Contract with Shell means Marin Clean Energy can power ahead...

http://www.pacificsun.com/news/story.php?story_id=1556
by Peter Seidman
Pacific Gas & Electric used get-tough tactics right up to the vote last week that put a Marin Clean Energy stamp on a contract--which dumps the utility and goes with Shell Energy North America--to produce renewable energy for Marin.
"This is a very momentous occasion," said Charles McGlashan, president of the Marin Energy Authority board, right before the board voted to approve a five-year contract with Shell Energy, a subsidiary of Royal Dutch Shell. McGlashan, the county supervisor who has spearheaded the effort to start a local power plan, voiced concerns echoed by others that PG&E plans to continue a vigorous campaign against Marin Clean Energy. "I think it's fair to say that the next five months are going to feel just as hard as the last seven years have been. And so with great soberness and a deep sense of commitment," McGlashan called for the vote.
As an example of that "vigorous campaign," local-power proponents point to the response MCE had to take when critics suggested its renewable energy plan would actually produce more greenhouse gases than PG&E. Greg Stepanicich, MCE's general counsel, told board members that rather than continuing the dispute, the contract includes an "iron-clad guarantee" that prevents "the greenhouse gas emissions of Marin Clean Energy from ever exceeding those of PG&E, and we still expect they will be much better and in no case will they be worse."
If, in a given year, MCE electricity produces more carbon emissions than PG&E, a 90-day period will kick in during which MCE must purchase "environmental products" such as carbon offsets to balance any excess carbon production. Stepanicich says MCE does not expect to need the offset provision, but it's in the contract as "a foolproof guarantee."
Initially, critics raised objections over contracting with Shell. Its parent company is no model of environmental friendliness, opponents say, and Marin would be better served using another company. But, proponents counter, Shell North America does have a history that includes clean energy, and using a large player like Shell makes sense in the opening years of the local power plan. Shell offers stability in a complex marketplace. And PG&E also gets electricity from Shell, so that argument is moot. In addition, the five-year deal is a bridge contract that takes MCE through the start-up phase to a time when it can embark on its long-term goal: local renewable energy production.
Critics say there's not much chance Marin has the ability to produce local renewable power, given its geography, demographics and land-use philosophy. Not so, says McGlashan, who points to a 2007 MCE study that shows "we have eight times the renewable power potential inside our borders than we need during peak loads. Just on solar resources on commercial and municipal rooftops, we have more solar capability than we need. Obviously, you don't get every one of those solar projects to work, but the coverage ratio of 5-to-1, potential versus need, lends confidence that we can meet or beat our business plan in terms of our ability to develop local resources."
The attack and counterattack ate up months as MCE officials fought charge after charge. They could have used that time lining up money for a bridge loan until the agency can start gathering money from ratepayers, says McGlashan. Instead, the unrelenting attacks from PG&E and MCE critics forced MCE to go back to cities and towns that already had decided to join the Marin Energy Authority joint powers agency but were taking a second look.
Using similar tactics, PG&E successfully stalled a local power plan at the San Joaquin Valley Power Authority. The utility spent considerable effort, including legal threats, trying to peel away members of that agency when it began its quest for local power.
PG&E brought the lawsuit threat to Marin as well. When MCE determined it needed a $1.7 million guarantee for the bridge loan, a plan popped up that included asking the Marin Municipal Water District (the largest electricity customer in the county) to join the county in co-signing the loan.
PG&E wasted little time threatening legal action if the water district directors agreed to co-sign, citing the action would violate state rules governing financing procedure. Rather than risk a court battle, district directors declined. That left the county agreeing to co-sign for part of the loan, leaving $750,000 still needing a co-signer. Four Marin residents stepped in after looking at the business end of the MCE plan. Harvey "Skip" Berg and his wife of Sausalito, Gwendolyn Grace of Tiburon and Effie Westervelt of Mill Valley are the financial angels.
In a one-two punch, PG&E was busy hinting that even if MCE got its bridge loan, and even if the board approved the contract with Shell, the utility might (hint, hint) refuse to deliver the renewable power that MCE contracts for with Shell. That kind of maneuver has thrown doubt on the MCE path for seven years.
The doubt found its way into the recent grand jury report that called for MCE to "pull the plug." Even though virtually all of the points of contention contained in the report met credible refutation, the echoes of the charges reverberate. Grand jurors maintain they investigated MCE honestly and without bias. That probably is true, but the inaccuracies first introduced by PG&E marketing operatives (former Assemblyman Joe Nation and former Supervisor Gary Giacomini) recur throughout the report; repeated enough, the misconceptions are taken to be true.
Late last week, 11 former Mill Valley mayors drafted a letter to the Mill Valley City Council, which is scheduled to discuss a response to the grand jury report Feb. 23. The 11 mayors want the council to withdraw from MCE. Their reasons are couched in the wordage of the grand jury report. The former mayors also cite the county treasurer, who came out against MCE as a risky financial proposition. But, say MCE proponents, the treasurer's opinion is based on the same grand jury report that contains the inaccuracies and partial picture of MCE.
Ross went through a similar bout of angst and withdrew from MCE, joining three other municipalities that have not joined: Novato, Corte Madera and Larkspur.
MCE has stressed that a firewall will protect the finances of the cities and towns in MCE if anything should go wrong. And ratepayers face virtually no downside, according to Dawn Weisz, the county sustainability planner and MCE interim director. If the local power agency fails to produce, ratepayers automatically revert to PG&E. An MCE bond will cover conversion costs at no cost to ratepayers. In addition, Weisz and others point out that local power plans already are in successful operation in Massachusetts and Ohio, and here in California, 25 percent of residents receive electricity through municipal utilities at rates lower than PG&E's.
The sustainability groups in Marin that support MCE, along with McGlashan, know that change can lead to reservation and reluctance. Last week, "The Sustainables" met to discuss strategy. Kiki La Porta of Sustainable Marin says they are tapping the marketing expertise of members to help MCE mount a campaign to go up against an all-out blitz they expect from PG&E.
Until now, MCE has been handcuffed. It could not actively market or proselytize during the lead-up to the contract signing. Now, however, MCE is free to, in the words of Weisz, "talk about what we can do."
The Shell contract guarantees at least 25 percent renewable electricity at rates that do not exceed PG&E's. And for a surcharge in the neighborhood of $3 to $6, residents in cities that joined MCE can receive 100 percent of their electricity generated from renewable sources. Resident can "opt up" to 100 percent green now, even if they are not among the customers in the first phase of MCE implementation, which has just begun. Residents will receive notices explaining the options. MCE has signed a contract with Sempra Energy to handle data and telephone calls. A link to the information is on the MCE website ([marincleanenergy.info marincleanenergy.info]).
PG&E has its own website, of course, and in all probability will be sending out a blizzard of mailers, just part of the strategy the utility is using to block MCE. In addition to the threat to file suit against the water district, the pending threat of a refusal to transmit Shell power to MCE, and the pending threat to file suit against MCE for failing to comply with the California Environmental Quality Act (CEQUA), the utility has qualified Prop. 16 for the June ballot. If passed, it would require a two-thirds vote before a local power agency could produce electricity. The wording of the ballot is so vague, virtually no one can say definitively whether it will affect agencies like MCE that already have formed and are signing up new customers. Weisz says the official MCE position is that the proposition will not affect MCE because the agency has formed and the contract is signed. Any potential new members, such as the cities not in MCE in June, however, would be required to get that two-thirds vote, a hurdle local power advocates say clearly is intended to block local power agencies from luring away PG&E customers.
While it could block new customers for the light-green 25 percent option, the proposition includes an exemption that will allow customers to sign up for a 100 percent green option even if the proposition passes--or before the proposition goes to a vote. The more "deep green" customers MCE garners, the better the outcome for MCE regardless of the proposition.
According to Stepanicich, the CEQUA charge carries little weight, and the California Public Utilities Commission (CPUC) probably will reject that charge. The threat of refusing to deliver power, however, is another matter. MCE has taken its case to the commission. "PG&E is in flagrant disregard of the law by illegally refusing that which the Legislature made clear it must do," says McGlashan.
In 2005, a CPUC decision relating to local power programs states utilities must "cooperate fully with any community choice aggregators (local power agencies) that investigate, pursue, or implement community choice aggregation programs."
PG&E maintains that it cannot sign a service agreement "with an entity that we believe is not complying with community choice aggregation tariffs and the law and, at this time, we are working through legal issues we have" with the MCE implementation program, says Katie Romans, PG&E spokesperson. Romans says the utility is "not actively blocking" MCE.
But at the meeting during which Marin supervisors voted to approve the MCE bridge loan, the CPUC's Stephen Roscow gave a different impression. He said that PG&E had told the staff of the CPUC local-power division that the utility could possibly refuse to transmit Shell electricity. "We have told them they are not allowed to make that threat," said Roscow, who is program and project supervisor at the CPUC energy division. "AB117 doesn't give PG&E a role in determining whether the implementation plan is workable. It's the commission's role to determine whether the (implementation) plan is complete."
Roscow says the utility is talking about protesting the commission's approval of the MCE plan. He also says the PUC energy division staff has "escalated" the issue to the PUC executive director because PG&E says it "will answer to the commission but not to commission staff."
The utility may be taking that position because it detects a tough audience among the PUC staff. PUC administrators have heard from energy division staff that, according to one knowledgeable source, "a reasonable case could be made that PG&E is acting in violation of the 2005 commission order that implemented the (local power) program, and the law (AB117)" that created legal framework for local-power agencies in the state.
San Francisco and Marin both are pursuing the issues and are working to persuade the commission that PG&E is acting in violation of AB117.
"The blizzard of misinformation headed our way is very daunting," says McGlashan. "If this program fails, we will know PG&E killed it. But I am hopeful and optimistic MCE will survive."
Many Marin residents, rather than doing the hard work of digging in and combing through the facts, are too easily swayed by the misinformation campaign, say MCE proponents. They also, in the words of Barbara George of Women's Energy Matters, "too easily put on and take off their green coats."
==I Contact the writer at [email protected].==

Find this article at:
http://www.pacificsun.com/news/story.php?story_id=1556
____________________________