North Bay Business Journal

Thursday, December 12, 2013, 5:29 pm

Sonoma Clean Power gets closer to setting rates

Proposed framework beats PG&E in 2014.


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    SANTA ROSA — The final retail rates that future customers will pay for electricity service under a new renewable energy-focused public power agency in Sonoma County are coming into greater focus, following a preliminary pricing framework released to two of the agency’s key committees this week.

    Sonoma Clean PowerCustomers of Sonoma Clean Power can anticipate paying on average between 2 percent and 2.5 percent less than the comparable price of service from Pacific Gas & Electric Co. under that proposed pricing structure, according to CEO Geof Syphers. Rates will be sufficient to cover the program’s costs during its first year, with 20,000 customers expected to begin service in May of 2014.

    The rate schedule will be up for discussion during a joint meeting of the agency’s Ratepayer Advisory and Business Operations committees on Dec. 17, with final rates expected in January of 2014.

    Planners determined those potential rates by assuming that they would charge customers 5 percent less than PG&E for the portion of their bill involving the generation of power. While recently secured wholesale power supply contracts could potentially allow for up to 2 percent in additional savings, Mr. Syphers said that the initial framework would allow some of those savings to be passed along to future customers if wholesale electricity prices were to rise in the coming years.

    “We felt like it was a very good starting point,” he said. “We’re trying to aim for a level we could use to pass on the savings for later phases.”

    The startup power agency finalized its first two power supply contracts in November. A three-year supply contract with Constellation, a subsidiary of Chicago-based Exelon, will supply the majority of the agency’s power needs. A second ten-year contract with Calpine Energy Service will supply around 10 percent of the agency’s power needs over the contract term, sourced from a network of geothermal plants at The Geysers along the Sonoma and Lake county border.

    The agency will launch with a power supply that is at least 33 percent renewable, a strict definition that excludes some low greenhouse gas-emitting sources like hydroelectric power.

    The proposed rates include additional charges related to PG&E’s role in Sonoma Clean Power’s operation. The startup agency operates on the “community choice aggregation” model, which purchases power for its customers and delivers it over the grid generally maintained by the larger utility.

    The proposed rates are compared to a number of commercial and residential rate schedules offered through PG&E, and vary depending on season and time-of-day.

    A small business consuming no more than 150,000 kilowatt-hours of electricity per year could pay an average of 9.2 cents per kilowatt hour under Sonoma Clean Power versus 9.7 cents under PG&E. A single-family dwelling or separately-metered apartment could pay around 8.8 cents per kilowatt hour under Sonoma Clean Power, compared to 9.3 cents under PG&E.

    Mr. Syphers said that the quick action by participating municipalities in Sonoma County allowed the agency to lock in what are currently low rates for wholesale electricity for its startup phase. Pressure from cheap natural gas has helped drive wholesale prices down in recent years, he noted.

    Sonoma Clean Power will gradually become available to around 80 percent of Sonoma County ratepayers in three years. The city governments of Rohnert Park, Petaluma and Cloverdale have chosen not to allow the agency to serve their residents and businesses at launch. Those cities will be given an opportunity to consider joining in 2014. Healdsburg operates its own utility, and is considered out of contention for joining.

    Customers opting for a 100 percent renewable energy option could pay a premium of around 3.5 cents per kilowatt-hour under the proposed framework.

    The meeting also involves the nature of Sonoma Clean Power’s net energy metering program, which describes how the agency will credit customers for generating excess electricity through rooftop solar or other means. The policy mirrors that of the state’s first CCA, Marin Clean Energy, and will give customers a non-expiring credit and the option to “cash out” for excess energy generation.

    The committees will meet on Tuesday, Dec. 17 from 9:30 a.m. to noon at the Hyatt Vineyard Creek Hotel & Spa in Santa Rosa.

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