The city's Board of Supervisors will consider whether to approve $19.5 million for the contract with Shell Energy North America, the San Francisco Chronicle reported.
The program called CleanPowerSF would give residents the option of paying more to fuel their homes with renewable power like solar and wind.
It would also give residents the choice of getting power from a source other than Pacific Gas and Electric Co., which has had a monopoly on the energy market in San Francisco for decades.
The arrangement is possible because of a 2002 state law that allows so-called "community choice aggregation," which permits local governments to buy power from the wholesale market and set rates for residents.
San Francisco would become the second local government in the state to employ community choice aggregation - Marin County implemented its plan in 2010.
CleanPowerSF has been in the works since 2004. And if it is approved by the supervisors, $2 million would fund the study of local power-generation options.
The city's goal is to use the program to build a clean-power customer base, reduce the emission of heat-trapping gases and increase city-owned power generation.
CleanPowerSF would automatically enroll about half of the city's 375,000 residential power customers, who would have five months to opt out at no charge.
The program would increase utility bills for residential customers by about $9 per month, and more for commercial customers.
Ed Harrington, general manager of the San Francisco Public Utilities Commission, said concerns over costs are why the city has provided a free opt-out for the first five months. After that, it will cost $5 to leave the program.
PG&E has proposed a competing "Green Option" program that is expected to cost less, at $6 a month, and will rely on a mixture of renewable energy generation and transferable clean energy credits