Potential benefits -- and risks -- of local power

Sonoma Clean Power is a community choice aggregation program being developed by the Sonoma County Water Agency to purchase electricity for Sonoma County customers. This program has multiple benefits and risks, is complex and not well-understood by Sonoma County residents and businesses.

In order to help the North Bay Business Journal readers understand the various aspects of Sonoma Clean Power, the Journal is partnering with the Sonoma County Water Agency to publish a series of articles discussing the various aspects of this effort. This article, the sixth in the series, discusses the potential risks and benefits of developing a community choice aggregation program in Sonoma County.Potential risks

Matching supply and demand. An over-estimation of demand could result in the purchase of too much power and having to sell excess power on the spot market at a loss. Conversely, under- estimation of demand could result in not having enough power to meet demand and having to make up the difference on the spot market.

Market risks. If a large number of customers opt out of the program, there is the risk that there would not be enough remaining customers to cover operational expenses.

Regulatory risks. The California Public Utilities Commission regulates the power industry in California. There is a risk that they could pass regulations that are detrimental to community choice aggregators.

Contract risks. There is the potential for contract defaults, where an energy supplier does not follow through on their promised electricity supply.

Worst-case scenario. High rates could cause accelerated opt-outs and Sonoma Clean Power (SCP) could be forced to sell excess contracted power at a loss. With a smaller customer rate base, the rates could rise, causing more opt-outs, until SCP has insufficient revenues to pay its debts. Potential benefits

Provides Sonoma County residents with a choice. Sonoma County customers could have a choice of power provider and therefore a choice in where their rate revenues go.

Local control of rates and operations. Customers would have more access to the decision making process. Decisions regarding rates and local programs would be made by locally elected officials.

Retaining rate revenue for reinvestment into local economy. While the majority of revenues collected would be used to purchase power, a portion of the revenues could be reinvested back into the community through aggressive electricity efficiency programs and local power generation facilities.


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