Upfront: The green light
MCE model inspires a Sonoma agency to form

What does green energy mean for Marin?
Posted: Friday, April 25, 2014 9:00 am | Updated: 11:17 am, Fri Apr 25, 2014.
by Peter Seidman
Marin Clean Energy (MCE), which is marking the start of its fourth year in operation, soon will no longer be the only community choice power provider in the North Bay.
On May 1, Sonoma Clean Power will begin serving customers in Sonoma County. Geof Syphers, CEO at Sonoma Power, says the road MCE traveled to start operations was instructive for the nascent Sonoma County agency.
Although the two agencies are both community choice aggregators, which receive authority from state legislation to buy power from any source they desire, the two agencies have some marked differences. While some of those differences come from creating a Sonoma program after watching the Marin experience, other differences come from winning a geographical roll of the dice in Sonoma because that county has a built-in renewable resource in geothermal energy.
In Marin, MCE is posting a solid financial reserve and sees prospects for expanding its renewable energy portfolio, while at the same time meeting a goal its founders set: to meet or beat the rates of the prevailing investor-owned utility. That would be Pacific Gas and Electric Company (PG&E).
PG&E raised its rates in January and will do so again in May, and again in July. MCE has raised it rates once this year. It doesn't match PG&E increase for increase. Part of the impetus behind creating MCE was to stabilize rates for customers. As of May, the average residential PG&E bill for power generation is $46.74 per month. The MCE light green product, which is 50 percent renewable, is $40.13 per month. The deep green 100 percent renewable MCE product is $45.21 per month.
That's for generation of the power supplied to customers. On top of that, PG&E and MCE both charge $36.26 per month for transmission of the electricity to homes. MCE customers also must pay an additional charge that PG&E levies as a kind of payback for contracts it entered into before MCE started operating. That charge, $5.89 per month, gets added to MCE residential bills. Even with the extra charge, MCE light green customers pay $82.28 per month, less than PG&E customers, who pay $83 per month. MCE deep green customers pay a premium of about 13 percent above the light green rate, or about $5 a month extra for a 100 percent renewable product.
As of May, when all charges and add-ons get calculated, commercial customers see no disadvantage from MCE rates. The average commercial customer pays PG&E $269.94 per month. Light green commercial MCE customers pay $255.98 a month. Deep green commercial MCE customers pay $269.81 per month.
Dawn Weisz, executive officer at MCE, notes that MCE customers pay about $13 million a year to PG&E in that extra charge. MCE is trying to get a three-year phasing out of the charge. The argument is that it shouldn't be assessed in perpetuity for contracts that occurred before MCE entered the picture. (The charge was insurance that PG&E—and other large utilities—wouldn't be crippled when and if customers left them in droves in favor of public-power agencies in the state.)
Getting in the ballpark of meeting or beating PG&E was part of the original intent of former Supervisor Charles McGlashan, a major MCE backer in its startup period. MCE was a signature and lasting achievement he helped create in the time before his death.
Another achievement McGlashan and other supporters hoped MCE would bring to fruition was reducing greenhouse gas emissions. According to Weisz, the agency is beating PG&E on the emissions front. "Our greenhouse gas emissions rate is 19 percent lower than [PG&E]. We are at 380 pounds of CO2 per megawatt hour for our light green product. PG&E is at 445." The MCE deep green product produces no emissions because it comes from sources that produce no emissions. MCE has relied on wind generation for the deep green product. Solar may be playing more of a role in the coming years.
The light green MCE energy portfolio includes 29 percent electricity from certified renewable sources. That beats the PG&E renewable product, which is at 19 percent. The MCE product includes Renewable Energy Credits (RECs).
Critics say they are the wrong way to proceed if the goal is to increase the number of renewable energy projects in the country, especially locally owned projects. RECs cost 10 to 15 times less than bundled renewable energy. Despite the controversial nature of RECs, even their critics say they can provide a bridge from a polluting energy infrastructure to a clean one. The trick is to get across that bridge as fast as possible. RECs can allow a young public-power agency to keep its rates lower than it could without them.
Including the RECs in the MCE portfolio, the agency can rightly say that it offers a light green product that is 50 percent renewable. Meanwhile, the deep green product is 100 percent renewable.
Paul Fenn is the guy who wrote the legislation that drew the whole community choice landscape in California. He's a principal in Oakland-based Public Power and has been a strong supporter of the push to start a public-power agency in San Francisco that focuses on locally owned generation. He pushed for that in Marin when MCE was in the planning stages, but McGlashan and others in Marin went down a more cautious path than the one Fenn proposed. Fenn is an ardent supporter of issuing bonds to provide investment opportunities in locally owned power.
"We gave up on Marin from the point of view of localization and local investment and building significant amounts of local product," says Fenn about his push at the start of MCE.
MCE does have local products, but not the kind Fenn envisions. MCE has a solar project at the San Rafael Airport. MCE has a local-project fund that comes from its deep green energy product rates. The money goes to pay for local-power projects in the planning stages. A solar project is set for the Buck Institute. Another solar project is set for the Port of Richmond.
An initial MCE contract with Shell triggered significant criticism from those who said Marin shouldn't be associated with the petrochemical giant, a polluter of major proportions. At the time MCE was a startup, Shell provided some stability in the market, critical for a newly hatched community choice program, said supporters of going with Shell. Since the startup, the Marin agency has created a diversified portfolio and isn't planning to renew with Shell, according to Weisz.
But the local projects MCE enumerates aren't really local in Fenn's vision. People who think Fenn is talking about things like wind farms in West Marin are off the mark. "Putting windmills in West Marin is just industrialization of farmland," Fenn says. "There's no real concentrated energy use there. Localization means windmills in San Rafael, in the urban area. Wherever there's industrial activity, you could have windmills [and solar projects]. You could even have windmills designed for residential areas."
A recent United Nations report states that the climate crisis is in danger of reaching unmanageable levels unless governments around the world start to take decisive action. Some of that action could describe the kind of localization that Fenn espouses. And that would take buy-in from local governments. Localization—building solar projects to power neighborhoods where the solar infrastructure gets built—is an integral part of Fenn's vision. But taking a plan for a hyperlocal solar project through the Board of Supervisors or any city council in Marin is a more than daunting task in the current political climate. The UN report is a wake-up call that governments—including local ones—need to find new ways to a clean-energy future.
Regular neighborhood citizens, including Marin residents, also need a change of attitude if the UN report is to be believed. A recent proposal to create a solar project at a nursery in Novato met staunch opposition from local residents who said it would destroy the aesthetics of their neighborhood. It's not an unusual situation, and it happens across the country. People who espouse clean energy and a non-polluting future are unwilling to change their attitudes. But as they stiffly stand barring the gates to the clean-energy local-power future, that UN report is sounding a harbinger of things to come.
For its part, MCE is reducing its reliance on RECs and moving toward increasing its portfolio of locally produced renewable energy, Weisz says. The power agency had 27 percent renewable energy in its light-green portfolio. In the last year, a 2 percent increase allowed a reduction of RECs. "Getting totally away from RECs depends on the market," Weisz says. "We have credits in our portfolio to make sure that customers don't pay super high rates. The RECs keep costs competitive." Moving toward fewer RECs depends on how well MCE can compete in the marketplace, she adds.
Fenn says public-power agencies need to take a much bolder position and move much more aggressively to public investment in true locally owned power. That's the ultimate goal at MCE, but the road the agency is taking calls for a much slower rate of travel than Fenn would like to see.
Fenn says public-power advocates should find residents and businesses that want local green power and will fight for it. "If you can find a cluster of people who want it," he says, "you will have good areas for possible development. Then at planning meetings, you will have not just opposed residents, you will have supporting residents. They are the ones who should fight for it." That strategy would produce a better result than unveiling a plan at a public meeting for a solar project, for instance, that gets dictated to a neighborhood.
The question, of course, is whether Marin residents really are serious about combating climate change and promoting sea level rise. MCE has a program that buys renewable power for customers who have solar installations, but Fenn wants a more aggressive locally owned paradigm that would stimulate the renewable industry—and the local economy.
Sonoma Clean Power is offering two options, one of which is close to Fenn's vision. The first Sonoma product is 33 percent renewable, with a goal of beating PG&E rates. The second product is 100 percent renewable and 100 percent locally generated. The abundance of geothermal energy in Sonoma means the power agency there can tap the local source for totally renewable power. (MCE gets some of its power from geothermal, from Calpine.) The 100 percent renewable and local product comes with a 20 percent premium.
Syphers says a main goal in Sonoma is to produce a pride in generating local clean power. But like MCE, the Sonoma agency will be using RECs. Fourteen percent of its portfolio will come from RECs in the first year. "It's a small chunk that will keep process low," Syphers says.
And like MCE, Sonoma is contemplating the issuance of bonds to stimulate investment in locally owned clean-power projects, just the thing Fenn espouses. But Sonoma will have to wait to generate some cash and a track record of about three years of operating to realistically approach the bond market. Weisz says MCE has encountered the same realities, and that's why the move to issue bonds has been waiting in the wings.
Fenn, who used to live in Marin but has moved, is disappointed that sustainability activists failed to remain active in the effort to promote the local-power paradigm in the first county to start a community choice program. The opportunity was missed while the issues were fresh on the table, he says. After the Marin agency formed, the activists disappeared. The hard work that should have come after the formation of MCE and its parent joint powers agency never occurred. "It went from 150 people in the room to no one," Fenn says. It takes more than "a fluffy, feel-goody" attitude to change the power paradigm. "It takes political maturity."
Is he bitter? Yes.