A San Francisco Board of Supervisors (BoS) proposal would allow the city’s Public Utilities Commission (PUC) to sell emissions-free hydropower-generated electricity from its Hetch Hetchy water system to private customers now served by Pacific Gas and Electric (PG&E).
The PUC currently sells Hetch Hetchy-generated electricity at a big discount to public power agencies and, if there is excess, to the wholesale market for residential and commercial customers at one-quarter of the price, but the BoS proposal would allow that electricity's sale at market rates to customers in new housing and commercial developments larger than 10 units or 10,000 square feet.
The proposal’s goal is to secure $882 million in new funding to reinvest over the next 10 years in a new water tunnel and new streetlights for SFPUC's struggling power enterprise division.
San Francisco leaders say PG&E is concerned about competition to its essentially monopolistic marketplace. But PUC leaders say the city’s power enterprise could soon not be financially viable because it is selling its power so cheaply to City Hall, the San Francisco International Airport and Muni.
Selling the same electricity at market rates would bring three to four times the return, adding an estimated $4 million for every 10 megawatts it sells into an expanding market that already is offering a new project, the Transbay Transit Center, that would buy 4 to 8 megawatts. Transbay Transit Center, for example, would save over $252,000 per year through buying from the PUC.