November 2012

Publisher's View: Energy

Steven J. Moss

Earlier this fall the San Francisco Board of Supervisors voted to enter into a contract with Shell Energy North America to provide renewable energy – solar, wind, biogas and geothermal – to San Francisco households. The contract will be managed under San Francisco Public Utilities Commission’s (SFPUC) CleanPowerSF program, taking advantage of a state law that allows municipalities to compete with investor-owned utilities – such as Pacific Gas and Electric Company (PG&E) – to provide power – but not transmission and distribution services – to their residents and businesses.

Renewables are cleaner, but more expensive, than fossil fuels. State-of-the-art natural gas-fired power plants can generate electricity at almost half the cost of the best solar facilities. But solar power produces a quarter or less of the polluting air and greenhouse gas emissions than natural gas. By participating in CleanPowerSF, San Franciscans would immediately reduce the environmental impacts associated with their electricity use, paying at least a $120 a year premium – and quite likely significantly more – to do so.

If this was the end of the story, when the times comes – roughly half of City households will be automatically placed in CleanPowerSF by next summer, with the option to stick with PG&E by “opting out” of the program – each of us could just make a simple decision about whether we want to pay more for cleaner electricity. But this being San Francisco – PG&E’s headquarters, and where the Examiner nee Bay Guardian is published – throughout 2013 they’ll be considerable noise about how great, or awful, CleanPowerSF is.

“Progressives” will claim that CleanPowerSF deals a crushing blow to monopoly PG&E, paving the way to a green­er, more community-friendly, electricity grid. PG&E, ever protective of its otherwise captured customer base, will insist that the City can’t be trusted with such an essential commodity as electricity, and the resulting costs to households will be ruinous.

Neither of these assertions are more than distant relatives to the truth. Since Shell will be providing the power, CleanPowerSF will do little to condition the City for a future, more significant, role – perhaps in the form of nurturing more home-grown, sustainable power sources, and expanding its distribution infrastructure from City-owned and former redevelopment-financed properties – in providing electric service to San Franciscans. And anyways, if the provision of Hetch-Hetchy hydropower to municipal facilities hasn’t created that capacity, CleanPowerSF won’t add much to SFPUC’s skill set. The program earmarks $6 million for environmental programs, including a study of local power-generation options and solar and energy-efficiency initiatives, but SFPUC could invest these funds – which, compared to the more than $20 million the City will spend on prepping for the CleanPowerSF launch, are a modest sum – without switching energy users from one large corporation to another. And under state law, one-third of PG&E power throughout Northern California has to be renewable by 2020. CleanPowerSF’s purchases will be a spark in the fire, so to speak; too small to move the renewable market.

Those who choose not to opt-out of CleanPowerSF will be provided with reliable electricity at a higher cost than PG&E power. How much higher isn’t yet known, and there’s some risk that rates will be more than expected. If Shell relies on “renewable energy credits” – certificates indicating the purchase of renewable power, rather than direct investments in renewables – there’s some risk that San Franciscans won’t get what they’re paying for, as recently reported by The New York Times. Over time, though, any potential for fraudulent behavior will be stamped out, and the price differential should diminish, as renewable costs decline with increases in scale, and PG&E raises its reliance on non-fossil fueled generation.

Low-income families and small businesses who can’t afford CleanPowerSF should stay with PG&E. But there are plenty of San Franciscans who have the means to pay a premium for electricity that has a lower environmental impact, and they should do so.


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