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Supervisors create Sonoma power authority
Eric Gneckow, Business Journal Staff Reporter
Tuesday, December 4, 2012, 1:01 pm
Categories: Breaking News, Energy, Green, Industry News, Local Government, North Bay News, Sonoma Report, Top News Item, Top News Stories | 1 Comment
SANTA ROSA — The Sonoma County Board of Supervisors today voted unanimously to create an initial governing authority for a proposed countywide renewable energy-focused power agency known as Sonoma Clean Power, a step needed before determining rates to charge potential customers when service is targeted to begin in early 2014.
The board voted 5-0 to approve a joint powers agreement and create the authority, also appointing its first board of directors and allocating an additional $150,000 to consultants working on the effort.
Planners call the vote a significant benchmark in a nearly two-year process to determine the feasibility of a community-choice aggregation power agency in Sonoma County (www.scwa.ca.gov/cca). Including the new funding — $50,000 through 2014 to work with Marin Clean Energy and $100,000 through mid-2014 to Sonoma Clean Power consultant Geof Syphers — more than $685,000 has been allocated to the effort to date, supporting studies that first began under the Sonoma County Water Agency in March 2011.
The forthcoming power agency, like Marin Clean Energy in Marin County (marincleanenergy.info), would purchase power from wholesalers and deliver it to customers over the grid largely maintained by Pacific Gas & Electric Co. Eight Sonoma County cities have expressed interest in participating, but asked planners to seek greater detail of how rates would compare with PG&E.
The joint powers agreement between the county of Sonoma and the Sonoma County Water Agency creates the Sonoma Clean Power Authority, a legal entity governing the proposed agency with the authority to solicit rate proposals from power wholesalers. The initial authority will be chaired by the five-member board of supervisors, which also serves as the directors of the water agency.
Planners said that the formation of the authority is primarily an effort to obtain more information for interested municipalities, though the supervisors also voted to authorize the potential rollout of the program to customers in unincorporated Sonoma County. [See "New proposal seeks specific rates for Sonoma Clean Power," Nov. 19.] Rate information will be presented to the authority and potential participants before a vote on whether to finalize the power agreements and the implementation plan that will create Sonoma Clean Power, and customers will be given multiple opportunities to opt out of the service if it is enacted.
An initial feasibility study estimated rates would be between 1 percent to 4 percent more expensive than with PG&E in the first 20 years, becoming cheaper over time, according to materials presented to the board of supervisors. Local control would allow the agency to establish favorable payment for customers that generate excess renewable power through solar photovoltaic arrays or other sources, and proponents say that structure will help incentivize small- and large-scale renewable-energy projects and new construction in Sonoma County.
The agency would offer a one-third mix of renewable energy to its customers at launch, growing to a minimum 50 percent mix in the following years. Nearly 16 percent of energy offered by PG&E comes from renewable sources like wind and solar, though the provider notes a number of other greenhouse gas emission–free sources like nuclear power.
Groups representing business, construction and environmental interests in Sonoma County submitted letters to the board, pledging to work with the authority and asking that the proposed agency is structured as a competitive commercial venture.
“We would not support an agency that is controlled and operated exclusively by elected officials and public employees,” wrote Brian Ling, chief executive officer of business-advocacy group Sonoma County Alliance, in a combined letter by Sonoma County’s Climate Protection Campaign.
“Recognizing that there will be a newly created public entity to control and manage the day-to-day operations, it is imperative that there is active and local business oversight to facilitate and oversee said operations, especially when there are any decisions pertaining to the investment and management of public funds,” wrote Greg Hurd, president of the North Coast Builders Exchange, in that letter.
The joint powers agreement includes the creation of two standing committees — one for input from ratepayers, and a second to facilitate involvement from the business community. The board is allowed to delegate powers to the so-called Business Operations Committee, and the ratepayer committee will have power to influence the agenda of the board, according to Steven Shupe, deputy county counsel and legal counsel for the Water Agency.
“We realized that this was an enterprise that would be operated to some extent like a business,” said Mr. Shupe to the board. “The idea is that this Business Operations Committee would assist the management of the Sonoma Clean Power Authority in making the kind of decisions that need to be made in the power markets and so on.”
The structure of the authority is also designed to shield the general fund of participants from the liabilities of Sonoma Clean Power, he said.
The rollout of the plan differs from the process that occurred in Marin County, the location of California’s first community choice aggregation agency. Six cities joined the county in that arrangement as part of its initial joint powers authority before knowing the specific rates that would be offered through the program. Service there began in May 2010.
Today, every municipality and the unincorporated areas in Marin County have joined the authority. The city of Richmond in Contra Costa County will join next year. After an opportunity to remain with PG&E, approximately 75 percent of commercial and residential customers in Marin have chosen to receive power from Marin Clean Energy, according to that agency. Rates in Marin average $3.85 more per month than PG&E for residential customers, with rates one dollar cheaper during the summer and six dollars more during the winter for commercial customers.
Sonoma County could represent a much larger customer load than Marin. The unincorporated areas alone represent nearly 80 percent of the customers enrolled in Marin Clean Energy, according to Cordel Stillman, water agency deputy chief engineer and head of the planning effort.
That population allows planners to offer a stable critical mass of customers to energy wholesalers, and an early formation of the governing authority gives those producers additional confidence in contract negotiations, he said.
Total startup costs for Sonoma Clean Power, including staffing, contractors and working capital costs, are estimated to be approximately $9 million, according to the draft implementation plan. Those costs are expected to be recovered by rates over time.
“By forming a JPA, you send a signal to the state and others that we’re serious about moving forward with this program,” Mr. Stillman told the board. “It gives us an entity through which to negotiate for startup financing.”
The new authority will hold its first meeting Dec. 11. Opt-out notices could go out to potential customers as early as fall 2013, and service would start as early as winter 2014, according to Mr. Stillman.
“I think it may be another concept incubated here in Sonoma County that other counties can use,” said Ann Hancock, director of the Santa Rosa-based Climate Protection Campaign. Ms. Hancock and others lauded the early formation of the joint powers authority as a move to solicit firm rates from providers.
“I do believe the cities will join, and that they will join by June,” said Board of Supervisors Chairwoman Shirlee Zane, an early participant in planning and outreach efforts, “To have competition, we need to have choice.”
Correction, Dec.4, 2012: Startup costs for Sonoma Clean Power are currently estimated to total $9 million.
Link to article: http://www.northbaybusinessjournal.com/65695/supervisors-create-sonoma-clean-power-authority/
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