SEC. 21.43. PURCHASE AND SALE OF CERTAIN ELECTRICITY AND RELATED PRODUCTS BY THE PUBLIC…

(a) Findings.

(1) The Power Enterprise (“Power Enterprise”) of the Public Utilities Commission (“PUC”) operates a municipal utility, Hetch Hetchy Power, and a community choice aggregation (“CCA”) program, CleanPowerSF. Both Hetch Hetchy Power and CleanPowerSF purchase and sell electricity in the wholesale markets to serve their respective retail customers in San Francisco.

(2) Hetch Hetchy Power serves its customers primarily with electricity generated by City-owned generation resources; CleanPowerSF serves its customers entirely with electricity purchased through wholesale market transactions. Both Hetch Hetchy Power and CleanPowerSF comply with state law and California Independent System Operator market rules, including requirements to procure renewable energy, Resource Adequacy (RA), and energy storage. In addition, as a CCA, CleanPowerSF is subject to numerous energy procurement requirements under state law and California Public Utilities Commission decisions. Both Hetch Hetchy Power and CleanPowerSF also must meet clean energy policies established by the City.

(3) To meet regulatory requirements, secure the best possible prices and terms, keep rates affordable and competitive, and manage procurement risk, the PUC engages in a continual process of procuring power and simultaneously negotiating a mix of short, medium, and long-term contracts for a diverse supply of energy and energy-related products with multiple suppliers, all in an expedited time frame consistent with commercial expectations and regulatory deadlines. The costs expended on procuring energy for Hetch Hetchy Power and CleanPowerSF are recovered by PUC through customer billing.

(4) The PUC is in a unique market position because both Hetch Hetchy Power and CleanPowerSF directly compete with PG&E and private power providers for retail electricity customers and with other PG&E and load serving entities for supplies of electricity and electricity-related products in the highly competitive wholesale markets. Hetch Hetchy Power and CleanPowerSF engage in procurement efforts through competitive bidding processes as necessary for agreements for energy and energy-related products. As the PUC manages fluctuations in supply and demand and navigates the constantly changing regulatory requirements of multiple agencies, it also engages in the sale of excess energy.

in the highly competitive wholesale markets. Hetch Hetchy Power and CleanPowerSF engage in procurement efforts through competitive bidding processes as necessary for agreements for energy and energy-related products. As the PUC manages fluctuations in supply and demand and navigates the constantly changing regulatory requirements of multiple agencies, it also engages in the sale of excess energy.

(5) In order to procure energy and energy-related products in California’s highly competitive wholesale market, the PUC relies on industry standard terms and conditions which deviate from the City’s standard contract requirements. The United States Department of Energy also requires pro forma agreements without City standard terms when it sells PUC low cost energy and services. In Ordinance No. 188-23, the Board of Supervisors authorized the PUC to use the Western Area Power Administration (“WAPA”) agreements for power and scheduling coordinator services. In Ordinance Nos. 75-15, 223-15, 08-18, and 11-20 (collectively, the “Procurement Ordinances”), the Board of Supervisors authorized the PUC to use commonly used industry form contracts and PUC pro forma contracts with terms that deviated from the City’s standard contract terms, and authorized modifications to the form agreements so long as such modifications, in the judgment of the General Manager and the City Attorney, did not materially decrease the City’s rights or materially increase its liabilities. These agreements are:

(A) Western System Power Pool (“WSPP”) Agreement;

(B) Edison Electric Institute (EEI) Master Agreement;

(C) PUC Renewable Power Purchase Agreement;

(D) PUC Energy Purchase and Sale Master Agreement.; [1]

(E) PUC Renewable Power and Energy Storage Purchase Agreement;

(F) PUC Energy Storage Purchase Agreement;

(G) PUC Small Renewable Power Purchase Agreement;

(H) California Community Power Buyer Liability Pass Through Agreement;

(I) California Community Power Project Participation Share Agreement;

(J) California Community Power Coordinated Operations Agreement.

(K) United States Department of Energy WAPA Full Load Service Agreement; and

(L) United States Department of Energy WAPA Scheduling Coordinator Agreement.

(6) In order for CleanPowerSF and Hetch Hetchy Power to meet State law requirements for RA, defined as electricity-related products that ensure sufficient electric generation resources are available to meet unusually high levels of demand, the Renewable Portfolio Standard (RPS), the state’s program for continuously increasing purchases from renewable energy facilities, and meet City clean energy requirements, the PUC transacts for such products from a variety of counterparties. These counterparties are increasingly requiring binding arbitration in contracts.

generation resources are available to meet unusually high levels of demand, the Renewable Portfolio Standard (RPS), the state’s program for continuously increasing purchases from renewable energy facilities, and meet City clean energy requirements, the PUC transacts for such products from a variety of counterparties. These counterparties are increasingly requiring binding arbitration in contracts.

In Ordinance No. 227-18, the Board of Supervisors authorized binding arbitration provisions in certain limited circumstances and approved three PG&E agreements with binding arbitration provisions. For the ordinance in Board File No. 241070, amending this Section 21.43, the PUC sought approval to allow the inclusion of binding arbitration in contracts with all counterparties, not just investor owned utilities.

(b) Approval of Form Agreements. The Board of Supervisors approves the use of the pro forma contracts and substantially similar agreements described in subsection (a)(5) for the purchase and sale of power and related products, including the indemnification and limitation of liability provisions therein, notwithstanding that the terms of those agreements may deviate from the City’s standard contract terms. The list of pro forma agreements in subsection (a)(5) may be modified by Board of Supervisors Resolution. Further, the Board of Supervisors approves hold harmless agreements for the purchase of power and related products. The Board of Supervisors also authorizes modifications to these form agreements so long as such modifications, in the judgment of the General Manager of the PUC, the City’s Risk Manager, and the City Attorney, as required, do not materially decrease the City’s rights or materially increase its liabilities. For the avoidance of doubt, the use of any pro forma agreement included in subsection (a)(5) and any modification approved by the General Manager of the PUC, the City’s Risk Manager, and the City Attorney is deemed to include waivers of contract requirements in subsections (e), (f), and (g).

(c) Delegation of Approval Authority under Charter Section 9.118. Pursuant to its authority under Charter Section 9.118, the Board of Supervisors delegates to the General Manager of the PUC authority to enter into purchases of power and related products using contracts with terms in excess of 10 years or requiring expenditures of 10 million dollars or more including amendments to such agreements with an impact of greater than $500,000, so long as the contract term, including any amendments, does not exceed 25 years. The annual expenditure for all agreements entered under this subsection (c) may not exceed 300 million dollars per year. This annual expenditure cap may be increased by Board of Supervisors Resolution.

tures of 10 million dollars or more including amendments to such agreements with an impact of greater than $500,000, so long as the contract term, including any amendments, does not exceed 25 years. The annual expenditure for all agreements entered under this subsection (c) may not exceed 300 million dollars per year. This annual expenditure cap may be increased by Board of Supervisors Resolution.

(d) Delegation of Approval Authority under Charter Section 9.118. Pursuant to its authority under Charter Section 9.118, the Board of Supervisors delegates to the General Manager of the PUC authority to enter into contracts for the sale of power and related products having anticipated revenue in excess of one million dollars or more. The annual revenue for all agreements entered under this section (d) may not exceed 300 million dollars per year. This annual revenue cap may be increased by Board of Supervisors Resolution.

(e) Delegation of Approval of Binding Arbitration for Agreements. The Board of Supervisors finds it is reasonable and in the public interest to delegate to the General Manager of the PUC the authority to enter into contracts for power and related products and services with binding arbitration provisions on approval of the City Attorney, and hereby delegates said authority to the General Manager of the PUC.

(f) Waiver of Certain Procurement-Related Requirements. The Board of Supervisors finds the waivers identified in subsection (g) below to be reasonable and in the public interest, for the entire procurement process for power and related products and services, where the General Manager of the PUC finds and documents in writing that the procurement process represents the best opportunity available to the City to obtain essential services and products in a manner beneficial to the City, and, for waiver of the competitive bidding requirements of Administrative Code Chapter 21 or a transaction otherwise designated as a sole source transaction by the General Manager of the PUC, the procurement process is consistent with industry standards followed by other community choice aggregation providers or other publicly owned utilities.

(g) Waiver of Certain Contract-Related Requirements. The Board of Supervisors finds the waivers identified below to be reasonable and in the public interest, for a particular contract whether arising out of the procurement process described in subsection (f) or otherwise designated as a sole

source transaction by the General Manager of the PUC, where the General Manager of the PUC finds and documents in writing that it is not feasible to add all standard City contract provisions to the contract and the contract includes language requiring compliance with all applicable federal, state, and local laws:

(1) Nondiscrimination in contracts (Lab. and Emp. Code Article 131);

(2) MacBride Principles (Admin. Code Chapter 12F);

(3) Local business enterprise utilization and non-discrimination in contracting ordinance (Admin. Code Chapter 14B);

(4) Consideration of criminal history in hiring (Lab. and Emp. Code Article 142);

(5) Consideration of salary history in hiring (Lab. and Emp. Code Article 141);

(6) First source hiring (Admin. Code Chapter 83);

(7) Competitive bidding requirements (Admin. Code Section 21.1);

(8) Tropical hardwood and virgin redwood ban (Environ. Code Chapter 8);

(9) Minimum Compensation Ordinance (Lab. and Emp. Code Article 111);

(10) Health Care Accountability Ordinance (Lab. and Emp. Code Article 121);

(11) Public access to meetings and records of non-profit organizations (Admin. Code Section 12L.2);

(12) Sweatfree contracting (Lab. and Emp. Code Section 151.4); and

(13) Food service waste reduction (Environ. Code Section 1605).

(h) Power and Related Products and Services. For purposes of the delegation, authorizations, and waivers in this Section 21.43, power and related products and services as required for assuring reliable services in accordance with good utility practices and applicable laws shall include shall include [1 ] power supplies, RA, the conveyance or transmission of same, or ancillary services such as spinning reserve, and voltage control.

(i) Reporting. The PUC shall quarterly report to the Board of Supervisors the duration, product purchased, and cost of contracts entered into pursuant to subsection (c). The PUC shall also annually report to the Board the program costs, the rates charged to CleanPowerSF customers to recover those costs, and a comparison of those rates to PG&E rates.

(j) Projects on City Property. The delegation, authorizations, and waivers in Section 21.43 shall not apply to projects being constructed on City property.

(k) Sunset Date. This Section 21.43 shall expire by operation of law on July 1, 2030. Upon expiration of this Section, the City Attorney is authorized to remove this Section from the Administrative Code.

(Added by Ord. 176-22, File No. 220652, App. 8/4/2022, Eff. 9/4/2022; amended by Ord. 95-23, File No. 230281, App. 5/26/2023, Eff. 6/26/2023; Ord. 24-25, File No. 241070, App. 3/14/2025, Eff. 4/14/2025)

(Former Sec. 21.43 added as Sec. 15.104 by Ord. 29-97, App. 2/7/97; amended by Ord. 337-99, File No. 992043, App. 12/30/99; redesignated and amended by Ord. 176-14, File No. 140596, App. 8/7/2014, Eff. 9/6/2014; redesignated as Sec. 21A.2 and amended by Ord. 142-15, File No. 150567, App. 8/6/2015, Eff. 9/5/2015)

CODIFICATION NOTE

1. So in Ord. 24-25.