The Golden State Warriors with their lightening passes, 3-pointers from the other side of the moon and tenacious defense clobbered the Cavs to win the NBA Basketball Championship. It’s exciting to watch a team perform at the top of their game.
In the public policy arena, the stakes are higher. We need our local elected officials to perform at the top of their game. Placer County, the cities of Auburn, Colfax, Lincoln, Rocklin and the town of Loomis serving 64% of the county’s population will soon have a fully functioning joint powers entity called the Sierra Valley Energy Authority (SVEA), which will replace PG&E as the purchaser of electricity for all Placer residents, businesses, non-profits and other organizations, except for those under the jurisdiction of Roseville’s municipal utility district. Will the seven locally elected officials serving on the governing board of the SVEA and the authority’s staff and contractors outperform PG&E? Will the SVEA craft a realistic (no wishful thinking) strategic plan and make wise decision that will help ensure that electricity for Placer residents, employers, workers and seniors will be more affordable and reliable than under the current system?
State law, AB 117 of 2002, created the Community Choice Aggregation (CCA) Program, which allows local governments to aggregate the electricity demand within their jurisdictions and purchase and/or generate the electricity to meet the demand. The local CCA, usually a joint powers authority, sets the generation rates and creates incentive programs while the host utility continues to provide transmission, distribution, maintenance, repair and billing services. The five California-based CCAs are operating in Marin, Sonoma, Lancaster, San Mateo, San Francisco and Santa Clara. On July 12, 2016 the Placer County Board of Supervisors voted to create the CCA program by forming the joint powers authority and the cities of Colfax and Auburn have voted to join the SVEA. It is expected that the remaining cities and town in Placer County will join the SVEA in the next several months. Customers will receive two written notices before the SVEA begins operation and two written notices allowing the customer to opt-out and remain with PG&E.
Is this a good idea? A Placer County Community Choice Energy Team composed of county staff and consultants wrote in a 42-page “Financial Analysis and Due Diligence Report” (October 10, 2016) that creating a CCA in Placer County is “financially, economically and operationally feasible.” The Team asserts that a CCA could result in a potential 5% reduction in the energy cost portion of the customer bills. With local control of the power supply including biomass energy from forest fuels, hydroelectric power from the Middle Fork dams on the American River and tapping landfill gases, the SVEA could produce “additional economic, environmental and social benefits.” Keeping more ratepayer money circulating in the local economy will create more jobs.
These are great goals. I applaud the Team for bringing the CCA option to the local governments and for crafting the initial Report of how it would work here. However, I didn’t accept all the assumptions in the Report and we need to ask hard questions, eschew wishful thinking and do a lot more strategic planning. We face six major challenges.
First, we don’t yet have a clear strategy on how the SVEA can obtain the lowest price possible for energy produced by natural gas or a Strategic Plan 2030 that outlines specific actions to develop local sources of energy, such as biomass, solar, hydro and landfill waste-to-energy.
Second, we need strategy to take advantage of the biomass energy potential from Placer’s forest lands while recognizing that biomass energy is much more expensive than natural gas and from heavily subsidized solar and wind power. California has only one-third as many biomass plants as we had in the 1980s due to poor federal and state policies.
Third, the California Public Utility Commission allows utility companies to charge a fee on CCA customers to compensate the utility for power purchase contracts they entered into on behalf of those customers. That fee has gone up 80% the last two years and if Placer does not create an effective lobbying effort any rate advantages of having a CCA may vanish.
Forth, since there are no detailed reports on how the SVEA will be staffed, I’m concerned that we are not ready to operate the SVEA in the most cost-effective way for ratepayers.
Fifth, we need to emulate what the Sonoma Clean Power CCA did when they worked with PG&E to produce a side-by-side comparison of the rates that will be charged by the local authority and PG&E. Customers should be given full information so they can decide whether to opt-out or not.
Lastly, we need more public input, a website, and a series of town hall meetings to explain this important and complex undertaking to the hard-working people and seniors who pay the bills.
Published in the Auburn Journal on June 23, 2017.