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Thursday, January 31, 2019

PG&E's Bankruptcy and CCA

The bankruptcy of utility giant Pacific Gas & Electric should be understood in the context of decades of
More Zilla, less God
 regulatory bailouts and giveaways suffered by California ratepayers, which taken together already exceed the book value of the utility. Todays "emergency" is more of the same routine. Moreover, its cause, and its solution, should be viewed in context not of climate change (as Washington Post recently did), but of electricity industry restructuring, starting in the late 1990s.
The bankruptcy of Pacific Gas & Electric was not caused by climate change. While this notion is catchy and trending, California has been in a drought for half a century: PG&E's power transmission and gas transportation systems have been causing explosions and fires in more recent years, because its corporate leadership has neglected what should be the core of its business (wires), failing to conduct standard simple activity of trimming trees around power lines, and maintaining their pipes. Why? Because it was distracted by an irresistible opportunity to take advantage of political conditions to capture regulators, and build a new and illegal retail electricity monopoly: a strategy that backfired with bankruptcy after successfully subverting competition in 2001, and today backfires with another bankruptcy after having failed to subvert Community Choice Aggregation (CCA).
PG&E's fox needs removing the CPUC's energy henhouse. Hopefully, California's new Governor will take the lesson from Gray Davis, who was recalled for mismanaging the state's energy crisis by giving in to, and simply bailing out, the utilities in 2003, and make a point of finding opportunity in this crisis. The opportunity would be to get rid of the cause of this bankruptcy and the 2001 bankruptcy, for which the California Public Utilities Commission approved a $9B ratepayer bankruptcy at that time. 
The cause of PG&E's distraction was politicization of its corporate leadership, based on an opportunity to subvert the legislature and corrupt state regulators. Since California's bipartisan legislature deregulated its electricity industry in 1997 and opened the state to competition in 1998, PG&E's brass, having won an equally large bailout of "uncompetitive assets" for endorsing the end of its power monopoly, nevertheless became obsessed with blocking competition, first by new suppliers entering the market, which they successfully blocked, causing a diaspora of would-be suppliers out of competing for customers. Having driven the Enrons and Reliants of the world into selling their power into  spot markets servicing utility "default service" customers, i.e. customers still "owned" by PG&E, PG&E has had a consistent strategy of rebuilding an economic, if not legal, monopoly over retail service. 
Customer ownership has been the strategic football of deregulation from the start. Subverting retail competition also resulted in the manipulation of spot markets, causing the energy crisis and the bankruptcy. At the time, one Nation writer called in an "Energy War." And, once the legislature found a new path out of the energy crisis by creating Community Choice Aggregation (Assembly Bill 117) in 2002, PG&E regarded municipalities, again, as mere competitors to body-block.  Building up to 2010, PG&E spent hundreds of millions of dollars on lobbying, lawsuits and astroturf campaigns to block early CCAs, starting in the Central Valley where it successfully killed the first CCA, and attempting to block Bay Area CCA startups, building up to Proposition 16 in 2010, which failed despite $46M in PG&E campaign spending.
Moreover, the attorneys and board of PG&E learned they could use the state regulators of a permanently weakened CPUC to subvert competition for electric supply, and made the CPUC its handmaiden. PG&E won approvals to resume monopoly-like activities as if CCA didn't exist, such as building new power plants that it would own, self-dealing and gas-for-power swaps with merchant generators, long-term power contract procurement undertaken with rubber stamp approval of contracts that are not even reviewed by commissioners, and multi-billion dollar regulatory reallocations of generation costs to transmission charges in the 2010 General Rate Case. In many of these decisions, CPUC regulators admitted that they were acting in violation of longstanding CPUC policy, and promised not to allow it again. This is widely known as bad parenting. The CPUC was training its corporate dog, Pavlovian style, that it could win by failing. Every high-cost contract would erect a new barrier to CCA. 

Today, PG&E plays victim, claiming that its renewable energy contracts have lowered the cost of renewables for CCAs, who have an unfair advantage now that renewables prices are lower. This is Mickey Mouse economics: PG&E didn't lower the price of renewables; China did. Moreover, CPUC regulators acknowledged that PG&E's contracts were extremely high at the time it approved them, and repeated this acknowledgement when it approved massive increases on the PCIA charge to CCA customers to pay the resulting premium. PG&E is no victim. It is a repeat offender. 

The pattern is clear, from 2004-5 during the CCA proceeding, which focused on the conflicts of interest of PG&E and the utilities in "cooperating" with CCA as required by the CCA law, while also having to maximize returns to Wall Street investors. All in all, CPUC dropped the ball. All of these monopolistic activities increased PG&E's desire to control retail energy, and made it neglect its core business of maintaining the wires and pipelines. Northern California has paid the price. 
It is indeed Groundhog day, 18 years later, and nothing has changed. So if Gavin Newsom is smart and wants to be re-elected, he will make it a point to avoid repeating Gray Davis' mistakes, by using this opportunity get PG&E out of the power business entirely, and to refocus it on its core mission: the grid. Moreover, he will move to strengthen the role of CCAs as the dominant retail power providers that they already are in California. Bailout or no bailout, this should be the "win" for California. Otherwise bailing out PG&E yet again will be merely another repeat-rinse, and California is likely to have another Republican governor in a few years.
For CCAs, CCA activists, and CCA suppliers, however, the question is, what will happen to the economics of CCA if yet another ratepayer bailout is approved by the CPUC? CCA has already been hit hard by CPUC approvals of extremely high cost PG&E power contracts (admitting at the time that they were too high, but approving them anyway), then increasing surcharges on CCAs to pay for them: the dreaded PCIA charge. We just got done paying for the last bankruptcy. All of these shrink the power portion of the bill and thus depress the competitiveness of retail supply.    
One question is how they are bailed out. This will have different impacts, obviously, but either way the overall trend is the same: competition shifting from energy rates to net utility bills: from energy to capacity. The worst case question is, assuming they are bailed out at customer expense, what is the net impact on markets and CCA. Or Assuming they are rescued, is there a different future?
Questions about impacts of the bankruptcy tend to focus on the bailout outcome, but in some ways the competitive landscape outcome is the same either way, based on the fact that bailouts have formed so much of the PG&E bill for the past two decades. One key question is will PG&E's insanely expensive power purchase agreements with renewable generators be invalidated by the bankruptcy, decreasing the extant and oppressive PCIA charge that Jerry Brown's CPUC imposed on CCAs? This is a big one, and would be appropriate, because it is the only upside we see other than getting PG&E out of the power business. However, it is not controlled by state regulators. This is a question of FERC jurisdiction vs. the bankruptcy court: and FERC recently said it can protect the holders of PG&E's high cost contracts: so don't count on it. 
All in all, the question is, if there is a bailout and a new bailout surcharge, will CCAs fold, or will they adapt? On that question, rest assured: CCAs are proven resilient public agencies, so they will adapt. There are over 1500 CCAs out there across the nation with a 20 year history, with few terminations in constantly fluctuating market conditions. CCAs in California have an unusually high level of control and resources that they have only begun to use. 
In some ways, the question is not whether CCAs will go away, but how this second crisis will influence CCA procurement activities and how it will impact California's energy markets. PG&E will either collect bailout costs from customers for the next decade or longer, or will not. Either way there will be strong pressure to get them out of the generation business entirely, and PG&E itself has made statements about some sort of "restructuring." Based on the last bankruptcy, a large surcharge will be added to already oppressive PCIA charge increases of recent years. But considering the likelihood of PG&E's days as a energy generating and procuring company will mean a drop in natural gas sales and a shift of wholesale energy markets to CCAs. Moreover, CCAs should use this opportunity to win more support from the state in their new role, such as backstopping Solar Bonds to invest in California renewables and energy efficiency.
When considering impacts of another bailout, it is important to remember that surcharges are volumetric charges on delivered grid power. Therefore, there are nonlinear benefits from PG&E's ever increasing "surchargization" of the power bill (in which paying a bill will be primarily to pay for surcharges, not energy). The more of the bill is a volumetric surcharge and not cost of energy, the better will look the economics of distributed energy resources that reduce the customer's use of grid power.  Increasing T&D charges will encourage CCAs to undertake a stronger adoption of a customer-ownership-of-energy model, promising an increasing turn to Community Solar, Cooperatives, Community Microgrids, and financed efficiency projects. A "CCA 2.0" focus on consumer electronics such as home area networks and IP thermostats, targeted V2B electric vehicle sharing, and generally the integration of residential and small and medium sized business customer investment in storage, onsite PV, boiler heat capture and other kilowatt-scale distributed power with onsite IP and system level networks, will prove more cost effective, being exempt (as non-consumed grid power) from volumetric surcharges, than surcharge-encumbered conventional supply with Renewable Energy Certificates, which otherwise (stupidly) remains the dominant CCA model.  
How will the utilities focus their strategy? 
PG&E is a very poorly trained dog that is fond of dragging its bottom on the Persian carpet. They have learned that they can win through over-procurement and above-cost procurement, ratepayer bailouts, and surcharge increases on departing customers. They appear to be considering an exit from the power business, speaking of "restructuring." The state and CCAs should support this move. Either way, they will seek to increase transmission and distribution charges. PG&E will continue to consolidate its position as a wires company, and a big part of this will be to get the CPUC to authorize a huge new investment and thus rate increases. One way or another it will seek increases, whether to repay a bailout or to make new customer rate-basing of  their transmission infrastructure, or both
How the CCAs will focus
--Turn away from increasingly expensive business model of conventional power with Renewable Energy Certificates, and toward resources that reduce consumption
--Move from in the current approach of in-state RECs and long-term PPAS with regional renewable developers to customer-owned, behind-meter, integrated Distributed Energy Resources
--Take an increasingly flexible approach to grid power procurement, shifting program emphasis towards a long-term focus on integrated DER and onsite integrated renewables development: Solar plus storage, EVs, in-city PV, and other technologies
--Deliver demand response and dispatch, load reform and peak shaving, avoided capacity charges, and lower non-supply savings to the cost of power.  
--Move into non-rate customer savings through focus on load management, and marginalization of procurement as the competitive part of the business model.
Market advice
From an investment point of view, PG&E's bankruptcy underscores the need for CCAs to get operational control over their power. Unconsumed energy cannot be surcharged. Whether a bailout follows or not, this is yet another hint for Community-scaled integrated DER to CCAs in California. Smart investors and CCA suppliers should focus on iDERs integration rather than traditional renewable PPAs, specifically automation, microgrids and flexible storage integrated with onsite renewable power generation and conservation technologies. Expansion of CCA service to heating systems and dynamic EV chargers are also highly recommended. Moreover, more innovative CCA service entities are needed that are responsible for both power and development of iDERs.

Sunday, May 27, 2018

As CCA transforms California's energy system, the state's top regulator mistakes the solution for the problem

San Francisco Chronicle, May 27, 2018
Bureaucrats cannot distinguish between their own power and the public's: yet they are totally different in fact and law. In the case of Community Choice Aggregation (CCA), public power over energy has been shifted, by the law of the  legislature and ordinances of California's local governments, from one creature of the state - the CPUC - to another: municipalities.
The CPUC's recently published "Green Book," while threatening that CCA could cause another energy crisis like the one in 2000-1, appears to forget that the CPUC itself caused the last one. Moreover, the CPUC's dysfunctional, co-dependent relationship with the utilities continues to cause many of the problems its President now blames on California communities that are now getting out from under the CPUC's control.
Instead, President Michael Picker repeats the fictional mantra that "shortages" were primarily to blame for California's energy crisis, when it was conclusively proven that these shortages were illusory
But Picker says CCAs will cause more shortages.  The CPUC forgets that what caused the last energy crisis was CPUC-tolerated market manipulation, starting with the state's investor-owned utilities,  PG&E, Edison and SDG&E, using their market power to block competitors from accessing the retail market in spite of legally mandated competition, and keeping all their customers captive under utility "default service," which forced competitors to sell power through manipulation-prone centralized spot markets. It was a failure to create retail competition that forced all selling through centralized utility channels and created the conditions for fake "shortages" and blackouts that were later blamed on the likes of Enron.
CCA has now created real retail competition.  President Picker was not professionally involved in energy during the energy crisis, so maybe he just doesn't remember that utility obstruction of competitive supply was primarily to blame. His new CPUC Green book is thus full of revisionism about the energy crisis, and appears oblivious to the continuing role of his own agency acting as handmaiden to the utilities, and causing the very crises he blames on CCAs.
For example, the CPUC report asserts over and over again that the utilities are the "Providers of Last Resort" in law, implying that they need to be guaranteed revenues in order to act as traditional monopolies, when the energy crisis proved this designation a myth in fact: that when the proverbial shit hit the fan during the crisis, the utilities unloaded this role on the state of California, under duress of blackouts. It was, and remains a fact of life that the State of California is the Provider of Last Resort, not the utilities, which are but wires companies. In 2000, California's investor-owned utilities abrogated their legal obligation to serve customers - breaking the legal foundation of the "Regulatory Compact" underlying their monopolies - reflected in the fact that the State (CA Dept. of Water Resources) lost $57B when it took over that responsibility to buy power, and ratepayers were ultimately forced to underwrite this loss.
CPUC's "Green Book" is boldly revisionist, also falsely claiming that the state "re-regulated" after the energy crisis and made the utilities into monopolies again in 2001. This is directly contradicted by the fact that the legislature and governor approved the CCA law (AB117) in 2002 as an answer to the crisis. In fact, the utilities have fielded several bills to re-establish monopoly regulation since 2002, all of which failed to pass the legislature. The CPUC's revisionism under Picker is a blatant and dangerous falsehood, and a betrayal of California ratepayers, who were after all required by the legislature and CPUC to pay PG&E, Edison and SDG&E $28.5B in utility bill surcharge ("Competition Transition Charge") payments in addition to the DWR contract surcharges, in return for giving up their monopolies, and with which these former monopolies formed unregulated holding companies and purchased unregulated utility assets all around the U.S., China and South America. Again, this is in addition to not only the $57B lost by California taxpayers in DWR contracts and the subsequent CPUC-approved bankruptcy bailouts (about $12B for PG&E) that were also born by ratepayers.
As the "Competition Transition Surcharge" bailout funds collected from ratepayers according to California's deregulation law AB1890 were after all received by the utilities, and obviously were never returned to ratepayers, the utilities cannot claim to be legal monopolies, cannot claim the right to be treated as such by the CPUC: ratepayers paid for the right to choice, specifically Community Choice, and are guaranteed this right specifically by the CCA law, AB117. The CPUC has neither the right to steal this back for the utilities through a bogus history lesson, nor the power to do so.
Moreover, while the CPUC "Green Book" admits that virtually the entire state is departing CPUC-regulated utility service to CCAs, it neglects to mention that they do so in part because of the discredit and disgrace under which the CPUC now operates, following multiple ethics violations and widespread evidence of continuing corruption, from illegal backchannel communications to cost-shifting, affiliate transactions, self-dealing, and gold-plated renewable energy contracts that the utilities signed and now wave before CCAs as if it were their problem. Since the CCA law was passed, the utilities have in fact used over-procurement of power to deliberately create new stranded costs that effectively erect new economic barriers to CCAs - a fact that we anticipated and attempted to head off at the CPUC's CCA rules proceeding over a decade ago.
The CPUC paper indicates that the state needs CCAs to fulfill their self-declared mission of building local renewables, behind-meter customer-owned solar, and expanding energy efficiency, and I agree with these statements - but they must be achieved by eliminating CPUC and utility barriers, not by backtracking or erecting novel protection rackets for would-be energy monopolies.
The CPUC paper fails to mention that CCAs have achieved record high renewable energy levels at rates below the utilities, and have revolutionary energy localization goals in their mission statements and charters. That being said, in their launch phases, CCAs have indeed depended too much on Renewable Energy Credits (RECs) for their renewable content, and need to focus on rebuilding their programs to use renewable energy and energy efficiency finance in the private sector to change the utility business model, create local power and eliminate the need for the mega-facilities and associated transmission lines that the utilities have always preferred.   
But again, the CPUC has a significant role in delaying the ability of CCAs to implement energy efficiency and finance renewables. It took eight years for the state's first CCA to receive an investment-grade credit rating from Moody's in large part because of perceived risk created by fierce and well-funded utility subversion of CCAs that has been largely tolerated by CPUC. Moreover, while the state's CCA law AB117 allows CCAs to administer substantial funds that their ratepayers pay every month for energy efficiency programs, the CPUC's obsolete program evaluation criteria have effectively blocked CCAs from innovating by forcing them to imitate utility programs, driving most of state's CCAs away for over a decade.
The CPUC should examine its own role in discouraging innovations by CCAs rather than flirt with an illegal and dangerous dream of re-establishing its discredited empire. It should abandon command and control and adapt its practices to allow local municipal innovation: the core mission of virtually all of California's CCAs.
It is critical that regulators and legislators recognize that CCA legitimately includes not merely a transfer of customers from monopoly service to competitive supply, but also a transfer from CPUC planning to regional planning. Picker complains that there is "No Plan," as if his own inability to plan CCA meant that no plans exist. This remark reflects a fundamental bureaucratic blind spot; there is central planning and regional planning - the former by one subdivision of the state of California (CPUC) and the latter by another (municipalities). AB117 enshrined a legislative decision and created a state-local process to make this transition, in which municipalities must comply with state requirements, but are as California subdivisions not regulated by the CPUC.  The CPUC doesn't because the legislature and people of California opted out of that system and into another. It is the CPUC's responsibility to use the limited powers it has under law to provide municipalities with appropriate guidance and support as they usher in a regional, more democratic, and greener energy system for the Golden State.

Sunday, February 11, 2018

New York CCA 2.0 Working Group Report Released!

New York State's "CCA Policy Recommendations Report" has recently been completed.

New York State created a special working group a year ago to prepare a detailed report assessing the opportunities, barriers and limitations to CCA 2.0 for the New York Public Service Commission's (PSC) Clean Energy Advisory Council (CEAC). You can read the report in full by clicking the link below.

New York State is a major opportunity for energy localization because, unlike other states with CCA, New York's leadership has recognized CCA, from day one and the highest level, the opportunity for Distributed Energy Resource development (CCA 2.0). Unlike other states, New York State has focused material resources to its implementation, such as the CCA Toolkit, which Local Power helped prepare. While New York's already deregulated electricity and gas markets present certain challenges to CCA 2.0, and the PSC's regulations added some restrictions to the "California" (wholesale) approach to local development, nevertheless New York is fertile ground for a CCA 2.0 model, which moreover can be replicated in other U.S. states with active deregulated markets having "retail" market structures. This, above all else, is the reason why Local Power worked with Citizens for Local Power to draft CCA legislation in 2014, and became actively involved with the PSC and NYSERDA since then: having gotten CCA 2.0 on its feet in California, we want to prepare a nationally replicable model that will work in states that (unlike California) have retail market structures.

The New York "CCA Policy Recommendations Report" is yet another systematic effort to make DER happen on a meaningful scale here. Local Power Inc. was honored (as the only outsider) to work with New York-based NGOs and market participants to make these recommendations to the PSC and the New York State Energy Research and Development Authority (NYSERDA) for policy and program changes to augment a transition of CCAs to locally-based renewable energy systems. The final report was presented to the CEAC and submitted to the Public Service Commission at the end of January, and could potentially expand CCA program opportunities if its recommendations are implemented by the PSC and NYSERDA.

The working group was chaired by Brad Tito, NYSERDA's Communities & Local Government Program Manager. As Citizens for Local Power reported, "a wide range of interests and perspectives were represented in the working group, including utilities, which did not agree with some of the report's recommendations." However the report provides valuable insight into current pathways and obstacles to CCA 2.0 in New York, as well as recommendations to the State of New York on how to further simplify and support ongoing efforts of CCAs such as Westchester to use CCA as a platform for Distributed Energy Resource (DER) development.

Apart from Local Power Inc., the report authors include the Association for Energy Affordability,  Citizens for Local Power, Constellation, Consolidated Edison, Croton Energy Group Inc., Joule Assets, Municipal Electric and Gas Alliance (MEGA), Office of Clean Energy, New York State Department of Public Service, New York State Electric and Gas Corporation (NYSEG) and Rochester Gas and Electric (RG&E), National Grid, Orange and Rockland Utilities,  Pace Energy and Climate Center, Renewable Highlands, Sustainable Westchester, and Tompkins County Council of Governments.

Read the Full Report Here.

Saturday, January 6, 2018

CCA Reaching Critical Mass

GTM Research - The "Total Addressable (PV) Market for
 California Community Choice Aggregators" - Oct 2, 2017

Even though Community Choice Aggregations (CCAs) still serve a small minority of communities in the United States, the scale of going green regionally is already registering in national green power industry statistics.  It's about to get a lot bigger.

CCA is already 4% of the national PV project pipeline based on a “green CCA” market that is just getting started and about to expand rapidly in both California and New York. Given the fact that CCA is just now hitting a major growth curve in some of America's largest energy using states, and most new adopters are motivated by a focus on energy localization, this percentage is certain to grow significantly in 2018. 

CCA is finally getting the attention of national industry and media as a major and revolutionary new force in American energy. In October, GreenTech Media announced that CCA has taken over the solar market in California, and the impact is being felt across the country.  “Community Choice Aggregators (CCAs) are positioned to represent up to 45 percent of California’s utility PV demand over the next five years. The total addressable market for CCAs is set to reach 3.9 gigawatts by 2022, but it is also expected to grow beyond that projection, as eight more (county-scale) CCAs are slated to launch in the immediate future."

 Green CCA is not new, and was in fact the original concept, but has taken years to make into the rule rather than the exception among CCA implementors. While the initial growth curve of CCA in Ohio and Illinois was focused on discounts and/or higher renewable energy content using Renewable Energy Certificates (RECs), more recent, and even much dramatic growth curve has been largely motivated by the benefits that can only be achieved by localization: local jobs, climate action, and local economic development. 

In California, truly a revolution in power is already underway, with 85% of all customers of investor-owned utilities expected to be served by CCAs in the next few years. Virtually all of these CCAs are focused on development of local renewables, energy efficiency and meaningful greenhouse gas reductions in addition to greener power: 150,000 GHh switching to CCA could leverage an unprecedented wave of DER development, and cause an historical greenhouse gas reduction.   

New York is the exciting new CCA 2.0 kid on the block. After the State of New York approved CCA as a platform for Distributed Energy Resource (DER) development in 2014, the New York State Energy Research & Development Authority (NYSERDA) has taken the lead role in helping municipalities pursue a DER-centric "CCA 2.0" strategy, creating a "CCA Toolkit" with Local Power's assistance, and forming a special workgroup to advise the state on how to augment energy localization and remove any outstanding barriers in state law and regulation. I am proud to have participated in these processes.

The trend towards green power has even spread back to early CCA states whose early adopters were initially focused on achieving discounted rates for customers, inspired by widespread successes of CCAs to achieve greener power at discounted rates, and also new local benefits associated with local renewables.

In Massachusetts, about 130 municipalities out of the Commonwealth's 351 total are already under CCA service, with the City of Boston recently joining the pack, focused on achieving greenhouse gas reductions. 

More than 250 communities in Ohio are under CCA service, including the nation’s first “green CCA” in Northeast Ohio. Today, NOPEC has 850K customers in 218 communities in 14 counties statewide, all being served 50% renewable power at a discount below utility rates - something that was unthinkable even in California only half a decade ago, but becoming widespread under CCAs, which have been proven able to deliver greener power much cheaper than utilities and deregulated suppliers. This kind of scale creates substantial environmental benefits. In Southeast Ohio, SOPEC has been focused not merely on greener power but on energy localization for the past couple of years, providing the state with a ramming rod for CCA 2.0.

About 600 communities in Illinois are under CCA service. Between 2011 and 2014, 91 Illinois municipalities representing 1.7 million consumers switched their communities to 100% Renewable Energy using CCA. 91 medium sized cities and towns containing 1.7M customers have chosen 100% renewable energy (using RECs), which is a six TWh annual renewable demand boost - the carbon reduction equal to eliminating one million cars! While Illinois' CCA law needs changing to eliminate barriers to CCA investment in local renewables and efficiency, these accomplishments demonstrate both the power of CCA and the political will for significant action in green power.

With the numbers starting to show, national policy groups are beginning to recognize the true potential that CCA has to create significant local benefits like customer equity, community wealth retention, local jobs and economic development, and local pollution reduction, as well as global benefits like greenhouse gas reductions.  NAACP's just featured CCA in its Environmental and Climate Justice Program's Just Energy Policies and Practices Action Toolkit. 

 Watch for some major new leaps in 2018, with emerging CCAs shifting their focus further towards the local, and even behind the meter. As CCAs continue to prove new services like EVs and solar plus storage, solar bonds/green bonds continue to go mainstream, and increasing levels of DER integration prove themselves in the form of community microgrids, and community solar, EV sharing and dynamic charging, CCAs will revolutionize demand-side technologies and customer-ownership the way the have already transformed retail energy. Mark my words: what was a luxury will soon prove cheaper than status quo power, and what was a fantasy utopia will soon become reality.

Friday, April 21, 2017

Don't Think of a Windmill

Activists from the West Coast to the East are awakening to the necessity of local action to transform the energy system. This has put new wind into the sails of the Community Choice movement, and with it a whole new level of purpose and meaning.

Next month, the Center for Climate Protection will host its annual California CCA conference in Long Beach: the Business of Local Energy Symposium. Like similar events going on around the country where CCA laws are in place, this year's Business of Local Energy Symposium is conspicuously focused on the theme of energy localization, "distributed energy resources," or CCA 2.0: on how CCAs can be the vessel for a bigger idea about change.

In part, the trend towards local action comes from widespread disappointment with President Obama's performance in battling climate change over the past eight years. An already growing awareness of the shortcomings of national politics in addressing climate change is reinforced by now-President Trump's effortless unravelling of Obama's modest gains. What little progress was made in the past eight years, was so easily unmade: hardly a recipe for stopping climate change.

In another respect, there is also growing awareness among people committed to climate action that the goal-setting paradigm of state and federal energy policy is simply inadequate. There is a growing awareness that it is easy and misleading to pretend to solve problems by setting targets for carbon reductions or green power levels twenty or thirty years into the future when future governments may un-set them. More people see now that greater strides and more permanent changes are needed. Creating new targets, incentives and trading schemes that can just be unchanged by the next politicians are just another form of kicking the can down the road.

Energy policies that don't actually change the energy system, but merely set targets, provide funding, adjust incentives or subsidies, or trade carbon credits, have inherently limited horizons that "real" change can and must transcend before we can declare victory.  Another form of this can-kicking, widely adopted by policy makers of all stripes until recent years, is also increasingly scrutinized by activists: renewable energy certificates (RECs).

From the time that Climate Change became a generally accepted phenomenon in U.S political discourse in the 1990's until today, the governing paradigm of public policy has been neoliberal, in the specific meaning that the government's role is implicitly defined as creating and/or tweaking markets in which incumbent corporate interests compete. Under neoliberal policies, governments do not do anything directly, but merely create market mechanisms so that market players will do it. This is the origin of carbon trading, renewable energy certificates, and similar policy frameworks.

Today, many activists and elected officials have come to recognize that deliberate, controlled actions by governments are required to ensure that significant greenhouse gas reductions are achieved and endure into the future. This cannot be under carbon credit and renewable energy credit trading, which are a form of "rented" green-ness that can disintegrate tomorrow when the natural gas market shifts.

In so many ways, neoliberalism has met its match in climate change. Much as Bernie Sanders called broadly for a "revolution" in American politics, many climate activists now see that structural change is needed to deliver a new business model in energy, and not just greener behavior by the same players. Many Americans now recognize that we need physical change in the energy industry, not trading schemes and meaningless goals and targets: a different way of doing energy, not just mitigations and marginal improvements.

We seem to have passed beyond a secret threshold, in which bigger ideas about change may now be considered. And we have come to a greater commitment to ensure that the policy solutions we work on are themselves sustainable into the future.  The epiphany that engages more and more Americans with each passing year involves a shift from the idea of "green power" to the idea of "local power," and from a paradigm of renewable energy certificates to a to a paradigm of physical change. The benefits of physical change, from de-growth, customer- and community-ownership, to grid and fuel independence, rate stability, to local green jobs and local economic development, offer ten-fold more compelling reasons to implement CCA compared to increasing renewable energy credits, as so many early CCAs limited themselves to doing. In this emerging view, environment, prosperity and social justice are not competing for crumbs, but combining into a single purpose.

As with Bernie, it was the "vision thing," that mattered: the people are not to be spoken down to with simplified fictitious renewable energy certificate schemes, but talked up to with palpable, enduring investments in a completely new energy, community-scaled system. This shift in emphasis is paradigmatic. It is a shift from thinking about making energy greener to reducing dependency on the grid: from green consumerism to energy independent communities.

In my view, the recent surge in CCA proliferation is the direct result of the successful realization of the CCA 2.0 vision to deliver a "revolution in power," starting with the Bay Area CCAs and spreading South and East to inspire climate activists who simply did not see the opportunity to use CCA in this way. As a result, the constituency for CCA is growing rapidly, and the trend towards innovation in iDER approaching a critical mass. We appear to be on the cusp of a national movement for energy localization.

Today, the realization of CCA as a platform for fundamental change is reaching  a shift from the conventional utility-based conception of renewable generation and energy efficiency programs to a more specific technological concept of integrated Distributed Energy Resources (iDER): of  technologies like microgrids, storage, load control, and islanding that when integrated provide a complete change from, and vastly increased independence from, the old system.  The maturation of technological integration has been matched with increasingly mature community-based energy mechanisms. Since the advent of Solar Bonds, an army of DER financing industries has developed which, in conjunction with key program design elements such as shared renewables, solar co-operatives, on-bill financing, and blockchain (non-utility) billing systems, provide ample opportunity for CCAs to organize and finance iDER.

From day one (22 years ago) CCA was designed to be a platform for this change, which has been a long, long time coming. The time has come to put down those credits, and pick up a shovel!

Wednesday, June 22, 2016

Honey I shrunk the utility: California's final nuclear plant closure attributed to CCA

The impact of CCA on California is just getting started, but it has already caused a nuclear power plant to become redundant. Pacific Gas & Electric officials said its recent decision to close the Diablo Canyon nuclear power plant was influenced in part by the loss of customers because of Community Choice Aggregation (CCA), under which local jursidictions group power purchases to choose alternative suppliers.

With six Bay Area counties already under service from Napa to San Francisco, and virtually every coastal county of the state now preparing to launch their own local electricity services, PG&E's nuclear baseload power is simply no longer needed. Industry analysts predict that 60% of all Californians served by investor-owned utilities like PG&E will soon be served by CCAs, leading the media to ask, can renewables and energy efficiency replace nuclear power?

Moreover, now that CCA is definitely and permanently transforming California's electricity system, the operative question is, will the CCAs forming up and down the coast from Humboldt to Alameda County, San Mateo County to San Jose, Santa Cruz to Lancaster and Los Angeles County and Riverside, San Diego and Del Mar, realize their founders' dreams of becoming energy independent, building local renewables and energy efficiency, creating local green jobs. and achieving a new business model focused on the other side of the meter? These are palpable local benefits that only get delivered if substantial local buildouts happen, and in a meaningful time frame.

The answer lies in the very activists who are driving each of these efforts in each community. CCA is not just a solution to the energy crisis and climate change: it is an opportunity for democracy to deliver this result. CCA is not an end, but a means to an end. Activists must realize that this unique opportunity to change everything requires more than the conventional campaign, in which winning a vote on a law is the goal, then everybody folds up their tents and goes home.

CCA is a more holistic, comprehensive process that takes years of community deliberation to fully execute. Changing everything takes perseverance on the inside, and activists who see CCA through to launch only are blowing it if they think they are "done" once the program launches. Creating your new CCA program is just the beginning, not the end, of CCA. Now you have to attend to the details of transforming energy. It must involve an active community process. If you want to deliver local jobs, local development, local companies, and local ownership, there is work to do to make those things happen. The physical transformation of energy takes time but it won't happen unless it starts at program launch. No waiting for reserves is called for, because so many ways now exist to finance efficiency and renewables, build-outs should begin at program launch, and local build-out be the centerpiece of the program from day one. If CCA activists, who have successfully made local build-out the central focus of California CCA, will just persevere with their elected officials that govern CCA programs, and hold their feet to the fire, democracy will prevail: we will truly revolutionize energy in this state, as we have promised for so many years. 

Friday, April 22, 2016

New York Gets CCA 2.0

On April 20, the New York Public Service Commission (PSC) approved an order authorizing the
establishment of Community Choice Aggregation (CCA) programs by municipalities statewide, and articulated the necessary program design principles and standards that municipalities must apply in developing and implementing CCA programs for their constituents.

The PSC order adds one of the nation's largest markets for power to the list of U.S. states that allow CCA, including California, Illinois, Massachusetts, Ohio, and New Jersey, with several other states considering similar laws. Local Power Inc. played an active role in educating the PSC and other New York state agencies throughout its process, drafting legislation in 2014 and preparing testimony and comments in the proceeding over the past year, while also advising local advocates on their efforts to win CCA rules to encourage and open a clear path to DER development and community energy in New York.

The order opens a path of activists in Ulster County, Sullivan County and others to follow the lead of Westchester County, which launched its local CCA program under a PSC pilot project earlier this year. Perhaps most significantly, New York's CCA take California's move toward a more ambitious form of CCA foward another step, focused strategically not only on retail choice or greener power, but the development of Distributed Energy Resources, or DER.

The Public Service Commission's order, approved following the lead from NY Governor Andrew Cuomo following disruption of New York's power supply from Hurricane Sandy in 2012, states that while CCA will offer the vast majority of residents and businesses benefits from retail electric competition that deregulated markets have failed to deliver, but "(m)ore importantly, the CCA construct provides substantial positive opportunity for meaningful and effective local and community engagement on critical energy issues and the development of innovative programs, products, and services that promote and advance the achievement of the State’s energy goals....CCA programs can educate, encourage, and empower communities and individuals to take control of their energy future through engagement with existing...opportunities and development of new DER and clean energy programs" with the Governor's Reforming the Energy Vision (REV) and New York's Clean Energy Fund (CEF).

Local Power Inc. is very pleased by this order, and thrilled to see CCA growing both in the scale of the market, and in the wisdom of is intention. We look forward to helping New York communities realize energy independence, develop local economies, create local jobs, and transform customers into owners in coming years under this order, and encourage community energy activists everywhere to take encouragement that our strategy is not only working, but finding its way to the mainstream.

Wednesday, April 13, 2016

CCA Transforming Electricity in California

California CCA Activity -  Spring 2016 (Local Power Inc.)
How to report on the details of a revolution? As of this year, everything has changed. No longer is California's energy landscape dominated by Investor-Owned Utilities. No longer is CCA just an idea for how things might be different. Things are different. No longer are CCAs just talking about localizing energy. They are actually doing it.

As of today, most Californians know about CCA - in a few years, most Californians will be served by CCAs.

As the Center for Climate Protection's Ann Hancock recently reported, it appears that over half of all Californians are about to become CCA customers. Whereas just one CCA served a population of 261K in 2010, by the end of 2016 San Francisco, the South Peninsula and Silicon Valley  - plus Lancaster - will cover a population of over 3 million: by next year CCAs will cover over 12 million Californians. CCP estimates that the total population of communities launching or exploring CCA to be over 17 million, which comprises some 60% of California's entire population served by Investor-Owned Utilities. Considering that their estimates actually exclude a number of CCAs, these figures are actually conservative.

California's electric pie 2018 - IOU pops. (red) vs. CCA pops. (blue) 
What is more, virtually the entire crop of cities - even, finally, Marin Clean Energy - is strategically focused on energy localization goals: local jobs, demand reduction, carbon reduction, and local economic development. With the launch of Lancaster Choice Energy in Southern California last year, California saw its first CCA formed outside of PG&E's service territory. Boasting one of the most ambitious solar photovoltaic programs in the U.S., its Republican mayor has put Lancaster on the map as one of the nation's greenest cities.  Perhaps most importantly, Lancaster's business model is clearly focused not just on greener power, but on energy localization, local development of renewables, local storage, and strategic demand reduction.
California CCA growth curve from 2010 to 2020 in pops.

The die is, as they say, cast. Sonoma Clean Power is building local solar. San Francisco is launching CleanPowerSF this year, and has already shifted its focus upon localization. The City of San Diego became the first city in the nation to adopt binding targets for its CCA program - the very kinds of targets Local Power Inc. has pushed for. Reading through the solicitation and planning documents of CCAs covering virtually the entire California coast, I must conclude that we have won the war of ideas. The revolution is truly here.

These basic elements describe the Revolution in Power that Local Power Inc. had in mind when we created CCA, and we are even more thrilled to see "CCA 2.0" take hold in California and beyond than we are to see CCA hitting prime time. A great deal of pain and suffering - controversy and acrimony - has paid off.

Sunday, October 26, 2014

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The past year has seen a lot of action on Community Choice Aggregation, and Local Power Inc. continues to rake in good press on our leadership. Next month I will join the manager of California's largest PACE program Renewables LLC and SolarCity at NorCal Solar to talk about the emergence of CCA as a revolutionary platform for solar development. In California, some ten counties are now actively preparing CCA programs for implementation as San Francisco's Local Agency Formation Commission completes a peer review of the business case and program design that LPI completed for the City last year. Meanwhile, Sonoma Clean Power, which is the state's second CCA to come online, just announced that it has doubled the amount of solar photovoltaics online countywide in a single stroke of the pen, signing a contract to install seventy megawatts. Nationally, I just returned from a speaking tour of New York State and Montana, where CCA has attracted the attention of both activists and policymakers. In New York, where last year's hurricane devastated the state with flooding, power disruptions and a doubling of Winter rates, Governor Cuomo has installed new leadership at the New York Public Service Commission with orders to find the best ways to implement distributed energy resources - the so-called Reforming the Energy Vision (REV) proceeding. Prompted by local activist group Citizens for Local Power, LPI prepared CCA legislation for New York state earlier this year, and the PSC appears to be interested in CCA as a platform for distributed energy resources to  enhance local energy resiliency. Finally, CCA continues to grow at a record pace throughout New Jersey, Massachusetts, Illinois and Ohio, promising yet another year of dramatic growth, with growing recognition of its radical potential to open the market for distributed generation, energy efficiency, storage, and microgrids. Today, some five percent of Americans receive their service from Community Choice Aggregation: it is thinkable that this figure will reach ten percent in the near future, making CCA a significant and permanent element in the American energy system. To review recent articles, sign up for updates or twitter feeds, check out Local Power's news page.  If you prefer facebook, connect with me here.

Thursday, November 21, 2013

California Gets Second CCA - Sonoma Clean Power Blows Past Marin on Local Power

I am pleased to announce that it is official: California finally has a Community Choice Aggregation with a focus on energy localization, as applauded by an editorial of the local daily (PD Editorial: "The promise of local power contracts"). Local Power Inc. spent many years helping Sonoma county and the Sonoma County Water Agency design this program with significant funding from the California Energy Commission.
We collected a mass of PG&E data and other government data, and used the data to come up with a localization regime for Sonoma county, which reached a localized portfolio of 67% by 2015), including a significant portion of power from a local Geysers geothermal expansion.

Sonoma Clean Power officials say the three-year contract will allow them to be competitive with rates by Pacific Gas and Electric Co., according to a Santa Rosa Press Democrat article, in a 10-year deal with a subsidiary of Calpine Corp. that will "fulfill their promise to spur local green energy generation and support local jobs." The deal will account for 15 percent of the agency’s overall supply as it begins rolling out to customers next year, and will make up for a little under half of the agency’s initial renewable energy portfolio according to the Press Democrat , which quoted Sonoma Clean Power's statement that "the power venture’s political standing, if not its business future, depends on staying true to that mission. “This is a really good start. I think it gives us credibility,” said Sebastopol Mayor Michael Kyes, an agency board member who has pushed for pursuit of local power. Another Sonoma Clean Power board member, Supervisor Shirlee Zane noted, the county wants the company “to expand as we expand and create those local jobs.”

We at Local Power Inc. are very pleased that a CCA has finally gone beyond the Marin-type green supply business model, and to include a first step of localization - signing a long-term agreement with an existing local renewable power operator to expand its capacity. This is an example of a CCA telling the market what it wants rather than asking what it can have.

While Marin has improved a great deal on PG&E in terms of greener power at the same price, with a 50% renewable mix that is price competitive with PG&E's 20% renewable mix, it has limited it self to a more conventional old business model based on CCAs pursing green power in other states like Ohio and Illinois, which have tended to focus on getting greener power content, or renewable energy credits.  The first CCA in California, Marin neglected local resources and imitated a supply-centric business model of power plant owners. Marin declared victory early without physically doing anything different - "The biggest change you'll never notice" was Marin Energy Authority's marketing campaign, though approval of the agency was achieved with a promise of localization. Three years later, no significant localization has been delivered - as of today, the agency's web site's "Local Power" page refers to a single solar array at the airport.

The Sonoma CCA's motto is "Local. Renewable. Yours."  With its commitment to true localization in physical plant and customer ownership, Sonoma has provided needed leadership to other CCAs now investigating or pursuing green power strategies among 1300 municipalities and 5% of the U.S. population under CCA service, most coming online in the past few years. Sonoma Clean Power will produce local green jobs, cause local tax revenues, achieve major regional greenhouse gas reductions, enhance local resilience and permanently eliminate energy dependency upon remote grid-based resources. These are mainstream, national policy goals.

San Francisco will hopefully provide additional leadership for Sonoma on direct financing and development of new local projects. Sonoma was blessed with a no-brainer low-cost resource with a willing operator, Calpine. So some will say "that was easy" because a high-capacity, low-cost resource is so conspicuously available in Sonoma county. But the truth is,  every city and county has a number of local renewable resources - solar, wind, wave, river, and most important - energy efficiency measures.

San Francisco is still debating how to get local build-out into it portfolio, where Local Power Inc.'s analysis has indicated a combination of energy efficiency solar photovoltaics, wind, battery storage, and other technologies will achieve the full "CCA 2.0" business model - building rather than buying more of your power. Sonoma's deal with Calpine is an important step forward by purchasing power from an in-county facility, and Sonoma Clean Power has indicated it plans to issue revenue bonds, like San Francisco, to actually finance and build new local renewable resources. San Francisco's voter approved the Solar Bonds a decade ago - "solar neighborhoods" being a cornerstone of CleanPowerSF since the beginning.

Defensively, Marin Energy Authority's staff have criticized Local Power Inc. for pushing so hard for localization and local green development to be central to CCA, claiming it was smarter to "start with baby steps" and implying that localization itself is the problem. So, with Sonoma's decision to go local, we are vindicated that localization is both technically and economically feasible in any of the 1300 CCA municipalities in America today, and we are grateful for the leadership of Sonoma municipalities and county, water agency staff and Sonoma activists, in particular the Climate Action Campaign, for getting us a step further towards The Real Thing. Next - look to San Francisco!

Thursday, August 1, 2013

San Francisco Turns the Corner as CleanPowerSF In-City Buildout Strategy Takes Hold

San Francisco – August 1.  I am pleased to report that CleanPowerSF has achieved an important new program realignment for the City's Community Choice Aggregation (CCA) program, which became evident when the City's new CCA Director presented an updated CleanPowerSF business model and strategy to members of San Francisco's Public Utilities Commission and Local Agency Formation Commission -  re-centering CleanPowerSF's focus on building local renewable power generation and efficiency in the City to serve local demand, using the CCA's ability to augment revenue bonds to finance the new infrastructure based on CCA ratesetting authority and substantial annual revenues. While there remain improvements to be made, and important weigh-in from the Board of Supervisors on the amount of revenue bonds to be issued, this is major news for Local Power, and we want to register this judgement publicly.

At a July 9 joint hearing of the two key Commissions governing and operating CleanPowerSF, including several city supervisors, CCA Director Kim Malcolm outlined a return to the original concept of CCA as a means to build distributed local renewables at scale, reducing consumption to repay solar bonds from the surplus. “Unlike Marin, San Francisco was conceived as a build-out program as well as a procurement service to customers.” explained Ms. Malcolm in the televised meeting. “So it is a little bit different business model and they have different circumstances.”

California’s first CCA, the Marin Energy Authority, is primarily focused on greener power procurement, or the purchase of greener electricity from suppliers the grid. But the City's CCA Director confirmed that San Francisco will focus the City's competitive electricity program on building local renewable power in San Francisco neighborhoods, in effect adopting Local Power's strategy and program design including numerous related recommendations Local Power made to SFPUC staff and Commissioners earlier this year.

Fortunately, Local Power's business model is starting to take hold in California. A similar focus on localization is being pursued north of Marin in Sonoma County's CCA, where a newly formed county/city-led joint powers agency, Sonoma Clean Power, has already been formed and held its first meeting last week, already including 2/3 of the countywide energy demand eligible to receive the service. Local Power Inc. also had a major role in helping the County and its water agency define the feasibility and strategy of energy localization, collecting and analyzing PG&E data for the county, and defining the economic feasibility of localization in Sonoma County, as a partner with the county water agency and data collector/manager for all of Sonoma's local governments.

In San Francisco, the July 9 joint hearing of SFPUC and SFLAFCO commissioners is a significant shift from previous staff’s earlier focus on procurement, a strategy that can give the City more control of energy it buys as to its GHG content, but would have been too expensive to afford investment in local resources that are needed to make the leap-of-business-plan, from a supply-based to a demand-based financial structure for the City - critical to delivering on the potential of Community Choice. CCA Director Malcolm's change is an important indication that CleanPowerSF will stay on track to meet the neighborhood solar innovation by San Francisco supporters and activists for more than a decade - and will finally answer the mandate of San Francisco voters when they approved the City’s solar finance authority, Proposition H - the "Neighborhood Solar Initiative" which has remained a key component of CleanPowerSF's "build-it approach," in 2001.

Local Power Inc. pioneered the CCA model, writing both the original state laws in California and Massachusetts, and San Francisco's unique local revenue bond charter authority that LPI conceived and drafted as an upgrade to our original CCA model - allowing purchasing aggregations to build and purchase power from their own local renewable facilities. We draft a plethora of ordinances, plans, studies, program design, and specifications in many hundreds of pages, since the original CCA ordinance was adopted and signed by Mayor Newsom in 2004. All along we have asserted that a substantial localization is economically feasible with competitive rates. We are glad to have won a contract to prove this mathematically to SFPUC, so that our change of business model - CCA 2.0 - can replicate and transform the energy industry. Local Power Inc. has proven in our deliverables to SFPUC that a $1B investment will deliver a $600M return in investment to the City, at rate parity. Were we allowed to complete a final draft of this model, we anticipated based on our many runs of the data that even greater localization at rate parity is economically feasible. With all the conjectural journalism, PR wars and straight propaganda surrounding CleanPowerSF, it is hard for people to know what is really going on. The answer is: pretty damn good, and I don't say that casually.

(Download summary version of Local Power Inc.'s work for CleanPowerSF - publicly released by SFPUC here in PDF format).

SFPUC’s response to Local Power's input is a significant starting point with the agreement to start building at launch. The question is obviously how large - we said $1B over 10 years. A substantial local build-out component as part of the program launch – $200M is a substantial amount for the first few years of startup based on limited initial participating customers, but the annual revenue bond issuance schedule for planning a decade of development, $1B is not so outrageously large an amount. The number of $200M should therefore rise if we are implementing a citywide program - not just a permanent startup.

Moreover, the decision to actually issue bonds must be the Board of Supes and Mayor, says the Charter (9.107.8). Therefore, it is appropriate that the Board of Supervisors and Mayor deliberate and hold hearings on an ordinance authorizing H bonds in coming months.  If Supervisors are uncomfortable with $1B of local investment, other supplemental public investments might be considered from Pension Funds currently being divested from fossil investments, and other supplemental options exist to get CleanPowerSF's In-City Buildout to the scale that is both possible and called for by the citizens of the City when they approved the H Bond "neighborhood solar" authority.

In its work for SFPUC completed in March, LPI recommended $1B in investment for extensive solar roofs, wind, extensive efficiency measures, and co-generation.  SFPUC staff claims a debt capacity of $200M for localization even at year 2.5. In our view, this is a policy matter - it just a question of how much city leaders will authorize in H Bonds to deliver on the true promise of CCA to accelerate localization.

I responded to the news by saying that while staff mentioned a lesser investment capacity of $200M, this is a start. Now the Board of Supervisors and SFPUC Commission may consider providing guidance to accelerate offering service citywide to any eligible resident or business, in order to raise more revenue and increase debt-carrying capacity.  Mentioning $200M  of H Bond carrying capacity and starting Buildout at launch indicates staff have internalized the need to make localization the integral focus of CleanPowerSF - unlike in Marin and other CCAs, where the focus was more on Renewable Energy Credits, with the supplier (Shell) more in control. Getting it right from the start – which is launching the In-City Buildout from day one – is the key to achieving real, scaled change with CleanPowerSF. From Local Power’s perspective, this is a welcome shift on part of CCA Director Malcolm, and vindicates the work my company did for the City even though our recommendations may have seemed controversial to some staff members when we submitted and presented to the SFPUC Commission and Rate Fairness Board, but not yet at the Board of Supervisors, which under the Charter must authorize H Bonds by ordinance.

The City's renewed focus on the in-city build-out from day one, is an auspicious starting point on the scale that is needed for CCA to be realized.  Locally generated clean power on a City-wide scale is a new kind of power which departs from the highly centralized model of traditional utilities. Energy localization - local ownership, local renewable generation and energy efficiency, means that CleanPowerSF will take a behind-the-meter approach to energy service, and this is the essential leap required to stop imitating conventional supply side utilities.  The model also establishes local control, community energy security and permanent energy independence – unlike strictly green supply products that “monetize” benefits to other parties but do not change physical supply.

Community Choice Aggregation has exploded around the country over the past two years, now resulting in some 1200 cities across the country pursuing the aggregation strategy as a means to dramatically reduce greenhouse gas emissions with little to no impact on rates.  Local Power Inc. started this movement and has worked tirelessly for two decades to realize its potential as a game-changer to mainstream decentralized, customer-owned renewable technologies.

SFPUC staff and commissioners’ statements include the following related changes:
  • Most importantly, the In-City Buildout will begin at program launch rather than waiting until later. SFPUC predicts the CCA revenue alone will provide a $200M bonding capacity over 2.5 years. Staff are preparing an In-City Buildout map. 
  • Accordingly, SFPUC announced that the GoSolar program to be integrated as a component of CleanPowerSF, bringing financing for customers into the service’s business model. SFPUC assures that In-City Buildout funds are assured, and that the program has headroom for reducing the rates further.
  • As Local Power strongly recommended, SFPUC also changed its procurement strategy, both in terms of Renewable Portfolio definition and in terms of getting lower prices from Shell so that surpluses are created for H Bond financing of localization. 
  • SFPUC took our advice to renegotiate lower prices with Shell and use lower cost RECs to reduce cost while focusing investment on In-City Buildout. SFPUC renegotiated with Shell and reduced “not-to-exceed” rates to 11.5 cents, but expects it could set rate comfortable under 11 cents. With PG&E at nine cents CleanPowerSF is within striking distance of a competitive rate. Expected CleanPowerSF bills are now within a couple of dollars of PG&E’s proposed all-REC tariff, and some are calling on the Commission to meet-or-beat the tariff. 
  • SFPUC staff have finally taken LPI's recommendations that SFPUC use city-owned hydroelectric power at Hetch Hetchy to reduce costs and fossil power dependence in the community’s power portfolio. They agreed that to accomplish this they need to build up the agency's transmission scheduling capability internally. LPI also recommended that the SFPUC create new in-house expertise in Behind-the-Meter renewable generation projects, demand response and energy efficiency applications, presently seeking a full-time manager to advance the critical behind-the-meter opportunities identified by LPI in our work for the SFPUC - the very opportunities that unlock decentralized energy as "baseload-quality" infrastructure.  

Thursday, July 11, 2013

California CCA Count Rises to 3 Counties in Bay Area - 10 Counties Statewide

Sonoma County has formed the third Community Choice Aggregation in California, joining some 1200 municipalities nationwide now under CCA service. Sonoma Clean Power, whose local towns have already joined 2/3 of countywide electricity demand, will be larger than Marin Clean Energy to the south, and rival San Francisco's CleanPowerSF program in scale. Like San Francisco, Sonoma is strongly focused on energy localization in addition to greener power - on local green jobs, local business benefits, and augmenting local solar finance.

Now there is a new generation of counties all over California, from Del Norte to San Diego, that are in varying stages of public hearings on CCA. The infographic representation of California counties above is based on actual population size. As you can see, Community Choice has already changed energy in California (and already has nationwide), but is about to become a major part of our electricity system.

We at Local Power are committed to making this movement Real - really focused on a demand-side approach, a change of business model from monopoly supply-centered to demand-centered and customer ownership-centered. With the emergence of localization-focused CCAs, we have achieved a huge leap from the green supply paradigm of the 1990's. This is the unique strategic opportunity of CCA in the U.S. - specifically of demand aggregation as a distinctively demand-centric. San Francisco and Sonoma recognize this opportunity, and we hope you understand how profound and unique an opportunity it is for those who want decisive, meaningful action on climate change, and want it now.

Local Power is proud to have played the part we have in shaping the progressive vision of the CCAs in Sonoma and San Francisco, and look forward to working with local officials in California, Illinois, Ohio, Massachusetts, and New Jersey - states where CCAs already serve 5% of the U.S. population. We feel that Community Choice has now earned the title of a national movement, and offers activists, communities, and policymakers in all states an unprecedented chance to achieve the kind of concerted effort and policy alignment that American was once known for - and the power of local government, more than any other public or private, to transform markets and build publicly needed infrastructure.

Wednesday, September 19, 2012

With San Francisco, a Whole New Environment in California Energy

The past two years have yielded a huge expansion of Community Choice Aggregation (CCA) from just a handful of CCAs in a couple of states into a national phenomenon including major cities like Cincinnati, Chicagoland, and  800 U.S. municipalities now under CCA service. The movement Local Power started has received a profound shot in the arm by recent approval to launch San Francisco's green power program, CleanPowerSF, in which Local Power has been deeply involved for over a decade and prepared many of the elements of the program. This is a long-awaited launch of a program that will have a profound impact on not just the growing California CCA movement but at the national energy policy level. San Francisco will provide intellectual leadership for a growing number of cities that see the logic not just of aggregation, but solar & efficiency finance, and green jobs.

San Francisco's ordinance to launch CleanPowerSF power service in Spring of 2013 also provides for the issuance of Requests for Proposals or RFPs - solicitations to developers of solar, wind, other renewable energy, energy efficiency, and other green technologies for rollout in San Francisco in the near-term (small footprint, easy to permit), medium-term larger projects, and long-term major projects requiring exhaustive state environmental permits. The In City RE/EE rollout will install a portfolio each year based on a financial model, deployment report and solicitation documents Local Power is now preparing for the San Francisco Public Utilities Commission, which operates CleanPowerSF.

An already vibrant movement for greener, more local power in states constituting 25% of the U.S. electricity market is now underway not only in Marin County, but also San Francisco, with dozens of local governments not far behind. Focused on scaled energy localization to make their community not just renewable but locally powered and customer-owned, CleanPowerSF starts with a small amount of power from a global conventional power provider. Our task is to advise the City on how the SFPUC may operate and control wholesale power procurement planned with decentralized demand reduction, in order to achieve a smooth citywide transition to local green power.

CleanPowerSF starts with a 100% renewable power service for a small initial group of early adopters (all residential 30 MW - less than 10% of the aggregated private sector), which will be followed by construction of a new, local, renewable infrastructure to power the CCA, while phasing in commercial customers and remaining residential customers citywide over the next couple of years.

Part of this focus is carbon. The San Francisco Public Utilities Commission's General Manager Ed Harrington spoke eloquently when he remarked to Supervisors that just Phase I of the CCA program (less than 10% of customers enrolled) will provide ten times the greenhouse gas reductions of all City policies of the past ten years combined, at a tiny fraction of the cost. But another rising criterion for municipalities is how to deliver green jobs today - the opportunity to get local jobs because the power generation is being brought to smaller local renewable developments. Localization creates local jobs because smaller companies can win this work, and local labor can be trained and prepared to work for these companies building here in the community.

Many other California communities are seeing green when they consider energy localization - not just global carbon reductions like CleanPowerSF or Marin Clean Energy on the other side of the Golden Gate. It is the green of monthly utility bill dollars not leaving the city or county. PG&E has claimed it is a "local company" compared to Shell North America. But it cannot compare itself to the city of San Francisco, which controls this program and intends to localize its energy supply using its solar "H" bond authority, both to build city-owned plants and to offer financing so San Francisco residents and businesses. This is localism in the true sense - not greenness defined by the logo or corporate identity of a wholesale power supplier like Green Mountain Energy, but greenness defined by  municipal financing, localization, and reducing our dependence on these companies through fundamental change.

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