North Bay Business Journal

Monday, December 30, 2013, 6:30 am

2014 Trends: Energy: Sonoma Clean Power eyes first customers in 2014

80% of county energy ratepayers eligible to join


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    While planners for a new public power agency in Sonoma County have celebrated a number of milestones this year, 2014 will mark what could easily be the renewable energy-focused provider’s greatest milestone yet — the onset of electricity service to its first group of 20,000 customers.

    That agency, Sonoma Clean Power, is the second community choice aggregation–type power agency in California and is set to begin serving customers in May.

    Like MCE Clean Energy, the state’s first CCA now operating in Marin County and Richmond, Sonoma Clean Power buys electricity for its customers and delivers it over the grid largely maintained by Pacific Gas & Electric Co.

    Aims for lower energy costs

    Sonoma Clean PowerThe cost of that power — which is meant to provide a more environmentally friendly alternative than PG&E — will be known as soon as January, when the agency’s board of directors are scheduled to consider authorization of a pricing framework that is expected to beat PG&E’s retail costs by an average of 2 percent to 3 percent.

    That favorable pricing has been a celebrated perk from securing long-term power supply contracts at a time when cheap natural gas has helped drive down the cost of other sources of wholesale electricity. Sonoma Clean Power finalized its first power supply contract with Baltimore, Md.-based Constellation Energy in November. Geof Syphers, chief executive officer of the agency, credited the participating municipalities for acting quickly to allow those negotiations to go forward.

    “We consider this great news. We have a much greener product, at a lower price,” said Geof Syphers, a longtime consultant to the project who transitioned from interim CEO in December.

    The finalization of that pricing structure will provide a clear answer in a longstanding question for municipalities and ratepayers, a “bottom line” concern that until recently has only been addressed through various estimates. While the Sonoma County Water Agency has been investigating the feasibility of the program since March 2011, the constantly shifting pricing of electricity on the wholesale market has made retail pricing among the most difficult questions to answer.

    Yet planners for the agency have long noted that providing a cheaper alternative to PG&E is not Sonoma Clean Power’s primary goal, but rather to provide a competitive option that promises a greater environmental focus and the goal of supporting job creation in Sonoma County.

    “It’s not a massive discount — that’s not the point,” said Mr. Syphers, during a recent presentation on draft rates to the agency’s board. “What these are competitive rates. We feel we provide a superior product and service.”

    The most recent pricing structure subject to discussion by the agency’s board of directors hinges on savings connected to the part of a customer’s electricity bill associated with power generation. Planners suggested generation pricing that is 5 percent lower than PG&E, stopping short of the full discount achieved through contract negotiation in order to pass those savings on to future phases of customer enrollment.

    Utility charges lessen discount

    That savings is mitigated somewhat by PG&E’s levying of certain additional fees to CCA customers, a cost that Sonoma Clean Power board member and Sonoma County Supervisor Shirlee Zane said she’d like to see changed. Those charges add about 1.28 cents per kilowatt-hour for most residential customers and 1 cent to 1.13 cents for commercial customers.

    “We need to look at the long-term goal of getting some of these surcharges removed through legislation,” she said.

    Around 80 percent of Sonoma County ratepayers will be eligible for service in the next three years, with the first year excluding residents in Cotati, Healdsburg and Petaluma. Potential customers will receive a number of notices reminding them of the option to opt out and remain with PG&E — part of the law governing CCAs in California — and can still return to PG&E at a later date for a small fee.

    Those municipalities that chose not to participate in the agency’s launch could still join in the coming year or at a future date.

    As that service rolls out, more attention is likely to shift to the various mechanisms that could allow the agency to incentivize renewable energy development within the county. Development of those local sources is among the long-term goals promising price stability and ratepayer savings through Sonoma Clean Power, highlighted recently by the decision to procure some of the agency’s power through a contract with the operator of a network of geothermal power plants at The Geysers, located on the Sonoma and Lake county border.

    ‘Net metering,’ ‘EverGreen’ to promote renewables

    High on the list of tools to encourage that development is an agency “net metering” policy, which determines how the customer is credited for producing excess electricity through rooftop solar or other means that is fed into the power grid. PG&E currently offers such a program, one that Sonoma Clean Power aims to eclipse through greater incentives.

    Under discussion along with the general framework for rates, the net metering policy could nearly mirror that of MCE Clean Energy by offering customers a one-cent premium for excess power production and providing credits that never expire. Participants could use those credits to diminish their own power bill or, if desired, receive a check for the retail value of that power.

    Also like MCE Clean Energy, Sonoma Clean Power is planning to offer a all-renewable energy program to customers. Known as “EverGreen,” the program is anticipated to have a 3 cent premium per kilowatt-hour. That product will draw entirely from the agency’s geothermal contract, with the potential to add other sources in the future.

    Advocates lauded the decision to pursue a nearby source for electricity, but have also asked that the agency consider an approach that could include the usage of revenue from that premium product to promote regional rooftop solar projects and, similarly, jobs.

    “We endorse the concept of EverGreen,” said Woody Hastings, renewable energy implementation manager for the Santa Rosa-based climate change advocacy group, the Climate Protection Campaign, which has long been actively involved in the CCA effort. “We feel, with more discussion, that the EverGreen program can be improved and further leveraged.”

    Final retail rates are expected to be up for board vote on Jan. 9, following a Jan. 8 meeting of the agency’s Ratepayer Advisory Committee. Strategic goals relevant to business interests are planned to be central to discussion in a meeting of the agency’s Business Operations Committee on Jan. 21.

    Multiple opt-out notices informing customers of the option to stay with PG&E are set to be sent throughout the first half of the year.

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