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Moody's assigns first-time A2 issuer rating to CleanPowerSF, with stable rating outlook

December 9, 2020

by Paul Ciampoli
APPA News Director
December 9, 2020

Moody’s Investors Service on Dec. 9 assigned a first-time A2 issuer rating to California community choice aggregator (CCA) CleanPowerSF. The rating outlook is stable.

CleanPowerSF is a not-for-profit, single jurisdiction community choice aggregator and a component unit of the City and County of San Francisco’s Public Utilities Commission (SFPUC), which has an extensive history of operations, Moody’s noted.

Moody’s said the A2 issuer rating for CleanPowerSF is underpinned by, among other things, the strength of its service area, the SFPUC’s long-standing experience operating large utility enterprises with energy procurement, a common pool of experienced employees, as well as access to the unrestricted portion of the city’s general fund liquidity pool in the case of an emergency.

The rating agency noted that CleanPowerSF is a single jurisdiction CCA, rather than a joint power agency (JPA) CCA.

“In many respects, a city-operated CCA is similar to CCAs operated by JPAs in expanding clean energy choices,” Moody’s said.

Strengths of city-operated CCAs include governance and ownership by the city, linkage to the city’s oversight, with city councils having authority over the unregulated rate-setting process, and experience managing other services such as water and sewer, the rating agency said.

Moody’s said a key strength for CleanPowerSF’s credit quality and liquidity profile is its access to the City of San Francisco’s Treasury pool, which provides additional liquidity to CleanPowerSF.

As of the first quarter of 2020, the City’s pool was made up of approximately $11.2 billion in unrestricted cash, of which $1.2 billion is reserved for the benefit of SFPUC enterprise funds (including $98.3 million for CleanPowerSF).

The stable outlook reflects expectations that CleanPowerSF will maintain an adequate liquidity profile through Fiscal Year 2021 “despite load demand decline given some flexibility built-into its supply contract positions, while temporarily compressing its discount to PG&E rates.”

In addition, the stable outlook incorporates the rating agency’s expectation the CleanPowerSF’s economic service territory will remain strong and supportive of a clean energy value proposition offered by CleanPowerSF through the CCA model for customers in San Francisco, Moody’s said.

“Today’s announcement of an issuer rating of “A2” by Moody’s is a significant next step in the development of CleanPowerSF as San Francisco’s clean electricity provider serving more than 380,000 residents and businesses,” said SFPUC Chief Financial Officer Eric Sandler. “The rating confirms that CleanPowerSF is a high-grade utility enterprise, which will allow us to provide our services on a more cost-effective basis while continuing to meet San Francisco’s ambitious climate action goals.”

The American Public Power Association has initiated a new category of membership for community choice aggregation programs.

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