SANTA ROSA — Planners for Sonoma County’s startup public power agency have received authorization to enter final negotiations for its first electricity supply contract, with pre-approval from the agency’s governing board to pursue a best offer that matches or beats next year’s anticipated average retail rates from Pacific Gas & Electric Co.
With a price ceiling and other contract provisions pre-approved on Nov. 7, negotiators said they will now be able to act quickly to secure a long-term power supply agreement in a market that can change significantly on a day-to-day basis, according to material presented to the Sonoma Clean Power Authority. That supplier, which would deliver its power over the grid largely maintained by PG&E, could be known in as soon as one week, said Sonoma Clean Power CEO Geof Syphers.
The board approved a negotiation ceiling that includes a maximum of 8.6 cents per average kilowatt-hour from suppliers — less than the 9.72 cent projection that PG&E has recently shared with the California Public Utilities Commission. Additional charges from PG&E would raise Sonoma Clean Power’s price by 1.12 cents, making the two rates equivalent.
If a supply contract is established, Sonoma Clean Power would spend the next two months determining the specific rates offered to individual homes and businesses, Mr. Syphers said. While those retail rates remain unknown outside of general estimates released earlier this year, the framework proposed for the upcoming wholesale supply negotiations represents a sense of confidence that those rates would be competitive with PG&E, he said.
“It means that, very likely, our retail rates will be at or below PG&E rates. But it’s not a guarantee,” he said.
Securing a first power supply contract would be the latest milestone for Sonoma Clean Power, a project that began under the Sonoma County Water Agency in 2010 and received its own governing board in December of 2012. The power agency will be the second “community choice aggregation”-type agency in the state after MCE Clean Energy — formerly Marin Clean Energy — and seek to offer a product that is more environmentally focused than PG&E.
The experience of MCE Clean Energy has helped to inform the rollout of Sonoma Clean Power, including the willingness to recommend a ceiling for negotiations that is on par with PG&E, Mr. Syphers said.
“Everything around our design, including rolling out with 33 percent renewable energy, was focused on rates. We’re doing something meaningful, but not something that negatively impacts prices,” he said.
The agency intends to ultimately ramp up to a power mix that is at least half from renewable sources in the coming years, and will also offer a premium 100 percent renewable product to customers. It is expected to begin serving an initial group of 20,000 customers in May of 2014.
"One of our mottos has been from the very beginning that we would provide competitive rates with PG&E. To beat or be lower than PG&E is going to be the real incentive for the public initially to make sure that they don't opt out, and to make sure we get the largest pool possible," said Shirlee Zane, a Sonoma County supervisor and member of the authority's board.
The upcoming negotiations will focus on the four wholesale power providers considered finalists to provide electricity during the startup phase of Sonoma Clean Power: Constellation Energy, NRG Energy, Direct Energy and Consolidated Edison. Cost of wholesale power is a central concern, but is joined by other elements including protections from liability for participating municipalities and customers and provisions to allow addition of new sources of electricity throughout the life of the agreement.