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PG&E tells local officials bankruptcy filing won’t affect energy rates

Pacific Gas & Electric Corp., the country’s largest utility, announced Monday it will file for Chapter 11 bankruptcy — a move that creates uncertainty as to whether Humboldt County energy ratepayers will be affected.

PG&E currently faces $30 billion in potential damages from litigation over a series of wildfires in California during 2017 and 2018. Many were killed and thousands of structures were destroyed.

“The number one priority must be to protect ratepayers and fire survivors,” state Sen. Mike McGuire said in a statement. “We must ensure PG&E doesn’t miss a beat with their electric and gas contracts and we must have survivors at the top of mind to make sure they are taken care of every step of the way.”

The Redwood Coast Energy Authority Board of Directors will receive an update Jan. 28 as to how the filing will impact local energy rates. The board has already heard from PG&E, which said the utility’s bankruptcy won’t change rates “in any way,” RCEA board member and 2nd District Supervisor Estelle Fennell told the Times-Standard.

“We’re working with PG&E and (Community Choice Aggregators) to find out in the long term how they’re going to resolve PG&E’s role in the provision of power,” Fennell said.

The California Public Utilities Commission, which oversees all state utilities, could possibly look at a restructuring, Fennell suggested.

Locally, PG&E owns multiple Eel River dams and over 5,000 acres of land in the area, which the utility was using for the Potter Valley energy project. In September, the utility began seeking to auction off the parcels associated with the project.

Rep. Jared Huffman said the utility’s status will be a state issue and out of his purview, but he added that it’s “hard to imagine” that the bankruptcy won’t affect ratepayers at some level, given the scale of liability.

“As we work through this issue — and I have no idea how it ends relative to PG&E solvency — we have to confront this bigger issue of climate change and disaster preparedness,” Huffman said. “Whatever happens in the PG&E bankruptcy, I think we’re going to need to look at creative reforms so we don’t have mass firestorms caused by failed power supplies and dry conditions.”

Shomik Mukherjee can be reached at 707-441-0504. The Associated Press contributed to this report.

 

PG&E tells local officials bankruptcy filing won’t affect energy rates, by Shomik Mukherjee, Times Standard, January 14, 2019.

CalCCA Statement on PG&E Bankruptcy Announcement

Concord, Calif. – With Pacific Gas & Electric (PG&E) facing billions of dollars in potential wildfire liabilities the investor-owned utility has announced it is on the verge of filing for protection under Chapter 11 of the U.S. Bankruptcy Code. Today, the California Community Choice Association (CalCCA) issued the following statement:

“Community Choice Aggregators (CCAs) are committed to providing reliable service, clean energy at competitive rates, and innovative programs that benefit people, the environment and the economy in communities across California. They are closely monitoring any developments related to PG&E’s financial situation and are in the process of evaluating potential impacts on CCA customers and operations.”

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About CalCCA: The California Community Choice Association supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. There are currently 19 operational CCA programs in California serving an estimated 8 million customers.

For more information about CalCCA, visit www.cal-cca.org.

Press Contact: Leora Broydo Vestel

(415) 999-4757 | leora@cal-cca.org 

Modern energy infrastructure could mitigate California’s wildfire crisis

What is the value of technology that can sense a problem with a power line and cut the electricity flowing through it faster than it’s able to hit the ground and ignite nearby vegetation? What about mini independent power grids that can disconnect from the main utility and function in the case of a system-wide failure — allowing critical infrastructure like hospitals and first responders to still operate while mitigating the potential fire hazard for the larger community?

Clean technologies like these that allow greater control over the power grid already exist.

They’re the kinds of solutions that should make hard choices easier — like the decision that local utility PG&E had to make about whether or not to keep power running during November’s fire in Paradise, California. Solutions like these mean that people may not lose their homes to fire, that power can be restored in minutes or hours versus days or weeks, and that essential services can keep lights and heating and cooling systems on during emergencies.

The question is — why aren’t utilities racing to incorporate them?

We used to be a nation that invested in energy technology and while some utilities have begun testing and incorporating newer clean technologies — we’re not anywhere near a transition.

The conversation has been stuck at the estimated $1 trillion cost of building a modern smart grid across the country. But we’re already spending $150 billion per year right now from outages due to weather alone. And in 2017, PG&E faced up to $6 billion for damages from that year’s wildfires. At that price, across the country, we could be integrating synchrophaser sensors that can detect and react within seconds to problems along miles of power lines, (which San Diego Gas and Electric has begun doing), along with microgrids.

Microgrids would make the biggest difference in a natural disaster. A large connected grid means limitless vulnerabilities that can wipe out the entire system, and continuous power that’s hard to isolate and manage when there are trouble spots. Self-contained and resilient — if there’s a problem with a microgrid, it only affects the immediate area. In the case of a wildfire it can be entirely shutdown, remotely managed, and easily restarted once danger has passed. Their small, compact nature also means that select sections of the grid can be kept in operation even if everything else is off.

While major utilities in the state have yet to adopt them, California has notable microgrids in operation — several of which belong to the military and serve as teaching examples: Camp Pendleton, Fort Hunter Liggett and Borrego Springs. Even Alcatraz runs on a microgrid.

Historically, the United States has always made the shift to the next era of power generation — from wood and hydro, to coal, to oil and then nuclear — but that hasn’t been happening this time around as renewables and clean technologies have become viable. The current power grid is literally stuck in the 60’s — an analogue system that relies on centralized generation and endless miles of cables, poles and substations spread over long distances. One major disruption along the line and the whole thing can go down, and worse, as we’ve repeatedly now seen in California — it can contribute to the damage done.

The unfortunate short answer to why utilities have been slow to adopt these innovations is that “it’s complicated.” It involves changing behavior and re-orienting and aligning current disincentives built into the regulated utility system into incentives to invest and deploy. This is the nature of moving from central generation to the future of distributed generation. Utilities, regulators and politicians are unsure of how to control and make money from distributed generation.

As the fires in California have demonstrated, natural disasters as a result of drier land from lack of rainfall, increasingly dangerous storms and other climate change related problems are already here and will only get worse. The California Climate Assessment forecasts that by 2050 the area burned by fire in the state will increase by 77 percent and costs will go up by 24 percent.  — But the need for better technology is as simple as the reality that it will always be impossible to maintain tens of thousands of miles of cables and the natural world that grows around them to a level that ensures safety without incident.

Making the investment in modernizing our energy infrastructure means we’ll be prepared with a more resilient system for future natural disasters. Now that we know — there’s no excuse for inaction.

Jigar Shah is the founder of renewable energy company SunEdison.

 

Modern energy infrastructure could mitigate California’s wildfire crisis, by Jigar Shah, The Hill, January 12, 2019.

Embattled PG&E Has Long History With California’s New Governor

With its equipment suspected of causing the deadliest wildfire in California history, PG&E Corp. may find its fate in the hands of someone familiar: Gavin Newsom, the former mayor of its home town.

Newsom, California’s governor-elect, will take office in early January, and the aftermath of Butte County’s Camp Fire will be one of the most pressing issues on his agenda.

The disaster killed at least 88 people and leveled the town of Paradise, creating a crisis for thousands of people left homeless. It also has sent shares of PG&E, the state’s largest utility, plunging and left regulators raising questions about its future — matters that Newsom, ultimately, must address.

Whether he will prove to be an ally for the company is an open question.

As mayor of San Francisco from 2004 to 2011, Newsom has already had to work closely with PG&E, whose ties to the city stretch back more than a century. He was considered friendly with the company, opposing efforts to create a municipal utility. In the past year, PG&E — and almost all its top executives — gave to his gubernatorial campaign.

And yet, Newsom also pushed PG&E to close one of the city’s last fossil-fuel power plants. As mayor, he berated the company for repeated equipment failures that caused manhole fires, blackouts and in one case, a sidewalk explosion that left a pedestrian with severe burns. More recently, as lieutenant governor, Newsom pressured PG&E to close California’s last nuclear plant.

Now the company is facing one of its gravest crises. Although no cause for the Nov. 8 Camp Fire has been determined, one of PG&E’s high-voltage transmission lines malfunctioned about 15 minutes before the fire started, in the same area where investigators say the flames began. The utility’s equipment has already been blamed for starting 17 of last year’s Northern California wildfires, which together killed 44 people, and survivors of this month’s blaze have filed suit against the company.

PG&E faces an estimated $17 billion in liabilities for the 2017 fires, and CoreLogic Inc. expects losses from the Camp Fire to reach as high as $13 billion. While one state lawmaker plans legislation to help the company deal with any costs arising from the Camp Fire, another wants it broken up. And the state’s utilities commission is exploring whether PG&E needs to be restructured, or possibly split into pieces.

Newsom hasn’t taken a stand on the proposed legislation, and his staff declined to make him available for this story. He will, however, have to get involved, even if public anger at PG&E makes that perilous, said Dan Schnur, a veteran California political analyst.

“There’s going to be considerable public pressure on Newsom to act,” said Schnur, a professor at the University of Southern California’s Annenberg School of Communication and Journalism. “Legislators get to choose which fights they lead. Governors generally don’t have that flexibility.”

PG&E declined to comment specifically on its relationship with Newsom. But Lynsey Paulo, a spokeswoman for the company, said it makes a point of working with many politicians.

“PG&E holds itself to the highest ethical standards of public disclosure and compliance, and we participate in the political process, working with elected officials at all levels on a variety of matters that are important to our state and local communities,” she said.

Newsom’s predecessor, Jerry Brown, was seen as an ally for the state’s utility companies, whose help he needed to boost the use of renewable power and fight climate change. One of his closest aides — Nancy McFadden, who died this year — had previously worked for PG&E. The governor’s sister, Kathleen L. Brown, sits on the board of another California utility owner, Sempra Energy.

Newsom, a centrist Democrat and San Francisco native, was among many of the city’s political leaders who were “cozy” with PG&E, said Tom Ammiano, who served more than a decade on the board of supervisors before winning a state Assembly seat. (Ammiano is also a Democrat but hails from a further left-leaning faction of the party than Newsom.) The company, whose Pacific Gas and Electric Co. utility was founded in the city in 1905, had long been considered the 500-pound gorilla of local politics and remains one of San Francisco’s largest employers.

Ballot Opposition

Newsom sided with PG&E to oppose a 2008 ballot measure that would have increased San Francisco’s use of renewable power — and given city officials the ability to set up a municipal utility on PG&E’s home turf. The campaign against the measure was led by one of Newsom’s advisers at the time, who had also worked with PG&E. But Newsom insisted that the adviser kept the interests of his clients separate.

“We had the public power thing — we thought it would be a good idea,” said Jake McGoldrick, a former supervisor who served from 2001 to 2009. “I never saw him show any sign of interest in any kind of municipalization.”

But while Newsom was mayor, the city sued to stop a 2010 statewide ballot measure sponsored by PG&E that would have made it far more difficult for California cities and counties to get into the electricity business. The city couldn’t keep the initiative off the ballot, but voters defeated it, even after PG&E spent $46 million on the campaign.

As lieutenant governor, Newsom used his leverage as chairman of the State Lands Commission to pressure PG&E into closing its Diablo Canyon nuclear plant, which is almost surrounded by earthquake faults. The utility, already worried that a flood of cheap renewable power could soon render the plant unprofitable, decided to retire it. The commission extended the leases long enough to ensure the orderly closure of the plant, now scheduled to shut down in 2025.

The debate over Diablo Canyon didn’t prevent PG&E from donating to Newsom’s successful run for governor. The company this year gave $58,400, according to state records, while its executives added $41,500. Chief Executive Officer Geisha Williams pitched in $10,000. Newsom raised $47.5 million for his campaign, according to data from the California Secretary of State.

‘Done Right’

Nathan Ballard, who served as Newsom’s spokesman during much of his tenure as mayor, said Newsom always insisted that the company resolve its problems rather than pushing for its breakup. Such problems included replacing aging infrastructure in San Francisco that, several times, caught fire or caused blackouts.

“He was always very aggressive about making sure PG&E got it done right,” Ballard said.

Ballard, who said he talks to the governor-elect regularly but won’t be part of the incoming administration, said he has “no doubt” Newsom would tackle the issue of wildfires and utility liability.

“It will be driven by Governor Gavin Newsom,” Ballard said.

— With assistance by Romy Varghese

 

Embattled PG&E Has Long History With California’s New Governor, by David R. Baker, Bloomberg, December 2, 2018.

PG&E Proposes Ditching Demand Charges for Commercial EV Charging

Businesses generally need to see cost savings in order to justify switching to an electric vehicle fleet.

“They need the rates to be better than gas or diesel if they’re going to give up their diesel bus or truck,” said Cal Silcox, clean transportation strategy manager at California utility Pacific Gas & Electric.

Right now, there’s no guarantee that commercial and industrial customers in PG&E territory will see any fuel savings, he said. That’s largely because of the demand charges C&I customers are required to pay when their electricity use spikes — such as during a high-powered EV charging event.

That’s why PG&E is hoping to replace demand charges with a new subscription rate plan for customers that are using commercial EV (CEV) charging. The proposal, submitted to the California Public Utilities Commission Monday, allows customers to choose the amount of power they need for their charging stations and pay for it with a flat monthly fee — similar to picking a cellphone data plan.

The proposal would create a new rate class for CEV charging and would offer two types of rates within that: one for customers with charging up to 100 kilowatts and one for customers with charging over 100 kilowatts.

“As EV charging stations become more common in places such as multi-family residences, businesses, transit stations and other commercial spaces, PG&E has recognized that the existing rate structure does not best meet the needs of commercial EV charging,” according to a company press release. “Currently, public or fleet EV chargers on PG&E’s commercial electric rates can see higher costs than the typical business customer, on average. These costs pose challenges to the expansion of EVs and needed charging stations.”

CEV customers currently pay 30-40 cents per kilowatt-hour in PG&E territory, while commercial buildings pay 18-25 cents per kilowatt-hour, Silcox explained. The new plan brings customer costs in line with their cost of service. PG&E’s modeling shows that it could save a transit agency, for instance, 20-34 percent on what it is paying today.

“We think it should get the price down to equal or less than the cost of diesel so it’s competitive and…makes the business case for going electric positive for them,” he said.

While the subscription fee is lower than the demand charges PG&E’s commercial customers currently pay, the plan is not unlimited. So if a customer’s electricity usage exceeds its rate program, it will have to pay for overages. But because the plan is monthly (rather than yearly, as some commercial rates are), customers have more insight into their usage and can adjust quickly to avoid additional payments in the future.

Also, any CEV customer that buys a plan covering their maximum charging capacity installed on site should never go over that limit, unless they add more chargers. Some customers may intentionally pick a subscription plan that covers less load than their charging stations require, running the risk of overages. But they would only elect to do so if they thought they could save more money through managed charging.

In that scenario, imagine a transit agency has a fleet of five electric buses and five 50-kilowatt chargers to fuel them up, said Silcox. The agency could either buy a 250-kilowatt subscription plan and cover all of its needs for the five buses, or purchase a 200-kilowatt plan and cover the remaining 50 kilowatts of charging load with energy storage or load management and potentially pay less overall.

The new proposed rate also includes a basic time-of-use structure that remains the same every day of the week and throughout the year. The time-of-use rate is specifically designed to encourage CEV charging during the middle of the day (with super off-peak rates offered between 9 a.m. and 2 p.m.) so that customers are taking advantage of California’s surplus solar power.

Peak hours would start at 4 p.m. under the subscription plan, which aligns with new time periods approved by the California Public Utilities Commission earlier this year. The peak period for CEV customers would end at 10 p.m. (an hour later than other customers), when prices start to decline again.

A new approach to ratemaking

PG&E has been working with California’s other investor-owned utilities to develop a new framework for designing rates, which is focused less on conventional rate classes and more on meeting a customer’s specific needs, for, say, EV charging. The utilities recently outlined this “modern rate architecture” concept in a white paper.

Margot Everett, senior director of rates and regulatory analytics at PG&E, said the fundamental idea is that rates need to get more granular in order to reflect how electricity customers actually use a utility’s products, which include energy generation, as well as the poles-and-wires delivery system, other services around that, and the utility’s public policy initiatives such as low-income programs. This approach also involves creating a rate that reflects a customer’s fair share of their cost of service, without creating other distortions in rate design.

“That’s the direction the state is going,” Everett said. “Really creating transparency around rates, really making sure our rates are meeting customers’ needs and making sure customers are paying for what they use…and not paying for other people’s costs.”

When asked why other utilities don’t take the same approach, Everett posited it’s mostly because they’re hesitant to do so.

“I think you’re going against a norm that’s been part of rate design for 100 years,” she said. “Creating rate classes based on how big you are or who you are, your demographic…is just the way utilities have been doing this for years.”

“Other utilities can start thinking in terms of creating different customer classes and recognizing that with technology evolution and customer choice, customers are not as homogenous as they used to be,” Everett continued. “This type of rate design worked fine in the 1970s, when everybody had pretty much the same type of load. […] Now you have customers that have a lot of choice, and we need to be thinking about how our customers are different and [considering] that it costs us something different to serve them.”

Moving to this new ratemaking model will require finding ways to gather more data. It could also be met with some pushback. Rooftop solar supporters have long opposed putting solar customers into a separate rate class from other residential customers, because these proposals typically reduce the economic benefits of going solar.

Things could be changing now that the solar market is maturing, though. And things could be different for EVs from the get-go, given that the additional load is generally a positive thing for utilities, whereas rooftop solar took load away.

PG&E says stakeholders have generally reacted favorably to the new subscription rate proposal so far. Everett said the California Public Utilities Commission and the advocacy group at the commission have also seen the plan receive positive responses. Regulators are highly motivated to approve this rate or something like it, she said, given that California’s two other investor-owned utilities already have CEV rates in place.

Because PG&E’s latest proposal isn’t tied to an EV infrastructure build-out and consequently doesn’t come with a big rate request, as previous EV filings have, the utility is hopeful it will move quickly.

Some industry members are too.

“ChargePoint applauds PG&E for the innovative commercial electric vehicle rate proposal that will, if approved, benefit EV drivers by significantly reducing barriers for operating charging stations in California,” said Renee Samson, director of utility solutions for ChargePoint, in a statement. ChargePoint hopes the new rate design will serve as an example for utilities around the country moving to support transportation electrification.”

“Creative new rate designs that help transit fleets like ours save on fuel costs will help enable us to make the transition to a 100 percent clean fleet, further reducing emissions on behalf of the residents that rely upon our fleet for safe, efficient, and reliable transportation throughout San Joaquin County,” said Donna DeMartino, chief executive officer for San Joaquin Regional Transit District. “PG&E’s proposed rate design provides a critical portion of that solution, and its approval will help bring us closer to our zero emissions goal.”

 

PG&E Proposes Ditching Demand Charges for Commercial EV Charging, by Julia Pyper, Greentech Media,  November 7, 2018.