SF Public power: Worst-case scenario
 	 		 		
October 10, 2001 | SFBG News
 		 		 		 		
Public power in San Francisco: Worst-case scenario
(Moderate rates, less renewable energy)                                                 
 						
                                    Revenue
                                   									
 									
Residential sales 1.481 billion kwh @ 12.6¢ per kwh (1) $186 million
 									
Commercial/industrial sales 3.942 billion kwh @ 9.5¢ per kwh (2) $374 million
 									
TOTAL $560 million
 									
                                   										
                                   Expenses
 									
Payment on revenue bonds $850 million @ 8 percent (3) $74.4 million
 									
Cost of power
 									
• Hetch Hetchy 425 million kwh @ 4¢ per kwh $17 million (includes wheeling and
backup) (4)
 									
• Solar, wind, efficiencies 98 million kwh (5) $7.5 million
 									
Purchased power (6)
 									
• Potrero Hill plant 1.752 billion kwh @ 6.9¢ per kwh $120 million
 									
• Contract purchases 3.098 billion kwh @ 5.5¢ $170 million
 									
Operations and maintenance (7) $131 million
 									
Replace PG's city taxes (8) $9.4 million
 									
Public benefits (9) $10 million
 									
TOTAL $539 million
 									
Surplus $21 million   							 						

This chart shows how a public power system in San Francisco would 
operate if some of the worst-case assumptions are true: if, for 
example, the municipal utility district or power agency had to 
spend $800 million to buy out PG's system (the highest likely 
figure, even according to pro-PG studies) and if the MUD was 
unable to fund and site affordable renewable-energy systems and 
was thus forced to rely on buying a large amount of its power 
from the Potrero Hill plant (owned by Mirant Corporation) and 
from other generators through long-term contracts.
 						
Even under those circumstances, the chart shows, the MUD could 
cut residential rates by 10 percent, keep commercial and 
industrial rates at the low end of PG's rates, and still end the 
year with a surplus.
 						
As in all of our calculations, the numbers are very conservative; 
expenses would probably be considerably lower.
 						
(1) The MUD could set rates at any level it wanted; for this 
scenario, we've set residential rates at 10 percent below PG's 
current rates.
 						
(2) The commercial/industrial rate is at the low end of PG's 
equivalent rate.
 						
(3) See story for details on the $850 million figure. The bond 
rate of 8 percent is based on an estimate from Ken Bruce of the 
Board of Supervisors' Budget Analyst's Office.
 						
(4) See story and "Public Power in San Francisco: Best-Case 
Scenario" for details.
 						
(5) This is the amount of solar and wind power projected in the 
city's report on the solar bond measure, Proposition B.
 						
(6) See story and "Best-Case Scenario" for details.
 						
(7) Based on comparable costs per customer at LADWP.
 						
(8) See story.
 						
(9) See story.
 						
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