Summary: Sonoma Clean Power is getting ready to flip the switch.
In what’s proved to be a power play from beginning to end, Sonoma County’s new startup power agency—Sonoma Clean Power—is getting ready to flip the switch.
Come January, if all goes according to plan, 10,000 homes and businesses in unincorporated Sonoma County, plus Santa Rosa, Windsor, Sebastopol, Sonoma and Cotati, will become the first customers of a new public agency that promises to reduce greenhouse gas emissions associated with electricity use, increase the amount of renewable energy systems in the county and provide energy efficiency programs and incentives—all while stabilizing energy rates.
It sounds cool, but it sure has generated heated debate as the real power brokers in city governments throughout the county spent most of the summer trying to decide whether or not to get on board.
Long time coming
Sonoma Clean Power (SCP) is a Community Choice Aggregator (CCA). While many think it’s a new concept, it’s actually something that has been an option for more than a decade.
In September 2002, shortly before his world unraveled in a recall election, California Governor Gray Davis signed California’s Community Choice Law (AB117), which let municipalities aggregate their communities to be served by Electric Service Providers (ESPs). The idea was to create more competition in the energy market, historically dominated by large corporations like Pacific Gas & Electric and Southern California Edison.
Around the same time, clean energy activists Ann Hancock and Mike Sandler, who were both residents of Sonoma County, founded the Climate Protection Campaign and successfully convinced the county and all nine cities to sign on to a Community Climate Action Plan to commit to an aggressive effort to reduce greenhouse gas emissions by 25 percent over 1990 levels by 2015—the boldest target in the United States at the time. Beginning early in the new millennium, Sonoma County began doing a lot of work to address climate change and greenhouse gas emissions.
As it looked to the community for input, the idea of establishing a CCA was broached, and County Supervisors Efren Carrillo (Fifth District) and Mike McGuire (Fourth District) eventually were assigned to an ad hoc committee to determine if it was something that made sense. Since the Sonoma County Water Agency (SCWA) already had a power portfolio with its hydro plant at Lake Sonoma and was itself the largest user of energy in the county, it teamed with Carrillo, McGuire and a wide array of stakeholders—including nonprofits, labor groups, business owners and private residents—to conduct a feasibility study that Carrillo describes as “transparent and fully vetted.”
“We’ve done our due diligence,” McGuire explains. “We looked at all the variables—energy demand, energy mix, rates, governance, potential short- and long-term risks—and we conducted financial analyses related to the operation. Then we conducted an independent peer review to make sure our assumptions were accurate. We also did an exhaustive residential and commercial ratepayer interest survey, followed by focus group sessions where we really dug into the data. We then developed an implementation plan, which we had peer reviewed by independent expert consultants.”
Over this past summer, the committee and its consultants took its dog and pony show on the road to each city council—sometimes as many as three or four times—in an effort to get buy-in.
Amping up: the case for SCP
At each city council meeting where Sonoma Clean Power was on the agenda, advocates of the CCA were out in force, carrying signs promoting choice—one of the main arguments for the new power agency.
Appearing at the first Santa Rosa City Council meeting, County Board of Supervisors Chair Shirlee Zane issued a plea to give customers “a choice” between PG&E and SCP. Comparing the current state of the electricity industry to the old “Pac Bell monopoly,” Zane noted that choice in communications providers since the divestiture of AT&T in the mid-1980s has “led to innovation and more choices than we ever could have possibly dreamed of even just 20 years ago.”
And in some ways, it’s a fair analogy. Remember the old phone wars between Sprint (“so clear you can hear a pin drop”), the long-faded MCI and a host of smaller companies that resold services they bought from AT&T?
Well, SCP will also be a reseller of sorts. It will purchase energy under contract from various providers and use PG&E’s transmission lines to deliver it to homes and businesses. PG&E will continue to provide line maintenance, outage management, new service requests, billing services and energy efficiency programs.
So what’s the big deal, you ask?
According to Geof Syphers, interim CEO for SCP, in addition to choice, Sonoma County residents and businesses that go with SCP will be using 33 percent renewable energy (versus the current 20 percent offered by PG&E); all customers will also have the option to pay a little extra for 100 percent renewable energy if they want. They’ll also be paying, on average, residential electric rates between 1.8 percent below and 1 percent above PG&E’s and commercial rates that will be between 3 percent lower and 0.5 percent above those estimated for PG&E in 2014.
Even bigger than that, since SCP will be a public agency, all revenues it generates will be reinvested to benefit its ratepayers, since SCP will not have to answer to shareholders.
“Since SCP is a not-for-profit provider, there’s another unique benefit,” Carrillo explains. “All the money it makes will be kept locally and some could be invested in local programs to help increase energy efficiency and educate users how to reduce demand.”
“Rather than the profit being delivered to investors, SCP will be able to invest its profits in keeping rates low, launching energy efficiency programs in local communities and developing renewable energy sources in the county that can be used by Sonoma Clean Power,” McGuire adds.
Noting that between $12 million and $14 million is collected in Sonoma County each year through what’s called a “public goods charge” on PG&E bills—which funds such things as energy analyses, rebates to customers for purchasing energy-efficient products and services, and contributions to residential and commercial incentives to make properties more energy efficient—McGuire says, “but there’s no guarantee that those dollars are spent in Sonoma County. Why should money collected from PG&E customers in Santa Rosa, for example, be given to customers in Fresno? Sonoma Clean Power will enable us to invest all our money at home.”
“The metaphor I like to use is a credit union,” Carrillo explains. “The ratepayers will effectively be the owners of the utility and they’ll be the first priority, just as the members of a not-for-profit financial institution are its first priority.” If you’re with PG&E or a regular bank, “then the shareholders are the first priority, not you.”
Since it will be a public agency, SCP will be governed by a board comprised of elected officials from the county and from each city that opts to join. “It will be a public entity with open meetings once per month and leadership that is held accountable every election cycle,” Carrillo says. But the governance issue is also a sticky wicket with both advocates and detractors, and was a source of robust debate at several of the city council meetings.
“Robust discussions of that sort are healthy and needed,” McGuire says. “Ultimately, this is the utility of the residents of Sonoma County, who generally pride themselves on being actively involved in the issues that affect their lives. There’s nothing wrong with that.”
At the time of this writing, plans are to award one vote to each director, but upon request by any director, an affirmative vote may also require a “majority of voting shares weighted to the relative electric load in each participating city,” according to the frequently asked questions on Sonoma Clean Power’s website.
Lights out: the case against SCP
While it’s hard to be negative about using renewable energy, having more choice and keeping the money in your own backyard, most SCP detractors don’t believe the CCA can really deliver on its promises.
While SCP promotes choice, state law requires that residents and businesses located in cities that decide to join the power agency are automatically enrolled. That means if you own a business in Cotati, for example, or a home in Windsor, as SCP gradually takes on more customers, you’ll automatically be switched to SCP when your number comes up, unless you actively choose to stay with PG&E. While the initial customer base in January 2014 will only be 10,000, over three years, the goal is to have all residential and commercial customers in participating cities enrolled.
“Choice is a misnomer,” says Hunter Stern, business representative for the International Brotherhood of Electrical Workers Local #1245, which represents upward of 20,000 members in a large territory that runs from California’s central coast all the way up to Humboldt County and into Nevada and Idaho. Many of its members work for PG&E, but they’re also employed by various other electric, gas, water and transit companies, as well as contractors.
“Technically, there is no choice. Every electricity customer will be switched if their city decides to join. The only way you can have a choice is if you opt out [which is allowed]. The reason the CCA law is set up this way is because of the lessons learned after deregulation of the energy industry. Sonoma Clean Power wouldn’t have enough customers if it allowed customers to opt in versus forcing them in.”
According to Stern, the industry learned a lot about consumer behavior at the onset of deregulation in 1996. “During this period, there was a company in the Bay Area called Green Mountain Energy,” which advertised extensively for customers to switch from PG&E. “Less than one half of one percent changed over,” Stern says. “And it wasn’t a problem with marketing, it’s because people don’t view electricity the way they do cars or washing machines. It’s an essential service. You get a fair price and safe delivery of a dangerous service and you’re basically happy. Even if the government steps in and provides your electricity [like SCP proposes to do]—clean and green—people still aren’t paying any attention. Most people simply don’t like their utility company at all.”
And then there’s the argument that the big bump in using renewable energy sources is bogus.
To meet its established goals, SCP—as do all California utilities—will purchase “renewable energy credits” (RECs). In short, an REC creates a way to let a renewable energy generator sell the environmental benefits of its power more easily. SCP’s website uses the example of a wind farm in Oregon that sells RECs to a utility in California without physically moving the energy across state lines, because the renewable attribute is sold separately from the underlying energy.
Purchasing RECs at the same quantity as your electricity consumption guarantees that the energy you use is added to the power grid from a renewable energy facility and supports the further development of these facilities.
SCP says purchasing RECs from far-away projects isn’t its long-term goal. Instead, it wants to focus on local projects that have the most environmental value because, in addition to their climate change mitigation benefits, they minimize the use of transmission grid infrastructure and have lower impacts on habitat. Plus, they directly support the local economy.
Critics say, no matter what, that RECs amount to “greenwashing.”
“The description is that it’s renewable because it’s paying for RECs to cover its power, and the state recognizes that as renewable, so it’s renewable,” Stern says. “Well, it may be true, but not in the amount it claims. Once electricity is in the grid, no one really knows where it goes. There’s been no analysis to see if the energy it plans to purchase is greener than the energy currently provided by PG&E.”
Jim Phelps, an engineer from Novato, was one of the more vocal opponents of the use of RECs at the Santa Rosa City Council meeting. He held up a cup of dirty water and compared it to brown power (energy from non-renewable sources). He then took a piece of white paper, which he said was equal to a renewable energy credit, wrapped it around the cup and said “Voila! Instant green energy that your constituents will buy—and they won’t know it. This is clean water. Who’d like a drink?” No one did.
Keeping everything local—another of the supposed benefits—is also a sham, detractors say. Stern says SCP is considering signing long-term contracts with energy companies “that have no connection to California.” The “Final Four” providers are NRG Energy, which is headquartered in West Windsor Township, N.J. and Houston, Tex.; Direct Energy, headquartered in Houston, Tex.; Constellation (now known as Exelon) in Baltimore, Md. and Chicago, Ill.; and ConEdison Solutions from New York City.
“The promise of local control is only an appearance. SCP will be managed by the people the board hires to direct it [they just named Geof Syphers, an adviser to the project under contract with the SCWA, interim CEO] and the staff. Elected officials [who will be on the board] don’t understand energy—they understand governance,” Stern says.
“What Sonoma Clean Power is doing is negotiating power agreements and contracts. That’s it. Now, if you put in build-out plans [which would enable the county to build its own energy generation facilities], that would bring jobs. Then we’re talking,” Stern concluded. “Otherwise, why would anyone do this? We’re wasting a lot of energy on this.”
The Marin model
Throughout the process, Sonoma County has looked south to Marin County for inspiration. In 2010, after seven years of research and planning, Marin Clean Energy (MCE) became the first active CCA established in California. Many of its consultants are involved with Sonoma Clean Power’s startup efforts.
According to Dawn Weisz, MCE’s executive officer, the agency offered service to customers in phases. Initially, MCE provided service to approximately 8,000 customers and is now serving close to 130,000 residential, commercial and municipal customers in Marin County and the city of Richmond. Initially, four cities in the county—Ross, Novato, Corte Madera and Larkspur—rejected joining, but decided to get on the wagon a year later. Like SCP, Marin Clean Energy uses PG&E for transmission, maintenance, billing, customer service and so forth, plus it purchases RECs. At present, MCE offers two service options: 50 percent or 100 percent renewable energy (20 percent of which is from RECs).
Its board of directors includes one representative from each member jurisdiction (including 12 cities and one county). The board sets policy and rates, and allows for a 60-day public review cycle for rate-setting. It’s negotiated 14 different power supply agreements.
Starting a CCA isn’t easy, and Weisz understands the challenge. “Once a CCA program is formed and the nuts and bolts of the program are hammered out—like rates, service area and electric product offerings—community outreach is key. Choice is a fundamental element of any CCA program; for people to make an informed choice, we need to provide clear, transparent, and direct information,” she says.
“The hardest thing we had to overcome at the time we were launching was an aggressive lobbying campaign by PG&E, which fed a lot of bad information. It continues to confuse people even today. I’m hopeful that approach won’t be used elsewhere,” Weisz says. “It wasn’t fact-based at all and it was discouraging to see that. At the very least, a customer should be able to make decisions based on facts.”
To its credit, PG&E has been relatively silent about SCP’s efforts, depending largely on its IBEW union membership to carry its standard.
MCE is proud of its achievements. It’s gone from using 25 percent renewable energy to 50 percent for its basic product offering. Some of its customers choose to pay about $5 more per month for a 100 percent renewable energy plan (dubbed “Deep Green” by MCE); 50 percent of revenue generated by the Deep Green program is used for a local renewable development fund.
MCE has been awarded approximately $4.3 million in energy efficiency funds for local building upgrades. It’s first local energy project was a 1 MW solar array at the San Rafael Airport, implemented through its Feed-In Tariff program. And while some criticize job production, MCE currently has 17 people on staff and another 15 to 20 contract consultants.
“The county has done a good job of designing an effective and successful program,” Weisz says, and she’s more than proud to have it serve as a role model for Sonoma County.
What advice does she give her neighbors to the north?
“Cities who decline membership from Sonoma Clean Power this time around should keep in mind that, as things stand currently, customers don’t have a choice in their electric supply. They pay the rates for energy sources that are dictated by the incumbent provider [PG&E]. If cities join, customers in their regions will have the option to pick from either supplier. Competition keeps prices competitive and helps provide different choices to meet the different interests of customers. Our customers are generally happier and the outcome is better economically. Why would anyone want to only have one choice and have to pay whatever rate they charge? If you walked into a store that had only one type of ice cream, with no option for something organic, has a different flavor or was from locally grown food sources, would you like that? You don’t see that with cell phones, houses or anything else. We need more opportunities to vote with our dollars. Choice leads to better outcomes,” Weisz explains.
“But beyond choice, there’s something else,” she adds. “We need to help our planet and make sure we’re shifting away from using fossil fuels to produce clean energy without nuclear, coal and other processes that hurt the planet.”
Otherwise, in the long run, it’s a power play that no one wins.
Marin Clean Energy
By Jamie Tuckey
When AB117—California’s Community Choice Aggregation (CCA) law—was passed in 2002, enabling communities to procure electricity and sell it competitively within their jurisdictions, local grassroots organizations and political leaders in Marin County sprang into action.
Seeing an opportunity to move toward greener, renewable energy sources, the Marin Clean Energy business plan was released in spring 2008. Community and business groups weighed in, reinforcing their overwhelming support for renewable power alternatives and, after years of extensive review and examination, the Marin Energy Authority (MEA) was formed in December 2008 to administer MCE, California’s first (and, currently, only) operating CCA program.
MEA is a not-for-profit public agency governed by a board of directors made up of elected officials from the county of Marin and cities of Belvedere, Corte Madera, Fairfax, Larkspur, Mill Valley, Novato, San Anselmo, San Rafael and Sausalito; the towns of Fairfax and Tiburon; and the city of Richmond in Contra Costa County. Customers in MCE’s service area have three options for their electricity supply: MCE’s Light Green (50 percent renewable energy); MCE’s Deep Green (100 percent); and PG&E’s standard plan (20 percent).
Because AB117 requires that CCA programs like MCE operate as “opt out” programs, customers in MCE’s service area are automatically enrolled into the Light Green option unless they choose to opt out and remain with PG&E’s power supply. Upon its launch, MCE informed customers of their enrollment and the opt out process through five direct mailers, in addition to extensive community outreach campaigns.
MCE partners with PG&E, which continues to read meters, send the monthly bill and provide power line maintenance. The difference is that MCE customers can choose to purchase 50 to 100 percent of their electricity from clean, renewable sources, including solar, wind, geothermal, biogas and small hydroelectric power. MCE replaces PG&E’s charge for electric generation and more than doubles the renewable content at competitive and, often, lower rates. Based on current MCE and PG&E rates, MCE will cost an average residential customer about $0.90 more per month and will save an average commercial customer about $8 per summer month and $2 per winter month.
MCE is a self-funded program, operating solely from the revenue generated by its customers. And as a not-for-profit agency, MEA reinvests in local programs and projects. Examples include providing additional solar and energy efficiency rebates to its customers and providing funding for the installation of electric vehicle charging stations in Belvedere, San Rafael and San Anselmo.
One of MEA’s primary goals is to increase local renewable build-out, which in turn boosts our local economy. In 2011, the largest solar project in Marin was built at the San Rafael Airport through MEA’s Feed-In Tariff, which is a standard offer contract for anyone wishing to sell 100 percent of the power output from a renewable project within the MCE service area.
Construction for the San Rafael Airport solar project generated 20 local jobs. The Bank of Marin financed half of the project, with the remaining financing stemming from San Rafael businessman Joe Shekou. San Rafael-based REP Energy designed the project, which was later built and installed on the airport hangars by Muir Beach-based Synapse Electric with the help of laborers supplied partially from the Marin City Community Development Corporation.
The one-megawatt San Rafael Airport project is the first of many local projects to come. A one-megawatt solar-shaded parking structure is being planned for development at the Novato Buck Institute as part of a contract MEA signed in 2012 for 30 megawatts of solar power. And just a few months ago, the MEA board of directors approved a policy to direct 50 percent of the revenue generated from MCE’s Deep Green program to a local renewable development fund. MEA is already exploring the possibility of building solar projects at the Richmond Port and Golden Gate Transit lots.
In 2013, MCE also became a supporting partner for the SEED Fund, which helps public agencies evaluate and participate in a regional group purchase of municipal solar photovoltaic projects. Ten public agencies have already signed on to participate in the program with a net potential photovoltaic (PV) capacity of almost 5 megawatts. If fully implemented, this will result in a 40 percent increase in public solar PV across Marin, Napa and Sonoma counties.
MCE is also administering and developing a $4.1 million energy efficiency program that includes incentives for small commercial and multi-family properties, financing through an On Bill Repayment pilot program and an online software tool to help homeowners develop a personalized list of measures to create an energy efficiency plan. To help support the energy efficiency program offerings, MCE executed a $50,000 contract with Rising Sun Energy Center and a $45,000 contract with RichmondBUILD to directly support local job training and development.
After more than three years of successful operations in clean power procurement, communities across the state (including Arcata, Berkeley, Monterey, Mountain View, Santa Cruz, San Diego, San Francisco, San Luis Obispo, Sunnyvale and Sonoma counties, among others) are considering following MEA’s footsteps by creating their own local public power program.
Jamie Tuckey is communications director for Marin Clean Energy (MCE). For more information about MCE, visit www.mceCleanEnergy.com, call (888) 632-3674 or email info@mceCleanEnergy.com.
