Sonoma Pursues Choice

By Published On: April 26, 2013

Sonoma County’s Board of Supervisors April 23 authorized a community choice aggregation program for the county’s 152,000 residents in unincorporated areas. The trick, according to the board, is how to make the program better than a choice program in neighboring Marin County. The Marin and Sonoma programs compete head-on with Pacific Gas & Electric’s service. Ultimately, officials hope to enlist cities to participate. Incorporated areas are home to another 328,000 people. “This is really the county’s moment,” said supervisor Efren Carillo before the supervisors—meeting as the board of the Sonoma Clean Power Authority—approved going forward by a 4-1 vote. The decision paves the way for the county staff to bring to the board for approval a detailed implementation plan and to begin negotiating a final energy supply contract. Service should begin January 1. The California Public Utilities Commission also has to okay the action. Supervisors and advocates focused on the promise of the program to advance local investment in renewable energy, provide consumer choice, promote innovation in the electricity business, control costs, and reduce greenhouse gases. California Coastal Conservancy chair Doug Bosco said that the choice program will spur innovation in the energy field like the breakup of the phone company did in the 1980s. Vintners voiced support in hopes they would be able to develop solar energy facilities on their properties to supply the new community choice program. Sonoma County joins a growing number of localities pursuing community choice aggregation, in which local entities purchase power for their residents and the local utility merely distributes it. Marin County was the first to go forward in California, beginning service in 2010. Richmond recently joined in with Marin—even though it’s in Contra Costa County, across the bay. In separate developments, San Francisco City and County are moving to activate a choice program and one is under examination in San Diego County. Recognizing that they are among the first to move ahead on choice, the Sonoma County supervisors approached their vote with caution. They particularly stressed they want to make sure their program does not turn out like Marin County’s community choice aggregation plan to date. “We want to show we are creating projects and jobs” in Sonoma County, said supervisor Susan Gorin. She referred to the apparent near-absence of on-the-ground investment under Marin’s choice program. To date, the only local project is a 1MW solar project at the airport in San Rafael. Marin is buying the output under a 20-year feed-in tariff deal. Many of those testifying questioned the benefits of the program unless it is implemented differently than in Marin County—where the program is supplied by Shell Energy. The Marin program hasn’t created much new renewable energy capacity, but instead relied mainly on renewable energy credits, according to several at the meeting. “They’re a feel-good scam,” asserted Ken Churchill, Sonoma County Taxpayers Association member. He said that due to its use of hydropower, PG&E has a carbon intensity about one-third of the national average. Churchill urged the Sonoma County Water Agency—currently staffing the program—to reveal the carbon intensity and number of renewable energy credits included in responses by prospective energy suppliers to a request for proposals. Staff declined to do so, but indicated 13 percent of the energy portfolio—which is supposed to consist of 33 percent renewable energy—would be based on credits, at least initially. Revealing detailed information could compromise negotiations, staff said. International Brotherhood of Electrical Workers Local 1245 representative Hunter Stern warned that renewable energy credits do not represent electricity and jobs, but instead are “financial instruments.” He noted that in three years under the choice program in Marin, only one local renewable energy facility has been built, which supplied 20 jobs for three months. Board chair Dave Rabbit—who cast the lone vote against going forward—said he fears that price volatility in the renewable energy credit market could boost the cost of the program. He noted price won’t be locked in place until a final power supply agreement is negotiated. Pricing information for the program so far is based on responses to Sonoma County Water Agency’s request for proposals from 11 companies. The responses show the choice program could supply power at rates competitive with PG&E’s, Cordell Stillman, Water Agency deputy chief engineer told the board. Depending upon the proposal, residential rates would range anywhere from 2 percent below to 1 percent above PG&E’s rates. Commercial rates would range between 3 percent less and 0.5 percent more than the utility’s rates. Stillman said the agency plans to narrow the list of proposals to those submitted by three companies and then begin negotiating for a final power supply deal. Costs could go up or down depending upon how many customers opt out of the choice program and whether the county can enlist cities to participate. Another factor expected to influence cost is the extent to which the county seeks to structure into its energy supply the development of local renewable energy projects, for instance by offering a feed-in tariff. County deputy counsel Steve Shupe told the board there were three key risks: * The prospect that regulatory decisions beyond the control of the authority could influence the price of power. * The possibility the authority could face losses if it doesn’t carefully match power supply and demand, so called “volumetric risk.” * The chance it could contract for power at a price only to find that the price for power declines during the term of the purchase agreement. He said this so-called “market risk” could be managed by entering numerous contracts for staggered terms. Under the worst case, he said, the authority would go out of business if it couldn’t stay afloat financially. However, Shupe stressed that the way the authority is structured neither the county or the ratepayers would be at risk since there are legal firewalls in place. If it did go out of business, its customers merely would revert to being supplied by PG&E, he added. Over the next two months, the county plans to hold workshops for cities, seeking to enlist them in the program. In addition, it plans to hire an interim chief executive officer for the program. A final implementation plan and energy supply contract could be presented to the board for approval this summer.

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