Utility Warned About Violating Rules on 'Community Choice'

PHOTO CREDIT: SUNPLUGGERS.COM
Point Reyes National Seashore is a major attraction in California's
Marin County. The upscale county and seven cities and towns have
established a community choice aggregation program to try to obtain
more renewable energy, including solar and wind.

By Michael Balchunas

Published May 4, 2010

The gathering battle over community choice aggregation in California took an unexpected turn Monday when the state Public Utilities Commission accused the utility Pacific Gas & Electric Co. of violating rules and ordered it to "immediately cease such actions."

Community choice aggregation is an energy-supply approach in which political jurisdictions such as cities or counties "aggregate" a group of customers to buy electricity from a different supplier than the one already serving their area, typically a private utility.

In many cases, the primary goal in establishing such programs is to significantly increase the percentage of renewable electricity that is supplied to consumers. At present, the amount of renewable energy available is limited, meaning the "supply" may come from the electricity provider's purchase of credits awarded to producers of renewable energy.

In December 2008, upscale Marin County and seven cities and towns in the county north of San Francisco established the Marin Energy Authority as a community choice aggregator, in part to "promote the development 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."

PHOTO CREDIT: SUNPLUGGERS.COM
Marin County lies north of San Francisco
across the Golden Gate Bridge.

The California Public Utilities Commission confirmed the Marin Energy Authority as an aggregator in April 2010.

Within the aggregation area, state law allows individual electricity consumers to either join the new service provider or to "opt out" and remain with the existing supplier, in this case PG&E. Pacific Gas & Electric is one of the nation's largest utilities as ranked by the number of customers served, according to federal statistics.

In a news release, the CPUC said Monday that it had notified PG&E "that certain recent actions by the utility in Marin County, Calif., related to Community Choice Aggregation have violated tariffs and rules and directed PG&E to immediately cease such actions."

The commission said PG&E must stop "telephoning customers to ask them to opt out and then transferring the call that PG&E initiated to a PG&E customer service representative." It said that customers electing to opt out of electricity service from the Marin Energy Authority must do so "only by the methods included in the customer notification provided by MEA – by the customer calling a phone number or visiting a website. PG&E cannot obtain an opt-out by using an opt-out form PG&E includes in a newspaper advertisement or by visiting a customer's residence and asking the customer to provide an oral or written opt-out during the visit."

In addition, the CPUC said, "PG&E may no longer send mailers that have the appearance of an official opt-out notice to its customers in Marin County for the purpose of encouraging these customers to opt out of the CCA program established by MEA. These mailers are likely to create unnecessary customer confusion and therefore violate the statutory requirement that PG&E cooperate fully with any community choice aggregators."

PG&E has been directed to meet with the commission's Energy Division staff to identify customers who have opted out of Marin Energy Authority service "in the manners specified above and develop a way of informing these customers that their opt-outs are invalid."

The first phase of the Marin program, called Marin Clean Energy, is scheduled to begin Friday, May 7, with about 7,500 customers, before being expanded to as many as 71,000 customers in 2011.

The immediate dispute involves contact with customers, but there are deeper issues as well.

The commission said it has "heard from members of the public and MEA that although PG&E has a statutory obligation to cooperate with community choice aggregators, instead the utility has been attempting to thwart MEA's efforts to launch the new CCA."

Paul Clanon, executive director of the utilities commission, said in the news release: "PG&E must understand its obligations in communicating with its customers in Marin County and other jurisdictions that may be considering or implementing a community choice aggregation program. I expect PG&E to cooperate fully with the directives given today and comply with the community choice aggregation law in California."

After the commission's letter to PG&E and its news release were issued, Andrew Souvall, a spokesman for the utility company, said: "We are currently reviewing the letter from the CPUC and will respond in the coming days. The CPUC has already affirmed our ability to communicate with our customers who are included within the Marin Energy Authority Phase I. We will continue to work with the CPUC to address the concerns raised in its letter."

Although Marin Clean Energy urges the increased adoption of renewable energy, PG&E's service territory has already been fertile ground for the growth of solar photovoltaics in the United States.

More households have installed solar-electric systems in Pacific Gas & Electric's service area than in any other utility district in the nation. In April, the utilities commission approved a five-year plan by PG&E to develop up to 500 megawatts of new solar photovoltaic generation capacity in its service area. The utility also has agreed to buy hundreds of additional megawatts of production capacity from a solar-thermal power plant yet to be approved in the Mojave Desert.

More households
have installed
solar-electric
systems in
Pacific Gas &
Electric's service
area than in any
other utility
district in
the nation.

The Marin Clean Energy program would buy electricity from Shell Energy North America, and Pacific Gas & Electric Co.'s distribution network would be used to transmit it to the Marin program's customers. PG&E would continue to own and maintain the distribution system and would handle meter reading and billing.

Marin Clean Energy says on its website that its program would double the amount of renewable energy used by customers, and that its customers also would be able to choose 100 percent renewable energy at a slightly higher price.

Shell Energy North America, part of Royal Dutch/Shell Group, is primarily a natural-gas producer. Natural gas is a significant energy source for conventional power plants serving California customers. Shell Energy also has eight wind-energy operations in the United States, including two relatively small wind-turbine sites in the Palm Springs area in Southern California.

Shell was an early participant in the development of solar photovoltaic equipment, but has since left that business in the United States. However, Shell is a 50 percent owner of Showa Shell Sekiyu K.K., a Japan-based company that is planning a major foray into the manufacturing of thin-film solar photovoltaic equipment. A Showa Shell subsidiary, Solar Frontier, was recently reported to be establishing a sales office in Northern California.

Shell Energy North America also is a participant in the market for renewable-energy credits or certificates, called RECs. These instruments represent the clean-energy attributes of a solar array or other renewable-energy installation. A solar owner can use the electricity generated by an array but sell the "credit" for it in the marketplace. Utilities or power providers such as Shell Energy may buy such credits, which can be an important source of revenue for solar owners and can spur solar adoption.

Utilities may buy RECs to help them meet requirements that they produce a certain percentage of electricity from renewable sources. The entry of community choice aggregators into the REC market could at least temporarily increase prices for credits or certificates by raising the number of buyers competing for a limited pool of RECs, until the supply rose.

How and to
what extent
the controversy
may affect
mom-and-pop
solar owners
is still unclear.

Pacific Gas & Electric Co. has become a focus of nationwide controversy by financially supporting a California ballot measure that would require a two-thirds vote by counties or communities to adopt community choice aggregation programs.

The utility, on its website, advises customers considering community choice aggregation: "One of the primary impacts is what you may be charged for electricity. The California Public Utilities Commission – the primary state agency that regulates PG&E – does not control CCA program rates, does not oversee CCA program reliability and will not act to resolve complaints by customers against CCA programs. CCA programs may incur higher or lower levels of costs in providing power than PG&E. The result may be an increase or decrease in a customer’s overall electricity bill. Customers may also receive a 'less clean' or 'cleaner' supply of power than provided by PG&E."

Marin Clean Energy, on its website, stresses that "the Marin Clean Energy Program supplies nearly twice the renewable energy content that you currently receive – at the same rates you currently pay."

How and to what extent the controversy may affect mom-and-pop solar owners is still unclear. Pacific Gas & Electric says that its solar programs would still be available to CCA participants. However, some electricity rate plans that are offered to PG&E customers would not be available to Marin Clean Energy customers.

For solar owners, time-of-use rate plans may become increasingly important. Solar PV systems typically produce electricity during or near peak demand periods, when the cost of electricity is highest. Solar owners can benefit by transmitting electricity into the grid during peak periods, and being credited for it at high prices, while shifting most of their own use to off-peak hours when prices are lower.

The states of Massachusetts, Ohio, New Jersey and Rhode Island also offer community aggregation programs for electricity.

The California Public Utilities Commission said it has the authority to levy fines if PG&E should violate the state law allowing community choice aggregation. Its news release also said it expects to take action May 20 on a request by the city and county of San Francisco to "further restrict activities by PG&E and other utilities in fighting against CCAs."