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The following article was posted on June 18th, 2014, in the New Times - Volume 28, Issue 47 [ Submit a Story ]
The following articles were printed from New Times [newtimesslo.com] - Volume 28, Issue 47

Proposition 16 part deux: Local energy advocates keep a close eye on a bill that may drastically change community choice aggregation

BY JONO KINKADE

A  bill steadily trudging its way through Sacramento has caused quite a scare among grassroots energy advocates across California.

Assembly Bill 2145, dubbed “Electricity: community choice aggregation,” was introduced in February by State Assemblymember Steven Bradford, a Democrat representing part of Los Angeles in the 62nd District. The bill—which would change how local energy providers are formed—coasted through Assembly committees and passed 51-15 on the Assembly floor after opposition was vocal but limited. Since its introduction, local energy advocates have been scrambling to stop the bill, which they say will have a debilitating impact on their hopes of establishing local, renewable energy production.

The contention stems from a technical linchpin that would drastically change how local energy markets function. Since 2002, California municipalities have enjoyed increased decision-making power in choosing where they buy their energy. After the rolling blackouts (and ensuing scandal) of 2001, Community Choice Aggregation (CCA) was adopted to grant cities and counties the ability to create a local, often not-for-profit energy provider that can buy energy from anywhere it chooses, rather then being limited to the incumbent utility. CCA advocates say that option allows for municipalities to buy renewable energy and to create a diverse energy market where competition brings more reliability and lowers rates.

Under current law, when a CCA is formed, people in its municipality can choose to opt out and keep their existing service with the incumbent utility. AB 2145 would flip that around and put the responsibility on the new provider to get people to opt-in, essentially requiring it to market its services and recruit customers. Opponents of AB 2145 say this would essentially make it impossible for a CCA to service enough customers to be viable. The bill’s advocates say that the opt-in requirement would bring more choice to consumers and greater transparency from disclosure requirements. Bradford claims this is necessary because CCAs can currently be misleading when they state how much energy generation actually comes from renewables.

“A CCA can purchase renewable energy credits and whitewash the fossil fuels that they’re actually providing,” Bradford said on the Assembly floor on May 28. “Green power is not being delivered to customers as power.”

On the surface, then, CCAs’ methods of sourcing may seem at odds with a goal of producing renewable energy. Yet many CCA advocates say that Bradford out of a complicated process used by just about every provider in the energy business.

Marin Clean Energy (MCE), the first up-and-running CCA in California, has been brought up often in the debate. MCE signed a large contract to buy energy from Shell Oil Co., which in turn has provided some electricity from renewable sources and some from not-so-renewable sources. While the contract has allowed for the use of cheaper, out-of-state wind power, for example, critics have cited Shell’s other energy sources and the company’s mixed reputation. But CCA advocates have pointed to the bigger picture, which suggests that as MCE and others pass through their infancy stages, greener and less corporate energy production is on the horizon.

“It makes sense to use these type of tools while they’re getting off the ground,” said Eric Veium, a local energy engineer who’s both an advocate of and entrepreneur in the renewable energy business. “These are young organizations with a lot of possibility.”

Veium said the scrutiny paid to MCE and other providers early on “is like telling a kid that they’re never going to amount to anything.”

For Bradford, the purpose of AB 2145 was twofold: give consumers an opt-in process rather than an opt-out, and hold CCAs and their providers accountable. The second part, however, has fallen victim to political maneuvering.

The bill contained a clause that would require disclosures of fee rates and greenhouse gas emissions. That particular clause and its spirit of oversight garnered support from many assemblymembers, including Katcho Achadjian, who represents the Central Coast in the 35th District. Achadjian told New Times that he voted for the bill because it required such disclosures and would increase transparency.

That clause, however, has since been struck from the bill, a move opponents say is designed to circumvent scrutiny from the Senate Environmental Quality Committee, which will no longer hear the bill. That leaves the opt-in principle, which opponents say is designed to reinforce the existing utility monopoly held by Pacific Gas & Electric and Southern California Edison.

Veium and other local CCA proponents say the opt-in process is a surefire way to stop CCAs in their tracks.

“Nobody gave a choice to opt-out of PG&E, nobody gave a choice to opt-in. You were just told ‘you get what you get,’” Veium said.

Primary supporters of the bill include PG&E, the utility servicing the Central Coast and Northern California; Southern California Edison; and the International Brotherhood of Electrical Workers (IBEW) union. The IBEW represents many of the utility employees, and their leadership is known for its close ties to the utilities. Aside from the advocating done on behalf of these groups, there’s no apparent community-based coalition in favor. Bradford, the bill’s author, was previously employed by Southern California Edison as a public relations executive.

Opposing AB 2145 is a growing list of municipalities, environmental organizations, energy providers, and regulatory agencies, including San Luis Obispo’s Mayor Jan Marx and San Luis Obispo County Supervisor Bruce Gibson.

In a May 21 letter to the Assembly Appropriations Committee, Marx wrote: “All other states with CCA statutes impose the same ‘opt-out’ process as California. The ‘opt-out’ approach gives customers full choice but also provides greater certainty in the market and helps level the playing field for small CCAs attempting to compete in a highly competitive market.”

In a June 4 letter to the Senate Energy, Utilities, and Communications Committee, Gibson echoed Marx’s opposition to the opt-in process, calling AB 2145 “the next sad phase in the effort to kill CCAs by burdening them with unreasonable regulation.”

Gibson referenced a previous move by PG&E to hinder CCAs: Proposition 16. Placed on the California ballot in 2010, the proposition, which failed, would have required a two-thirds supermajority from voters in a given service area to approve a CCA, thereby turning the formation effort into a more expensive, uphill political process. As the proposition’s main champion, PG&E spent more than $46 million on the campaign.

The proposition sparked widespread grassroots opposition that accused the utility of trying to both monopolize the market and stymie efforts for local control. The campaign against Proposition 16 saw everything from lollipops with homemade tags reading, “Don’t be a sucker, Vote No on Prop 16,” to widespread advertising that characterized the move as a “PG&E Power Grab.”

Now, memories from 2010 have resurfaced. John Geesman is a former California Energy Commissioner and public interest attorney.

“AB 2145 is a brazen attempt by PG&E to reverse the decisive rejection (53-47 statewide, 59-41 in PG&E’s service territory) of Proposition 16,” Geesman wrote in a June 10 letter to the Senate Energy, Utilities, and Communications Committee. “After wasting $46.5 million trying to fool voters, the company apparently thinks that legislators can be misled at a lower cost.”

As of press time, Bradford couldn’t be reached for comment.

The bill was scheduled to go before the Senate Energy Committee on June 23, where opponents hope it will be killed. Members on that committee have been receiving an earful about the legislation, from both supporters and opponents. As for those backing AB 2145, there’s plenty of muscle to throw around. According to campaign finance disclosures, the committee’s chair since March, Alex Padilla—the current frontrunner in the 2014 race for secretary of state—has received more than $25,000 and counting from PG&E, Southern California Edison, the UBEW, and individual members among the cabal’s leadership. That’s just one more piece that’s kept CCA advocates across the state on the edge of their seat, wondering what will become of their dreams for a local energy economy.

 

Contact staff writer Jono Kinkade at jkinkade@newtimesslo.com.