Chairperson Commissioner Gonzalez stated that a number of LAFCo Commissioners and Board of Supervisors members indicated a desire to suspend the activities of SF LAFCo to accommodate budgetary and scheduling issues. Last year the LAFCo discussed mainly one subject. This year the Commission had successful public hearings on desalinization, tidal energy, and San Francisco fresh water lakes that have been informative for the public. A question was asked as to whether the Commission would be able to select interesting topics and if the Executive Officer would be able to assemble panels to continue this work.
Commissioner Schmeltzer stated that the Commission is in the middle of two studies and was not sure of the context of this agenda item in relation to the work on these studies.
Chairperson Commissioner Gonzalez stated that the LAFCo would not be shut down because of the pending studies and would meet on an as needed basis instead of twice a month as scheduled.
Vice-Chairperson Commissioner McGoldrick stated that it would be advisable for the Commission to meet less than twice a month, and that would address the scheduling issues. He recommended keeping budgetary issues in mind and spending wisely.
Commissioner Schmeltzer asked what the impact on the budget would be.
Chairperson Commissioner Gonzalez stated the impact would be trivial given the fact that the LAFCo has spent the money that would have been expected to be in the budget. Nevertheless, there are associated costs such as televising, legal counsel fees, etc. He stated that he felt this issue was primarily on the agenda because there are members of the Board of Supervisors who are overextended with Committee and regional Board-work.
Commissioner Fellman asked legal counsel to go through the legal requirements the LAFCo Commission has.
Nancy L. Miller, Esquire stated that SFLAFCo’s legal requirements are to maintain a web site and provide for staff noticed on the web site. If someone had a proposal to initiate a resolution to change an organization they would know what staff to go to and what staff you have. LAFCo has to conduct at least two noticed public hearings a year to adopt a budget. She stated that meeting twice a month is unusual for the LAFCo’s that she represents across the state. LAFCo’s policies that were adopted in 2000 provided for LAFCo to meet as needed and not on a regular meeting schedule.
Gloria L. Young, Executive Officer stated that there is a balance of $132,000 in the budget until the end of this fiscal year. It includes the completion of the AB117 study. Any remaining funds will be encumbered to the next fiscal year to pay for the Electric Financial Feasibility Study. There would be minor savings in stipends paid to the Commissioners if the number of meetings is reduced. There would be ongoing legal services required with the completion of AB117 and the Electric Financial Feasibility study. Expenses would be ongoing whether there would be meetings held or not. The next fiscal year budget that the Commission adopted in May was a total of $404,000. About $50,000 to $70,000 of that total amount could be saved unless the Commission requested additional studies that would have to be approved by the Commission and the Board of Supervisors as part of a future work plan.
Chairperson Gonzalez asked if the vacant position for the alternate LAFCo Commissioner was filled.
Ms. Young stated that the alternate LAFCo Commissioner is Supervisor Peskin, but he has not been active. All of the positions have been filled.
Chairperson Gonzalez asked if there was only one alternate position for a Board member.
Ms. Young stated one alternate Board and one alternate Public member.
Commissioner Ammiano stated that he felt the Commission could have less meetings, but did not want it suspended. He felt that the members could relinquish or half their compensation for participation.
Chairperson Commissioner Gonzalez stated that the Finance and Budget Committee members that brought this item to his attention had seen the line item budget for the LAFCo and thought it should be shut down for a cost savings. Once they learn that the bulk has been expended even into next year, their opinion may be different.
Commissioner Hall asked what net savings would be achieved in suspending the LAFCo since studies have already been paid for.
Ms. Young stated the studies have not been paid for as of yet. The payment for the AB117 report will be completed in this fiscal year. The draft is due to be heard at a public hearing on June 20. The Electric Financial Feasibility Study will be completed by the end of August. The next fiscal year’s budget includes $100,000 toward the completion of the Electric Financial Feasibility Study.
Commissioner Hall asked what would be saved by suspending LAFCo now.
Ms. Young stated just the stipends and savings for legal counsel being present at the meetings. The legal counsel is required to do work for both the studies so we would be paying for that time for them to do the research and study.
Commissioner Schmeltzer asked if there would be an administrative cost reduction associated with reducing the number of meetings. She recommended having public meetings on each of the two studies.
Chairperson Commissioner Gonzalez stated that the Commission could have a discussion at the next meeting on a future work plan. He recommended tabling this item and hearing it at a future time if necessary.
Commissioner Fellman recommended that the Commission vote on the number of meetings and drop the twice a month schedule.
Chairperson Commissioner Gonzalez stated that one of the two meetings scheduled in the month may be helpful in preparation for the public hearing. He doesn’t think the meeting costs are what the Budget Committee members had in mind. They were seeing the larger figure related to the studies thinking that if the LAFCo were not in operation, they could re-appropriate that money.
Public Comment
Mr. Bruce Brugman of the Bay Guardian, supported retaining the LAFCo and voiced his opposition to suspending activities. He recommended an Economic Impact Study on the City and County of San Francisco as one of the activities for the future work plan.
Mr. Robin David voiced his concern that the LAFCo would be suspended in the middle of two studies and voiced his opposition to suspending the activities of SFLAFCo.
Suspending the activities of SFLAFCo was tabled unanimously with no objection.
Mr. Jared Blumenfeld, Director, Department of the Environment stated that LAFCo is a useful forum for detailed discussions and applauded LAFCo’s work especially in the area of renewable energy. In 1997, the Clinton Administration set a goal of having a million solar roofs. In that same year, Mayor Brown’s administration and the Board bought into that million solar roof initiative. In 2001, Propositions B and H passed with resounding support of the San Francisco voters. San Francisco is clearly in the lead nationally in wanting to make a difference in terms of renewable energy and in making it the solar capital of the world. There are many obstacles to getting there and community frustration as far as progress. He stated that the discussion today is to set the record straight, to clarify where we are, and to push forward as fast as possible to get as many solar panels on as many roofs as possible.
Commissioner Ammiano stated that the topic of today’s meeting is closest to being implemented because of the commitment of the San Francisco voters to solar power and the Bay Area’s campaigns.
Speakers
Craig Stevens, founder of Solarbuzz Inc., an independent solar energy consulting firm discussed (1) solar photovoltaic (PV) market demand; (2) programs and structures; (3) success factors; and (4) implementation issues. The presentation is on file at the Clerk of the Board’s Office, Room 244, City Hall.
Keith Rutledge, President and CEO of the Renewable Energy Development Institute (REDI), discussed photovoltaic installations and program implementation issues such as (1) technical factors; (2) financial factors; (3) market factors; (4) site factors; (5) client factors; and (6) financing methods. The presentation is on file at the Clerk of the Board’s Office, Room 244, City Hall.
Ed Smeloff, Assistant General Manager for Power Policy, Planning and Resource Development for the SFPUC discussed the implementation of solar energy in San Francisco and plans at the Public Utilities Commission on Propositions B and H. An overview was given on the Moscone project, the next project planned by the PUC. The presentation is on file at the Clerk of the Board’s Office, Room 244, City Hall.
Peter O’Donnell, Senior Energy Specialist, Department of the Environment, sitting in for Cal Broomhead, discussed the Department of the Environment’s role in the residential and commercial sectors in relation to solar and the obstacles that need to be overcome.
Greg Kennedy, Solar Energy and General Contractor, Occidental Power, discussed his solar energy market experience in San Francisco for the past twenty-two years. The presentation is on file at the Clerk of the Board’s Office, Room 244, City Hall.
Commissioner Hall asked if the panels that you see on the homes in the western end of the City are long term maintenance free.
Mr. Kennedy stated that there is always a maintenance component particularly with solar thermal. There are systems that are over twenty years old and are as good as the day they were put in.
Commissioner Hall asked for the average cost of a residential installation.
Mr. Kennedy stated that an average residential installation in San Francisco for a photovoltaic 2.5 kilowatt system which will make 12.5 kilowatt hours per day will cost about $25,000 to $30,000 gross before tax credits, rebates, and business incentives.
Commissioner Hall asked what percentage of usage the solar installation would have for typical household.
Mr. Kennedy stated that it could oftentimes zero out their consumption. There are still standby fees from PG&E that could knock it down to just a few dollars a month.
Commissioner Ammiano asked about hook-up fees.
Mr. Kennedy stated just to stay on the grid. In a sense you are treating the grid as a giant battery and you are feeding back into it and drawing from it as needed in the evening.
Commissioner Ammiano stated that the City goes into this program and purchases in bulk so it minimizes the startup costs for the commercial building residents, so that $25,000 figure does not intimidate the average homeowner.
Commissioner Fellman asked Mr. Kennedy if solar works in San Francisco with all of the fog. Solar has value where it is sunny, and that is most of California.
Mr. Kennedy stated that we have twelve micro-climates in San Francisco, and some produce better than others. Studies have been done to determine where the best outputs would be. Their shop is operating in the Sunset District, and they have a lot of systems out in the western side of the City that works very well. There are days that you wouldn’t get the production you would in some other climate. Sometimes in the coast you might get a ten-percent drop. With photovoltaics, it has more to do with light than heat.
Mr. Smeloff stated solar electric PV does not need direct sunlight. It can produce electricity with diffused sunlight. There are big differences in parts of the City, and we have an ongoing monitoring program so that we can determine where the best locations in the City are. Generally, an area like the Bayview is going to have about twice the amount of solar radiance than parts of the Richmond. The portions of the City that will be targeted are the ones with the best solar resource.
Commissioner Fellman asked if this information would be folded into the public outreach that the Department of the Environment is doing.
Mr. O’Donnell stated that the Department of Environment updates the City’s website regularly. Last week at an installation review at Pet Camp, right off Third Street, which is the largest commercial installation in the City at 38 kilowatts, during a brief rain shower, they were still getting sixty-percent generation capacity.
Commissioner Fellman stated that solar needs an ad that would catch people’s attention that is similar to the one that GE has for wind power with the Viking ships.
Commissioner Hall asked Mr. Kennedy if someone outlays $25,000 or $30,000 before rebates if it would take them down to zero dependency on the grid.
Mr. Kennedy stated there are a few factors, but yes.
Commissioner Hall asked what the estimation of the expenditure for the average house would be if they were on the grid and didn’t have solar.
Mr. Kennedy stated that it varies and there are a lot of over baseline rates. A system is put in that’s the correct size to get rid of the penalty phase of the rate billing. People will often call and say they spent a $150 a month and ask what it will do. He stated that he has to look at the bills and see what the kilowatt hours are, know what the rates are, and look at the home. There is customization involved. By in large, peoples’ bills can be reduced to little or nothing for about that price. The ultimate outlay is about half of the $25,000 to $30,000.
Commissioner Hall stated that if someone laid out $25,000 or $30,000 and spent a couple of hundred dollars a month, that would be a ten-year savings right there.
Mr. Kennedy stated that if someone’s net cost after the cash rebate gets down to $16,000 or $17,000 and able to roll in the additional cost into a loan, the paying for that solar system might be $80 a month whereas their previous bill may have been $100 a month. As a result, they would have a positive cash flow afterward and have bought their power. They then would not be buying the power from PG&E and would be hedging against future rate increases. The saving is based on certain rate increases of one or two percent a year, but who knows what the cost of electricity will be.
Commissioner Hall asked what the average monthly bill would be on the average installation that was assumed to be on higher end houses.
Mr. Kennedy stated it depends on different factors and that they do all different sizes. Some people would actually have small bills and be conservative in their consumption and want to put in a small system. They go from people who spend hundreds of dollars a month to some who spend only $50 to $100 a month.
Public Comment
Mr. Albert Fong, Bayview Hunter’s Point Community Advocates, program manager for the ACE program, a project where they work in collaboration with the Department of the Environment and is funded through a settlement through the California Public Utilities Commission and PG&E. The project has two parts. The first is to install about 60 solar systems. The second part is to train Bayview Community interns in the construction trades who will be well trained in solar. He requested the writers and respondents to the procurements in the San Francisco solar program to include this resource in the procurement process by including a local hiring requirement, and award additional points if folks use local resources from minority communities. Using this resource would benefit both the vendors and the city both economically and socially.
Commissioner Ammiano stated that labor unions as well as City College are being talked to about apprenticeship programs and resource hiring.
Mr. Don Paul, From the Group Up, Housing is a Human Right, stated they’ve attended hours of meetings with PG&E, the independent system operators, SFPUC, and the Department of the Environment representatives over the last year about the pilot program that had been announced. They received the details of the 16.3 million dollar program Wednesday afternoon. The program’s objectives state that special attention would be given to customers in the Bayview Hunter’s Point neighborhood and that the City and County of San Francisco’s expertise is to work within the community of Bayview Hunter’s Point to determine how best to reduce the energy bills of residents there. However, there is not a single item in the $16.3 million dollars that actually addresses residents of Bayview Hunter’s Point. There is $2.1 million for commercial turnkey services for small and medium-sized businesses; there is $4.2 million for non-residential facilities; and there are $7.1 million cash rebates for cash customers. This pilot program as they understood it and as they were enlisted to testify before the CPUC, was to benefit the residents of the most polluted and affected community in San Francisco. He asked the City to look over this agreement closely before it enters into it and to do whatever it can to make sure that the residents are served. He stated that Commissioner Susan Kennedy of the CPUC wanted the Bayview Hunter’s Point Community to benefit. The city of Hamburg and the city of Munich in Germany offer rebate incentives for the installation of PV systems--that is another way they can be encouraged in San Francisco.
Mr. Marvin Feldman, Resource Decisions, stated that he has worked with both the CPUC’s self-generation program and the CUC’s bi-dome program. He asked Mr. Smeloff how they are going about identifying the points on the grid which would most benefit from distributed generation.
Mr. Smeloff stated that the SFPUC is working with the California Energy Commission through their public research program and has brought on a consultant to look at the grid within San Francisco. They are just beginning to study what the so-called choke or congestion points are on the grid and to look regionally where distributed generation and solar energy would have the most value.
Mr. Tom McDonagh stated that the highlights in today’s hearing were that to have credibility you must have a long-term commitment. Greg Kennedy discussed both systems that would last. Peter O’Donnell, Cal Broomhead and the people at the Department of the Environment are establishing a solid foundation for this industry to grow. He thanked the panel for showing their experiences and for their diverse skill sets and commended the Commissioners. He recommended going directly to the consumer and to the ultimate source of energy, the sun.
Ms. Silvia Johnson spoke during public comment.
Mr. Gerald Grundstein stated that Mr. Stevens discussed expansion and asked who would benefit from expansion. He asked Mr. Rutledge what financing is tied to. The state of California is providing financing in terms of millions of dollars and asked if this money is going to companies based here in California. If not what is the state government doing to make certain that those jobs and those economic opportunities go to the state of California. Other issues such as monitoring--has anybody done any kind of study? Sales have been mentioned about landlords not wanting to put in installations because it doesn’t make any sense because of lease agreements. Lease agreements are negotiable. Resale values attracting tenants are negotiable. Why wouldn’t a landlord want to put in a solar installation? Why wouldn’t we as a City want to commission a study on real estate appraisal for private homes that have possible increased resale value as a result of solar installations? Is there resale value increases as a result of these kinds of installations?
Mr. Stevens stated that solar energy has been very good for the United States economy. The high technology end of the business in terms of making the cells--there is a substantial domestic manufacturing content. About 40 percent of the production capacity are actually exported to other countries. The manufacturing content is extremely good for the United States economy. The second point is that most studies demonstrated that in terms of the labor content as an energy source, this has a high labor content, particularly at the installation end. The investment in solar energy because it involves local installation is definitely an investment in local jobs. Quite unlike almost any other energy source. In terms of California, there are substantial locations for solar cells just outside of Los Angeles. Power Light, a large shell facility and a good major installer that are in the forefront of creating and marketing large commercial systems are just five miles from us. They qualify as being within the Forbes top 500 companies of the fastest growing companies.
Mr. Rutledge stated that he agreed with the speaker’s comments regarding the opportunity for economic development and job creation and that is a huge component of this program. He stated that he finished working with the State of Hawaii’s utility companies, and they asked the same questions about the benefits and the credits of the rebates. The millions of dollars that are being paid right now by rate payers are going to utility companies to buy fuel that comes from outside of our area. A lot of that money leaves our economy. By avoiding those costs by having your own energy system, the savings that the individuals are going to see will stay in the area. If the money is kept locally, more of that money will be spent locally, and more jobs created. He agreed with one of the speakers about requiring local participation. The sunshine is here and the sun is being converted into electricity or hot water. That is what can be converted into real dollars that stays in our community and spent locally.
Commissioner Schmeltzer asked Mr. Rutledge about Hawaii’s relatively new program that has generated a lot of installations in the last year.
Mr. Rutledge stated that they had helped design that program. There is a revolving loan fund now in three islands. It started with Maui Electric. It is a zero interest loan fund primarily targeted to low-income home owners. The county of Maui actually came up with the money and put it into a pool that is loaned out to the consumers. The consumers are paying back the first three or four years worth of their energy savings to pay the loan off. Once the loan is paid for with no interest costs, they will get all of the savings. Oahu’s electric company has started a program with over a million dollars. The Maui fund has about $350,000. He understands that the big island is going to implement their own program. Having that source of financing either at a low or zero interest rate and having it accessible in this case through the utility company that is administering the program makes it an easy access to financing--very simple application, payment processing, etc. It is low-cost and easy access financing that is key to the program.
Commissioner Schmeltzer asked how many homeowners have taken advantage of this program.
Mr. Rutledge stated that Hawaii has an incredible amount of installations for a lot of other reasons. The program is new. Out of the $350,000 that is funded in Maui this last year, it had 87 applicants/residences. The Honolulu program just started so they haven’t even loaned any money. They are figuring that it would be a revolving loan on an ongoing basis--as the money comes back in, it can be loaned out again. In Maui, they’ll have about 15 systems a month on a sustainable basis from loan repayments with that $350,000 investment. He stated that they are trying to get the fund up to $1,000,000 so that amount can be tripled to 45 systems a month. Hawaii imports over 90 percent of their energy--solar water heating and solar electric is everywhere.
Mr. Stevens stated that you are not assessed new property tax when you put a solar system on your home. It is exempt. If you put a $30,000 solar system value on your home and if it is assessed again, that installation is not put into the equation although you increased the value of your home.
Mr. Rutledge stated there is evidence from the Appraisal Institute that energy efficient homes have consistently sold for more than non-energy efficient homes. Solar electric in particular is so new that there isn’t good market data. But, the appraisers have a methodology for adding both the capital improvement value and also a monthly energy savings that can be added to the applicant’s income when they are borrowing money. There is a process in place for determining both the value of the property without having market data and also for adding income for a borrower through the energy efficient mortgage program and the standard appraisal form. He agreed with the idea of a pilot program of gathering data over time. He is trying to fund whether the property tax assessors are really exempting solar equipment from property taxes because in some cases the only way they would be able to know is by looking at building permit applications. People may be charged for property taxes even though they are not supposed to be.
Commissioner Ammiano stated that with the Potrero Hill Daycare Center the school building had to be made as energy efficient as possible, and then they put the panels on. He asked where most of the panels were manufactured.
Mr. Stevens stated last year from a market of about 400, about 100 megawatts was manufactured in the United States. Japan is starting to do exports as well. That is a confidence of having a strong local market.
Commissioner Ammiano stated Israel too.
Mr. Stevens stated on thermacide yes.
Commissioner Ammiano asked who the manufacturers are in this area. There is one in Berkeley.
Mr. Stevens stated there is one in Berkeley, Power Light that does manufacturing of systems. There is a large facility in Camarillo in Southern California, and there is a manufacturer in the East Coast.
Commissioner Ammiano stated that is something San Francisco could look at depending on it becoming more zoning friendly. There is the concept of farms where you would have a number of panels not necessarily on a building. Is that something that is within the net?
Mr. Stevens stated that is a version of small distributive generation which people could buy in and access. That is starting to work in Germany. He recommended a steady approach on that. The largest system in the world of the farm type is about four megawatts in Germany. In terms of the industry capability, it is in the one to four areas where attractive procurement can be achieved at that sort of level. There is no need to go higher, particularly to get better prices.
Mr. Rutledge stated that when you produce power on a home or business, you not only avoid the electricity portion of the cost, but you are also avoiding the transmission and distribution portion. If you put a field of panels someplace, you will only get the electrical component of it, so it is typically not as cost effective. Although it could be if it had grid benefits and those are valued such as peak times.
Commissioner Ammiano stated we are also always looking at backups to switch to in case of emergencies.
Mr. Dan Whooley, Director of Education, San Francisco Electrical Training Trust stated that they have been preparing a workforce of journeymen and apprentices for the emerging and renewable energy technologies. Currently they have apprentices installing solar panels and co-generation from residences down to the commercial district as well. Of their current 320 apprentices in the program, over 40 percent are San Francisco residents from all over the city including the Bayview. They work closely with the community developers and have a great reputation with them. Some of their candidates are on a waiting list to get into this apprenticeship. He applauded the efforts and agreed that San Francisco should become the solar capital of the world.
Mr. Blumenfeld stated that SB289 is a bill that Senator Murray just introduced that would require half of all homes constructed in California after 2006 be built with energy efficient PVs. Secondly, in terms of energy conservation there would be a LAFCo hearing on July 18th at 2:00 p.m. The first precursor to do any kind of PV or renewable energy is to make sure you have energy conservation taking place first.