SAN FRANCISCO (KCBS) – San Francisco took another step Wednesday towards signing a controversial contract to provide renewable energy to households in the city at rates higher than Pacific Gas and Electric Company and, ironically, to the benefit of Shell Oil.

The Board of Supervisors Budget and Finance Committee Tuesday approved the CleanPowerSF  proposal which would shift thousands of PG&E customers in the city to receive green power from Shell Energy, a subsidiary of Shell Oil Company, the American arm of Royal Dutch Shell.

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Monthly power bills for participating homes would go up an average of $27 a month according to the proposed contract.

KCBS’ Barbara Taylor Reports:

The program would start small, initially switching 90,000 PG&E customers to clean power produced by Shell Energy.

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The San Francisco Public Utilities Commission sought the deal with Shell after the city determined it could not generate its own green power cheaper than PG&E.

While acknowledging some of the program’s flaws, proponents say the higher rates will eventually drop when competitors begin offering their own green energy proposals. PG&E has already announced its own plans for a  green energy program, mostly likely at a cheaper rate than Shell Energy.

Residents who don’t want to pay higher monthly bills to an oil company in the name of global warming must opt out of the program. Critics testifying before the committee derided the Shell Energy deal as better suited to Marin County than San Francisco.

The contract was sent to the full board for approval by a 2 -1 vote.

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