An MCE official calls the California Public Utilities Commission’s decision last week to require customers to pay more in exit fees to investor-owned Pacific Gas & Electric Co. a flawed approach that unfairly shifts costs to customers.
But CEO Dawn Weisz said it won’t deter the community-choice aggregator from its core mission of “providing cleaner power at stable rates, reducing greenhouse gas emissions, and investing in local programs.”
Formerly known as Marin Clean Energy, MCE has seen sharper increases in the exit fee in past years, Weisz said. In January 2016, the PUC approved nearly a doubling of the fee.
“We’ve always maintained competitive rates with a lot of stability,” Weisz said, “and we’ll continue to do that.”
Supervisor Damon Connolly, who formerly served as chairman of MCE’s board, wrote in an email, “At a time when we are seeking to incentivize people to sign up for clean energy sources like MCE Clean Energy to meet Marin and California’s ambitious climate goals, this decision goes in the opposite direction by making it harder to do so.”
Richmond Mayor Tom Butt, an MCE board member, said, “All the community-choice aggregators are trying to do the right thing. They are on the front line addressing climate change and to get whacked down by a public agency, particularly in California, is really disappointing.
“The CPUC is basically a surrogate of the investor-owned utilities,” Butt said. “They have huge power over the CPUC commissioners, and I don’t know why. These people all get appointed by the governor, and the governor is supposed to be friendly to people who are trying to do something about climate change.”
When a PG&E customer switches to MCE or another community choice supplier, PG&E is permitted to charge that customer an exit fee to compensate it for the power contracts it previously entered into to supply that customer electricity. The fee was imposed by the California Public Utilities Commission to ensure that customers remaining with the utilities do not end up footing the entire cost of the contracts.
Weisz, however, says that PG&E shareholders should bear more of the cost for the utility’s poor decisions in building power plants and purchasing power. For example, Weisz said that in the early 2000s PG&E built a number of natural-gas-fired power plants that now might not be needed.
“There should be some shareholder risk involved in choosing to build a facility,” Weisz said, “but unfortunately this latest decision by the PUC means that all customers will be covering the cost of those assets.”
Weisz said the new CPUC decision contravenes an earlier CPUC policy that the costs of building utility-owned generation after 2002 would be recovered over a 10-year period.
Weisz also said the exit fee is unnecessarily high because PG&E in many cases dumps its excess energy contracts on the spot market where they sell for less than they are really worth.
In an email, Marin Supervisor Kate Sears, who currently heads MCE’s board, wrote, “Community choice aggregation (CCA) customers will have to pay for poor investor-owned utility portfolio management and load forecasting decisions and profit-making utility assets for decades to come. This does not treat CCA customers fairly.”
But in an email, PG&E spokeswoman Lynsey Paulo wrote that if the exit fee is not set correctly, “remaining PG&E customers pay more — residents in communities not served by a CCA — not PG&E corporation or its shareholders.”
Paulo wrote that in 2017, due to the current outdated methodology for calculating the exit fee, “CCA customers paid approximately 65 percent of their share of above-market costs.
“This shifted approximately $180 million in costs to PG&E customers who were not part of a CCA,” Paulo wrote.
“In PG&E service territory currently, 27 percent of customers that PG&E procures energy for are on the CARE low-income rate,” Paulo added, “while only 13 percent of customers served by a CCA are on a CARE low-income rate.”
Mindy Spatt, communications director with the Utility Reform Network, known as TURN, said, “The problem here was that the costs that were being allocated were going to be paid by consumers one way or another. So the best we could hope for is an equitable distribution of the responsibility among all customers.
“We would have loved to have seen investors pick up more of the burden but that wasn’t one of the choices, unfortunately,” Spatt said.
In an email, Jim Phelps of Novato, a longtime critic of MCE, wrote, “As consumers awaken to being in these CCA programs as costs increase, they will seek to opt out.”
Butt, however, said, “I don’t think this is a crisis. I think there is a pretty good chance that we can still deliver electrical power cheaper than PG&E can. If we can’t, it will be very close to the same price.”
MCE customers who have switched from PG&E since 2017 are paying about $15 a month in exit fees, while MCE customers who made the switch earlier are paying a bit less. PUC Commissioner Carla Peterman has estimated the newly approved increase in exit fees will result in a 1.68 percent increase in the monthly bills of MCE’s residential customers, but Weisz said MCE believes it may be closer to a 2 percent increase.
MCE says its residential rates are currently 3 percent to 4 percent lower than PG&E’s.
According to a website where MCE and PG&E jointly report their rates, a typical residential MCE customer (based on estimated usage of 450 kilowatt hours per month) was paying an average of $123.94 per month as of March 1, compared with an average PG&E residential customer who was paying $126.89 per month.
MCE says 60 percent of its energy comes from renewable sources, while PG&E says 33 percent of its energy comes from renewable sources.
MCE has about 450,000 customers. Only 16 percent of its potential market has taken the initiative of opting out to remain with PG&E.
The jurisdictions MCE serves include all of Marin County and Marin’s 11 municipalities; Napa and Contra Costa counties; and the municipalities of Richmond, Concord, Walnut Creek, Pittsburg, San Ramon, San Pablo, Benicia, El Cerrito, American Canyon, Calistoga, Lafayette, the town of Napa, Saint Helena, Yountville, Pinole, Oakley, Moraga, Martinez and Danville.
Marin-based energy aggregator decries state-approved fee hike, by Richard Halstead, Marin Independent Journal, October 15, 2018.