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• Community Choice Implementation Activities Temporarily Suspended
• PG&E Uses Initiative Process to Undermine Competition
• KRCD Suspends Power Plant Licensing Process
• Marin Communities Receive Strong Response to Energy Solicitation

Community Choice Implementation Activities Temporarily Suspended

At the regular board meeting of the San Joaquin Valley Power Authority held on June 25, authority directors voted to temporarily suspend activities to implement Community Choice, an innovative energy program developed to benefit central San Joaquin Valley businesses and residents.

The San Joaquin Valley Power Authority (SJVPA), which members include Kings County and the cities of Clovis, Corcoran, Dinuba, Kerman, Kingsburg, Lemoore, Hanford, Parlier, Reedley, Selma and Sanger, have been working together over the past several years to establish a Community Choice program for the region. For valley residents and businesses within the boundaries of the member municipalities, this means they would have the chance to choose between remaining full customers of Pacific Gas and Electric Company (PG&E) or Southern California Edison (SCE) or enrolling in the Community Choice program and receiving electrical generation from the San Joaquin Valley Power Authority at proposed lower and more stable rates.

In recent months, SJVPA General Manager David Orth has been negotiating terms for an energy contract with several potential energy service providers to supply energy to the program at a rate lower than PG&E and SCE. It was reported by Orth at the June 25 meeting that several issues hinder the development of final terms for a contract.

"We are not immune to the market conditions that are affecting the state and national economy," stated Orth. Along with the tightness in the credit market and the volatility in energy prices, other concerns include the uncertainty with California's energy regulations including the increase from 20 to 33 percent of renewable energy that must be provided to customers and the need to contract for additional energy to meet resource adequacy requirements. "We will continue to monitor these issues for changes that will make conditions more favorable for implementation of Community Choice," said Orth.

In addition, the SJVPA has experienced strong opposition from PG&E, which is marketing against the program in order to retain customers. "For the last few years, PG&E has continually placed roadblocks in front of our program in an attempt to stop us from implementing Community Choice and ultimately not providing residents and businesses the opportunity to have a choice about who will provide them electrical energy," said Ron Manfredi, city manager of Kerman and chair of the San Joaquin Valley Power Authority. "Considering the hurdles that we are currently facing, it is not possible for the San Joaquin Valley Power Authority to move forward with Community Choice at this time."

Orth acknowledged that the San Joaquin Valley Power Authority has been out in front in implementing Community Choice. "We have paved new ground," he stated. "Many of the Community Choice programs around the state have benefitted from the progress we have made in our program. We will continue to support their efforts to provide choice to the residents in the communities of Marin, San Francisco, East Bay and others."

It was noted by Manfredi that there are other opportunities for the San Joaquin Valley Power Authority to achieve its objectives of regional collaboration, investment in local infrastructure and price discount and stability. "During the suspension of implementation activities, we can still make a positive difference regarding the energy needs and uses for the residents and businesses in this region," he said.

The SJVPA directors supported the recommendation by Orth to continue to pursue activities that meet their objectives including continuing the investigation of rooftop solar projects on municipal facilities and pursuing public goods funds to implement energy efficiency projects in the region.

PG&E Uses Initiative Process to Undermine Competition

The California Taxpayers Right to Vote Act initiative, supported by PG&E, was filed in May with the attorney general's office. The proposed initiative will prevent local governments from creating indebtedness or liability to implement a community choice aggregation program and giving customers choice about who will supply them energy without first conducting an election that requires a two-thirds super-majority to pass.

In a letter written to the attorney general's office from the San Joaquin Valley Power Authority (SJVPA), General Manager David Orth states that the proposed initiative would seriously undermine and effectively negate the efforts of the SJVPA and other local governments in developing critically needed electric infrastructure projects and greenhouse gas reduction programs for California.

Orth states further that the proposed initiative misuses the cloak of taxpayer protection to create significant burdens on local governments seeking to expand or initiate electric delivery service. More accurately, the proposed initiative really seeks to protect incumbent investor-owned utilities from competition by local governments. The proposed initiative creates numerous questions as to scope and impact on planning, development, finance and implementation of these important projects and programs.

Under the current community choice aggregation law (AB117), customers will have four opportunities to "vote" over a 4-month period if they prefer to stay with PG&E. The choice will be through opt-out notices mailed directly to their homes or businesses.

The SJVPA also requested that the attorney general consider the legality of the proposed initiative and the efficacy of an additional and costly standard upon a narrow sector of local governments, all for the obvious purpose of protecting the incumbent investor-owned utilities.

The attorney general's office is currently reviewing the proposed initiative. It could be placed on the ballot in 2010.

KRCD Suspends Power Plant Licensing Process

In April 2009, KRCD submitted a motion requesting a 6-month suspension of the Community Power Plant licensing process with the California Energy Commission. The suspension will allow KRCD more time to secure real-time emission reduction credits to offset project air emissions.

While working to develop much-needed local generation, KRCD is committed to an air quality strategy that will create net reductions of emissions to the fullest extent possible in the region. The Community Power Plant will use the most advanced air emissions control systems available. The design will result in a project that is one of the lowest emitting power generating facilities in California. Given its combined-cycle configuration and technology, the Community Power Plant will also be efficient at converting its fuel into electricity. This efficiency helps to reduce emissions further.

KRCD has chosen to voluntarily seek and procure new emission reduction credits (ERCs) from the local area. This approach has been discussed with and is supported by the San Joaquin Valley Air Pollution Control District. The use of newly available, local ERCs to the maximum extent possible will result in a net air quality benefit to the local area for such emissions as nitrogen oxides, fine particulate matter and sulfur dioxide.

By law and regulation, the Community Power Plant is required to offset its emissions of pollutants for which the local area is in non-attainment status of either the National Ambient Air Quality Standards or the California Ambient Air Quality Standards. The process through which the Community Power Plant must meet this requirement is the purchase of ERCs.

The air district maintains an inventory of ERCs in the Central Valley, and this ERC bank is used as a starting point for ERC procurement. Owners of existing ERCs are contacted by potential buyers, a contract is negotiated and the ERCs are transferred into the name and account of the new project.

The ERC program allows the use of credits that may have been created and banked years before a new project acquires and applies these ERCs as offsets. Similarly, the location of the ERCs may be at one end of the air basin and the new project may be located at the other end. This flexibility is necessary to allow continued economic activity in the Valley.

As compensation and in order to ensure consistent progress toward improved basin air quality, the air district generally requires that a new project offset considerably more than its actual emissions. The air district requires this type of project identify and show proof of control of any offsets which will be used to mitigate project emissions prior to issuance of their Preliminary Determination of Compliance.

While credits may be purchased from anywhere in the San Joaquin Valley's air basin from Tracy to Bakersfield, KRCD believes real time emission reduction credits can be acquired to offset project emissions, but doing so will require additional review and negotiation between the potential parties.

Marin Communities Receive Strong Response to Energy Solicitation

The Marin Energy Authority (MEA), which includes 8 cities and Marin County, recently received a very strong response with a number of proposals from their solicitation for electric power supply services to serve retail electric customers that will participate in a community choice aggregation program.

MEA will begin reviewing these responses and preparing a bid summary document for discussion at their Technical Advisory Committee and Executive Committee meetings scheduled for mid-August. The results and preliminary recommendations will be presented at the August 20 board meeting.

The purpose of the MEA is to address climate change by reducing energy related greenhouse gas emissions and securing energy supply, price stability, energy efficiencies and local economic and workforce benefits. It is the intent of the MEA to promote the development and use of a wide range of renewable energy sources and energy efficiency programs, including but not limited to solar and wind energy production at competitive rates for customers.

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4886 E. Jensen Ave., Fresno, CA 93725
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www.krcd.org  |  www.communitychoice.info