of Understanding: Regular Calendar Project Manager: Michael Hyams, Deputy AGM, Power – CleanPowerSF
Authorize a Memorandum of Understanding Between the San Francisco Public Utilities Commission and the San Francisco Local Agency Formation Commission Regarding the CleanPowerSF Program
Summary of
Proposed
Commission Action:
Authorize the General Manager to execute a Memorandum of Understanding with the San Francisco Local Agency Formati on Commission to perform services for CleanPowerSF, for an amount including remaining funds and up to $600,000 in new funds over the duration of the agreement, for a term of three years and two months commencing May 1, 2023.
Background: Under San Francisco Charter Article VIIIB, the San Francisco Public Utilities Commission (SFPUC) has exclusive control of the City’s power assets. The SFPUC operates CleanPowerSF, San Francisco’s community choice aggregation (CCA) program, under this authority.
In 2007, the Board of Supervisors requested the San Francisco Local Agency Formation Commission (SF LAFCo) monitor the
implementation process and advise the SFPUC and the Board of Supervisors regarding the development, operation and management of the CCA program (Ordinance No. 146-07).
CleanPowerSF began serving customers in May 2016 and completed citywide enrollment in 2020. CleanPowerSF is now a mature CCA program, serving more than 380,000 customer accounts with cleaner power at competitive rates.
The SFPUC and SF LAFCo previously maintained a memorandum of understanding (MOU) that was initiated in 2009 and extended several times before it expired in 2021.1
1 The 2009 MOU was approved in Commission Resolution 09-0073 and amended four times to extend its term for a total duration of 12 years from Fiscal Years 2008-2009 through 2019-2020 with no change to the total not-to-exceed amount.
Agreement: Authorize Memorandum of Understanding with the San Francisco Local Agency Formation Commission Commission Meeting Date: April 25, 2023
SFPUC and SF LAFCo staff propose a new MOU with a term of three years and two months, commencing May 1, 2023, for work performed in FY 22-23 through FY 25-26. Funds would include approximately $129,583 still remaining from the 2009 MOU , plus additional funds up to $600,000 from CleanPowerSF ratepayer revenues for an annual cost of approximately $200,000. These funds will need to be identified from the CleanPowerSF operating budget, and subject to the budget appropriation process. The term of the MOU could be extended by mutual agreement.
The MOU would:
• Recognize the exclusive jurisdiction of the SFPUC over energy services, including CCA, consistent with the City Charter;
• Establish the scope of activities PUC asks SF LAFCo to perform to assist CleanPowerSF; and
• Set the expectation that SF LAFCo staff would meaningfully engage with PUC staff on all matters involved in the
expenditure of CleanPowerSF funds (i.e., scope of RFPs, selection of consultants, review of draft work products).
Scope of Activities
With the contribution of CleanPowerSF ratepayers’ financial resources described above, SF LAFCo would:
Conduct specified studies addressing the opportunities for and barriers to local energy innovations and recommending policies and actions to support San Francisco’s decarbonization goals and other energy-related Climate Action Plan goals that are related to CleanPowerSF’s scope of operations.
“Energy innovations” would include, but are not limited to, technologies and pr actices in the areas of electric mobility, building decarbonization, SF-located renewable energy generation and energy storage, and hydrogen as a local fuel source. “Impediments and barriers” include, but are not limited to, assessing state and local regulations and codes, financial realities and mis -aligned incentives, and grid ownership.
The specific studies that SF LAFCo will prepare under the MOU will address:
i. Natural Gas System Decommissioning: identifying challenges regarding the decommissioning of natural gas infrastructure; Agreement: Authorize Memorandum of Understanding with the San Francisco Local Agency Formation Commission Commission Meeting Date: April 25, 2023
ii. Battery Storage: identifying opportunities and barriers to battery storage installations across the City , by use type, including public safety, permitting and other local regulatory issues, and proposing amendments to local and state codes to support installation of battery storage;
iii. Electric Vehicle Charging: identifying barriers to broader adoption of electric vehicles in San Francisco and analyzing possible solutions that may involve various City departments or State agencies, such as solutions for curbsi de charging and policies and actions to address access for multi -family buildings, including smart poles, and providing equitable public access to charging infrastructure;
iv. Green Bank Financing: identifying opportunities for and barriers to financing CleanP owerSF initiatives through green bank models —such as a non- depository municipal finance corporation or a public bank as defined by California
Government Code Section 57600— that could access funding available through the federal Inflation Reduction Act’s Greenhouse Gas Reduction Fund (Section 134 of the Clean Air Act, 42 U.S.C. § 7434); and
v. Emerging Clean Energy Technologies: studies of specific emerging clean energy technologies, as agreed to by the SFPUC and SF LAFCo (an initial study will survey existing literature on the future use of hydrogen fuel within urban environments, e.g., possible use cases, pros/cons of urban hydrogen use and infrastructure, local regulatory
considerations, safety, and sustainable fuel production.
Subsequent studies may survey t echnologies such as offshore wind, tidal, or wave power).
In developing the studies and/or undertaking the work , SF LAFCo may convene City departments with appropriate jurisdiction and members of the community to identify their interests and concerns.
The proposed work would be performed by the SF LAFCo Executive Officer, other SF LAFCo staff, and professional services consultants.
SF LAFCo is in the process of preparing a solicitation to secure qualified professional services contractors.
The studies to be prepared and/or work to be undertaken by SF LAFCo may be modified subject to written approval from both the SF LAFCo Executive Officer and the Assistant General Manager for Power, and written notification of any changes will be provided to t he SF LAFCo and SFPUC commissions.
At public meetings, the most recent of which was on April 21, 2023 , SF LAFCo considered a draft MOU but took no action on the item.
Description of
Agreement:
The MOU will allow the SFPUC to engage SF LAFCo to prepare specified reports and/or undertake work on specified study areas.
Agreement: Authorize Memorandum of Understanding with the San Francisco Local Agency Formation Commission Commission Meeting Date: April 25, 2023
Parties to Agreement: San Francisco Local Agency Formation Commission
Purpose: Prepare specified reports
Location: San Francisco
Commencement
Date:
May 1, 2023
Result of Inaction: A delay in authorizing this MOU will delay SF LAFCo’s commencement of the proposed scope of work.
Budget & Costs: The estimated new cost of services is $600,000.
Approximately $129,583 will be available upon execution from Project No. 10014574 - Community Choice Project – LAFCo.
Additional funds will need to be identified from the CleanPowerSF operating budget, and subject to the budget appropriation process.
Schedule: Services are anticipated to begin in May 2023 and end in June 2026.
The total duration of this agreement is three years, two months.
Environmental
Review:
This action does not constitute a “project” under the California Environmental Quality Act Guidelines Section 15378(a) because there would be no physical change in the environment.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
Attachment: Draft SFPUC-SF LAFCo Memorandum of Understanding
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, The San Francisco Board of Supervisors established a Community Choice Aggregation (CCA) program in 2004 (Ordinance 86- 04) and has implemented the program, called CleanPowerSF, through the work of the San Francisco Public Utilities Commission (SFPUC) in consultation with the San Francisco Local Agency Formation Commission (SF LAFCo) (Ordinances 146-07, 147-07, and 232-09); and
WHEREAS, On April 17, 2009, this Commission authorized the General Manager of the SFPUC to execute an initial memorandum of understanding (MOU) with the SF LAFCo to allocate up to $2,100,000 of Power Enterprise funds in reimbursement for SF LAFCo services related to the development and implementation of CleanPowerSF, from Fiscal Year 2008 -09 through 2010-11; and
WHEREAS, The initial MOU was amended four times to extend its term for a total duration of 12 years from Fiscal Years 2008-2009 through 2019-2020 with no change to the total not-to-exceed amount; and
WHEREAS, Since 2009, SF LAFCo has expended $1,970,417 of the $2,100,000 under the initial MOU, with approximately $129,583 remaining; and WHEREAS, SFPUC and SF LAFCo staff propose a new MOU with up to an additional $600,000 and a term of three years and two months, from Fiscal Year 2022- 23 through 2025-26, commencing May 1, 2023; and
WHEREAS, SFPUC and SF LAFCo staff propose a scope of work under the new MOU that includes SF LAFCo conducting specified studies and/or undertaking work addressing the opportunities for and barriers to local energy innovations and recommending policies and actions to support San Francisco’s decarbonization goals and other energy- related Climate Action Plan goals that are related to CleanPowerSF’s scope of operations; and WHEREAS, The specific studies to be prepared by SF LAFCo may be modified subject to mutual agreement between SF LAFCo and SFPUC, and written notification of any changes will be provided to the SF LAFCo and SFPUC Commissions; and WHEREAS, Funds identified in this new MOU between the SFPUC and SF LAFCo will continue to be available from Project No. 519782 – CCA Project LAFCO-HHP in the amount of $129,583, and additional funds will need to be identified from the CleanPowerSF operating budget, subject to budget and appropriation procedures; and WHEREAS, The
SFPUC shall advise SF LAFCO in writing if it determines, after consideration of CleanPowerSF’s rates, revenues, financial reserves, and other funding needs, to not recommend to the Mayor that funds allo tted for a fiscal year and not used by the end of that fiscal year be carried over to the subsequent fiscal year; and
WHEREAS, This action does not constitute a “project” under the California Environmental Quality Act Guidelines Section 15378(a) because there would be no physical change in the environment; now, therefore, be it
RESOLVED, That this Commission hereby authorizes the General Manager of the SFPUC to execute this Memorandum of Understanding with SF LAFCo, for an additional amount of $600,000, for a term of three years and two months, through Fiscal Year 2025-2026 ; and be it
FURTHER RESOLVED, That this Commission hereby authorizes the General Manager of the SFPUC to make changes to the Memorandum of Understanding with SF LAFCo that are necessary to accomplish the goals identified herein and do not increase the burdens or decrease the benefits of this agreement to the SFPUC.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of April 25, 2023.
Secretary, Public Utilities Commission
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Memorandum of Understanding Between The San Francisco Public Utilities Commission and The San Francisco Local Agency Formation Commission Regarding the Community Choice Aggregation Program
THIS MEMORANDUM OF UNDERSTANDING ("MOU") is dated for convenience as of _____________, 2023, by and between the SAN FRANCISCO PUBLIC UTILITIES COMMISSION ("SFPUC") and the SAN FRANCISCO LOCAL AGENCY FORMATION COMMISSION ("SF LAFCo").
1. Purpose. The purpose of this MOU is to establish the scope of and approach to work funded by CleanPowerSF ratepayers performed by SF LAFCo through Fiscal Year 2025- 26 for an amount inclusive of new funds of $600,000.
2. Term and Reimbursement. The Term of this MOU is for work performed during Fiscal Year 2022-23 through Fiscal Year 2025-26. The term may be extended following evaluation by the SFPUC of the work performed and by mutual agreement of the parties. Expenditures to complete the Scope of Work are reimbursable using the SFPUC funds carried over from a prior MOU, and SFPUC will seek additional appropriations of CleanPowerSF ratepayer funds in the amount of $600,000 to fund work completed over the duration of this MOU. If any of the funds allotted for a fiscal year are not used by the end of that fiscal year, the SFPUC may, after consideration of CleanPowerSF’s rates, revenues, financial reserves, and other funding needs, recommend to the Mayor that those funds carry over to the subsequent fiscal year, and if approved by the Board of Supervisors and Mayor in the subsequent budget process pursuant to the San Francisco Charter, then the maximum amount that can be reimbursed for the subsequent fiscal year shall be adjusted accordingly. In the event the SFPUC cannot recommend carry over of the funds, the SFPUC shall advise LAFCO in writing of that determination.
3. Background.
a. The San Francisco Charter establishes that the SFPUC holds exclusive control and charge over the City’s power assets, energy suppplies, and utilities. b. The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (California Government Code Sections 56000 et seq.) establishes the powers and duties of SF LAFCo.
c. Neither SF LAFCo nor SFPUC has the authority to appropriate funds, and funds may not be removed from reserve without the action of the Board of Supervisors at a noticed and public hearing.
d. In May 2004, by Ordinance No. 86—04, the Board of Supervisors approved the development of an Implementation Plan to create a San Francisco Community Choice Aggregation Program ("CCA Program"). (File No. 04-0236.) e. The Board of Supervisors adopted Ordinance No. 146-07 which provides that "[m]anagement and control of the Community Choice Aggregation (CCA) Program will be undertaken by the San Francisco Public Utilities Commission (SFPUC)." (File No. 07-0777.)
f. Pursuant to Board of Supervisors' Ordinance No. 146-07, SF LAFCo's CCA DRAFT
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Program assignment is "to monitor the implementation process and advise the SFPUC and the Board of Supervisors regarding the progress of CCA development and implementation. To the extent the SF LAFCO agrees, the SF LAFCO will assist with the startup of the CCA Program and advise the Board of Supervisors, SFPUC and other agencies regarding all aspects of development, implementation, operation and management of the CCA Program, as established by Ordinance 86-04, this Ordinance and any subsequent ordinances." (File No. 07-0777.) SF LAFCo accepted this assignment by adopting Resolution No. 2007-01.
g. The Board of Supervisors enacted an ordinance which adopts and incorporates by reference a CCA Program Description and Revenue Bond Action Plan and Draft Implementation Plan. (Board of Supervisors, Ord. No. 147-07; File No. 07- 0501.)
h. The SFPUC, pursuant to California Public Utilities Code Section 366.2(c)(7), obtained certification as a CCA on May 18, 2010 (re-certified on August 26, 2015). In May 2016, the SFPUC began serving customers.
i. On June 5, 2009, the SFPUC and SF LAFCO entered into a Memorandum of Understanding Regarding the Community Choice Aggregation Program (“2009 MOU”), which memorialized agreement between the SFPUC and SF LAFCO to provide up to $2,100,000 in reimbursement for worked performed by SF LAFCo to monitor the implementation process and advise the SFPUC and the Board of Supervisors regarding the progress of CCA development and implementation, for Fiscal Years 2008-2009 through 2010-2011.
j. The 2009 MOU was amended four times to extend its term for a total duration of 12 years from Fiscal Years 2018-2019 through 2019-2020 with no change to the total not- to-exceed amount.
k. Since 2009, SF LAFCO has expended $1,970,417 of the $2,100,000 under the previous MOU, and the excess has been carried over from year to year. The 2009 MOU has approximately $129,583 remaining in appropriations available to SF LAFCo.
l. The Parties desire to formally terminate the 2009 MOU, and incorporate any remaining funds into this MOU.
4. 2009 MOU Terminated. That certain Memorandum of Understanding Between the San Francisco Public Utilities Commission and the San Francisco Local Agency Formation Commission Regarding the Community Choice Aggregation Program is hereby terminated and of no further force and effect. The Parties hereby agree that the remaining appropriations available to SF LAFCo under the 2009 MOU will be available under this MOU, and this MOU shall become the sole agreement between the Parties with respect to this matter.
5. Scope of Work. The work to be funded by CleanPowerSF ratepayers and performed by SF LAFCo during the term of this MOU shall include:
a. Conducting specified studies of the opportunities for and barriers to local energy innovations and recommending policies and actions to support San Francisco’s decarbonization goals and other energy-related Climate Action Plan goals that are within CleanPowerSF’s scope of operations. In developing the studies, SF LAFCo shall convene City departments and members of the community to identify their interests and concerns.
i. “Energy innovations” include, but are not limited to, technologies and practices in the areas of electric mobility, building decarbonization, SF-located renewable energy generation and energy storage, and hydrogen as a local fuel source.
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ii. “Impediments and barriers” include, but are not limited to, assessing state and local regulations and codes, financial realities and mis-aligned incentives, and grid ownership. For example, the studies may examine and identify the barriers to wide-scale adoption of certain energy technologies in San Francisco. The studies would identify those challenges, working with the City departments with appropriate jurisdiction, and describe policies and actions to overcome these impediments and barriers.
b. The specific studies that SF LAFCo will prepare and/or undertake under this MOU will address:
i. Natural Gas System Decommissioning: identifying challenges regarding the decommissioning of natural gas infrastructure;
ii. Battery Storage: identifying opportunities and barriers to battery storage installations across the city, by use type, including public safety, permitting and other local regulatory issues; and proposing amendments to local and state codes to support installation of battery storage.
iii. Electric Vehicle Charging: identifying barriers to broader adoption of electric vehicles in San Francisco and analyzing possible solutions that may involve various City departments or State agencies, such as solutions for curbside charging and policies and actions to address access for multi-family buildings, including smart poles, and providing equitable public access to charging infrastructure; and
iv. Green Bank Financing: identifying opportunities and barriers to financing CleanPowerSF initiatives through green bank models—such as a non-depository municipal finance corporation or a public bank as defined by California Government Code Section 57600—that could access funding available through the federal Inflation Reduction Act’s Greenhouse Gas Reduction Fund (Section 134 of the Clean Air Act, 42 U.S.C. § 7434); and
v. Emerging Clean Energy Technologies: studies of specific emerging clean energy technologies, as agreed to by the Parties (lower-priority studies conducted by LAFCo staff and/or graduate student interns); an initial study will survey existing literature on the future use of hydrogen fuel within urban environments, e.g., possible use cases, pros/cons of urban hydrogen use and infrastructure, local regulatory considerations, safety, and sustainable fuel production. Subsequent studies may survey technologies such as offshore wind, tidal, or wave power. c. The studies to be prepared in Section 5.b may be modified subject to written approval from both the SF LAFCo Executive Officer and the Assistant General Manager for Power, and written notification of any changes will be provided to the SF LAFCo and SFPUC commissions.
6. Certification of Funds; Budget and Fiscal Provisions; Termination in the Event of Non- Appropriation; Procedures.
a. This Agreement is subject to the budget and fiscal provisions of the City's Charter.
Charges will accrue only after prior written authorization certified by the Controller, and the amount of City's obligation hereunder shall not at any time exceed the amount certified for the purpose and period stated in such advance authorization. b. This Agreement will terminate without penalty, liability or expense of any kind to City at the end of any fiscal year if funds are not appropriated for the next succeeding fiscal year. If funds are appropriated for a portion of the fiscal year, this Agreement will DRAFT
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terminate, without penalty, liability or expense of any kind at the end of the term for which funds are appropriated.
c. City has no obligation to make appropriations for this Agreement in lieu of appropriations for new or other agreements. City budget decisions are subject to the discretion of the Mayor and the Board of Supervisors. The SF LAFCo assumption of risk of possible non-appropriation is part of the consideration for this Agreement.
THIS SECTION CONTROLS AGAINST ANY AND ALL OTHER PROVISIONS OF THIS AGREEMENT.
7. Invoicing Procedures
a. Invoicing reimbursement shall be accomplished through the City and County of San Francisco financial management system with administrative support from the Office of the Clerk of the Board of Supervisors (“the Clerk”). b. SF LAFCo staff shall track time worked on the Scope of Work through the City and County of San Francisco payroll management system. The Clerk shall transmit summary timesheets for SF LAFCo staff work performed each month for approval by the SFPUC along with invoices to the SFPUC for reimbursement or payment.
c. SF LAFCo will submit for SFPUC approval detailed invoices for contracts where Scope of Work duties are performed for a fixed "not to exceed" amount. Upon its approval of the presented charges, SFPUC shall promptly pay such invoices. d. Should a question arise regarding an invoice, SFPUC and SF LAFCo agree to work cooperatively to resolve the matter.
e. If SF LAFCo and SFPUC later determine that a different invoicing procedure will be more efficient or save costs, this invoicing procedure may be revised, subject to written approval from both the SF LAFCo Executive Officer and the Assistant General Manager for Power. Written notification of any changes will be provided to the SF LAFCo and SFPUC commissions.
f. The SF LAFCo Executive Officer will prepare a memo, semi-annually, to the Assistant General Manager for Power, summarizing SF LAFCo’s use of funds made available under this MOU, including a summary of projects undertaken, work products completed, and activities underway/planned for the subsequent 6 months.
8. Approach to Work.
a. Cooperation. SF LAFCo staff will meaningfully engage with SFPUC staff on all matters involved in the expenditure of CleanPowerSF ratepayer funds, including the determination of the scope of any Requests for Proposals or Requests for Qualifications, the selection of consultants, and the review of draft work products; and use of any work products produced with the expenditure of CleanPowerSF ratepayer funds. SFPUC staff will cooperate to the best of its abilities with requests from SF LAFCo staff and consultants for data, reviews of draft work products, or other information. b. A ppropriate Charge Categories. To fulfill the Scope of Work, SF LAFCo will invoice SFPUC for the actual hours worked by SF LAFCo Executive Officer and SF LAFCo Policy Analyst or Planner, and Professional Services Consulting support, procured through a competitive bidding process and where allowed hourly rates and Other Direct DRAFT
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Charges comport with SFPUC contracting standard terms. To the extent SF LAFCo wishes to obtain exceptions to SFPUC contracting standard terms, it shall consult with, and receive concurrence from the SFPUC.
c. Limited Term Employment. Any SF LAFCo staff hired to perform the Scope of Work will be for a limited term. The employment will continue until the earliest of:
i. the Scope of Work is complete; or
ii. the funding for the position is exhausted and no additional funds are received; or
iii. SF LAFCo's CCA Program responsibilities and obligations are completed.
9. Amendments. No alteration or variation of the terms of this MOU shall be valid unless made in writing and signed by the parties, and no oral understanding or agreement not incorporated in this MOU or written amendment, shall be binding on either of the parties.
SF LAFCo and the SFPUC will reevaluate the status of expenditures and services performed under this MOU during the development of the SFPUC’s proposed Fiscal Year 2025-26 budget. SF LAFCo and the SFPUC may agree to update the terms of this MOU at any time.
10. Counterparts. This MOU may be executed in multiple counterparts.
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San Francisco Local Agency Formation Commission,
Date:
Jeremy Pollock
Executive Officer
San Francisco Local Agency Formation Commission
San Francisco Public Utilities Commission,
Date:
Approved as to Form
David Chiu Dennis J. Herrera
City Attorney General Manager
Deputy City Attorney San Francisco Public Utilities Commission
By: By:
Title: Title: