Marin County residents want more solar and wind power. San Francisco officials think they might be able to strike better energy deals. Some cities in the San Joaquin Valley want to build their own power plants.
From the North Bay to Hollywood, California communities are trying to exert more power over, well, their power.
Marin County officials will open a public relations campaign today for “Marin Clean Energy.” The plan, called “community choice aggregation” or CCA, would pool the energy needs of all residents and businesses, allowing a local board to negotiate not only for energy rates but energy sources. Similar efforts are under way in San Francisco, Berkeley, Beverly Hills and other cities.
However, the player that stands to lose the most – Pacific Gas and Electric Co. – isn’t likely to let Marin or any other community considering similar programs go without a fight. PG&E, which both supplies and distributes energy throughout Northern California, stands to lose the lucrative supply side of its business in communities that choose to go their own way. The company has a long history of successfully staving off public power efforts in San Francisco and elsewhere. This week, the utility settled a dispute with a Central Valley power authority over the company’s marketing tactics, which appear to have helped persuade Tulare County and the city of Fresno to stop pursuing local control of their power. Marin officials expect the same onslaught.
“They’re throwing up regulatory, legal, political roadblocks,” said Tim Rosenfeld, project director for the Marin Energy Management Team.
The Marin effort has roots in the California energy debacle of 2000 and 2001. In 2002, in response to the crisis, the state passed a law allowing local governments to participate in the open power market. Today, the worries driving the movement are local and global: climate change, dependence on foreign oil, record oil industry profits.
“It’s probably the quickest and most powerful thing we can do to reduce Marin’s carbon footprint,” said Ed Mainland, a Novato supporter of Marin’s plan and co-chair of the energy-climate committee of the Sierra Club. “And it’s also more democratic decision-making; it’s trying to take care of our own energy futures and getting it out of the boardrooms of the corporations and bureaucratic state agencies.”
But big questions loom. Can local governments play in the complex and competitive energy market? More importantly, is cheap green power a reality? Severin Borenstein, director of the University of California Energy Institute, says the answer to both questions is a resounding no.
Even factoring in municipalities’ favorable tax status and their ability to borrow money at rates lower than private businesses, he said, the cost of renewables is steep.
“The basic fact is, renewables cost more. I hope that won’t be the case for long, but it’s the case for now,” Borenstein said. “So the idea that you’re going to save a bundle of money with a CCA is not well founded.”
Marin wants sun power
Marin County, with its liberal sensibility and fondness for all things earthy, seems a likely spot for a community drive toward renewable energy. The county wants more power from sun, wind, hot springs, biomass and other natural sources. And officials say they can offer that at costs initially on par with or possibly higher than PG&E’s generating costs. Eventually, they say, those costs would fall below the utility’s.
“What this constituency is saying repeatedly is, ‘Cut greenhouse gases now. Do it in a financially responsible way, but do it,’ ” said Charles McGlashan, supervisor for southern Marin County.
Economist William Marcus says Marin is taking a gamble. Marcus, whose JBS Energy Inc. evaluated PG&E’s response to Marin’s program, said the company’s early March analysis of the plan forecasts that natural gas prices will drop by an “improbable” 14 percent between now and 2020.
“Marin is trying to hedge natural gas price risk by buying renewables,” Marcus said. “If natural gas ends up really cheap, Marin’s prices are going to be expensive; but if they bounce up and down, Marin’s will look pretty good.
“We’ll all know who’s right in 12 years, but (a CCA) is a perfectly good choice to consider from a public policy standpoint.”
Under Marin’s plan, five years in the making, a joint power authority composed of representatives of all 11 Marin County towns would oversee the program. Officials expect to submit the plan to the California Public Utilities Commission for approval next year.
Ratepayers would have a choice: “light green” or “dark green.” Light green customers would get 25 to 50 percent of their energy from “qualified” renewable sources – everything other than large hydropower. PG&E estimates 14 percent of its energy will come from renewable sources this year.
Dark green would offer 100 percent renewables. PG&E would still distribute power and maintain poles and lines; Marin would simply choose other energy generators. (Technically, electrons can’t be tagged “green” or “brown” – advocates say demanding renewable sources forces more into the overall grid).
Ratepayers to get mailers
Over the next several months, Marin ratepayers will get mailers about opting out of Marin’s attempt to go local. During an initial period, consumers could opt out for free; at a later date, a fee might be charged.
PG&E argues that becoming part of the local program will open ratepayers to high costs and not necessarily more renewable sources. For one, PG&E says it’s already in the renewable hunt. Although it won’t meet a state-set deadline for 20 percent renewable power by 2010, the company expects to soon after. In addition to large-scale solar projects, the utility is working on buying power from more small alternative energy companies.
So far, PG&E has hit the same thorny issue – high costs.
“We’re working hard to bring new renewable supplies into being … but they don’t come without a cost, so it’s a balancing act,” said David Rubin, director of service analysis for PG&E. “We don’t think it’s credible to get to those (renewable source) levels without much stiffer costs than are being represented in (CCA communities’) business plans.”
Put simply, the renewable energy goals aren’t attainable at the prices advertised; and they will continue to track above PG&E rates, the company said.
The other main criticism of the aggregation system has less to do with money than management.
“A small town getting into the energy business is asking for trouble,” Borenstein said. “If you don’t know what you’re doing, it’s pretty easy to get your clock cleaned by a sophisticated company.”
Depending on how the system is structured legally and financially, Borenstein also said cities could put basic services at risk. If, for instance, a local power authority were to lock into a long-term contract at rates that prove expensive. it could hurt a city’s credit rating.
“If (a CCA) goes badly, other aspects of the city are going to go badly… you’ll have budget cutting.”
Marin officials say they’ve examined every angle and concluded the risks of the status quo are far higher; they also emphasize they’re looking to hire experienced power brokers.
Few programs tested
There are few test cases for aggregation programs in California. The San Joaquin Valley Power Authority is first out of the gate – the California Public Utilities Commission certified the plan this year. System administrators, who hope to power about 115,000 customers in the valley, are working out a contract with Citigroup Energy to handle its entire energy supply.
Eventually, the power authority expects to issue bonds to pay for some local energy plants. The current energy supply is largely a mix of hydroelectric – which they worry will become less reliable – and imported, which sometimes creates system bottlenecks.
Marin also hopes to invest in regional energy projects, particularly alternatives – a stepped-up variation on the “buy local” credo.
“Right now we’re dependent on fossil fuels – the cost and supply is very uncertain,” said Dawn Weisz, sustainable planner for the Marin Community Development Agency. “So getting unhooked from that dependence is good for rate stability, for economics, and it’s good for self-sufficiency… and as a way to reduce our greenhouse gas emissions.
“We need to do as much as we can … and then maybe we can step back from the tipping point. That’s where Marin wants to be.”
How it works
Under a “community choice aggregation,” a local government or a group of local governments buys power for customers within their communities. Although the CCA does not own the transmission wires, it may or may not own energy generating facilities.
Proponents say the system allows for more local control, the inclusion of more renewable energy sources and the possibility of negotiating for better electricity rates.
Opponents contend that renewable energy remains expensive and that local power authorities might not have the necessary expertise in the energy market.
Kelly Zito, Chronicle Staff Writer
16 April 2008
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