Marin, Sonoma clean power providers gearing up for rate hikes in 2023

The North Bay’s two primary sources of clean energy plan to raise rates starting next year.

On Dec. 1, Sonoma Clean Power approved a rate increase that is expected to take effect Feb. 1. CEO Geof Syphers said he was unable to estimate the amount, but said it the company wants to set rates 5% below PG&E’s.

Marin Clean Energy, or MCE, is proposing to increase rates by 8%, or 4 cents per kilowatt-hour, Jan. 1. Its board intends to consider the increase, which is 1% below PG&E’s estimated rates, on Dec. 15.

The two firms are community choice aggregation providers, a designation by which cities, counties and other qualifying governmental entities in the service areas of investor-owned utilities like PG&E are allowed to purchase or generate electricity for their residents and businesses.

Customers in CCA service areas are automatically enrolled unless they opt out, but PG&E bills for the transmission and delivery of the power.

“Commodity rates have been skyrocketing,” Sonoma Clean Power’s Syphers said, referring to the need for the increase. The accounts in his energy firm number 230,656, which includes more than 30,000 non-residential customers.

“We are estimating that most SCP customer generation rates will increase on Feb. 1,” he said. But he added that it’s hard to say how much the rates will change because the clean energy provider sets its rates based on the moves PG&E makes.

“We cannot know for certain because PG&E has not published their rates yet, but we are estimating that SCP rates will rise, even while providing a 5% discount on total costs relative to PG&E,” Syphers said.

The combination of power fluctuations and rate adjustments is a routine part of life in the complex energy market.

PG&E may entertain rate changes three to five times year to offset costs, Syphers said.

But PG&E officials point out the utility company must apply for approvals through the Federal Energy Regulatory Commission and California Public Utilities Commission.

PG&E has had two rate increases this year and is seeking a 2.1% increase in full-service customers effective Jan. 1.

PG&E has also filed another letter of intent to raise rates by 19% in 2023.

Syphers, whose company purchases a third of its power from hydro sources in the Pacific Northwest, said 1- to 20-year contracts “insulate” the company from much of the cost volatility. The remaining two-thirds of the company’s power generation comes from wind, solar and geothermal sources.

Officials with the Marin County-based MCE say the company faces a balancing act each year when climate change produces weather conditions that call for more power — whether it’s an acute need for heating, cooling or some other event. It helps that the firm serving Marin, Napa, Solano and Contra Costa counties operates under contract with energy sources to keep costs low, MCE Director of Power Resources Lindsay Saxby contends.

“We hedge our energy position to match the supply and demand,” she said, citing severe weather events like the “heat dome” that hung over the North Bay last Labor Day weekend that presented challenges when North Bay temperatures reached the triple digits. At the time, the demand for air conditioning taxed the state’s energy structure, while threatened the grid then consumers with outages.

When load exceeds supply, MCE is forced to “suddenly” buy more power at premium rates from the California Independent System Operator (ISO), a nonprofit corporation that manages the flow of electricity across high-voltage power lines that encompass 80% of the power grid.

“Well, we budget for that, but we try to make sure we’re not caught off guard,” Saxby said.

PG&E spokesman Mike Gazda said recent adjustments to electric rates have been driven in part by commodity prices, adding that inclement weather and wildfire mitigation also factor into the mix.

On Nov. 14, the Journal reported commercial rate hikes may reach 20% more for its agricultural customer base, a small segment of the roughly 300 different classifications of ratepayers. That decision is expected by next September.

One agricultural customer that chooses to pay for clean energy on its utility bills is Straus Family Creamery, an organic Petaluma creamery.

“Energy markets are fluid and volatile, so we have adapted in so many ways,” Straus Vice President of Sustainability and Strategic Impact Joe Button said. “This year both electricity and natural gas rates have increased significantly, but I think most of that is in (PG&E) transmission rates.”

Button declined to provide what Straus Family Creamery has paid for power, but he said the operation’s creamery in Rohnert Park uses 3 million kWh (hours) per year. A longtime advocate for regenerative, environmentally-friendly farming, the company uses a “97% carbon-free business model,” he said.

To Button, Sonoma Clean Power model meshes with his company’s philosophical and civic standards.

“We see them as a key partner. We want to help them grow in (establishing) the future energy structure,” he said.

Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. Reach her at 530-545-8662 or susan.wood@busjrnl.com.