SMUD cancels controversial power line project north of Sacramento

SMUD on Friday canceled a controversial $345 million power line project north of Sacramento that had drawn opposition from farmers.

The Sacramento Municipal Utility District announced that it had scrapped the Colusa-Sutter Transmission Line Project, saying the project had grown too expensive. The original price of $245 million had grown to $345 million since the project was conceived in 2014.

“It was determined that the project is too costly,” SMUD said in a prepared statement.

The proposed 500-kilovolt transmission line through Colusa and Sutter counties would have enabled SMUD to access more hydro power and other clean energy from the Pacific Northwest. SMUD said the line would have improved system reliability.

Farm groups in the Sacramento Valley rose up in opposition, with farmers saying the new power lines and transmission towers would have disrupted their operations and disturbed wildlife. In some cases they would have had to surrender farmland to the project.

“I do not want the wires,” Sutter County rice grower Mike Cole told The Sacramento Bee in 2016. “I don’t like them from a farming standpoint and I don’t like them from a wildlife standpoint.”

 

SMUD cancels controversial power line project north of Sacramento, by Dale Kasler, The Sacramento Bee, March 1, 2019.

Status Check: Community Choice Aggregation

In September 2018, a Davis-based Community Choice Aggregation option known as Valley Clean Energy offered to extend its service to Winters and West Sacramento, months after launching in Woodland, Davis and unincorporated Yolo County.

A month later, Comstock’s published a story about CCAs and their impact on the energy market and their potential long-term viability. CCAs offer an alternative to investor-owned energy giants like Pacific Gas & Electric in areas that public utilities like the Sacramento Municipal Utility District don’t extend to, such as Yolo County (“Power Politics,” by Steven Yoder, October 2018). First launched in 2010, these publicly run ventures can also deliver cheaper energy to ratepayers and provide higher percentages of clean energy to meet upcoming state mandates.

At the time of our reporting, a big question hadn’t yet been answered: How would an expected change to the exit fee charged to customers who leave their investor-owned utility impact the future of CCAs, such as Valley Clean Energy?

For several years, investor-owned utilities including PG&E had been requesting that the California Public Utilities Commission reconsider its Power Charge Indifference Adjustment, which is a fee CCA customers are required to pay to ensure remaining utility customers aren’t financially affected by their departure from an investor-owned utility. The fee shows up on a CCA customer’s monthly bill.

“The [PCIA] ensures that the customers who remain with the utility do not end up taking on the long-term financial obligations the utility incurred on behalf of now-departed customers,” according to a news release from the PCUC in June 2017, when it announced it would reevaluate this fee. “Examples of such financial obligations include utility expenditures to build power plants and, more commonly, long-term power purchase contracts with independent power producers.”

While traditional utilities have argued that this cost-sharing is needed to cover operational expenses, proponents of CCAs say the exit fee is actually a penalty and deters customers from switching to these new energy options. Last Oct. 11, the CPUC voted 5-0 to increase the exit fee, acknowledging at the time that former PG&E customers would pay 1.68 percent more than they did in 2018.

“I support the creation of alternative electric providers to expand customer choice, and our legal obligation is to make sure this happens without increased costs to customers who do not, or cannot, join a CCA,” Commissioner Carla J. Peterman said in a written statement at the time. “Today’s proposal ensures a more level playing field between customers.”

Jim Parks, director of marketing and customer care for Valley Clean Energy, says the CPUC’s decision to increase exit fees “was about a $3.5 million hit on our budget,” which caused his company to make its rates equal to PG&E.

On Oct. 16, just days after the CPUC decision, Valley Clean Energy went ahead with its goal of extending its service to Winters, and presented an informational proposal to Winters City Council. The council directed city staff to look into CCAs further, though City Manager John W. Donlevy says it might take until summer to do this. The reason: The analysis would cost $25,000 to perform, and Donlevy would prefer to see how this fiscal year goes. “Quite honestly, things are very tight for us,” he says. “We don’t have the $25,000 right now.”

Valley Clean Energy has not yet presented to West Sacramento, according to city spokesman Paul Hosley. “But will be looking at it, along with others opportunities, with the goal of making energy costs more competitive for our residents and businesses,” he says.

Parks says the CPUC’s decision has “slowed things down a bit. It’s not like it just stopped everything cold. But it made, I think, Winters kind of step back and go, ‘OK, we’re going to have to take a look and see how Valley Clean Energy and other community choice aggregators are impacted by these exit fees.’”

And once again that question remains unresolved. Last November, the CalCCA trade association filed paperwork requesting a rehearing for the CPUC to revisit its decision on the exit fee adjustment. Meanwhile, PG&E faces some of the greatest uncertainty in its history, having filed for bankruptcy in the wake of the Camp Fire in Northern California November, with tens of billions of dollars in potential legal liability.

Parks remains hopeful of eventually doing business with Winters and West Sacramento. “The way I would term it is that we’re kind of on hold right now,” Parks says. “But I believe the conversations will begin again before too long, which could be a year or two.”

 

Status Check: Community Choice Aggregation, by Graham Womack, Comstock’s, February 28, 2019.

Local Impact as PG&E Files for Chapter 11

As expected, PG&E filed for Chapter 11 Bankruptcy protections.  PG&E in a press release Tuesday announced that it remains committed to continue to deliver “safe and reliable electric and natural gas service to (its) customers.”

In addition, they pledge to continue to invest in their system’s safety and maintenance, and to work with “customers, civic leaders, regulators, policymakers, the financial community and other key stakeholders to consider alternatives to provide for the safe delivery of natural gas and electricity and new safety solutions in an environment challenged by climate change.”

“Our most important responsibility is and must be safety, and that remains our focus. Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires,” said John Simeon, interim CEO.

“We also intend to work together with our customers, employees and other stakeholders to create a more sustainable foundation for the delivery of safe, reliable and affordable service in the years ahead. To be clear, we have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve,” Mr. Simeon said.

“Through this process, we will prioritize what matters most to our customers and the communities we serve – safety and reliability. We believe that this process will make sure that we have sufficient liquidity to serve our customers and support our operations and obligations,” Mr. Simon said.

“I know that our 24,000 dedicated employees remain steadfastly focused on delivering safe and reliable natural gas and electric service for the 16 million people across our service area,” said Mr. Simon. “Each day I see the hard work and resilience of our team, and I thank them for their continued dedication to working safely and delivering for our customers.”

Senator Bill Dodd in a statement had harsh words for the utility.

 

“Given its track record of obfuscation and mismanagement, I’m not surprised PG&E claims it can no longer meet its financial obligations,” Sen. Dodd said. “It’s extremely disappointing and underscores the need for change at PG&E in both its leadership and corporate culture. In the weeks ahead, I will be working with the governor and legislative leaders to ensure the safety, reliability and affordability of electric power in California.

“Wildfire victims shouldn’t have to deal with the uncertainty this causes, which in many respects re-victimizes them,” Sen. Dodd said. “Where PG&E has broken the law, it’s unconscionable for it to be protected from paying any of those damaged.”

In the meantime, Valley Clean Energy (VCE) reassured its customers that this move would mean very little for its customer.

In a statement, Valley Clean Energy stated, “What will that mean for Valley Clean Energy customers? Probably very little—it’s likely you won’t notice any difference at all in your electricity service.”

As a local electricity provider, VCE was “formed specifically to promote a healthier climate while keeping the best interests of its customers in mind.”

They stated, “We source clean, competitively priced electricity and feed it into the grid, and PG&E provides transmission, maintenance, service and billing for our customers. Revenues from the program stay right here at home, supporting our local communities, rather than paying PG&E shareholders. With VCE, communities are working together towards a healthier climate.”

“VCE ratepayers can rest assured that their energy needs will continue to be cared for by their own board of local elected officials,” said Board Chair Tom Stallard, who also serves on the Woodland City Council.

“PG&E has stated on the record that they expect to continue providing electric and natural gas service to customers, and working with Community Choice Aggragations (CCAs) to provide transmission, billing and remittance services as one of their highest priorities,” Mr. Stallard continued.

VCE is coordinating its efforts with other Community Choice Aggregations and with PG&E to address the potential impacts this filing may have on CCA programs in PG&E territory. There are 12 CCAs in PG&E service areas, representing approximately 2.4 million accounts.

“What else do we know so far? PG&E has filed a ‘first day’ motion seeking approval from the Bankruptcy Court to continue collecting revenues and passing them through to CCAs, as part of the normal course of business. VCE supports this motion—as do the other CCAs in PG&E territory—and fully expects the Court to approve it,” the statement noted.

—David M. Greenwald reporting

 

Local Impact as PG&E Files for Chapter 11, by David Greenwald, The Davis Vanguard, January 30, 2019.

SMUD Is Showing How California Can Lead the Way

California Gov. Jerry Brown recently signed some of the most ambitious clean energy and carbon reduction goals in the world. The state’s utilities must have 60% of their power mix come from renewable resources by 2030, and by 2045, all retail electricity sold must be met by carbon-free resources.

As California pursues some milestone goals, one of the state’s leading utilities has been taking an even bolder path. SMUD, a community-owned, not-for-profit electric utility serving 1.5 million residents in California’s capital region, already had a running start on the road to 2045.

For instance, the greenhouse-gas reduction goals SMUD established several years ago predated and exceeded those set by the state. SMUD is also a trendsetter in making time-of-day rates standard for all customers and in supporting the electrification of buildings and transportation to improve regional air quality.

Utilities are required to submit an Integrated Resource Plan (IRP) to the California Energy Commission in early 2019, outlining their investment priorities through 2040. The approach SMUD took in developing its IRP shines a light on how a utility with a reputation for innovation intends to deliver on aggressive carbon reduction goals while maintaining the reliability customers expect and keeping its electric rates among the lowest in the state.

“SMUD does much more than deliver electrons,” SMUD CEO & General Manager Arlen Orchard said. “The IRP will help us achieve several goals for our customers and community, including affordability, reliability environmental leadership, economic development and supporting disadvantaged communities.”

“By taking a holistic approach to sustainability, we’re serving the social, economic and environmental needs of the greater community – for today, tomorrow and years to come.”

In the near term, SMUD’s Board of Directors set a greenhouse gas (GHG) goal of 60 percent below 1990 emissions by 2030. The longer-term goal for SMUD is to achieve a net-zero GHG position in 2040. By focusing on local investments renewable energy and building and transportation electrification, SMUD’s IRP looks to achieve a 64-percent reduction in the Sacramento region’s GHG emissions by 2040.

Orchard recognizes the heavy lift inherent in meeting SMUD’s IRP goals but says the utility is up for the challenge.

“We’re laser-focused on carbon reduction,” he said. “We have a long history of achieving carbon reductions that exceed state and national trends, and we fully anticipate being able to continue doing that.”

A key component in SMUD’s IRP is a $2 billion investment over 20 years in the electrification of buildings and transportation. As California’s reliance on carbon-based fuels decreases each year, increased electrification will reduce GHG emissions, improve air quality and advance economic development across the Sacramento region.

SMUD is partnering with developers in the region to create new all-electric single- and multi-family housing developments. Together with an all-electric smart home program incentivizing retrofits of existing homes, SMUD is boosting Sacramento’s all-electric housing stock.

SMUD ramped up its longstanding support of electric transportation with a “Charge Free for Two Years” incentive for customers who purchase or lease a new EV. The utility is installing DC fast-charging stations across the region, assisting major employers in deploying workplace charging, and testing new business models for renewable integration and charging.

The EV momentum accelerated in 2018 when Sacramento was designated the first “Green City” in the Volkswagen Electrify America Investment Plan. SMUD particularly supports Electrify America’s commitment to making electric transportation more available to low-income customers.

This dovetails nicely with the “Sustainable Communities” strategy SMUD is rolling out to help customers and neighborhoods in three key areas: social well-being, a healthy environment, and a prosperous economy. Support for traditionally underserved communities is a central tenet of the strategy as SMUD aims to improve access to distributed resources such as rooftop and community solar, storage, and clean transportation alternatives.

Customers in disadvantaged communities, which tend to be located near freeways and co-generation facilities, will also benefit from the decarbonization efforts set forth in SMUD’s IRP. And the dollars invested in local renewables and electrification will have a profound impact on the regional economy, Orchard said.

“Our IRP provides holistic and long-term investment to help our customers, community and region thrive in a new energy future,” Orchard said.

“while cutting GHG emissions is a major goal of the IRP, so is ensuring reliable electricity for our customers,” Orchard said. “The plan recognizes that at least through 2040, the Sacramento region will need a certain amount of gas generation for reliability purposes. SMUD will find offsetting reductions through electrification to ensure that our carbon footprint is next zero by 2040 – five years ahead of what the state is planning to do.

“The IRP is a living document that provides the pathway forward.”

SMUD has laid out a bold vision for the Sacramento region’s energy future. While the state is requiring utilities to update their resource plans every five years, SMUD will review its IRP annual to ensure it incorporates the latest innovations into its approach.

“Community-owned utilities exist for one reason – to serve the needs of our customers and our communities,” Orchard said. “SMUD has been doing that successfully for more than 70 years, and it’s our job to keep doing it. We plan to lead the way.”

 

SMUD Is Showing How California Can Lead the Way, by Gordon Feller, Transmission and Distribution World, January 22, 2019.

Fresh Energy to Start an Exciting New Year

A new year offers a clean slate — a chance to celebrate achievements, assess the challenges of the past and start the new year with fresh energy.

Our biggest achievement in 2018 was the launch of Valley Clean Energy (VCE), our local public electricity program. With years of planning and lots of community support, we officially started serving the cities of Woodland and Davis and unincorporated Yolo County last June. Over the past six months, VCE has been providing greener energy, customer choice, local control and reinvestment in the community.

VCE’s standard portfolio of electricity includes 42 percent renewable energy, compared to 33 percent provided by PG&E. This allows VCE customers to help our region and our state take a big step toward changing our fossil fuel-based economy.

Another notable achievement in 2018 was the VCE partnership with Davis, Woodland and Yolo County to apply for a $2.9 million grant from the Sacramento Area Council of Governments (SACOG), which we ultimately received. The grant will provide dozens of new, publicly available electric vehicle chargers and will lay the foundation for electric vehicle charging and lower-carbon transportation options in the region.

 

Although 2018 was a banner year for the effort to bring local energy control to Yolo County, we also faced significant headwinds from state regulators. Due to decisions by the California Public Utilities Commission that favored investor-owned utilities like PG&E, as well as requirements from the California Energy Commission, VCE took a $4.7 million hit to our young program’s budget, leaving us with many difficult choices — one of which was the decision to delay the enrollment of existing solar customers.

Since both of us are solar customers, we were disappointed that we could not sign up right away for the local energy program we help run. But as board members we understand that this delay is simply a bump in the road on a long journey toward completely renewable, more affordable electricity. We also understand why some folks may be unhappy about the delay of enrolling solar customers, but the VCE board’s difficult decision was made with the long-term good of the program in mind.

Despite these challenges, we are reminded that our communities launched Valley Clean Energy last summer to bring cleaner energy at competitive rates to local residents and businesses while reinvesting earnings into our economy by creating local green energy programs and projects.

We have been successful in taking the important first steps toward these goals because VCE is accountable to the communities it serves, not to shareholders. VCE offers choice, local governance and transparency — everything local energy customers have sought for years.

One of the tangible, immediate impacts of our local energy program is the fact that VCE customers are reducing greenhouse-gas emissions by automatically receiving a higher percentage of renewable electricity than that provided by PG&E, and they can up the ante, at a small premium, by choosing that 100 percent of their power come from renewables.

We are proud that VCE customers are each doing their small part to help California avoid the growing consequences of climate change like the tragic wildfires of 2017 and 2018 that devastated our sister communities in Northern California.

VCE’s customers are joined in these efforts by the 18 other CCE programs that are already serving 8 million-plus customers in more than 160 communities across California. Dozens more communities are recognizing the benefits of taking local control of their energy futures and are lining up to form or join CCE programs. We encourage and welcome them to this energy renaissance that is challenging the old ideas that clearly no longer serve the best interests of our communities.

With Valley Clean Energy, we’ve taken a big step toward a more sustainable future. As solar customers ourselves, we’re willing to wait another year to join the program, knowing we’re already doing our part for renewable energy.

Because VCE is in the business of delivering value to the customers and communities we serve instead of shareholders and Wall Street, we have the advantage of being able to take the long view. As we reflect on 2018, we are reminded that the success of our community choice energy program is our higher priority because it is poised to deliver decades of value to our communities.

—Tom Stallard is a Woodland City Council member and board chair of Valley Clean Energy. Don Saylor is a Yolo County supervisor and a member of the VCE board. To learn more about Valley Clean Energy, visit www.valleycleanenergy.org or email customerservice@valleycleanenergy.org.

 

Guest Commentary: Fresh Energy to Start an Exciting New Year, by Tom Stallard and Don Saylor, The Davis Vanguard, January 16, 2019.

Valley Clean Energy watching PG&E bankruptcy developments

SACRAMENTO — The announcement by the nation’s largest utility that it is filing for bankruptcy puts Pacific Gas & Electric Co.’s problems squarely in the hands of Gov. Gavin Newsom and state lawmakers, who now must try to keep ratepayer costs down, ensure wildfire victims get the money they’re owed and rethink California’s energy picture in the face of climate change.

“This issue is all about three fundamental things: It is about safety, it’s about reliability and it’s about affordability,” Newsom told reporters after spending the day in and out of meetings with lawmakers about the pending bankruptcy.

Earlier in the day, PG&E announced it will file for Chapter 11 bankruptcy as it faces at least $30 billion in potential damages from lawsuits over catastrophic California wildfires in 2017 and 2018 that killed scores of people and destroyed thousands of homes. The announcement kicked off a 15-day window before the official filing. Newsom said he’d like to stave off the bankruptcy but it may not be possible.

“We’d like to see it avoided but we’re not naive,” he said. “I respect the taxpayer, I respect the ratepayer and I’m absolutely cognizant of those that lost their homes.”

Meanwhile, customers of Yolo County’s Valley Clean Energy — the local green energy provider that partners with PG&E for delivery of electricity to customers in Davis, Woodland, and unincorporated Yolo County — have been told they need not fear an interruption in service following PG&E’s announcement.

“We’re watching these developments very closely,” said Mitch Sears, VCE’s interim general manager. “But PG&E has said it does not expect any impact to electric or natural gas service for its customers as a result of the Chapter 11 bankruptcy process. That is good news for our customers.”

Several months ago, the local agency — which has been working for years to provide power through the PG&E network — was told in a court decision it must reimburse the statewide utility for lost revenue.

That threw the local power provider as well as others throughout the state, into a tailspin. It had been hoped that groups like Valley Clean Energy could provide power at a savings to customers of between 3 percent and 8 percent.

The ruling that low power providers must reimburse PG&E would lower that rate of return, although agencies were still trying to figure out exactly how much.

VCE, a nonprofit public agency, delivers cost-competitive clean electricity, product choice, price stability, and energy efficiency. The local agency’s power portfolio provides higher levels of renewable energy than PG&E does, reducing greenhouse-gas emissions and providing reinvestment in the community.

The bankruptcy filing by PG&E, meanwhile, would not make the lawsuits disappear, but would result in all wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury. That could shield the company from excessive jury verdicts and buy time by putting a hold on the claims.

“The chances of victims getting what they would’ve gotten without a bankruptcy are not good,” said state Sen. Bill Dodd, a Napa Democrat, who represents Yolo County.

How much and what the state can do remains to be seen. Lawmakers last year tried to prevent a threatened PG&E bankruptcy resulting from the 2017 fires by letting the utility pass on some of its costs to ratepayers, a move some critics dubbed a “bailout” for the utility. Democratic Assemblyman Chris Holden had considering introducing a similar bill that would pass on the costs of 2018 fires, but said Monday he’s backed off that idea.

“Clearly PG&E has made a decision that the legislative arena is not where they feel they’re going to get the kind of results that will go far enough,” he said, adding that the decisions about PG&E’s future now appear to be in the hands of bankruptcy court.

PG&E services about 40 percent of California’s utility customers, Newsom said, making it the nation’s largest utility. It operates in three-quarters of California’s land most vulnerable to wildfires, Newsom said. While PG&E’s equipment has been named the cause of multiple recent fires, experts blame climate change for extending California’s wildfire season and making blazes more deadly and destructive.

State officials are investigating whether the utility’s equipment sparked the deadliest, most destructive wildfire in California history, a November blaze that killed at least 86 people and burned down 15,000 homes.

Newsom and legislative leaders carefully avoided laying out potential solutions in the hours after the bankruptcy announcement while stressing the importance of ensuring wildfire victims get the money they are owed. But no one has yet figured out the future of California energy policy as the state faces increasing threats — and more wildfires — as it copes with climate change.

Democratic Sen. Jerry Hill, meanwhile, said a PG&E bankruptcy may turn out to be a good thing. Hill represents San Bruno in the San Francisco Bay Area, where a PG&E natural gas pipeline exploded in 2010 and killed eight people.

“This company has been dishonest, it has prioritized profits way over safety and there has been no effort on their part to change that,” he said. “I don’t believe it will change unless there is some sort of restructure.”

Newsom agreed PG&E hasn’t been a “trusted actor” in the past but said the state must work collaboratively with the utility. He noted that a portion of the utility’s leadership is gone, including chief executive Geisha Williams, who resigned on Sunday with a $2.5 million severance package.

Chapter 11 reorganization represents “the only viable option to address the company’s responsibilities to its stakeholders,” Richard Kelly, chairman of PG&E’s board of directors, said in a statement.

“The Chapter 11 process allows us to work with these many constituents in one court-supervised forum to comprehensively address our potential liabilities and to implement appropriate changes.”

Regardless of the solution, the process is likely to be long: 18 years after the company’s last bankruptcy filing, PG&E customers still see a small fee on their monthly bills to pay for it, labeled the “energy cost recovery amount.”

The Natural Resources Defense Council warned that bankruptcy could threaten billions in funding for PG&E’s clean energy initiatives, which are key to California’s environmental goals. PG&E is the state’s largest investor in energy efficiency and electric vehicle infrastructure, said the NRDC’s Ralph Cavanagh.

The bankruptcy is different from PG&E’s bankruptcy in 2001, when California faced an energy crisis that caused power outages. Newsom said the state has an “abundance” of energy and power shutoffs are not imminent.

The Daily Democrat contributed to this report.

 

Valley Clean Energy watching PG&E bankruptcy developments, by Kathleen Ronayne and Janie Har, The Daily Democrat, January 15, 2019.

River City Bank partners with SMUD to help grow the local economy

As one of three local banks involved in the Responsible Investments for a Stronger Economy program, also known as RISE, River City Bank received a $5 million deposit from SMUD which will be used to provide loans to local businesses. RISE was developed by Region Finance, a local non-profit that advocates for local economic development and job creation. As Sacramento’s premier business bank, River City Bank has committed to loan at least 50 percent of the designated funds to qualified applicants in the SMUD service area and will provide periodic updates to SMUD regarding the number of loans made and the projected number of jobs created.

“We are committed to investing in the growth of locally owned businesses and securing additional jobs as Sacramento’s stature grows on the national stage,” said Steve Fleming, President and CEO of River City Bank. “As a founding member of Region Finance and a firm supporter of the RISE program, River City Bank is excited to partner with SMUD to ensure the growth of our local economy, and our bankers look forward to leveraging this investment for the benefit of our entire region.”

River City Bank has been headquartered in Sacramento for more than 45 years and is heavily involved in the local community through its banking services and philanthropy. The bank recently announced that it is providing the loan financing for the new Fort Sutter Hotel in support of the Sacramento-based Paragary family. The 105-room boutique hotel is part of the Hilton Tapestry Collection and will open in Midtown Sacramento in 2020. With the recent launch of its Clean Energy Division, River City Bank also has taken the lead in servicing clients in this fast-growing space and is dedicated to expanding relationships with Community Choice Aggregation businesses such as Yolo County-based Valley Clean Energy and other players.

To learn more about River City Bank, visit RiverCityBank.com.

About Region Finance
Region Finance is a new trade association of Region Business for community banks and related institutions focused on advancing regional economic growth by improving access to capital for businesses in the Sacramento region. Region Finance advocates for government entities and regional corporations to keep money local through the use of local community banks whose business leadership, staff and customers are all located in the Sacramento area. Its mission is to catalyze success for the local business community by keeping and expanding the capital available in local banks that allow for a larger investment into the region. For additional information, please visit RegionBusiness.org/Region-Finance.

About SMUD
As the nation’s sixth-largest community-owned electric service provider, SMUD has been providing low-cost, reliable electricity for more than 70 years to Sacramento County (and small adjoining portions of Placer and Yolo Counties). SMUD is a recognized industry leader and award winner for its innovative energy efficiency programs, renewable power technologies, and for its sustainable solutions for a healthier environment. SMUD’s power mix is about 50 percent non-carbon emitting. For more information, visit SMUD.org.

About River City Bank
Named one of Sacramento Business Journal’s “50 Fastest Growing Companies” for each of the past two years, River City Bank is the Sacramento region’s premier business bank with assets over $2.1 billion. River City Bank offers a comprehensive suite of banking services, including loans, deposits and cash management tools to the business, consumer and commercial real estate sectors. With tailored, executive-level service and a Five Star “Superior” financial rating from the nation’s leading independent bank-rating firm, Bauer Financial, River City Bank redefines the banking experience and every touch point that surrounds it. River City Bank is the largest, independent, locally-owned bank in the Sacramento region with an office in the San Francisco Bay Area and a growing presence in Southern California. For additional information, please visit RiverCityBank.com or call (916) 567-2600. Member FDIC. Equal Housing Lender.

 

River City Bank partners with SMUD to help grow the local economy, Press Release, PR Web, December 18, 2018.

$2.9M grant approved for county ‘energy’ agency

The Sacramento Area Council of Governments board of directors has approved a $2.9 million grant to Valley Clean Energy that will lay the foundation for increased electric vehicle charging opportunities and multi-modal transportation hubs in Yolo County.

The cities of Davis, Woodland and Yolo County joined forces with VCE to submit a joint application for grant funds.

Valley Clean Energy is a nonprofit public agency formed to provide electrical generation service to customers within Davis, Woodland and unincorporated areas of Yolo County.  The so-called “community power” concept is to deliver cost-competitive clean electricity, product choice, price stability, energy efficiency, greenhouse gas emission reductions and reinvestment in the community beyond that provided by public utilities such as Pacific Gas & Electric.

“We are excited about this grant and believe it lays a strong foundation for the future growth of electric vehicles and charging infrastructure in the City of Davis and throughout the region,” said Lucas Frerichs, Davis city councilman and chairman of the Valley Clean Energy board of directors. “This is one of the benefits that community choice energy providers like VCE offer — to partner with local government agencies and support infrastructure development.”

Last week’s action by SACOG will result in larger numbers of publicly available, networked electric vehicle charging stations throughout Davis, Woodland, and Yolo County. The charging infrastructure will include up to sixty 240-volt, level 2 chargers, along with two to five fast chargers near highway corridors such as Interstates 5, 80 and 505 and Highway 113.

These chargers will also be located to encourage “active transportation” (walking, biking, and transit) and enhance downtown economic vitality as co-benefits of EV charging. The grant also provides for up to 10 mobile electric vehicle chargers and an electric bus serving downtown Davis and the UC Davis campus.

“This is one way to reduce the ‘range anxiety’ associated with electric vehicle ownership,” said Tom Stallard, Woodland city councilman and vice chairman of the Valley Clean Energy board of directors.  “As more publicly available charging infrastructure is installed, more people will feel comfortable purchasing electric vehicles. This provides a great benefit to the people of Woodland and across Yolo County.”

The grant is provided through SACOG’s newest competitive program, the Green Region Program. The Green Region Program is intended to help the Sacramento region’s transportation system reduce emissions while continuing to function effectively and efficiently.

Green Region focuses on bringing together both public and private partners who are working toward the same goals of reducing vehicle miles traveled and improving air quality in their respective regions. Four grants of approximately $3 million each were awarded in the region. The VCE grant was the only award for the full requested amount.

“This is an example of cooperation between public agencies that will have wide-ranging, positive impacts on the community,” said Don Saylor, Yolo County supervisor and member of the Valley Clean Energy board of directors. “Through this grant, we will be able to install publicly available electric vehicle charging infrastructure in many new locations in Yolo County.”

The grant partners have four years to complete the project.

 

$2.9M grant approved for county ‘energy’ agency, by The Daily Democrat Staff, Daily Democrat, December 12, 2018.

PG&E Exit Fees? OK, But Let’s Be Fair

In a disappointing decision, the California Public Utilities Commission (CPUC) recently voted to approve increases to the “exit fees” charged to Valley Clean Energy (VCE) customers by PG&E.  Valley Clean Energy is our official locally governed electricity provider, bringing cleaner energy at competitive rates to Davis, Woodland, and unincorporated Yolo County. It began serving 55,000 customer accounts this past June.

The decision by the CPUC to raise the exit fee affects all 19 community choice aggregation (CCA) programs in the state, including VCE.

The exit fee is called the Power Charge Indifference Adjustment, and if you are a VCE customer, you will see it on your PG&E bill. This fee is charged by each of the utilities to all CCA customers to compensate for electricity generation they built or contracted for in past years.

Valley Clean Energy believes a reasonable exit fee is fair as long as these costs are shared equitably by all PG&E and CCA generation customers.  Unfortunately, we don’t find this recent ruling by the CPUC to be fair. It over-compensates PG&E for past investments and leaves out reasonable cost-control measures that would hold the utility accountable for its past business decisions.

Not only did the CPUC allow the utilities to include these costs in the exit fee, it did so before even considering whether these costs were reasonable.  What is even more puzzling is why the CPUC took this action against the advice of its own expert administrative law judge, who had studied the issue for a year and held extensive hearings where evidence was provided by all sides—including representatives for VCE.

The end result of the CPUC ruling is an exit-fee formula that will increase the amount of money PG&E will get from CCA customers by tens of millions of dollars in 2019 alone.  The scale of the new fees and the lack of effort by the CPUC to mitigate costs mean that CCAs are facing significant financial challenges—with parallel threats to California’s renewable energy goals—despite having lower overhead costs than the investor-owned utilities.

Valley Clean Energy’s share of the additional exit-fee costs in 2019 is about $3.5 million. This financial hit has forced your VCE board of directors to make some challenging decisions to help manage program costs wisely while meeting VCE’s long-term goals of service to the communities it serves. Those difficult decisions include reducing staffing costs, delaying enrollment of solar customers, and adjusting electricity rates to be at parity with PG&E’s prices.

It’s disappointing to make these program adjustments so early in the game, but take heart — there are experienced industry organizations, lobbying groups, and 19 CCA programs across the state representing more than 160 cities and counties that are fighting hard to reverse this decision. Should we succeed, VCE will act quickly to reinstate the customer advantages that were offered originally.

In the meantime, remember that VCE is a not-for-profit public energy program that has been created by our communities to benefit all of us. VCE and the other CCA programs operating successfully across California are already saving their customers millions of dollars a year, reducing greenhouse-gas production by tens of millions of tons, and creating jobs as they contract for and build renewable energy facilities in California.

California CCAs are buying and building renewable energy faster than any other type of electric provider in the state. But changing the status quo in a fossil fuel-based economy is a pretty big deal—nobody said it was going to be easy. And even though our growing pains have set in earlier than we would have liked, VCE’s dedication to comprehensive community benefits remains, including:

  • Local control: The VCE board — composed of elected officials from Davis, Yolo County and Woodland — makes decisions with the benefit of constituents in mind as opposed to Wall Street. We welcome your opinions at our public meetings. Consider joining us when you can.
  • Energy choice: VCE ends the electricity monopoly, offering a choice of electricity-generation providers and an option to opt up to 100% renewable energy, or to opt out.
  • Sustainability: VCE provides higher levels of renewable energy. Our current portfolio is 42% renewable compared to 33% for PG&E. We will strive to go higher in the years ahead.
  • Reinvestment in the community: Net revenues will be reinvested in the community in the form of energy projects and programs, including local renewable generation, energy storage, electric vehicle infrastructure, and/or energy efficiency.
  • Competitive rates: We strive to be competitive with the electricity-generation rates offered by PG&E.

The latest update on PG&E’s exit fee will be discussed at Valley Clean Energy’s next Board meeting, at 5:30 p.m. Thursday, Dec. 13, in the Community Chambers at Davis City Hall, 23 Russell Blvd. Unlike the investor-owned utilities, our board meetings are public; you’re welcome to attend.

Regular board meetings are on the second Thursday of the month from 5:30 to 7:30 p.m. The meeting location alternates between Davis City Hall and the Woodland City Council Chambers, 300 First St. in Woodland.

Please visit our website for additional information at valleycleanenergy.org.

—Lucas Frerichs is a Davis City Council member and the Valley Clean Energy board chair. Tom Stallard is a Woodland City Council member and the board vice chair.

About Valley Clean Energy: Valley Clean Energy is a not-for-profit public agency formed to provide electrical generation service to customers within the cities of Woodland, Davis and unincorporated areas of Yolo County. Its mission is to deliver cost-competitive clean electricity, product choice, price stability, energy efficiency, greenhouse gas emission reductions, and reinvestment in the community.

 

PG&E Exit Fees? OK, But Let’s Be Fair, by Lucas Frerichs and Tom Stallard, The Davis Vanguard, December 8, 2018.

The murky future of Valley Clean Energy

A curious thing happened in late September as Winters city officials were putting the finishing touches on a mid-October city council agenda: An unsolicited offer came from a community energy group that was looking to add more customers. The group, called Valley Clean Energy, had been distributing greener, cheaper electricity to several Yolo County communities compared to what PG&E had to offer, and they wanted to expand out to Winters to offer that same cheap, green energy to more residents and businesses. Was the city council interested in hearing them out?

City officials were surprised by the unsolicited offer — Valley Clean Energy had launched just a few months earlier, and they weren’t expecting to be on the group’s radar. But they decided to go for it, and at the last minute, a modified version of the city council’s agenda was published and sent to the Express that included time set aside for a presentation by Valley Clean Energy.

That presentation was delivered at the Oct. 14 meeting by Mitch Sears, a Valley Clean Energy executive who could have easily blended in with anyone he was speaking in front of. Sears carries himself like a city official in large part because he is one: On top of his duties as the interim general manager of Valley Clean Energy, he works for the City of Davis as a sustainability program manager, a role that requires him to explore ways to strike a balance between the city’s energy and environmental initiatives and the costs associated with them. As a city official, he knows all the right notes to hit when pitching a project like Valley Clean Energy to his peers: Here’s all the good things we do, here’s all the ways we can save you money.

Right off the bat, Sears focused on all the good things: Valley Clean Energy offers customers a higher mixture of green and carbon-zero energy in their electricity portfolio compared to PG&E. That could help a local government meet some of their climate goals and also give communities certain bragging rights: Who wouldn’t want to live and work in a town that could honestly say it was part of the solution instead of part of the problem? On top of that, as a community organization, there are few closed doors at Valley Clean Energy: Their key meetings are open to the public, and materials associated with those meetings are available online.

But Sears knew the biggest selling point of the night would be how Valley Clean Energy could save Winters residents and businesses money: Valley Clean Energy customers paid 2.5 percent less for their electricity compared to PG&E. That rate discount was not locked in, Sears warned — it might go up, it could go down — but the allure of the discount was repeated over and over again to the point where it became clear that it was the carrot used to convince cities to join.

If city officials were interested, Valley Clean Energy said it could bring Winters online sometime between 2020 and 2021. All it would take to get the ball rolling was a check for $25,000 and an authorization to pull current residential and business data held by PG&E.

City officials were interested.

“I think, with the depth of what you’re looking at, $25,000 to get a release of all our customer data to go and crunch those numbers, it doesn’t sound like an unreasonable amount,” City Manager John Donlevy said at the end of the presentation. He noted that other communities had poured between $500,000 and $1 million just to get Valley Clean Energy off the ground. By comparison, $25,000 up front to save money over time was a drop in the bucket.

“I would absolutely recommend it,” Donlevy said. “We’ll try to figure out where we can come up with the $25,000.”

But before the city cut a check, it needed to strongly weigh its options. Donlevy said there was a due diligence process involved, and a decision on whether or not to start the exploration process of joining Valley Clean Energy was not going to be made at that evening’s meeting.

Council Members Jesse Loren and Philip Neu also said they liked the idea, but agreed that the plan needed more consideration before they could make a formal decision.

“I’m not sure the community would like us to jump into it instantly,” Neu said. “But I think that the community will back it once they know what it’s all about — so I can support this, certainly.”

It was probably not the answer Sears and Yolo County Supervisor Don Saylor, who was also at the meeting, wanted to hear: What they knew that no one else did in the room was that Valley Clean Energy was already exploring the possibility of reducing the amount of green energy in their portfolio or reducing the rate discount that saved electricity customers money. Several weeks later, Valley Clean Energy would indeed decide to do one of those two things.

Community Choice Aggregation

For decades, there were only two options for signing up for electrical service: Build your own power plant and transmission grid — which most people don’t know how to do — or sign up for service through a for-profit, investor-owned utility (IOU) company like PG&E. Before the 1990s, the federal government imposed restrictions on how states could regulate the production and sale of energy. In the mid-1990s, the energy market opened up a bit with federal and state de-regulation efforts, but those efforts had unforeseen consequences: Market manipulations by out-of-state companies like Enron coupled with stringent caps on the price of electricity led to a catastrophic state energy crisis in the early 2000s, the bankruptcy of PG&E in 2001, the recall of Republican Gov. Gray Davis in 2003 and the collapse of Enron (which just a decade earlier had been one of the biggest backers of the de-regulation efforts that, through its own greed, would ultimately lead to its demise).

During that turbulent time, a Massachusetts regulator-turned-power activist named Paul Fenn had an idea: What if local communities could supplant monopolistic utility companies by arming themselves with the power to choose where their energy came from? If they didn’t like where a company like PG&E was buying their electricity — because, for example, that energy came from non-renewable resources like coal or oil — they could simply choose to buy that energy from somewhere else.

Fenn helped draft the legislation passed by California lawmakers in 2002 that established Community Choice Aggregation (CCA), a system that allows local governments to form non-profit energy organizations that decide where residents and businesses in a given area get their energy. CCAs don’t completely replace utility the companies that are already in a community — for example, if PG&E is the electrical company for a city, it continues to transmit, meter and bill customers in that city. But CCAs get to decide where that electricity comes from — they can choose to buy from the same suppliers as a company like PG&E, or they can get their electricity somewhere else where the energy might be cheaper, come from greener sources or both. In Marin County, anywhere from 50 to 100 percent of the energy supplied to customers comes from green sources — higher than PG&E’s portfolio of just under 40 percent. California law requires all customers in an area served by a CCA to be automatically enrolled when the CCA launches or expands to a new community, though customers can opt-out if they want.

In 2017, Sears led an initiative within the City of Davis to explore the idea of creating an alliance with Yolo County to form a CCA. Through that effort, the Valley Clean Energy Alliance was formed. Backed in part by a $11 million line of credit through River City Bank, Valley Clean Energy reached an agreement with the Sacramento Municipal Utility District (SMUD) to provide energy and technical services to customers served by the CCA. In June, the gently-renamed Valley Clean Energy formally launched in Davis, Woodland and certain areas of unincorporated Yolo County.

Under California law, CCAs have to conduct a certain amount of public outreach both before and after it takes over energy purchasing powers. Valley Clean Energy fulfilled this obligation in part by contracting through a Sacramento-based publisher that employed real journalists to write content for a newspaper supplement touting the benefits of the newly-formed CCA over PG&E: At launch, Valley Clean Energy would provide customers a lower rate on electricity that came from a higher percentage of green sources compared to PG&E. That 2.5 percent discount was estimated to save customers well over $1 million every year. After covering operational expenses, anything left over would be invested right back into the community.  And unlike PG&E, where highly-paid executives make decisions behind closed doors, Valley Clean Energy had a six-member board of directors comprised of local representatives that set rates and made other decisions in open, public forums.

“As a locally-based energy provider, VCE is accountable to the communities it serves, not shareholders,” Lucas Frerichs, a Davis city council member who serves as the chairman for Valley Clean Energy, said in the supplement.

The supplement contained a number of stories from people who endorsed what Valley Clean Energy stood for: Yolo County Superintendent Jesse Ortiz said the 2.5 percent rate discount offered by the CCA would help shave some of the $200,000 his office spent on electrical costs every year. Woodland resident Mary Kimball said local control of the CCA meant it would “always have the needs of the community it serves first.” Paul Muller, the operator of Full Belly Farm in Capay Valley, said Valley Clean Energy could be trusted to make “better energy choices” that sent “a message to energy providers and policy makers that renewable energy is what people want.”

Needless to say, private energy providers aren’t crazy about CCAs. For the last 10 years, PG&E and other IOUs have organized efforts to try to undermine the ability of local governments to launch CCAs in their communities. In 2010, PG&E spent $46 million in an attempt to convince voters to pass Proposition 16, a ballot initiative that would have required two-thirds of voters to approve a CCA before it formed. Four years later, at the urging of several IOUs, a state lawmaker wrote legislation that would have changed how customers are enrolled in a CCA: Instead of being automatically enrolled, as the 2002 law required, customers would have to opt-in when a CCA entered their community.

Ultimately, voters turned down Proposition 16, and the lawmaker’s efforts to undo customer enrollment by default stalled in the state senate. But a short time later, PG&E and other IOUs figured out a way to make CCAs seem like a less-attractive option by increasing a state-mandated fee on the bills of CCA customers.

That fee, called the Power Charge Indifference Adjustment (PCIA), is imposed on customers who leave a for-profit utility like PG&E for a CCA like Valley Clean Energy. When PG&E purchases power only to have customers depart for a CCA, it’s left over with power that it can’t sell. Instead of writing off that power as a loss or charging customers who stay with PG&E the difference, a fee is passed on to CCA customers.

PG&E and other IOUs say the PCIA is needed to make sure customers who stay with them aren’t on the hook for certain operational expenses. CCAs have disputed this, saying the PCIA is an “exit fee” that penalizes residents and businesses who opt for local energy purchasing control.

In 2016, PG&E and two other IOUs petitioned the California Public Utilities Commission (CPUC) with a request to reconfigure the formula used to calculate the PCIA fee. CCAs were on board with this idea, agreeing with the IOUs that the PCIA formula needed to be reconfigured. The IOUs wanted a formula that allowed them to charge more through the fee; the CCAs, naturally, wanted a formula that charged less.

In August, an administrative law judge issued a proposal that some CCAs said resolved a lot of uncertainty regarding the updated PCIA formula and would help keep costs low. One month later, the head of the CPUC issued an alternative proposal that reconfigured the formula in a way that allowed IOUs like PG&E to charge more through the PCIA.

Both plans were put up to a vote. In October, just one week before Valley Clean Energy was set to meet with the Winters city council, the CPUC unanimously approved the alternative proposal.

When the Express asked if the CPUC felt the PCIA fee was fair, a spokesperson responded with links to press releases and blogs, including one written by CPUC Commission Member Carla Peterson for Express media partner CALmatters.

“Neither the judge’s proposal nor mine would increase overall costs or allow the utilities to increase their profits,” Peterson wrote. “My job is not to pick winners or losers. It’s to do what’s fair for all customers while providing stability for California’s electric grid and communities as they exercise their right to choose.”

But in a competing commentary piece for CALmatters, Efren Carillo of the Center for Climate Protection wrote that Peterson’s proposal handed IOUs a win that would lead to rate hikes for customers who departed for CCAs like Valley Clean Energy.

“Peterman’s plan puts the interests of corporate utilities over those of local ratepayers,” Carillo wrote. “Her fee proposal would shift costs to community choice aggregation customers, hampering efforts to expand their services and enroll more residents.”

Carillo would be proven right when Valley Clean Energy started deliberating a rate hike for customers just two days after pitching a rate discount to the Winters city council.

Tough Choices

Two days after the approach to Winters, Valley Clean Energy held a meeting to discusswhat they could do in response to the anticipated increase of the PCIA exit fee. It was a packed house inside a special wing of the Davis Public Library, with most of those in attendance either directly connected to or having a special interest in Valley Clean Energy. Few residents from Davis or Woodland showed up. No one from the City of Winters was there. The Express was the only media outlet in the room.

The meeting opened with a presentation from a financial auditor that largely spoke positively on how Valley Clean Energy was handling its money. The group had been spending money wisely and still had a good buffer in its line of credit with River City Bank.

It was a second presentation by a law firm representing public utilities where the frustrations started to set in: If Valley Clean Energy didn’t do something — reduce their green energy portfolio, eliminate the rate discount for customers, something — the group could be headed for disaster.

Documents presented at the meeting and later obtained by the Express showed that if Valley Clean Energy kept their green energy portfolio mix and the rate discount the same, the group would take in about $2.8 million in operating profit for 2018. But Valley Clean Energy would have an operating loss of $439,000 in 2019 with the operating loss nearly doubling in 2020.  If Valley Clean Energy eliminated the 2.5 percent rate discount, they argued, the numbers would go the other way: The company would generate the same amount of operating profit in 2018, plus a profit of $1.35 million in 2019 and $938,000 in 2020.

Essentially, the difference between the two was whether Valley Clean Energy wanted to be in the black or in the hole. Financial experts at the meeting warned if Valley Clean Energy leaned more toward the first option, they could be in default on certain agreements and loan covenants made with River City Bank and other investors.

Everyone in the room was frustrated for two reasons: First, while Winters had showed some interest in Valley Clean Energy, Sears and Saylor walked out of the council’s chambers two days earlier without so much as a handshake agreement, let alone that $25,000 check. Valley Clean Energy had made a similar approach to the City of West Sacramento that ended basically the same way.

That was a problem because Valley Clean Energy was in the process of negotiating long-term energy contracts beyond 2021. If they could have something more than a cursory interest from Winters and West Sacramento, the group could go to those power providers with some more leverage.

“As we gain even more members, that’s clout,” Sears said at the board meeting. “That’s our strategy going forward.”

The second source of frustration was that just two weeks earlier Gov. Jerry Brown had signed legislation that mandated all electrical energy come from renewable resources before a certain deadline.

“Here we are at this incredible moment,” started board member Dan Carson of Davis. “The governor has signed SB 100, a measure requiring a totally renewable electricity grid by 2025..and five appointees of this governor have taken action that I believe strikes a serious blow toward the long-term efforts of achieving those important environmental goals.”

The CPUC’s decision undermined the efforts of Valley Clean Energy and other groups from meeting those goals in an accelerated time frame — much quicker than anyone in the room felt PG&E would move.

The anger was palpable. But no one expressed it more than Carson: At the end of the meeting, he stood up from his chair, approached a meeting attendee and said: “Can you tell I’m pissed?”

The Other Shoe Drops

One month after the board meeting in Davis, Valley Clean Energy convened again — this time in Woodland —to announce its cost-cutting decision. The mood in the room had changed from frustration to indignant resignation. No one summed up how everyone was feeling better than Chairman Frerichs.

“It’s been hard to keep and stay chipper…in light of the continued ass-kicking from the Public Utilities Commission that all CCAs have been receiving,” Frerichs said at the Nov. 15 meeting.

In the meantime, the company would have to do what was necessary with what they already knew to be true: In their books, the CPUC had given PG&E and other IOUs a win with respect to the PCIA exit fee, and the company needed to do what it took to remain on good financial ground. That meant trimming operational costs and eliminating the rate discount.

The company was nowhere near out of the woods: Between the Davis and Woodland meetings, PG&E had come under intense public and legislative scrutiny after its transmission lines were suspected of igniting a 150,000-acre wildfire east of Chico. When the group met, the death toll from the Camp Fire was still climbing (as of this report, it stands at 88), the number of missing was over 1,000 (it is now around 200) and thousands of homes and businesses had been destroyed.

 

Express Investigates: The murky future of Valley Clean Energy, by Matthew Keys, Winters Express, December 6, 2018.