Using electricity is easy. The quick flick of a switch illuminates our living rooms, dries our laundry, and heats our coffee in the morning. Using energy is such a natural and necessary part of everyday American life that its source is often considered only when the monthly Pacific Gas & Electric bill comes. But the system is vulnerable to manipulation, as we learned during California’s 2001 energy crisis, and relies heavily on non-renewable power sources that produce heavy emissions. Each California resident generates around eleven tons of carbon dioxide a year, and our expansive population makes California the nation’s second highest carbon dioxide-polluting state, outdone only by Texas.
California Assembly Bill 117, passed into law in 2002 in the wake of the energy crisis, sought to reform California’s energy business by giving city and county governments the power to localize energy production and distribution, and to choose more ecologically sound production methods. In turn, it stripped power-sourcing authority from investor-owned utilities like PG&E, and encouraged investment in local renewable energy. This program is called Community Choice Aggregation, or CCA, and in many ways, it is a complete reinterpretation of California’s current energy system. Renewable energy activists say it is essential for future energy stability and independence, while others, like PG&E, warn that it is too risky and may raise prices.
Even though the law passed six years ago, bureaucratic wrangling has stymied progress, and only now are communities beginning to move towards this model. At a time when the perils of climate change have wide public recognition and reducing carbon dioxide emissions has become a statewide priority, Marin, San Francisco, Berkeley and Oakland are all in stages of researching, developing, and implementing Community Choice Aggregation.
To understand how Community Choice Aggregation would work, it helps to compare it with today’s investor-owned system. PG&E provides energy to 15.1 million customers in Northern California. The utility is able to supply power on such a large scale by purchasing it on the wholesale market, signing contracts with power plants, and transmitting energy through an extensive power line grid.
The California Public Utilities Commission regulates the rate that PG&E charges its customers, which both protects consumers from drastic price fluctuations and makes competitively priced contracts an essential part of the utility’s economic success. For PG&E, large traditional energy generators—such as gas, coal, hydroelectric, and nuclear power plants—are attractive energy sources because they offer more energy at lower prices. Small, local, renewable producers, which transmit smaller amounts of intermittent power that often costs more, remain less compatible with the utility’s business goals.
“If you look at the business of the gas and electric utility, it is basically an energy importer,” says Paul Fenn, energy activist and author of AB 117. “That business is inconsistent with renewable energy. If heavy investments are made in local renewables, their carefully established supply chain will crash.”
According to Fenn and other renewable energy activists, establishing CCAs would cause an important shift in the energy business by allowing localities to take over power sourcing authority from large, private utilities, and invest long-term contracts into local, renewable energy providers. For example, Marin Clean Energy, Marin County’s proposed CCA, expects to secure power purchase contracts for wind, solar thermal, landfill gas, geothermal, and hydroelectric energy, which would supply 145,000 MWh of renewable energy. The smaller customer base would allow for a tailored energy supply system, and the government’s tax-exempt status would help offset investments in more expensive renewable energy generation.
Unlike a public power municipality, however, CCAs would still rely on PG&E to distribute the energy they source. The utility would continue to own and maintain power line infrastructure, handle billing, and provide customer service to all residents enrolled in the CCA plan. For many Bay Area cities and counties, establishing an energy aggregator seems like the least risky way to lower carbon dioxide emissions, invest in local renewables, and use less natural gas and coal. “CCA is easier [than public power] because it doesn’t have to absorb the creation of infrastructure, like power lines,” says Marin county supervisor and CCA advocate Charles McGlashan. “The utility continues doing what it does best, but the community chooses its energy source.”
In April 2008, Marin County and its eleven participating cities released a final version of its Community Choice Aggregation Business Plan. If the city and town councils pass the proposal, the county plans to create a Marin Clean Energy Joint Powers Authority in early 2009 and begin sourcing power for Marin municipalities and commercial and industrial accounts by 2010.
Dawn Weisz, principal planner for the Marin Community Development Agency and leading Marin Clean Energy advocate, expects that a CCA will help her county invest in more renewables while meeting or beating PG&E’s prices. To do this, Marin Clean Energy is planning to offer its customers two energy plans: the “Light Green” plan would offer one-quarter renewable energy for PG&E prices, and the “Green Tariff” would charge more for 100 percent renewable power. “The primary goal of Marin Clean Energy would be to purchase 25 percent renewable energy for our Light Green customers, growing to fifty percent in the next five years,” Weisz says. “That would be the maximum amount of renewable energy that we could offer while keeping costs at or below PG&E’s costs.” The Green Tariff option would charge 11.3 cents per kWh, about two cents more per kWh than the Light Green plan.
Weisz believes the financial advantages a local government entity has over an investor-run utility are key to offering competitive prices while also investing in renewable energy. “ First of all, we have low overhead, we have kind of a nonprofit structure,” Weisz says. “We don’t have a large number of staff and large headquarters to keep up. We don’t have to pay shareholder profits. We are tax-exempt and we are able to borrow money at a cheaper rate, usually a five percent discount compared to private utilities. We can also use our bonding authority to build and own our own renewable energy assets.”
Marin Clean Energy would seek to stimulate renewable resource development by providing financing for individual property owners who invest in energy efficiency upgrades, rooftop solar photovoltaic arrays, or small-scale wind projects. Using the same bonding authority that allows governments to invest in large infrastructure projects regardless of immediate financial return—like the new Bay Bridge for example—Marin would have the resources to invest in large-scale solar, wind, biomass, biogas, and ocean power facilities.
CCA proponents say it makes sense to invest in local renewable resources because it keeps money within the community. “We now send $150 million a year to PG&E headquarters; with CCA some of that would be spent locally,” says McGlashan, the county supervisor. He also notes that Marin Clean Energy expects to reduce carbon emissions by 300,000 tons a year and eventually will save customers money by avoiding hikes in natural gas prices.
PG&E is not nearly as confident about the benefits of Community Choice Aggregation. Officials insist that their company provides consumers with the best possible energy prices and is dedicated to lowering emissions and investing in renewable energy resources. “We are really proud that we deliver the cleanest energy in the nation among utilities,” says PG&E spokesperson Darlene Chiu. PG&E’s power, she says, is “over fifty percent emission-free.”
Recently PG&E has been marketing itself as an environmentally friendly company. The corporate Web site encourages energy efficiency, explains PG&E’s commitment to no-emission and renewable energy, and hopes to reach California’s twenty percent renewable energy mandate by the year 2010. The company reports that in 2007 it provided customers with a power mix in which approximately half came from emission-free sources like nuclear energy, hydroelectric power, and renewable sources, with the remaining half coming from mostly natural gas and some coal.
PG&E is also stepping up its pursuit of renewable technology. In 2008, PG&E announced contracts with BrightSource Energy, Inc. to buy 900 megawatts of renewable solar thermal power, and celebrated its advances in facilitating customer-owned solar, which transmits power from small-scale solar panels to the grid. The utility feels it is going above and beyond to provide clean energy for their customers and that a CCA could not do better.
Chiu claims that CCAs will be forced to raise energy rates, and says that such business plans have not provided sufficient data or proof of success. She says that the public should have more information. “We don’t oppose Community Choice Aggregation, we support customer choice,” says Chiu. “We just want to make sure that customers have an informed choice. But we also aren’t going to readily give up customers.” She believes customers will choose a lower price tag over higher renewable energy.
Will buying energy from a CCA cost customers more? It’s hard to say; since California doesn’t have any working CCAs yet, both PG&E spokespeople and CCA proponents are basing their opinions on future estimates. PG&E claims that increasing demand has raised renewable resource prices, and that CCA business plans are overly optimistic with their numbers. Local officials note that investments in renewable energy infrastructure will help reduce prices in the future, and say that they are dedicated to keeping rates low for all customers, including low-income families.
Despite PG&E’s official position, green energy activists and Bay Area officials feel the company is actively fighting the implementation of CCAs, leaving residents with a confusing choice indeed. “We are experiencing vigorous resistance from PG&E,” says Marin County Supervisor McGlashan. “They are trying to claim that we haven’t done our research and that our numbers are off. We’ll know how much renewable power will be available in one year and then we’ll see, but PG&E is trying to convince people that CCA is a bad idea so they won’t vote for it now. They want to scare people.”
Whether or not Bay Area cities approve the CCA business plans currently under consideration, residents of Northern California do have a choice: they can either put their faith in PG&E while applying pressure for necessary changes or commit to reworking the energy system. Both hold risks, but no risk seems greater than inaction. “The challenge of climate change is not simply to replace the brown power supply with a green power supply, but to completely reconfigure the grid,” says Fenn. Our challenge is not to simply turn off the lights when we leave a room, but to seriously consider where our electricity comes from.