Streamlined Contracting for
Customer Installation of
Electric Infrastructure
Presentation to the San Francisco
Public Utilities Commission
February 24, 2026
Catherine Spaulding
Deputy Assistant General Manager, Power
Planning and Capital Delivery
Davidson Substation Transformer Placement
2 Background
Need for electric infrastructure in response to strong demand • We are in an unprecedented sharp uptick due to AI/data centers, electrification • We need new substations, transmission and distribution upgrades Need for a unified construction process
• Large load customers want Hetch Hetchy Power service ASAP as part of larger construction projects on their property
• Private sector partners are accustomed to constructing and turning over facilities to utilities as part of these larger construction projects 3 Opportunity
• Opportunity to capture efficiencies of construction that is already underway and be responsive to market conditions
• We are seeking authorization to contract to purchase from a customer facilities that PUC would otherwise be required to install • The intention is to facilitate existing City policy that PUC provide electric service to all new customers whenever feasible
• But, due to the scope of work necessary, and PUC’s work on other capital improvement projects, PUC could not otherwise complete the project design, solicitation, and construction in the timeframe the customer requires 4 Admin Code Section 99.5
• Our proposal is to extend the authority granted in Admin Code Section 99.5 to other customers
• Would apply to just a few, largescale projects with unique circumstances
• In 2021, the Board of Supervisors added Section 99.5 to the Administrative Code on contracting with developers with a development agreement to install facilities on the part of PUC • This has been very successful – City standards and requirements have been met, infrastructure successfully delivered
5 Proposed Extension of 99.5 Authority
The PUC can contract to purchase from a customer electric utility facilities that PUC would otherwise be required to install, provided that:
• Amounts PUC will pay to the customer for facilities may not exceed what SFPUC would expect to pay to perform the same work itself • The PUC and customer have entered into an agreement that describes scope of work and each party’s cost responsibility
• Such an agreement includes equity, labor, and local economic participation requirements
• City is authorized to accept ownership of the facilities • Construction will be performed by licensed contractors and comply with applicable City requirements
6 Sooner customer
and rate base
growth
More City-owned
electric
infrastructure
City’s housing
density and climate
action priorities
Cost and efficiency
savings
Equity, labor, and
local economic
participation
requirements in
contracting
Proposal is in the Public Interest
Thank you
DEPARTMENT
Power Enterprise
AGENDA NO.
7 MEETING DATE
February 24, 2026
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Calendar: Regular Calendar
Contract/Project Manager: Catherine Spaulding
Authorize the General Manager to seek Board of Supervisors approval to extend the authority in Section 99.5 of the Administrative Code for streamlined contracting for customer installation of electric infrastructure
Summary of Proposed
Commission Action:
Authorize the General Manager to seek Board of Supervisors approval to extend the authority in Section 99.5 of the Administrative Code for streamlined customer installation of electric infrastructure. This authority would allow the San Francisco Public Utilities Commission to contract to purchase from a customer electric utility facilities that the San Francisco Public Utilities Commission would otherwise be required to install , subject to specified conditions.
Background: Across the country, and particularly the San Francisco Bay Area, we are facing a sharp uptick in electric demand due to artificial intelligence, data centers, and electrification efforts to meet climate action goals. The City needs to build electric infrastructure in response to this strong demand, including new substations and transmission and distribution upgrades . The San Francisco Public Utilities Commission (SFPUC) is working toward meeting that demand.
Currently at $1.2 billion and proposed to expand significantly, the SFPUC Hetch Hetchy Power ten -year capital program is planning to meet this demand and opportunity. Planned investments include new substations to provide City departments with more clean power, support increased housing density, and meet building and transportation electrification goals as outlined in the City’s Climate Action Plan.
In addition, private sector large load customers are requesting Hetchy Power service due to our low rates , reliable service, and expanding infrastructure.
These large customers are seeking our electric service as part of larger construction projects on their property, and are accustomed to funding, constructing, and turning over electric facilities to utilities as part of such large construction projects. T he City has the opportunity to capture the efficiencies of scale and accelerated schedule of construction that is already underway by the customer.
In May 2021, the San Francisco Board of Supervisors added Section 99.5 to the Administrative Code to authorize contracting with developers to install Agenda Title: Authorize the General Manager to seek Board of Supervisors approval to extend the authority in Section 99.5 of the Administrative Code for streamlined contracting for customer installation of electric infrastructure Commission Meeting Date: February 24, 2026
necessary electric facilities that SFPUC would otherwise be required to install (Ordinance 65-21). The Power Enterprise has since used this authority for new horizontal electric infrastructure on Treasure Island/Yerba Buena Island, HOPE SF locations in Sunnydale and Potrero, Mission Rock, and Pier 70, powering 2700 new residential housing units to the City, ground floor retail, commercial offices , and public amenities .
Building upon this success, the Power Enterprise proposes to seek Board of Supervisors’ approval of an extension of the Administrative Code Section
99.5 authority to apply to other customers. This authority will facilitate existing City policy that SFPUC provide electric service to all new customers whenever feasible. However, due to the scope of work necessary, and SFPUC’s work on other capital improvement projects, SF
PUC could not
otherwise complete the project design, solicitation, and construction in the timeframe customer s require. The SFPUC Power Enterprise would use this proposed authority in few instances with unique circumstances, such as when electric facilities are being constructed on customer -owned property as part of larger construction projects by the customer.
Extending
Section 99.5
Authority:
The proposed amendment to San Francisco Administrative Code Section
99.5 would provide that:
• Amounts SFPUC will pay to the customer for facilities may not exceed what SFPUC would expect to pay to perform the same work itself.
• SFPUC and the customer will enter into an agreement that describes the scope of work and each party’s cost responsibility, and ensures all City equity, labor, and local economic participation requirements are met.
• The City has authority to accept ownership of the facilities, unless an applicable regulation or tariff requires ownership by a third- party electric utility.
• Construction will be performed by licensed contractors and compl y with all applicable City codes, ordinances, and electric standards . • Contracts entered under Section 99.5 are exempt from Chapters 6 and 21 of the Administrative Code.
Facilities that c ustomers install under the amended provisions may have excess capacity that SFPUC can use to serve more customers, including municipal services and new housing developments in the City. This is more efficient and cost-effective than piecemeal construction by different parties and may minimize disruption due to construction in the public right -of-way.
Result of Inaction: Without this new authority, for many projects, the Power Enterprise would seek Board of Supervisors ' approval for a sole source contract for construction of facilities by the customer.
Agenda Title: Authorize the General Manager to seek Board of Supervisors approval to extend the authority in Section 99.5 of the Administrative Code for streamlined contracting for customer installation of electric infrastructure Commission Meeting Date: February 24, 2026
Schedule: The proposed Ordinance would take effect following approval by the Board of Supervisors and Mayor.
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Section 15378 because it does not involve any commitment to any specific project which may result in a physical change in the environment. The agreements Staff execute with customers under Section 99.5 will allow Staff to disburse funds for tasks such as planning and design, which do not entail any physical changes in the environment, but will not allow disbursement of funds for construction until any necessary environmental review of the project has been completed in conformance with the CEQA.
Recommendation: SFPUC staff recommend that the Commission adopt the attached resolution.
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, The San Francisco Public Utilities Commission (SFPUC) Power Enterprise operates a municipal utility, Hetch Hetchy Power, and a Community Choice Aggregation (CCA) program, CleanPowerSF; and
WHEREAS, Hetch Hetchy Power has a robust capital investment program to build electric infrastructure such as new substations and transmission and distribution upgrades to meet increased electric demand resulting from artificial intelligence and electrification efforts to meet the City’s climate action goals; and
WHEREAS, Some large customers seeking Hetch Hetchy Power electric service are willing to fund, cons truct, and turn over electric facilities to City ownership, as part of large construction projects ; and
WHEREAS, In Ordinance No. 65-21 establishing Administrative Code Section 99.5, the San Francisco Board of Supervisors authorized contracting with developers to install facilities that SFPUC would otherwise be required to install, to support the successful delivery of electric infrastructure at a commercial pace; and
WHEREAS, Hetch Hetchy Power seeks to extend the 99.5 authority to authorize contracting directly with customers where amounts payable to the customer for the facilities do not exceed the amount the SFPUC would expect to pay to perform the same work itself , the customer will comply with City equity, labor, and local economic participation requirements, and the contracts will be exempt from Chapters 6 and 21 of the Administrative Code ; and
WHEREAS, This proposed amendment to the authority in 99.5 is reasonable and in the public interest because the contracts would enable new City -owned electric facilities to support municipal services, help achieve climate action goals, and increase economic development in the City; and
WHEREAS, This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Section 15378 because it does not involve any commitment to any specific project which may result in a physical change in the environment; a nd
WHEREAS, The agreements Staff execute with customers under Section 99.5 will allow Staff to disburse funds for tasks such as planning and design, which do not entail any physical changes in the environment, but will not allow disbursement of funds for construction until any necessary environmental review of the project has been completed in conformance with the CEQA; now, therefore, be it,
RESOLVED, That this Commission authorizes the General Manager to seek Board of Supervisors approval to extend the authority under Section 99.5 of the Administrative Code to allow SFPUC to contract to purchase from a customer electric utility facilities that SFPUC would otherwise be required to install, as described above; and, be it,
FURTHER RESOLVED, That this Commission authorizes the General Manager to approve changes to the proposed legislation that the General Manager determines, in consultation with the City Attorney, are in the best interest of the City, are necessary or advisable to effectuate the purposes and intent of this resolution, and are in compliance with all applicable laws, including the City’s Charter.
I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting of February 24, 2026.
Director of Commission Affairs
San Francisco Public Utilities Commission