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Thursday, April 11, 2013

PG&E "Green Option," a Competitor for CleanPowerSF, Discloses its Terms

Posted By on Thu, Apr 11, 2013 at 3:11 PM

PG&E's service area covers much of California. "SRA" is State Responsibility Area.

PG&E "Green Option" expected to cost far less than tentative CleanPowerSF rates

In the current edition of SF Weekly, we explore the long-term goal of CleanPowerSF to provide San Francisco with "a local build-out which would supply the city with vast quantities of renewable power, energy independence, and jobs, jobs, jobs."

A "goal," however, is not the same thing as a "plan." And, when it comes to a plan to transition CleanPowerSF from its initial phase of procuring "100 percent renewable" energy from Shell to the verdant world of a local build-out, the city and its Public Utilities Commission are empty-handed.

Say what you will about PG&E, the century-old monopolistic San Francisco utility that blew up the town next door. But, today, terms were announced for a "PG&E Green Option" following lengthy settlement talks before the California Public Utilities Commission. And this proposal does present a plan for potential build-out of in-state  -- or even local -- renewable facilities:

Under the program, PG&E will execute contracts for new renewable generation from facilities to be built within the PG&E service territory sufficient to serve the electrical demand of customers participating in the program. The amount paid by participating PG&E customers will be based on the actual cost of procuring new renewable generation, thereby providing them with a fair price and long-term hedge against rising conventional supply costs.
click to enlarge PG&E's service area covers much of California. "SRA" is State Responsibility Area.
"The whole point of this is that it will fund new renewable facilities in PG&E service territory," says Marc Joseph, the attorney representing the Coalition of California Utility Employees, one of the parties that negotiated this settlement.

Joseph said that Green Option customers can initially expect to pay about 3 cents per kilowatt hour more than PG&E's base rates -- though he anticipates this price "will decline substantially and fairly quickly." CleanPowerSF's rates have not yet been set -- but, based on its tentative Not-To-Exceed rate, its future customers could pay 7.3 cents per kilowatt hour more than PG&E base rates. "This is a lot less than anything CleanPowerSF has put on the table," says Matthew Freedman, a staff attorney for The Utility Reform Network.

Future "new facilities" are intended to be no larger than 20 megawatts (the Sunset Reservoir, as a point of comparison, has a capacity one-quarter that). Until "new resources are developed to serve Green Option subscribers," energy will be provided from "recently developed and operating renewable energy projects" located within PG&E service territory.

"PG&E service territory," incidentally, stretches across broad swaths of California, from the Oregon border down to as far south as Bakersfield. Limiting Green Option power to facilities from this area essentially cuts out the possibility of out-of-state power being utilized. This is the professed major beef with CleanPowerSF's Shell contract expressed by the International Brotherhood of Electrical Workers -- who have threatened to sue the city regarding CleanPowerSF. The IBEW, perhaps not coincidentally, is PG&E's most prominent union.

It's also a member of the Coalition of California Utility Employees, one of the seven parties that negotiated with PG&E to produce the settlement terms disclosed today. (Others include The Utility Reform Network -- which played a leading role -- Sierra Club California, and the California Clean Energy Committee).

The Green Option includes language indicating a desire for constructing renewable energy facilities in proximity to large numbers of future customers -- but the language is not exactly committal:

As part of the program mix, PG&E may incorporate energy supplies from projects located within a reasonable proximity to customer enrollees. PG&E and the settling parties mutually will continue to consider additional community renewables options and improvements.

The IBEW has been unsubtle in its opposition to the CleanPowerSF Shell contract
When PG&E originally submitted its "Green Option" terms last year, the power would have been supplied, entirely, by Renewable Energy Credits. These certificates function much like a papal indulgence, as we noted in our cover story Essentially, purchasing one allows an energy provider to claim credit for power generated by an existing renewable facility -- power that would have been generated regardless and is distributed to someone else -- while providing its customers with system power. Locals paying a premium for "100-per cent renewable" energy may actually be receiving whatever's in the grid -- while propping up existing wind-farms in Idaho or landfills in Washington.

Dissatisfaction with this proposal led to multiple parties objecting to the California Public Utilities Commission -- which triggered the ongoing legal proceedings leading to today's proposed settlement.

While the city of San Francisco did, at one time, play a role in these negotiations, it is not one of the participating parties listed on today's proposed settlement. Messages for the San Francisco PUC querying for an assessment of PG&E's proposed terms -- and asking if the PUC would take any action to alter them -- have not yet been returned. The City Attorney's office hasn't yet replied either.

Messages have also not yet been returned by CleanPowerSF director Kim Malcolm, or the attorneys representing PG&E and the Sierra Club.

Read the source document here

Update, 3:27 p.m.: PG&E spokesman Jonathan Marshall returned our call to the utility's lawyer. He pegged the initial premium at 3.5 cents per kilowatt hour, with the expectation this price would decline sooner rather than later. Marshall added that power would emanate from almost exclusively solar sources. "We're intending for it to be solar," he said -- though PG&E provided itself with "wiggle room" in the official wording.

Update, 4:40 p.m.: City Attorney spokesman Jack Song notes "Comments on the proposed settlement are due in 30 days.  At that time the City could support, oppose, propose modifications, etc. ...  the City is exploring all of its options."

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About The Author

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.


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