DEPARTMENT
Power Enterprise
AGENDA NO.
6a
MEETING DATE
August 13, 2024
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Calendar: Consent Calendar
Project Manager: Timothy Minezaki
Approve Amendment No. 2 to Contract No. PRO.0174, Cooperative Agreement with The Energy Council to Participate in the Bay Area Regional Heat Pump Water Heater Contractor Incentive Program
Summary of
Proposed
Commission Action:
Approve Amendment No. 2 to Contract No. PRO.0174, Cooperative Agreement with The Energy Council for CleanPowerSF’s participation in the Bay Area Regional Heat Pump Water Heater Contractor Incentive Program , increasing the contract amount by $750,000 and extending the contract duration by nine days , for a new not-to-exceed contract amount of $1,200,000 and a new contract duration of three years, one month, and nine days.
Background: The San Francisco Public Utilities Commission (SFPUC) Power Enterprise, through its operation of the Hetch Hetchy Power and CleanPowerSF electric service programs, provides over 75% of the electricity consumed in San Francisco . E lectricity supply in San Francisco is now much cleaner due to San Francisco’s increased deployment of renewable and carbon free electricity sources to serve our customers. For that reason, converting energy use in buildings from natural gas to electricity
has been identified as a key pathway to
achieving the City’s and State’s ambitious greenhouse gas emission reduction goals. Additionally, building electrification is crucial to protecting public health; burning natural gas in buildings is one of the most significant sources of both indoor and outdoor air pollutants, which lead to adverse health outcomes.
Heat pump water heaters provide high- efficiency water heating powered by electricity , replacing existing w ater heaters powered by natural gas. Despite their benefits to reducing greenhouse gas emissions and air pollution, adoption of h eat pump water heaters remains low.
Barriers to adoption include low awareness among consumers, lack of training among contractors, and low stocking of the technology among distributors to make heat pump water heaters available for emergency replacements.
The Bay Area Regional Heat Pump Water Heater Contractor Incentive Program (Program) was launched to increase the adoption of heat pump water heater technology in the region by providing contractor and distributor training and incentives for installation of heat pump water Agreement: Cooperative Agreement
Commission Meeting Date: August 13, 2024
heater units in residential settings. The Program provides a rebate to contractors for each unit they instal l. The Program is administered by The Energy Council, a Joint Powers Agency based in Alameda County, with startup funding provided via the Bay Area Regional Energy Network (BayREN) from a grant provided by the Bay Area Air Quality Management District.
Since April 2019, The Energy Council has organized a collaborative regional program among community choice aggregators and publicly- owned utilities in the Bay Area to foster the deployment of heat pump water heaters.
On July 28, 2020, by Resolution No. 20-0166, this Commission authorized the General Manager to enter into a Cooperative Agreement so that CleanPowerSF could participate in the Program , in an amount not-to-exceed $450,000 and a duration of two years and eight months .
Along with the S FPUC’s CleanPowerSF , Ava Community Energy, Marin Clean Energy, and the City of Santa Clara ’s Silicon Valley Power are currently participating in the P rogram under a Cooperative Agreement.
Pursuant to the Cooperative Agreement , The Energy Council began granting incentives in San Francisco in May of 2022, and has now enrolled over 50 contractors that have installed over 250 heat pump water heater s for CleanPowerSF customers under this P rogram. The large number of installations can be attributed to multiple factors such as the outreach efforts by the Power Communications team last summer coupled with other Federal and State incentives for heat pump water heaters.
The Cooperative Agreement between the San Francisco Public Utilities Commission and The Energy Council expires March 31, 2025, and there is currently $105 ,250 remaining in the approved spending authority which could fund contractor incentives for 92 heat pump water heaters. Based on the current participation rate of approximately 60 heat pump water heater installations per month, plus some expected growth in this rate in the coming months, staff forecasts that incentives for these remaining 92 installations will be claimed and paid by September 2024 or soon thereafter. To ensure this P rogram builds on its recent success and supports the continued installation of heat pump water heaters until the expiration of the Cooperative Agreement , staff requests an increase t o the agreement not -to-exceed amount of $750,000.
Finally, this resolution seeks to extend the agreement duration by nine days to correct a previous administrative inconsistency for a total program duration of three years, one month, and nine days.
Scope of the
Contract:
The work under this agreement consists of the following tasks.
Agreement: Cooperative Agreement
Commission Meeting Date: August 13, 2024
Each Participating Agency , including San Francisco Public Utilit ies Commission, is responsible for:
• Reviewing and responding to all materials submitted by The Energy Council for review and approval in connection with the Program.
• Reviewing and paying promptly to T he Energy Council
invoices for the funding specified in the agreement.
• Providing a staff member as the Primary Contact for the Program and designating that person to participate in guiding the program, including providing input on administrative fee revenue spending once minimum Program expenses are met. • Marketing the Program to eligible customers.
• Advising the Program Administrator of any anticipated changes in Program funding.
The Energy Council is responsible for:
• Convening meetings among Participating Agencies to discuss the Program, provide updates, and solicit feedback.
• Informing Participating Agencies of new policies and programs in the region or state impacting heat pump water heater sales. • Contracting with and overseeing a Program P rovider that provides administrative services, including handling incentive applications and processing payments.
• Holding all funds contributed by Participating Agencies in an account insured by the Federal Deposit Insurance Corporation.
• Ensuring that Program expectations are met and following up with contractors to correct any issues.
• Complying with the scope of work in the Bay Area Air Quality Management District Grant.
• Reporting to each Participating Agency on the number of heat pump water heaters installed and other project details monthly and annually.
Modifications to the
Contract:
Amendment No. 1: On October 24, 2022, by Resolution No. 22-0177, this Commission authorized the General Manger to extend the contract Agreement: Cooperative Agreement
Commission Meeting Date: August 13, 2024
by five months, for a total duration of three years and one month, with no change to the contract amount.
Proposed Amendment No. 2 : Staff recommends this Commission approve Amendment No. 2, to increase the contract amount by $750,000 to ensure this Program builds on its recent success and supports the continued installation of heat pump water heaters until the expiration of the Cooperative A greement, and extend the duration by nine days to correct an administrative error in the previous amendment approval, for a new total not-to-exceed contract amount of $1,200,000, and a total duration of three years, one month, and nine days.
Failure to increase the spending authority will halt the San Francisco Public Utilities Commission’s participation in this Program, making CleanPowerSF customer installations no longer eligible for incentives, once the existing amount is spent , which is
anticipated to occur in
September 2024, six months prior to the end of the Program agreement.
Funding and Costs: Funding Source : CleanPowerSF, Project No. 10036107, CleanPowerSF Customer Program
Original Not-to-Exceed Amount: $450,000
Amendment No. 1 Amount: $0
Recommended Amendment No. 2 Amount: $750,000
Total Not-to-Exceed Contract Amount: $1,200,000
The table below summarizes the changes to the Program spending authority were this resolution to be adopted.
Table 1. Summary of Proposed Change
Not-To-Exceed
Program
Authority
# of Heat Pump
Water Heaters to be
Incentivized
Current Amount $450,000 392
Requested Increase $750,000 621
Proposed Amount $1,200,000 1053
Schedule: Original Duration: Two years and eight months
Amendment No. 1 Duration: Five months
Recommended Amendment No. 2 Duration: Nine days
Total Not-to-Exceed Contract Duration: Three years, one month, and nine days.
Agreement: Cooperative Agreement
Commission Meeting Date: August 13, 2024
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
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 (Ordinances 146- 07, 147-07, and 232-09); and
WHEREAS, The Energy Council is a joint powers agency comprised of Alameda County and all cities in Alameda County and was formed to seek fundi ng to develop and implement programs and policies that reduce energy demand, increase energy efficiency, advance the use of clean, efficient and renewable resources, and help create climate resilient communities; and WHEREAS, Installation of heat pump wate r heaters in residential settings as soon as practical is an important action for reducing greenhouse gas emissions from the building sector and improving air quality, and this urgent and immediate action will reduce the long term, cumulative impacts on the environment and public health; and WHEREAS, The Energy Council is administering the Bay Area Regional Heat Pump Water Heater Contractor Incentive Program, which provides incentives to contractors that install heat pump water heaters, using funding provided under this Cooperative Agreement by the CleanPowerSF program and other participating agencies; and WHEREAS, On July 28, 2020, by Resolution No. 20-0166, this Commission authorized the General Manager to execute the Cooperative Agreement with The Energy Council so the CleanPowerSF program could participate in the Bay Area Regional Heat Pump Water Heater Contractor Incentive Program, for an amount not-to-exceed $450,000 and a duration of two years and eight months; and
WHEREAS, On October 24, 2022, by Resolution No. 22- 0177, this Commission authorized the General Manager to execute Amendment No. 1, extend ing the Cooperative Agreement with The Energy Council so the CleanPowerSF program could continue to participate in the Bay Area Regional Heat Pump Water Heater Contractor Incentive Program by five months, for a new contract duration of three years and one month, with no change to the contract amount; and
WHEREAS, Services under the Cooperative Agreement began on February 22, 2022, and will be terminated for lack of spending authority prior to the planned program end of March 31, 2025, unless this Commission authorizes an increase in the not-to-exceed amount; and WHEREAS, Since its commencement in San Francisco, the Bay Area Regional Heat Pump Water Heater Contractor Incentive Program has issued incentives to contractors for the installation of over 250 heat pump water heaters at the residences of CleanPowerSF customers; and WHEREAS, Staff recommends the Commission approve Amendme nt No. 2, increasing the contract amount by $750,0000, and extending the contract duration by nine days, to ensure this Program builds on its recent success and supports the continued installation of heat pump water heaters until the expiration of the Cooperative Agreement and to correct an administrative error in the previous amendment duration approval, for a new contract not -to-exceed amo unt of $1,200,000, and a contract duration of three years, one month, and nine days; and WHEREAS, Funds are available from Project No. 10036107, CleanPowerSF Customer Program; now, therefore, be it
RESOLVED, That this Commission hereby approves Amendment No. 2 to Contract No.
PRO.0174, Cooperative Agreement with The Energy Council, increasing the contract amount by $750,000, and extending the contract duration by nine days, for a new not -to-exceed contract amount of $1,200,000, and a contract duration of three years, one month, and nine days.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of August 13, 2024.
Director of Commission Affairs,
San Francisco Public Utilities Commission