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North Bay Business Journal

Monday, November 19, 2012, 6:45 am

New proposal seeks specific rates for Sonoma Clean Power

Initial JPA between agency and county would be first step

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    Sonoma County Water AgencySONOMA COUNTY — By forming an initial governing authority between the Sonoma County Water Agency and the County of Sonoma, planners behind the proposed power agency known as Sonoma Clean Power said they will be able to solicit specific rates from electricity wholesalers and give interested municipalities an accurate picture of how the cost for customers would compare to current providers like Pacific Gas & Electric Co..

    Preliminary estimates have projected rates to be cheaper by one-10th of a cent per kilowatt hour — 8.1 cents — versus PG&E, according to an early draft implementation plan generated under the water agency. The agency has spearheaded the planning effort since March 2011 at the request of the Sonoma County Board of Supervisors.

    However, those estimated rates, which assume a one-third mix of renewable energy in the launch phase of the agency, are still highly influenced by the specific wholesaler contracts that can only be negotiated when a joint powers authority is in place, said Cordel Stillman, deputy chief engineer at the water agency and leader of the planning effort. In addition, fees charged by PG&E will bump up rates.

    “The reason we moved forward with the JPA was in response to what were heard from the city councils in wanting more certainty in what the rates would be,” Mr. Stillman said.

    Eight Sonoma County cities are considering adoption of Sonoma Clean Power, along with the county’s unincorporated areas and the Water Agency. Like Marin Clean Energy (marincleanenergy.info) in Marin County, the agency would follow the “community choice aggregation” model by purchasing power from wholesalers and providing it to customers over the existing grid largely maintained by PG&E.

    In addition to environmental benefits, proponents say the agency will spur renewable energy projects and offer rate stability, dynamic pricing and favorable payments for excess power generated from solar and other sources.

    While participating municipalities will ultimately be given a seat on the governing authority, establishing that group could take more than a year and risk missing a current window of low pricing for long-term contracts with providers of environmentally friendly electricity, according to the Water Agency.

    In addition to allowing earlier contract negotiations, the new proposal also seeks to address concerns that joining the authority would put municipalities at risk of absorbing potential debts and liabilities from Sonoma Clean Power (www.scwa.ca.gov/cca). While the water agency has insisted that any proposed authority would insulate participants from those impacts, the new proposal is expected to include a structure that would allow municipalities to participate and vote in the authority without formally adopting the joint powers agreement.

    “It avoids that perceived risk,” Mr. Stillman said. “If the cities pass an ordinance that allows their participation in the program, they are given a full voting seat on the board.”

    The Water Agency directors — who also serve as the county’s Board of Supervisors — are expected to consider a vote to approve the initial joint powers authority in December. Further information about the new structure will be available in the coming weeks.

    Members of the North Bay business community have also been converging to discuss potential impacts from the proposed agency, including a recent gathering of more than 45 individuals hosted at the engineering firm GHD in Santa Rosa. The late October gathering included representatives from regional developers, technology firms, lenders and the wine industry, with presenters that included Rep. Mike Thompson and the chair of the Marin Energy Authority, Damon Connelly.

    “I think people went there thinking that clean power could create a new revenue source,” said Pat Kilkenny, retired CEO of the former National Bank of the Redwoods and one of the organizers of the event. “The groundwork has been laid in the mindset of the community in terms of renewable energy. The business community will follow along if it’s in their best interest.”

    Commercial and residential customers in participating areas will be given several opportunities to maintain their current coverage if the power agency is adopted. In Marin County, home of California’s first community choice aggregation agency, approximately 75 percent of potential residential and commercial customers have chosen the provider, said Jamie Tuckey, spokeswoman for Marin Clean Energy.

    Marin Clean Energy purchases power from sources throughout the northwest United States to reach a baseline of at least 50 percent renewable energy, the same goal as Sonoma Clean Power. The agency, which serves the municipalities and unincorporated areas of Marin County and will begin serving the city of Richmond next year, also offers a premium “deep green” product of 100 percent renewable energy.

    Residential customers in Marin pay an average of $3.85 more per month under the plan, which includes fees from PG&E that are expected to decline over time, she said. Including those fees, commercial customers typically pay one dollar less during the summer, and six dollars more per month during the winter.

    The agency recently unveiled a 1 megawatt solar project in Marin, with contracts for power from 70 megawatts in new solar and biogas projects elsewhere in California.

    While Sonoma Clean Power could also source electricity from a broad region, plans include a heavy focus on developing sources within the county and tapping into existing renewable energy providers there. A final vote to establish the agency will not occur until additional information about rates is obtained.

    “We’ve been looking at this for 18 months now. Everything is pointing towards rates being competitive with PG&E,” Mr. Stillman said.


    Correction, Nov. 19, 2012: Marin Clean Energy has contracts for power from 70 megawatts in new solar and biogas projects elsewhere in California.

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    Comments

    3 Comments

    1. November 19, 2012, 7:23 am

      by george Oliver

      Shell Oil is behind Sonoma Clean Power, just as it’s behind Marin Clean Energy. An oil company.


    2. November 20, 2012, 10:31 am

      by Wayne Lusvardi

      Water agency board members should beware that Community Choice Aggregation is a scheme that relies on buying power according to “negative pricing.” It’s a scheme to off load energy costs onto taxpayers (partial socialization of energy pricing).

      What is behind the Community Choice Aggregation plan is an old-fashioned, buy low-sell high scheme. Using different terms, this is called “arbitraging,” “playing the price spread,” or “gaming the system.” The Wall Street Journal article by Lamar Alexander and Mike Pompeo of Sept. 18 – “Puff, the Magic Drag on the Economy” — gives us a clue as to how this might work.

      Conventional power plants only generate electricity sales when there is a demand for energy. But solar and wind power plants can collect a federal tax credit for every kilowatt hour they produce power, whether there is a demand for it or not.

      Strangely, the government green power subsidy is so generous that green power producers can pay municipal power departments to buy it.

      It’s called “negative pricing.” It allows green-power companies actually to bribe customers to take their power so they can collect a net profitable tax subsidy from U.S. taxpayers.

      And to make it even crazier, wind turbines mostly generate electricity at night and thus have an efficiency factor of only about 30 percent. But wind energy producers get a tax credit as if the wind turbine was producing power 24 hours/7 days a week/365 days a year.

      For a utility to generate a 10 percent electric rate hike and justify it, a city would only have to buy about 2.5 hours of wind power at night when electricity prices are often near zero anyway. You might call wind turbines “tax farms,” not wind farms.

      So cities like San Francisco could charge customers $9 more per month for wind power than wind producers are paying municipal utilities. “Buy low, sell high” is always a winning strategy, especially if you can force electricity customers into taking this power. And they can call it “choice.”


    3. November 20, 2012, 7:27 pm

      by Mike Fitzpatrick

      The most startling point and no one seems to care is that our government passed a law making it possible for the taking of a business. The ramifications of this move are as unimaginable as this action itself.


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