October 17, 2013
California

Sonoma Clean Power lays out green energy goal

By BRETT WILKISON | THE PRESS DEMOCRAT | October 17, 2013 | www.pressdemocrat.com

Officials overseeing Sonoma County’s startup public power agency on Thursday unveiled terms of a proposed power supply contract they contend would make their venture immediately greener than PG&E.

The new information came as the agency enters a critical period leading up to key business decisions next month.

Two advisory committees that will provide input on that work were sworn in Tuesday and told to keep their schedules free.

“Congratulations, or some would say condolences, because you have some serious work ahead of you,” said county Supervisor Susan Gorin, board chairwoman of Sonoma Clean Power.

The setting of green power targets came in a preliminary sketch of the agency’s work on two contracts central to the venture’s launch. The aim is to begin serving the first wave of customers, mostly commercial accounts, by May.

For the initial power supply deal, they revealed terms dictating that 70 percent of the electricity purchased by the agency must come from carbon-free sources.

By comparison, PG&E’s carbon-free power amounts to 51 percent of its supply, according to the utility’s power content label, which is filed with the state and visible on customer bills.

Geof Syphers, interim CEO of Sonoma Clean Power, touted that difference, calling the agency’s emission-free focus “meaningfully larger” for the initial three-year contract period.

The public power venture has been billed as a more environmentally conscious, competitively priced alternative to PG&E, but it has yet to convince many skeptics, partly because to date they’ve been unable to make comparisons on which provider would have a cleaner overall supply.

Public power officials are keenly aware of the need to convince prospective customers and clearly are making a bid for the greener mantle.

At the outset, a little under half the carbon-free load – 33 percent – would come from renewable sources, including wind, geothermal, biomass and small hydroelectric projects. PG&E’s current renewable portfolio is 19 percent of its supply.

The remainder of the agency’s carbon-free supply would likely come from large hydroelectric projects, which don’t qualify as renewable under state rules, or wind. No nuclear power will be used. The remainder of the overall supply would likely come from natural gas, Syphers said.

The picture is muddied somewhat by the agency’s planned use of renewable energy credits, allowing it to package a premium payment for undelivered green power with contracted electricity from a conventional source. Of the agency’s 33 percent renewable portfolio, about half – 16 percent of the overall supply, to be exact – will be made up of renewable energy credits.

The cost-saving tool is seen as transitional by supporters, who ultimately want the agency to plow more money into actual green energy generation, especially on a local level. It could leave the agency open to attacks from its sharpest critics, who contend the credits are a form of greenwashing.

Other points of the proposed power supply deal include a right to purchase from other suppliers and an option to meet an increasing greater share of its power demand – up to 25 percent by the third year – through agency projects, efficiency programs and other means.

Four energy supply bidders, all of them national or multinational power companies, are competing for the initial power contract. It could be worth up $130 million annually by 2017, based on current enrollment from the county and five participating cities and assuming a 20 percent opt-out rate by customers who prefer to stay with PG&E.

A board decision on general terms and conditions of the deal – essentially everything but final price – is set for the next meeting, on Nov. 7. At that meeting the board could decide on a maximum average retail power rate and authorize staff to execute a deal with the winning bidder sometime thereafter.

The idea, Syphers said, is to come within a few percent of the rates offered by PG&E with the goal of being lower.

“It’s very important – and this has been impressed on me by everyone I have ever talked to with knowledge in the industry – that we do not commit to being lower than PG&E,” Syphers said. “That’s a problem for marketing. But the reality is, if the market moves and PG&E drops its rates through a surprise move and we’ve promised to customers that we are lower, we are suddenly out of business, even if we are a percent above.”

Later in the day, however, one of the agency’s consultants said that jockeying between rates offered by Marin County’s power venture and PG&E had not seemed to significantly affect customer participation, which has held around 80 percent, the consultant said.

The other main proposed contract detailed Thursday was a deal for data management, overseeing coordination with PG&E on billing and metering and customer service.

Board members said that deal, also set for a Nov. 7 decision, could prove just as crucial because it will establish who runs several “customer-facing” parts of the venture, including a call center.

On the upper end of its range, the proposed five-year deal could be worth $3 million annually by the third year, when the largest wave of residential customers is set to hit.

With six large power companies competing for the job, its unclear now whether such a center would be locally based. Several board members made it clear that would be their preference, seeking to deliver on their promise of local jobs and assure some level of expertise about the program.

Syphers said he was looking into the possibility of an existing local center taking on that role, and sharing some higher level customer service staff with the Marin program.

“We need to have some local people on the ends of those lines,” said Supervisor Shirlee Zane. “For the accountability factor and for the factor that we want to deliver what we said we were going to deliver, which is a local company.”