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Marin energy aggregator could benefit from PG&E bankruptcy

MCE and the other eight community choice aggregators in Northern California will be watching closely if Pacific Gas and Electric Co. files for bankruptcy as expected on Tuesday.

Assembly Bill 117, which made it possible for local governments in California to buy electricity directly from suppliers and sell it to their residents, was passed by the Legislature in 2002 on the heels of the state’s failed experiment with deregulation of the electricity market and PG&E’s related bankruptcy in April 2001.

Community choice aggregators in Northern California focus exclusively on securing electricity for their customers. Transmission and distribution of the electricity as well as meter reading, billing and revenue collection are left up to the investor-owned utility, PG&E.

“CCAs will want to make sure there is no interruption in that revenue collection and billing process, and the transfer of revenue that keep the CCAs operating,” said Shawn Marshall of Mill Valley, executive director of LEAN Energy U.S., a nonprofit organization that supports the formation of CCAs nationwide.

She said CCAs will also want to make sure they and their customers are not asked to pick up the tab from contract restructuring due to the bankruptcy that may result in some PG&E power vendors “being forced to take a haircut.”

Longer term, however, a PG&E bankruptcy could benefit CCAs, Marshall said.

For example, she said some of PG&E’s transmission and distribution could be municipalized, allowing CCAs to get involved in that end of the business.

In a release issued on Dec. 21, the California Public Utilities Commission, which regulates PG&E and the CCAs, said it is considering a range of possibilities in response to PG&E’s tarnished safety record and threatened financial state due to related lawsuits. Those possibilities include reconstituting the company as a publicly owned utility.

The San Francisco Public Utilities Commission, which operates CleanPowerSF, San Francisco’s Community CCA program, has said it is exploring the possibility of acquiring or building electrical infrastructure assets.

Marshall said longer-term CCAs could also benefit if the bankruptcy proceeding results in the restructuring of some of PG&E’s older, more expensive contracts. That might result in customers leaving PG&E to join a CCA having to pay lower exit fees.

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.

Dawn Weisz, MCE’s chief executive, said the main thing CCA customers need to know is, “There won’t be any impacts to community choice aggregation customers due to this potential bankruptcy filing.”

“PG&E has stated publicly that they will continue in a business as usual fashion,” Weisz said. “The lights will stay on. This was the case when PG&E filed for bankruptcy protection in 2001, and we don’t expect anything different to happen here.”

Severin Borenstein, a business professor at the University of California, Berkeley, and faculty director of the Energy Institute there, said, “The bankruptcy itself is not going to change PG&E’s function as a transmission and distribution provider so it’s not going to hurt CCAs in an actual delivery sense.”

He doubts that many CCAs will want to get into the transmission and distribution business.

“They are not in a physical energy business, and I’m pretty sure they don’t want to be,” he said.

Borenstein, however, sees PG&E’s bankruptcy as an opportunity for CCAs to woo new customers. He said the filing will be a blow to PG&E’s reputation.

“Part of what has made the CCAs so attractive is they are viewed more positively by people in the towns which have joined,” Borenstein said. “So I think the bankruptcy will accelerate interest in CCAs.”

In addition, Borenstein said, “There is a real question regarding the investment of PG&E in renewables if they’re in bankruptcy.”

He said if PG&E has to cut back on investments in renewables that could serve to further differentiate the CCAs’ product.

“They already make a big deal of being much greener that PG&E, and the reality is the difference isn’t that large,” Borenstein said. “It could potentially become larger.”

MCE says 61 percent of its energy comes from renewable sources, while PG&E says 33 percent of its energy comes from renewable sources.

Weisz said MCE signed three new contracts with renewable energy producers at the end of the year. The producers — solar farms in Fresno County and Lancaster and a wind farm in Mohave – will deliver 728,000 megawatt hours of electricity annually.

If the PUC gives PG&E permission to pass along costs to ratepayers both PG&E and CCA customers will feel the pain equally. PG&E and CCAs charge different rates for their electricity, but all customers pay the same amount to maintain the electrical grid.

In December 2003, the PUC approved a bankruptcy plan that required PG&E’s customers to pay the company $7 billion to $8 billion over nine years. PG&E’s shareholders were required to contribute $2 billion in lost dividends.

“The collection of fees is bifurcated so customers are billed directly by PG&E for the transmission and distribution activity separate from the generation activity,” Weisz said.

Marshall said that also means that PG&E can’t blame increased competition from CCAs for its maintenance issues.

“The reason that PG&E is in the spot that it is in has nothing to do with emergence of community choice,” Marshall said. “It has everything to do with their maintenance of infrastructure, or lack thereof.”

 

Marin energy aggregator could benefit from PG&E bankruptcy, by Richard Halstead, Marin Independent Journal, January 27, 2019.

Explaining what MCE is all about

The recent public interest and controversy about a proposed solar field has reminded us that we as a community must come together to make choices that are good for the environment, good for our quality of life and good for our economy.

First though, we want to make sure we are all using the same facts about the role of MCE (formerly known as Marin Clean Energy) in supplying clean electricity to Napa County’s electricity customers. Some basics:

The name: Marin Clean Energy is, at this point, sort of a misnomer. Think “My Clean Energy” instead.

MCE is a not-for-profit public agency, a “community choice aggregator,” composed of member municipalities from around the North Bay. Members include all communities in Marin County (where it started), all communities in Napa County, the city of Benicia in Solano, and 14 communities in Contra Costa County.

MCE is one of several community choice energy suppliers across the state, including Sonoma Clean Power, serving Sonoma and Mendocino counties; Clean Valley Energy, serving Davis and Yolo County; and CleanPowerSF, serving San Francisco.

MCE is governed by a board of directors of elected officials, each of whom represent the communities they serve.

The job: MCE buys electricity generation supply for customers. PG&E still delivers your electricity. Typically, the reasons utility customers stay with MCE is because they’ve historically been slightly cheaper than PG&E while also getting more of their energy from renewable sources (economics and environment, hand in hand). MCE also offers a 100 percent Deep Green option for electricity that is currently less expensive that PG&E’s 100 percent renewable option.

The way it works: MCE buys renewable energy in the marketplace – as PG&E does—and uses its revenue to incentivize local solar installations, to increase the amount of locally-generated renewable energy available to its customers. Each of these projects must fulfill and conform to local regulations and the normal permitting process to be eligible for MCE’s contract.

MCE is not involved in finding and developing sites for projects, but is always interested in supporting local renewables if the project is approved by the community and it meets their requirements.

MCE’s energy portfolio is at least 50 percent renewable. Much higher that the 30 percent of PG&E’s portfolio that is from renewable sources. Given that the vast majority of Napa County’s customers are served by MCE, that 50 percent means that we have made significant progress toward our greenhouse gas reduction goals.

Especially now, with the county redrafting its Climate Action Plan this could be an excellent time to explore strategies for well-considered development of local renewable energy generation. For example, creation of renewable energy zones to identify the best and most appropriate locations for solar in advance of any particular project.

In short, the challenge is not that Napa customers get their electricity from MCE, nor that MCE is developing local sources of renewable energy generation. The challenge is finding the best locations to carry out this good idea. Astute use of renewable energy will be a significant resource in meeting our climate action goals and powering our communities with clean energy.

Dave Whitmer

Chair, Board of Directors

Sustainable Napa County

Brad Wagenknecht

Napa County Supervisor, District 1

MCE Board of Directors

 

Explaining what MCE is all about, by Dave Whitmer and Brad Wagenknecht, Napa Valley Register, September 19, 2018.