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11.23.11

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SHINE A LIGHT: Paul Fenn asserts that public power rates in Sonoma County wouldn't have to rise $4–$10 a month.

The Bottom Line

Green and cheap energy: Can Sonoma County have both?

By Darwin Bond-Graham

According to the recently released feasibility study for establishing community choice aggregation in Sonoma County—a public power program presented to the board of supervisors on Oct. 18 under the name Sonoma Clean Power—green energy will come at a cost, about $4 to $10 added to the average consumer's monthly bill.

But Paul Fenn thinks otherwise. Fenn, a widely respected energy consultant who wrote the 2002 California law that enables cities and counties to aggregate ratepayers, purchase energy on the open market and develop their own sources of local power, says the goals of green power and lower rates are not at odds. In fact, says Fenn, the faster the county moves toward local green energy production and retooling its buildings and infrastructure, the faster bills will drop.

"The key problem is that they used these pre-existing rate models," says Fenn about the Sonoma County feasibility study's methods. "Community choice aggregation [CCA] is a new structure. It's not a private utility. It's not deregulation. It's not a municipal utility."

Dalessi Management Consulting, the company contracted to conduct the study for the Sonoma County Water Agency, came to its conclusions using a model that "excluded demand-side technologies from their portfolio design," says Fenn. "It's so harmful to the current economics of the model if you do that. It's sort of like picking the cheapest item out of your grocery bag so that the average cost of everything remaining goes up tremendously. Efficiency, broadly defined, is the radical economic opportunity in energy. If you exclude it, it makes localization and CCA look expensive."

Even so, Fenn says he is pleased with the reception CCA has gotten in Sonoma County. Indeed, the board of supervisors enthusiastically embraced the study's findings. Some board members and water agency staff also seem aware that green energy and cheaper bills are not mutually exclusive.

Tucked into the preface of the feasibility study is a note to further investigate the exact point Fenn is making. The report tasks stakeholders with determining "whether varying the mix of power resources could reduce CCA power costs, while still providing greenhouse gas-reduction benefits" and "whether the addition of a significant energy efficiency component could result in a decrease in the estimated CCA program rates."

Fenn and his colleagues at Local Power Inc. have been helping to establish community choice aggregation programs for over a decade. Since the 2002 California law, his company has worked behind the scenes on San Francisco's nascent CCA, CleanPowerSF, the Marin Energy Authority and in the battle to repel PG&E's legislative attack against CCAs in 2010 with Proposition 16. Experts at Local Power Inc. have also contributed to Sonoma County's push to establish a CCA.

To understand how Sonoma Clean Power can provide green energy and cheaper bills, it's instructive to look south, to the state's first CCA, Marin Energy Authority. Although MEA has provided a greener mix to consumers, its average bills are slightly higher than PG&E's. What went wrong?

Charles Schwartz, a colleague of Fenn's at Local Power Inc., says the biggest problem is MEA's reliance on purchasing green power on the open market through Shell Energy North America, a subsidiary of the oil giant. According to Schwartz, MEA failed to localize energy production, choosing instead to buy green electricity from distant power plants.

Fenn says it's a matter of renting vs. owning. "Green power on the wholesale market is sold at a premium. If you're going to go out on the market and buy power from a plant that somebody else owns, you're going to have to pay for the renewable energy credits." The extra costs derive partly from the companies that own the landfill gas, wind and solar plants exporting energy to Marin from the interior of California and to the middleman, Shell.

"Sonoma, to its credit, is focusing on building resources," explains Fenn. "We worked pretty hard getting that to the center of the table, rather than this 'rent first and own later' approach," explains Fenn. When Sonoma County's CCA finally rolls out, Fenn and others think rates will be lower than the feasibility study estimates, largely because the county's leaders, business community and activists are committed to a vibrant, local green model.

"If they had just scoped the model the way we scoped it," says Fenn of the study, "you don't have to come out saying there's a premium. You don't have to give the argument to PG&E that this is going to raise your rates."







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