In the Fresno area, more than 750 manufacturing businesses use the bulk of electricity directed here by Pacific Gas & Electric, but the cost of that energy is among the most expensive in California, said Mike Betts, president and CEO of the Betts Co., a south Fresno manufacturer of industrial springs and truck accessories.
In fact, he noted that manufacturers here pay up to 40% percent more than manufacturers in coastal California.
“We’re also paying three to five times more for energy than other states, like Texas and Oklahoma. Manufacturing pays the bulk of the cost for the energy,” Betts said to the small audience attending the Fresno Community Choice Energy Business Forum June 5 at the Central Valley Community Foundation headquarters in Fresno.
Community Choice Energy — more commonly referred to as “Community Choice Aggregation” (CCA) — is a program California lawmakers approved in 2002 allowing cities and counties to individually or jointly purchase electricity on their own, allowing them to control prices and choose the source.
Currently, there are 19 CCAs, most in coastal and southern areas of the state, and Hanford is in the process of forming the Valley’s first CCA, while a proposal to fund a $60,000 research project to determine the pros and cons of forming a Fresno CCA has been included in the city’s budget proposal the city council has been hashing out this week.
Right choice for Fresno?
“The two big things I think will be very beneficial to Fresno in looking at securing the possibility of this in the future is, one, it will allow us to shape and really route the energy the way we want it to,” said Fresno City Councilmember Luis Chavez, who put forth the CCA study proposal and spoke at the June 5 event.
Though the study hasn’t been funded yet, Chavez said he believes forming a local CCA could provide savings for the low-income residents of his district, as well as savings that could serve as incentives for manufacturers to stay or locate here.
PG&E maintains a role
If a CCA is formed, it wouldn’t mean Fresno is getting into the energy business — at least not fully. While CCAs decide from where to purchase electricity and the rates charged to customers, distribution is still provided by the electrical utilities — PG&E among them — along with maintaining electrical poles and wires and other tasks to maintain the electrical grid.
As such, the utilities charge their own separate rates for their services, as well as handing the billing for themselves and the CCAs.
Besides being a speaker at last week’s event, Betts, who also is president of the San Joaquin Valley Manufacturing Alliance, said he also was there to learn about CCAs and share that information with other Valley manufacturers to decided if they favor forming a Fresno CCA.
Rate hikes in the future
He said manufacturers are worried their energy costs are going to go up soon — perhaps considerably — as PG&E seems likely to have to pay billions of dollars in damages for its equipment reportedly causing a series of California wildfires in recent years, among them the devastating Camp Fire that destroyed more than 21,000 homes in parts of six counties in Northern California.
In April, the utility asked the state Public Utilities Commission (PUC) permission for a rate hike estimated to cost residential customers about $22 more a month.
For manufacturers and other heavy energy users, cold storage businesses among them, the extra costs could be in the thousands or tens of thousands of dollars.
While CCAs can’t prevent the utility’s hikes for distributing power, they could set their own rates low enough to somewhat offset the PG&E hikes.
In addition, Betts said, the CCAs that have formed have programs to help customers, which have included funding electric vehicle charging stations and others to offset some of the costs to buy electric vehicles.
“We want to know more about those programs — all of them — to understand the positive impacts not only [for] a business but on homeowners.”
Officials with Santa Rosa-based Center for Climate Protection, which organized last week’s Fresno event, have noted that an important part of what CCAs do is choose from where they buy energy and how much of it comes from renewable sources — wind generators, solar, etc. —though in actuality even if contracts are signed with wind generator plants in the California desert and solar farms up north, that electricity wouldn’t go to customers in the client cities or counties. Instead, the electricity is directed into the electrical grid, from which all customers pull their electricity, and they’re charged for it at their set rates.
Right to opt out
Individual customers in any CCA have the right to opt out and get their services entirely from the utilities at their rates.
For his part, Chavez said even without a local CCA study, he believes one here could save residential and business customers money, because it would foster competition among energy suppliers, and the electrical utilities no longer would be alone shopping among power providers.
“And everybody knows, when you have competition, that causes prices to go down,” he said in an interview.
He said a major reason for the Valley’s higher rates compared to other parts of the state is that it gets so hot here in the summer months that electrical systems work harder due to the added demand from cooling homes and businesses, adding to the costs of running and maintaining electrical systems here.
Those added energy costs could determine whether some businesses stay or locate here, so it’s particularly important to find ways to reduce local electricity costs, he said.
Betts agreed, noting that part of the reason Hanford is forming a CCA is to offer Faraday Future, the electric car plant under development in the city, a break on its energy costs and to create an incentive to draw other businesses into the city.
“Industry, all of us, are very concerned about the environment, but I think we need to be realistic about what’s most important — good-paying jobs. And we don’t want to be scaring industry away from here. We want industry to want to come and invest here … and exorbitant energy costs will drive people from here,” Betts said.
Does Fresno Need To Make An Energy Choice?, by David Castellon, Fresno Business Journal, June 25, 2019.