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Green Scheme 

The city's master plan for cleaner energy is fraught with risk. And, like it or not, you're already signed up.

Wednesday, Jan 14 2009

Page 3 of 5

In light of its potential effects on all San Francisco residents, you might think that Community Choice Aggregation would be well suited to an up-or-down vote through popular democracy. But Mirkarimi, who from his perch as LAFCo chairman is one of the foremost advocates of public power in city government, demurred when asked whether CCA should be put to a citywide referendum along the lines of previous energy initiatives. "My concern about that is that it becomes another campaign of public power, where PG&E spends $10 million and we spend $50,000," he said. "They run this campaign of disinformation and it just shuts down the whole argument for what we would be trying to offer."

PG&E has lobbied actively against CCA in Marin County, which is developing its own plan, but has so far been relatively quiet in San Francisco. As CleanPowerSF progresses, however, it is almost unthinkable that PG&E won't launch its own opposing marketing campaign to persuade people to opt out. "We believe that the draft [San Francisco] CCA plan carries great risk for our customers," PG&E spokeswoman Emily Christensen said. The company sees itself as having a responsibility to share this view with residents, she said, but declined to comment on when or how it might do so.

In other words, when it comes to CleanPowerSF, PG&E will be ready to fight, and fight hard. Anyone who doubts as much need only look to the Central Valley, where the utility has battled the state's most promising CCA program to a standstill.

The San Joaquin Valley Power Authority (SJVPA) is headquartered in a ranch-style building on a lonely commercial avenue in southeastern Fresno. Passersby probably don't guess that this modest building is home to the agency that has pioneered one of California's most revolutionary approaches to energy policy. Residents of the cookie-cutter housing tracts and agricultural flatlands that spread in all directions are probably none the wiser: Despite receiving final regulatory approval from the California Public Utilities Commission in the spring of 2007, the power authority's CCA program has yet to serve a single customer.

On a winter day in the Central Valley — the sky was overcast, and the morning's tule fog had left a lingering chill — Cristel Tufenkjian, an SJVPA spokeswoman, took a reporter on a tour of some of the authority's 12 cities. Driving through countryside quilted with orange groves and raisin vineyards, she explained that the SJVPA had lost crucial time moving its plan ahead because of wrangling with PG&E.

Typical of the utility's marketing tactics was a full-page advertisement in the Fresno Bee. "Whatever Happened to Open Government?" the ad screamed, arguing that the switch to CCA would entail "billions of dollars" in debt and power costs for the cities. "We ask you to involve local residents in the decision-making process," it continued. "After all, they are the ones who will have to live with the outcome of your decisions."

PG&E's efforts did not sink the SJVPA, though the utility did land a heavy blow: The city of Fresno, whose 470,000 residents would have accounted for about half of the authority's energy use, dropped out. SJVPA officials responded by lodging a complaint against PG&E with the state Public Utilities Commission, alleging misleading marketing tactics. The result was inconclusive: Both sides agreed to ground rules for their CCA-related marketing, such as clear disclaimers of sources of information presented to the public. But other problems, having nothing to do with PG&E, were in the offing.

Next to CleanPowerSF, the SJVPA is striking by virtue of its modesty. The Central Valley program involves no renewable-energy requirements beyond those laid out in state law; its goal is one of economics, not ideology. But the power authority's founding objective — providing energy that would be about 2.5 percent cheaper than that offered through private utilities — has proven more difficult to guarantee than its supporters had expected.

"What we have been challenged by the last six months is the incredibly volatile energy markets, now further compounded by the credit market uncertainties," SJVPA manager Dave Orth said. "We cannot buy the energy through 2015 that we need to support the program. There are opportunities for shorter deals — two, three years — but our program goal is to provide more stability than that." As a result, the initiative has been put on hold.

Several other regions in California have devoted extensive time and energy to developing CCA programs since the 2002 passage of AB 117, but none have succeeded in making their plans a reality. Marin County has in recent months advanced its own plan, Marin Clean Energy, but its fate, like that of its S.F. counterpart, is uncertain.

Meanwhile, across the bay, energy officials in Oakland, Berkeley, and Emeryville suggested to their city councils in October that plans for an East Bay CCA be dropped. Reports in each of the three cities concluded that the risk of higher rates to customers, as well as the general pitfalls of plunging into an untested prescription for buying and selling power on such a large scale, were simply too great.

"In my mind, there's a basic flaw in that business model," Emeryville city manager Patrick O'Keefe said. "You can't guarantee that your revenues are going to equal what your [debt] obligations are. The only other way to do it is to raise rates, and the more you raise rates above PG&E, the more customers are going to opt out."

Successful CCAs can be found — two of them. Both are outside California. In Massachusetts, the Cape Light Compact has since 2004 served about 200,000 customers, and in 2007 offered rates roughly 4 percent below those of the incumbent private utility. Similarly, the Northeast Ohio Public Energy Council (NOPEC), established in 2000, is a CCA serving 118 towns and cities. In its 2005 year-end report, NOPEC calculated that it had saved its customers $46 million over five years when compared to the default local power utility, a savings of about $33 per customer per year.

About The Author

Peter Jamison


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