California ‘community choice’ energy program takes a hit

The community choice aggregation (CCA) movement has built considerable momentum in California in recent years. In CCA programs, groups of local government agencies team up to take over decision-making on what sources of power to use in the local electric grid – with utilities continuing to hold responsibility for maintaining the grid. 

CCA advocates contend that not only will this lead to use of more environment-friendly types of energy, it will bring down rates for businesses and households by creating competition for utility companies that often have no rivals. Critics say decisions on what types of energy are used are already mostly dictated by state laws requiring a long-term shift to cleaner renewable energy sources. They also question whether local governments have the necessary expertise for the responsibilities they are taking on.

But since the state’s first CCA, Marin Clean Energy, was launched in Marin County in 2010, the programs have proven popular and kept expanding. Nineteen programs serving 10 million of the state’s 40 million residents have been established.

Last week, however, saw the first major bad news for CCAs in years. The Ventura County Star reported some of the local governments in California’s largest CCA – the Clean Power Alliance – were unhappy enough with the cost of power for street, highway and outdoor lighting that they had opted to return to Southern California Edison to provide that power.

The backlash is limited. The alliance includes Los Angeles County, Ventura County and 30 local cities. The cities of Ventura, Camarillo, Moorpark, Oxnard and Thousand Oaks have taken steps to limit their reliance on the alliance, and at least two other cities are considering the same step. They must give six months notice. 

Edison blamed for defections from Clean Power Alliance

Most member agencies are satisfied, with many choosing to use the 100 percent clean energy option provided by the alliance even if it carries a cost premium of 7 percent to 9 percent. 

Alliance leaders blame the defections on pricing decisions by Edison that they say were attempts to punish their CCA’s members. Edison said all its decisions had been ratified by the state Public Utilities Commission in a transparent process and challenged claims that the utility subsidized some customers at the expense of others.

But as cities are squeezed by the cost of pensions and look to save money wherever they can, the decisions made by Ventura, Camarillo, Moorpark, Oxnard and Thousand Oaks could be copied by other local governments. And while the cities are retaining use of the Ventura-L.A. CCA for most of their energy accounts, the street, highway and outdoor lighting accounts are among the biggest of all in terms of total bills, and thus most coveted by CCAs. 

Nevertheless, the news continues to be mostly bright for CCAs. In February, the San Diego City Council voted to begin negotiating on establishing a CCA with other local governments. San Diego would be the largest city in the nation with a CCA. The cities of Carlsbad, Chula Vista, Del Mar, Encinitas, La Mesa and Oceanside have expressed interest in joining the regional initiative.

Large utilities split on how to deal with CCAs

The decision was made easier by the surprising decision of the giant investor-owned San Diego Gas & Electric utility to welcome a new era in which it runs the regional grid but others choose energy sources. The utility disclosed in November that it hoped for state legislation “that would allow us to begin planning a glide path out the energy procurement space.” Edison and Pacific Gas & Electric have been far cooler to the CCA movement.

In another sign of CCAs’ acceptance as part of the California energy landscape, in May, Moody’s gave Peninsula Clean Energy aninvestment-grade credit rating. Peninsula serves 300,000 accounts in the Bay Area.

Only one other CCA has such a high rating from Moody’s: the Marin program that launched the movement in 2010. It has about 255,000 customers.

Local Energy Programs Are Gaining Popularity


Power electricCommunity-choice energy programs – in which a local government or coalitions of local governments procure electricity and use the infrastructure of existing utilities to distribute it – are growing in popularity across California.

Proponents say government control will lead to cheaper utility rates and faster adoption of renewable energy.

This month, more than 950,000 homes and businesses in Los Angeles and Ventura will shift to a community-choice program – the Clean Power Alliance. It will be the state’s 20th and largest community-choice provider, which will then provide power to nearly 3.6 million customers in the Golden State.

Those numbers could drastically grow in coming years. Both San Diego Mayor Kevin Faulconer and Dianne Jacob, chair of the San Diego County Board of Supervisors, have endorsed community-choice programs. Many other local governments are watching how the programs work in places that have already adopted them.

SDG&E says it welcomes infrastructure-only role

To the surprise of many industry watchers, one of the state’s three giant investor-owned utilities isn’t fighting this development.

After San Diego began taking steps toward a community-choice program last year, San Diego Gas & Electric made clear its interest in getting out of energy procurement. Earlier this month, Kendall Helm, SDG&E’s vice president of energy supply, told the Los Angeles Times that the decision was straightforward.

“We don’t think we should be signing big, long-term contracts for customers that have made a conscious choice to be served by a different” provider, Helm said. “We think our primary role and our primary value is in the safe and reliable delivery of that power.”

Pacific Gas & Electric and Southern California Edison continue to defend the status quo and to work with the California Public Utilities Commission and SDG&E on “exit fees” assessed to departing customers to make sure they help pay for maintaining energy infrastructure. But PG&E, now in bankruptcy and facing possible dissolution by the CPUC because of repeated scandals, has dropped its once-aggressive opposition to the very idea of community-choice energy, including sponsoring a failed state ballot measure on the issue in 2010.

CPUC president fears programs could fail, cause havoc

But California’s most prominent regulator worries that adoption of community-choice’s programs could have huge unintended consequences.

CPUC President Michael Picker told the San Francisco Chronicle last spring that he worries about things going haywire.

“You’re going to have some failures,” Picker said. “Electric markets can be brutal. So what happens to the customers, midyear, if the company or the program goes away? Where do those customers go?”

In a May op-ed in the Sacramento Bee, Picker urged local officials pursuing community-choice to act with care.

“The last time California deregulated electricity, it did so with a plan, however flawed. Now, electricity is being deregulated de facto, through dozens of decisions and legislative actions, without a clear or coordinated plan,” he wrote. “If California policymakers are not careful, we could drift slowly back into another predicament like the energy crisis of 2001.”

Picker warns that managing California’s power grid requires expertise and will become increasingly difficult as new clean-energy mandates kick in and as new technologies come to the fore.

But these warnings so far don’t seem to resonate with the statewide business community, which so far has not taken a strong, consistent stand on community-choice.

Some local groups have, however. The San Diego Regional Chamber of Commerce, for example, questions the assumptions that community-choice will lead to cheaper utility rates and increased use of clean energy.

This article was originally published by CalWatchdog.com

CARTOON: Nuking Coal Power


Clean energy cartoon

Report: EPA Regulations To Raise Power Costs 37 Percent By 2020

Electricity prices are already increasing at record levels and Environmental Protection Agency rules will only force power prices up even higher as the agency finalizes a slew of regulations aimed at the power sector.

A report by Energy Ventures Analysis found that the EPA underestimates how much its power plant regulatory regime will raise electricity and natural gas prices by imposing new regulations on power plants, most recently being the agency’s rules to cut carbon dioxide emissions from new and existing power plants.

These new rules to tackle global warming, combined with other rules to reduce more traditional air pollutants, will dramatically increase Americans’ utility bills by 2020, according to EVA’s report which was sponsored by the coal company Peabody Energy.

“Annual power and gas costs for residential, commercial and industrial customers in America would be $284 billion higher ($173 billion in real terms) in 2020 compared to 2012—a 60% (37%) increase,” the EVA report found.

The EPA’s so-called Clean Power Plan to reduce emissions from existing power plants aims to reduce carbon dioxide emissions from the power sector 30 percent below 2005 levels by 2030. The EPA says its plan will result in “approximately 46 to 49 GW of additional coal-fired generation” being “removed from operation by 2020.”

On top of this the “decrease in coal-fired power will also cause natural gas prices to rise up to 11.5 percent as an additional 1.2 trillion cubic feet of natural gas is used to make up for the lack of coal power in 2020,” EPA said. “Average retail electricity prices are projected to increase in the contiguous U.S. by 5.9% to 6.5% in 2020.”

The Energy Information Administration estimates that 50 gigawatts of coal-fired power are slated to shutdown by 2020, mainly because of an EPA rule targeting mercury emissions. This means that the Clean Power Plan could nearly double the amount of coal-fired capacity being retired by 2020.

Retiring coal-fired generators and using more natural gas-fired power and green energy comes at a cost, however, as new energy infrastructure must be built to accommodate the shift and gas prices rise as demand increases.

“The cost of electricity and natural gas will be impacted in large part due to an almost 135% increase in the wholesale price of natural gas (100% in real dollars), from $2.82/mmbtu in 2012 to approximately $6.60/mmbtu ($5.63) in 2020,” EVa reports. “These increases are due to baseline market and policy impacts between 2012 and 2020 as well as significantly increased pressure on gas prices resulting from recent EPA regulations on the power sector and the proposed [Clean Power Plan].”

U.S. industry would be hit the hardest, seeing their electricity and gas costs soar 64 percent by 2020 over 2012 costs. EVA notes that skyrocketing “operational costs in the industrial sector are of particular concern for energy intensive industries in the U.S. such as aluminum, steel and chemicals manufacturing, which require low energy prices to compete.”

“Industrial power consumers would be expected to pass energy cost increases on to their customers, affecting the costs of goods purchased by American consumers over and above increased monthly utility bills,” EVA reports.

“The EPA’s collection of regulations will force American families, businesses and manufacturers to shoulder the burden it stands to create,” said Chad Kolton, spokesman for the Partnership for a Better Energy Future — which opposes the EPA’s Clean Power Plan.

“Today’s report from EVA is consistent with what industry has been saying for months — the EPA’s regulatory agenda will do significant damage to the American economy,” Kolton said.

Environmental groups, however, have said the Clean Power Plan — and pretty much all major EPA rules in the last six years — are necessary to protecting public health and the environment. Activists have spent a large amount of energy, in particular, protecting the Clean Power Plan which they see as the centerpiece of President Obama’s climate agenda.

The Natural Resources Defense Council recently published a report saying the Clean Power Plan will actually save Americans money while fighting global warming. NRDC argues, in contrast to EVA, that EPA’s plan overestimates the compliance costs of cutting carbon dioxide emissions.

“It’s clear that EPA has ample room to significantly strengthen the Clean Power Plan, making deeper cuts to dangerous carbon pollution from power plants at a reasonable cost,” said Starla Yeh, the report’s co-author and NRDC policy analyst.

“It can do so relying more on energy efficiency and clean energy—such as wind and solar energy—which can help slash America’s biggest source of heat-trapping pollution.,” Yeh said.

NRDC’s report argues that EPA overestimated the cost of increasing energy efficiency in the power sector by double what current projections are and overestimated the cost of green energy use by 50 percent.

Taking these factors into account, NRDC argues the Clean Power Plan will save Americans between $6.4 billion and $9.4 billion from energy efficiency by 2030 — well above EPA projected savings of up to $8.8 billion by that year.

“In 2030, energy efficiency savings could total 140 terawatt-hours more than what EPA projected,”NRDC reports. “Renewable generation could be 171 terawatt-hours higher than EPA’s projections.  Collectively, that’s equivalent to the electricity used by 29 million homes in one year—roughly the population of the New York and Chicago metropolitan areas together.”

This article was originally published by the Daily Caller News Foundation.