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Revised PG&E ‘exit fee’ impact to vary on MB community power, customers

MONTEREY — Despite statewide and local warnings about the potential impact of a revised Pacific Gas & Electric Co. “exit fee” approved by the California Public Utilities Commission last week, Monterey Bay Community Power officials said the relatively new power agency is sticking to its promise to keep their bills lower than PG&E’s and is well-positioned to absorb the change.

On Thursday, the CPUC approved an alternate proposal backed by Commissioner Carla Peterman that gave PG&E more leeway on charging former customers, including those now signed up for a growing number of community choice aggregation agencies such as Community Power, an annual exit fee (also known as a power charge indifference adjustment fee) for contracts and other investments the corporation made in anticipation of its power needs before millions of customers fled to community choice aggregation agencies. The fee is designed to ensure PG&E’s customers don’t pay more than their fair share of those costs.

Ahead of last week’s vote, Community Power issued a press release that featured local community leaders speaking out against the alternate proposal, arguing it could “derail” the state’s clean power programs and increase energy fees for residents, businesses and families, and inviting people to send letters to the CPUC opposing the alternate proposal and in favor of a proposed decision seen as friendlier to community choice aggregation agencies.

In the wake of the CPUC’s decision, Community Power director of communications and external affairs J.R. Killigrew said the agency’s customers will still see lower bills than they would have under PG&E due to an agency rebate that is actually supposed to increase next year along with the exit fee, which could rise by as much as 25 percent, according to Community Power.

“We are still fully committed to matching and lowering PG&E rates,” Killigrew said.

And Killigrew said the agency’s strategic planning has it poised to absorb the increased exit fee and the uncertainty associated with future related costs while continuing to invest in local clean energy programs.

“We won’t see as much impact as others because we planned,” Killigrew said.

Where the revised exit fee could directly affect Community Power and its customers is in its future revenue, which could be reduced by about $40 million annually, falling from about $260 million to about $220 million and cutting the agency’s surplus — estimated at $30 million for next year but potentially $6-$7 million higher without the revised exit fee — for programs like customer bill rebates, local clean power programs and reserves, which help build the agency’s credit rating and borrowing capacity for clean power projects.

“It makes it harder for Community Power to set aside reserves for local energy generation programs,” Killigrew said. “It’s harder for us to re-invest in the region like we’d like to.”

Longer term, Killigrew said the CPUC decision greatly expanded how long PG&E can continue charging community choice aggregation agency customers the exit fee and for what, as well as leaving unaddressed a potential buyout of the fee-associated costs, all of which leaves Community Power and other similar agencies in a state of uncertainty that hampers long-range planning.

“It’s more difficult to plan when you’re in a reactive state,” he said. “It’s better to have a fixed (exit fee).”

In the final analysis, Killigrew dismissed the idea that the revised exit fee is the beginning of the end of community choice aggregation agencies in the state, which has been suggested by some.

 

Revised PG&E ‘exit fee’ impact to vary on MB community power, customers, by Jim Johnson, Monterey Herald, October 15, 2018.

Marin-based energy aggregator decries state-approved fee hike

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.

 

Marin-based energy aggregator decries state-approved fee hike, by Richard Halstead, Marin Independent Journal, October 15, 2018.

Local government energy-buying idea bruised by ruling

The effort of Butte County and Chico to form an agency to buy electrical power for their citizens suffered a blow Thursday, but it’s unclear just how severe a blow it was.

The state Public Utilities Commission approved a set of costs for customers who leave PG&E or the state’s other investor-owned utilities (IOUs) to receive power from providers like the community choice aggregator that is being pursued locally.

“The ruling was favorable for the IOUs, so it’s not favorable for CCAs,” said Butte County Assistant Chief Administrative Officer Brian Ring.

Under a community choice aggregation program, a government entity buys power on the open market, which locally is estimated to result in savings of at least 2 percent. PG&E would still deliver the power and retain ownership of the power lines and other electrical infrastructure, but it would be delivering power provided by the county and city.

The other municipalities in Butte County could join in, but a study found in the minimum Chico and the county would both have to participate to provide the necessary customer base.

What the PUC approved on a 5-0 vote largely involves long-term power purchasing contracts PG&E and the other utilities have. The contracts were signed to provide power for a customer base that is shrinking as more and more CCAs and other alternatives form.

The utilities argue the people who leave owe a share of the costs of the contracts that were purchased partially for them. There hasn’t been much disagreement on that, but how much that cost would be has been contentious for more than a year.

The vote Thursday put the charge at an average of 1.68 percent for residential customers in PG&E’s service area. The costs for customers who leave Southern California Edison or San Diego Gas & Electric are even higher: 2.50 percent and 5.24 percent respectively.

Locally, that could still mean savings if the CCA is formed. The 2 percent figure was a conservative estimate, and savings could easily be more than that.

But Ring said it would mean less money coming to the CCA, and lengthen the time it will take to pay off the debt it will have to incur to form. Paying off the debt would give the CCA flexibility to reduce rates or pursue other initiatives.

He said the county’s consultant would be rerunning the data through the model used for the study to see if the CCA was still feasible here. “We’re crunching the numbers,” Ring said.

“It’s going to have an adverse impact on our study,” he said, “to what degree we haven’t determined.”

 

Local government energy-buying idea bruised by ruling, by Steve Schoonover, Chico Enterprise-Record, October 14, 2018.