Power Play

PG&E cuts into the savings promised by Sonoma Clean Power

Something looked amiss to Santa Rosa resident Ethan Wilde as he scanned his first electricity bill of the new year.

Wilde is one of thousands of Sonoma County residents who recently switched his power company from the investor-owned utility Pacific Gas & Electric to Sonoma Clean Power (SCP), the local power company formed out of a national push toward what’s called “community choice aggregation” models of greener, more localized energy generation.

But PG&E is still responsible for the transmission of electricity in the county. Wilde, for one, would like to pull the plug on that arrangement. PG&E transmission charges showed up as a $136 “delivery charge.”

This was the first bill Wilde got as a new SCP customer, and it seemed out of whack with what Wilde had been paying: his total bill from the previous month had been $155, when he was still with PG&E for generation and transmission of electricity.

Curiously, PG&E sent the transmission part of the bill separate from the SCP generation bill of $63.84, even though they covered the same time period.

The PG&E delivery bill was dated Feb. 4; the SCP bill for the same period was dated Jan. 13. They both roughly covered his December usage. This was confusing to Wilde, and to the SCP employees he showed it to. “They thought it was very strange that they were splitting the charges across two bills.”

None can deny that SCP is fulfilling its mission to provide power that’s cheaper and cleaner than PG&E. Wilde says his bill is cheaper under SCP. But it could be cheaper still, says SCP CEO Geof Syphers—were it not for PG&E.

Even as SCP customers are seeing their bills reduced by between 6 and 14 percent, “it’s frustrating that PG&E is raising their rates that much when wholesale markets are actually down,” says Syphers.

The utility giant is delivering electricity to SCP ratepayers and remains the “provider of last resort.”

While paying for the transmission of electricty is unavoidable, CCA supporters would rather pay their local utility than PG&E. Beyond that, critics of PG&E point to other charges utility customers feel are less justified—and less visible.

Some of the promised SCP savings to ratepayers are being absorbed by PG&E, thanks in part to actions taken by the California Public Utilities Commission. (Commission president Michael Peevey was forced to resign in January after his cozy relationship with PG&E was revealed in a massive email trove.)

As he was scanning his bill, Wilde paused over the line item for the “power charge indifference adjustment,” or PCIA. It’s not a big charge, about $9, but it’s a persistent one that the CPUC re-upped in October on behalf of PG&E.

Wilde called SCP and was told the PCIA was a fee PG&E charged customers who had jumped ship to SCP, and is based on prior contracts it had signed on their behalf.

Syphers says the issue with the PCIA isn’t the propriety of it, but the duration. It’s one thing to recoup charges—especially when the state told PG&E to enter into the contracts—but the utility has foisted up to 20 years’ worth of charges onto ratepayers, depending on the length of a procurement contract associated with a particular meter.

“The big debate is over whether [the charges] should phase out as those contracts start ending,” says Syphers.

Critics say PG&E could end the PCIA through better forecasting its future energy needs—and engage in a good-faith forecasting of the rapid growth of CCAs in the state while they are at it.

Jeremy Waen is a regulatory analyst for Marin Clean Power, the other local CCA that’s grappling with PG&E’s presence in the new power mix. That PG&E could possibly charge a fee to a customer for 20 years of power it will never deliver, he says, “is mind-boggling.”

The company, says Waen, should do a better job of estimating its future procurements, “so they are not buying excessive amounts of energy.”

Marin Clean Energy expanded its service into Napa County in February, he says, and PG&E could “shift contracts and supplies so they are bringing less energy on.” It hasn’t done so.

There’s another part of Wilde’s power bill that PG&E has its thumb on, but it doesn’t show up in the fine print: charges associated with the cost allocation mechanism, or CAM.

This charge is to ensure that there is sufficient capacity in the power grid to account for fluctuations or emergencies. The CAM is a legacy of past energy crises in the state, and critics say it needs to go.

But the state has decreed that PG&E is the so-called energy provider of last resort. As such, “our resources are not counted by the CPUC’s planning process,” says Waen. That restricts the ability of SCP and MCE to build-in extra capacity into their systems for emergencies or fluctuations. “We’re forced to buy the capacity that the utilities are buying on our behalf,” says Waen.

This arrangement cripples any CCA’s ability to procure extra capacity on its own, says Waen, since the local CCA is compelled to rely on electricity generated by PG&E. “It cuts down on our ability to procure resources for our own customer base,” he says, “and on our ability to have autonomy over the procurement.”

In other words, this dynamic stymies exactly the innovation that SCP ratepayers had hoped for when they signed on to this far-reaching plan for locally controlled and created energy.

“What could be possible with changes to the CAM is that we could have the ability to build combined heat and power units within Sonoma County,” says Syphers, who adds that the effects would include economic stimulus, the creation of local jobs and other benefits.

“We would like to be localizing power sources and making them as clean as we can,” says Syphers.

But under the CAM? “We’re compelled to not do that—that’s the situation today.”

Waen notes that persistence of the PCIA and the CAM indicate what PG&E would like ratepayers to believe—that these CCAs aren’t as reliable as PG&E, and no matter what, the big power company will be there for you.

Yet Marin Clean Energy doesn’t plan on going anywhere soon, says Waen, except to expand into Napa.

Furthermore, Syphers notes that the nascent CCAs in the North Bay are the tip of a growing CCA movement stateside. Sacramento lawmakers are getting used to the idea, he says, that the CCAs weren’t created to destroy a monopoly, but to complement it and create savings for ratepayers.

Syphers points to a recent comment from a CPUC official that broached the possibility that the future of power in California may be the decoupled generation and transmission dynamic at play in the local CCAs.

The best way to ensure that PG&E doesn’t ride herd over the state regulators charged to protect ratepayers?

“Good oversight at the CPUC,” says Syphers, “and more CCAs, so that we have more people watching what happens over there—so that we make sure our customers’ needs are being taken care of.”

PG&E did not get back to the Bohemian in time for our deadline.

Sonoma County Library