City and County of San Francisco
CCA Citizens Advisory Task Force

MINUTES

Thursday, December 15, 2005
5:15 p.m. – 7:30 p.m.
City Hall, Room 421

Members

Ron Dicks, Interim Chair
Paul Fenn, Interim Vice Chair
Cal Broomhead
Lino Del Signore
Barbara Hale
Gino Lazzara

1.      Call to Order and Roll Call

Interim Vice Chair Paul Fenn called the meeting to order at 5:29 PM. Present: Mr. Paul Fenn; Mr. Cal Broomhead; Mr. Maurice Campbell; Ms. Barbara Hale; and, Mr. Gino Lazzara.  Absent: Ron Dicks, Interim Chair and Mr. Lino Del Signore.

2.      Approval of Minutes for the December 1, 2005 Meeting

Ms. Hale moved to approve the minutes of the December 1, 2005 meeting.  Motion was seconded and the minutes were approved unanimously.

3.      Public Comment

There was no public comment.

4.      Discussion and Possible Action Regarding Election of Officers

It was agreed upon that all members should be present for the election.  A motion was made to move the item to the end of agenda in the event the absent members should arrive to meeting.  Motion was seconded and approved unanimously.

5.      Discussion and possible action regarding the SFPUC’s Draft Request for Information (RFI) (Hale)

Ms. Hale explained that after the last meeting, the SFPUC emailed for purposes of discussion a draft request for information.  The concept is that this document will lay out for interested bidders, members of the public, stakeholders, and the community the proposed shape of the request for bid that will ultimately be sent out so that there is some feedback from the potential bidders and stakeholders and members of community on the shape of that RFP.  The information gathered will help ensure that the request for proposals/bids is solid when it does get issued.  This request for information and comment is very similar in form and approach to the request for information and comment the City recently issued on WiFi.  The Tech Connect project has now moved from request for information and comment on WiFi to preparing a bid package and soliciting proposals.

Ms. Hale continued, explaining that one of the principle issues around the RFI is the timing of publishing it because the assumed content about what would be in the RFI would depend upon how far CCA has progressed when it is issued.  In this draft, it is written as if the RFI were being issued now.  It leaves blank questions that remain today unresolved about the content of the implementation plan.  This current draft of the RFI plugs in the SFPUC’s preferred variables.  There has been considerable deliberation and discussion recently on some of these questions over the course of 13 meetings held by a CCA Stakeholder group that has included the Mayor’s office and the SFPUC as well as Local Power.  Some of the issues that had been reported in a memo to Mayor’s Office and the Board of Supervisors’ Budget and Finance Committee are not reflected in this draft. 

Mr. Fenn articulated that the draft RFI still contains questions asking the suppliers whether the 360 MW CCA electricity resource portfolio target is feasible or not and that there is a consensus among Local Power, the SFPUC, and other CCA Stakeholder Group members agreeing that this will be a requirement and not a variable.  It should be drafted as a post implementation plan document that contains the resolution of these issues within the next month.  It should take at least a month or two to figure out what should be in this.   

January 2006 was the initial release date for the RFI in the CCA Task Force work plan but now the schedule is to go back to the board and make every attempt to resolve all the remaining issues regarding: load growth, calculations, resource definitions, who runs it the program’s implementation, where will start-up funds come from and how much we get.  No major structural issues need to be resolved.  A supplemental modification to the Implementation Plan is coming in February.  We have told the Budget and Finance Committee that we will come back to them at the end of January with the budget & supplemental issues resolved. 

Mr. Fenn stated that he would like to resolve outstanding issues in mid-February in time for a supplemental budget request.  The “long” Implementation Plan (longer document) is the City’s plan.  This document, which should include details regarding the CCA program, the issuance of Prop H revenue bonds, and the roll out of the solar component, will be approved in March or April.  A second document that has been developed is a shorter document, and contains only the CPUC required content.  It is still in draft form and looks like it will be done in Feb or March.  The RFI should go out about that time and all the questions will become variables and elements of the program where feedback is needed on whether they should be done rather than receiving comments on how those elements or variables should be done. 

Ms. Hale explained that the pages of the draft that precede the questions outline the CCA program’s goals and describe the generation components within SF.  The purpose of this is to educate the community that reads the RFI about CCA and explains the kind of information that is needed in order to resolve outstanding issues.  It also lays out affirmatively what the programs policies and goals are. The pages of questions starting on page 15 are intended to solicit additional questions and comments about particular aspects of that program and those goals in order to help the City better refine its program design and eventual Request For Proposals.  They are not intended to say that the City is unsure of its policy; rather the intention is to shape the direction of respondents’ comments back to us about the policy goals and the program so that we get an orderly narration back from the community. 

Mr. Broomhead requested that they begin by going through the questions at the back of the RFI under Section 11.   The Task Force reviewed this section of the RFI/RFC page by page commencing on page 15.

Section 11, Question A was read.

Mr. Fenn noted in particular, that this series of sentences requests comments on feasibility and calls the resource portfolio “goals,” and not bidding requirements.  The questions are geared toward gathering comments on whether or how to best use the authority to issue revenue bonds.  All this is generally resolved.  These issues have been resolved and aren’t outstanding questions.  Therefore, they shouldn’t be presented as questions. 

Ms. Hale stated that she believes that the questions should read as an introduction to the energy resource portfolio goals for the CCA.  “The city is particularly interested in gathering comments regarding whether and how best to use the authority to issue revenue bonds to attain the following energy resource portfolio[.],” she stated.

Mr. Fenn suggested that in terms of the CCA’s resource portfolio goals (the “360 MW”), the word “feasibility” could be replaced with the word “methods”. With respect to the Prop. H Bonds (revenue bonds for renewable energy and energy efficiency projects)  – City staff has expressed certain concerns about the bonds, but in terms of whether the bonds may be used -- that has been resolved.  Furthermore, the parties within the recent meetings organized at SFPUC by the Mayor’s Office have resolved that the 360 MW resource portfolio target be required.  Mr. Fenn suggests that the RFI be changed from “goals” to read: “bidding requirements” and “feasibility of methods”.  

Subsections i - iv of Question A describe the resource portfolio

Mr. Fenn explained that the CCA Stakeholder Group has agreed to no longer require that the 360 MW resource portfolio bidding requirement be rolled out within 3 years.  However, the 360 MW must be rolled out with the Power Purchase Agreement on the 1st of the year, but we are not requiring the 3-year timeframe. 

Ms. Hale clarified that the agreement reached by the CCA Stakeholder group was 3 years, or longer if necessary, in order to meet the liability and performance per the City’s outright requirements.  The City has different expectations in terms of responses for potential bidders versus stakeholders of the community who just want to comment.

Mr. Fenn referred to the last paragraph on pg. 15.  With respect to “All of the infrastructure and generation assets described above are intended to ultimately be owned by the City…” if you want to have a crossover by tax bonds (general obligation bonds) & H bonds, some are owned by the government and some are owned by individuals that you have a certain complexity there surrounding how to structure that issuance.  And so to state outright that the city and county might ultimately own them – it might be too tight because we do want people and businesses to buy-in and add their own revenue and participate so that they end up owning it as opposed to a CCSF only. Alternately you have the City buy-in facilities as PUC is currently building solar facilities and therefore does the city want a piece of this in terms of their investment.  Do they want to spend the General Fund revenue in terms of purchase?  There are three sectors of ownership options.  

Mr. Broomhead asked if the paragraph be removed altogether because this paragraph puts a box around what the methods and bidding requirements ought to be.

Mr. Fenn responded that rather, the paragraph should be refined because it is a distributed facility and a planned rollout and along with that – it provides the option of owners providing rooftops the ability to participate.  Private sector vs. government only ownership needs to be outlined.  The outline of what we are looking for includes the H Bond assumptions re: whether we’ll use them not that we’ll use them.  The City is prepared to finance or to have more complex option to residents and businesses as well as the City itself thus adds more revenue.  The baseline is that the City will finance and will provide a degree of businesses & residents who want it.  The City will also consider owning part of this thing.

The language should incorporate what is there but that the City may consider non-City ownership of distributed resources to the extent that can be accomplished without violating the Prop H revenue bond.  It needs to have a few sentences added to include business, private enterprise, and neighborhood individuals and neighborhood individuals group ownership (such as has been done in Germany).  Mr. Fenn stated that he will work on the paragraph and will revisit next meeting to include multiple individuals as ownership, businesses, individuals and the City.

Pg 16, Section B of the draft RFI was read out loud.

This Section states that the CPUC will require CCAs to meet resource adequacy requirements.  Moreover, San Francisco’s grid operator, California Independent System Operator (ISO), has identified it as an area that is deficient in local generation.  What the RFI will ensure is that bidders and the community heard from the City that it will remain true to the electric resource plan statement in that facilities like Hunter’s Point and Mirant, should be shut down.  It will insure that against a bidder coming in and saying that the CCA can provide the resource portfolio needed for CCA by signing a contract with Mirant that would make it operational because that keeps it in conflict with another city policy.  The RFI is asking for comment on how to best meet the local resource adequacy requirements that are set by the state without getting in the way of existing policy so that that the large and older plant will have to be shut down because the aggregation program will need to meet these state requirements.C.        Section C of the draft RFI was read out loud.

Ms. Hale noted that this question addresses that there is a bidding requirement that says the bidder will be building renewable generation facilities.  Meanwhile, there is a state statutory requirement that says CCAs will have to meet the renewable state portfolio requirement of 20 percent.  In addition, the CCA will be marketing its programs to PG&E customers and PG&E may have it’s own advertising or commentary about the CCA program so there needs to be sensitivity to the fact that PG& E will have a certain level of renewable power in their portfolio, from day 1 of the CCA program.  What is needed is to receive commentary on how best to achieve a green resource portfolio that can compete against PG&E's resource portfolio from day 1 recognizing that the CCA is going to have these generation assets coming on line later. 

Mr. Campbell asked whether the ISO would want to see a history of something in place for a year before they count any generation from new City assets against their load factors and how does that affect the CCA.

Ms. Hale asked Mr. Campbell if he meant what resources ISO would allow the CCA to use to meet that requirement.  For example, the intermittent resources like wind and solar don’t have as good of a load capacity factor as other types of generation technologies and so that will be a factor that the ISO will look at and that the SFPUC is considering in the resource adequacy proceeding.  The issue of the duration of time that a generation asset has been in operation is certainly something that will be part of a response.  If this is issue to be called out, there can be some additional text about that. 

Mr. Broomhead noted that there would likely be no tidal power developed in the next 5 years.  Wind could happen, but the City may have to model this.

Ms. Hale asked if a second paragraph in C to talk about the later years was needed.

Mr, Fenn stated that this will be enhanced by the RPS and once the compliance approach it is worked out, comments on the schedule could be requested.  Whatever is agreed to for the compliance approach can be set aside and then approval of the compliance schedule could be requested.  Regarding 51% RPS by 2017 – can we accept that they build power up until and on that schedule?  They will also have to consider a Phase II roll-out and whether or not they would want to do a big wind farm, an offshore or central grid/shore connection installation to finish off the RPS.  The city will be either buying power at a premium price, or they will bed dealing with a phase II plan beyond their first 4/5 years of service.  There are several different Phase II big options.  PUC has looked at all of these resources and will need to do some modeling as to what the prices are. 

Ms. Hale noted that Section C addressed the earlier compliance concern, that until the assets have actually been built, there should be thought given to whether or not renewable power should be in the portfolio.  What is being discussed is in the later years, i.e., is another paragraph in Section C needed regarding a phase 2 in the later years and whether or not the 360 MW is needed.  This needs to be looked at so that they are not treating the 51% as an empty promise.

Mr. Fenn stated that the existing Section C is fine but needs a second part added to  it that addresses 51% and the second part of rollout.

D.             Section D was read out loud.

Ms. Hale stated that there had been a request that the respondent’s should recommend pricing structures (e.g., a rate schedule).  There should be some kind of outline regarding a rate structure that is indexed to another factor like Page’s.  It could also be indexed to a natural gas rate.  If the Task Force could come up with a structured rate, or a description of what should be pursued, it would be nice to ask them about the nature of a commitment that they prefer.  Pension, health care cost changes, and other things need to be taken into account.  Competitive rates need to be provided.

Mr. Fenn stated that if huge renewable commitments were being made, they are fixed prices as opposed to the huge renewable up and down PG&E because their prices are not fixed. 

Mr. Lazara asked how does one project what PG&E makes over the next 10 years and how would they react to this.

Mr. Fenn stated the ISO are the transmission operators, subject to deregulation and their jobs are to protect the transmission system so they are focused on revenue requirements.  The CCA’s structured deal is significant and is a basis upon which it may negotiate with PG&E in the future.  There will need to be a lot of paradigm smashing to take place with respect to the CALISO; this may be tough. 

Section E was read.

Ms. Hale summarized that this is soliciting comment on how to have the revenue bonds issued there to support CCA but in addition noted that there could be other bond opportunities to invest in other renewable resources and to try to expand the pool of dollars in a way that integrates those resources for consumption by the CCA customers. 

Mr. Broomhead asked if this related to Section C and whether or not it was redundant.  Ms. Hale stated that this section envisions the City (as opposed to the CCA)  as an investment partner.

Mr. Fenn noted that Section C talks about how the generation assets would be developed by CCA while E talks about the City taking responsibility for a portion of the supply of renewable energy as opposed to the CCA.  Section E should be moved up to follow Section C so that people can see what the accumulation of renewables can do. 

Maybe insert something about the H bond repayment because they have to financially internalize the h bond because the rates reflect their financing costs.  They will therefore have to model the financing.  Would be nice to see the amount of financing time and the actual repayment of the bond. 

Ms. Hale stated that a request could be added to address the relationship between generation construction, bond repayment and contract duration.

Mr. Fenn noted that there would be two phases.  Phase 1 (a 4-6 year roll out); Phase 2 will include the second bond issuance.  The length of contract becomes an issue here and requires addressing different financing approaches.

Mr. Campbell inquired how an ESP that is not performing well would be handled versus how a well performing ESP be kept motivated in Phase II. 

Mr. Fenn responded Phase II could be “cushy” compared to Phase I but the main issue is if the ESP is not performing. Mr. Lazara asked how the margin in Phase II would be maintained. 

Mr. Fenn stated they could address incentive issues with respect Phase II rollout.

Mr. Fenn called for public comment.  Mr. Ken Cleaveland requested to drop “owned by the City of SF and . . .”

6.      Update regarding decisions re CCA at CPUC (SFPUC staff)

Mr. Casey stated that the decision was finalized today but had not reviewed it; key issue in Phase II Decision Making was the extent of CPUC oversight over CCAs.  CPUC rejected arguments put forth by the IOUs.

CPUC process:  Submit Implementation Plan; CCA will be registered, whatever that means; 90 day CPUC review and comment; very good for CCAs.

IOUs have 30 days to petition CPUC to clarify or modify this decision.

Mr. Fenn stated that the decision is good; CPUC was very firm with the utilities.  Cities have to make a firm commitment to CCA, instead of having an “open season,” before utilities would have to change procurement.  CCAs could be on the hook for a bigger CRS.  Would it be possible to assume an existing PG&E procurement contract? 

Mr. Casey responded it was possible, but the costs and complexities of trying to do that would make it inadvisable.

7.      Discussion & Planning for Outreach for BOMA meeting
Mr. Fenn noted that the meeting was set for BOMA at their offices at 233 Sansome Street at 8:30 am on January 27, 2006.

8.      Discussion and possible action to Schedule Next Meeting(s) and AgendaTopics for the next meeting included:  Election of officers; Continuation of review of RFI;

Another CPUC update by SFPUC staff; additional planning for BOMA meeting

9.      Adjournment
Mr. Fenn moved for adjournment.  Mr. Campbell provided the second.  The meeting was adjourned at 6:50 p.m.