The Leading Community Energy Aggregator – Episode 19 of Local Energy Rules Podcast

Date: 3 Apr 2014 | posted in: Energy, Energy Self Reliant States, Podcast | 0 Facebooktwitterredditmail

Community choice aggregation describes a situation where a town can become the bulk buyer of electricity on behalf of its residential and small business customers. Such local aggregations serve about 5% of utility customers in Illinois, Ohio, Massachusetts, Rhode Island, and California, but it’s Marin Clean Energy in California that stands above the crowd for their commitment to renewable energy and their nearly decade-long fight to offer service.

Learn more about the struggle for local control of the energy system and its numerous advantages in this interview with Marin Clean Energy Executive Director Dawn Wiesz, recorded via Skype on Feb. 13, 2014.

Dawn Weisz: Well, we’re able to offer competitively priced renewable energy because we have a low operating costs. We are a small and nimble shop here in the community. We procure in a very prudent way, maximizing renewable. Another key factor is that we don’t have shareholder profits.
John Farrell: Over 300 communities in Illinois and dozens more in Ohio, Rhode Island, and Massachusetts, which collectively serve almost 5% of all energy consumers in the US, are buying their electricity in bulk for their residents, often saving these customers millions of dollars per year. But the real test of this concept called community choice aggregation happened in California over the past decade. It was the first state without an existing competitive electricity market to let cities buy power on behalf of their residents. And it was a barn burner from the time the law passed in 2002. It took 10 years for Marin County to overcome the legal and financial opposition from Pacific Gas and Electric to set up the state’s first local aggregation. Here to tell us why this struggle is worthwhile is Dawn Weisz, executive director of Marin Clean Energy. I’m John Farrell, and this is Local Energy Rules,  a Podcast sharing powerful stories of successful local renewable energy and exposing the policy and practical barriers to its expansion. Now, by all accounts, you had a long, hard road to set up Marin Clean Energy. What makes it worth the effort?
Dawn Weisz: Well, it was absolutely worth the effort because we’ve been able to achieve many of the goals that we set out and actually even exceed many of the goals that we set out as far as getting more renewable energy onto the grid and reducing greenhouse gas emissions. And we’ve been able to do that by purchasing more than double the amount of renewable energy that customers were getting before, and offering rates that are competitive and in most cases, lower for customers than what they would have been paying with the incumbent utility.
John Farrell: There was massive opposition from the incumbent Monopoly Pacific Gas and Electric. You know, it took 10 years from when California passed this law that set the stage for communities to take control of their electricity purchases until when Marin Clean Energy became the first successful community to do so. When did you realize you had finally won?
Dawn Weisz: Well, I think we really weren’t sure that we had won until we actually launched service on May 7th, 2010. It was really a down to the wire development that we went through with, you said a lot of opposition from the incumbent utility. They launched a very aggressive marketing campaign with misinformation spread around our community, did a lot of phone banking, encouraging customers to opt out, even telling them their lights might not stay on if they didn’t opt out and stick with the incumbent utility. We had a lot of difficulty on the regulatory front and of course with customer interactions due to the misinformation. And so it was really at the very last moment before we launched service that it looked like we had won. Also, another thing that happened during that time period is that the incumbent utility ran a ballot initiative in the state spending over $45 million to make it difficult or impossible for future efforts like ours to ever succeed in the state by requiring a two-thirds majority vote of the people, before a program like ours could go forward. And so that vote was set for right around the time that we launched. And so not knowing the outcome of that vote made it a risky proposition to be launching a service at that time. Fortunately, the people turned down that proposition and it failed. So that was good news, but it was definitely not until we began serving customers that we knew that we had actually succeeded.
John Farrell: I’m so glad that you mentioned that story of the ballot initiative because it seems to be a common theme that we’ve seen around this notion of, you know, local control over the energy system. You have in Boulder, Colorado, they had a ballot initiative to try to proceed with forming a municipal utility. They are outspent 10 to one by the incumbent Xcel Energy, Although the amount of sheer amount of money was not nearly as much as you had to face with PG&E in California. It’s unfortunate, I think that the fight for these local communities ends up being so much about, you know, the big money of the incumbent versus the will of the people.
Dawn Weisz: Yeah, it’s true. There’s really not a level playing field when a new, a local government program comes in to offer electricity options in a competitive environment where there’s an incumbent monopoly provider, they have brand recognitions, they have an army of lawyers, and they have a lot of inroads to the community that a new entrant doesn’t have. And they’re often able to set the stage for dialogue with information that may or may not be true information. In our case, they used that advantageous position they were in to really take advantage of customers and do what they could to stay for our program. Fortunately, we’ve been able to overcome that and now have a lot to show for it. And the results are speaking loud and clear to the community and we’ve had a lot of participation in the program. About 75% of all the customers in our jurisdiction are now taking power from our program.
John Farrell: You know, speaking of your success, many incumbent utilities like PG&E say that it will be costly or technically challenging or prohibitive or both to offer a high percentage of renewable energy to their customers. How can Marin Clean Energy offer, you know, as I read, a minimum of 50% renewable energy and then an option for a hundred percent renewable for just a penny more per kilowatt hour?
Dawn Weisz: Well, we’re able to offer competitively priced renewable energy because we have a low operating costs. We are a small and nimble shop here in the community. We procure in a very prudent way. We, we are careful about not overspending, but maximizing renewables within our portfolio. Another key factor is that we don’t have shareholder profits to account for. All, any revenue that comes into the agency is used to keep rates low, or to help fund other local programs that benefit the community, like solar rebate programs for low income individuals, energy efficiency programs, electric vehicle charging, that sort of thing. But we were a not for profit government agency, and so, we don’t, you know, there’s a big percentage of revenue that we don’t have to send off to the shareholders, and that benefits us a lot with cost competitiveness.
John Farrell: Now you have, I think a one megawatt solar project that’s at a local airport. But I’d imagine that’s a relatively small portion of the total amount of renewable energy you have, especially with such a high percentage, you know, are there plans to add more local renewable energy in Marin County?
Dawn Weisz: Yes. I’m so glad you asked about that because that’s something that we’re working on right now on multiple fronts. So I’ll tell you a little bit about the different efforts we have going on for what we call local build out. The first is we have a deep green local renewable development fund that’s been created by the customers in our service territory that have chosen the deep green energy product. That’s a 100% renewable energy offering that we offer to customers. And 50% of all of the deep green customer revenue goes into a local renewable development fund to pay for the pre-development costs of local projects that we will build and own within our jurisdiction. We’ve been evaluating sites for our first built and owned project, and it’s looking like the Richmond port is going to be a great location for the first project.

We have a few other locations in mind as well. And so far we have designated about $150,000 for that pre-development fund, which is gonna allow us to put together a project that’s between one and three megawatts in size. We also have a feed in tariff program that allows local developers or land owners to bid in projects to us that are one megawatt in size or smaller. That is the program that the center airport took advantage of. And there are a few others in the works that we expect to be coming through in the next 12 months. So that will be some additional local build out. We also have a project in development through a contract with a counterparty that’ll be building a carport shade structure at a non-profit organization in Nevada, which is in the northern part of our jurisdiction.

There’s a very large employee lot that will be able to build about a megawatt worth of power to shade the vehicles that are parked there. And then last but not least, we are developing a syndicated solar program that will allow customers who want to have tie to a local solar project but can’t put it on their own rooftop to buy into a local project. And we have a program being put together right now that will allow customers to sign up for this program. It’s been done in some other jurisdictions nearby. The Sacramento Municipal Utility District has set up a great model for this type of syndicated solar program, and this will be a third alternative for customers that wanna go beyond just the deep green a hundred percent renewable product and choose a local solar project that they would be purchasing directly from. The neat thing about that program is that customers will likely be able to lock in costs because solar power, once it’s built doesn’t have a fluctuating cost. It’s something you can lock in and, it can keep rates flat over time long into the future because it’s really, a way to unhook from the fluctuating cost of fossil fuels. And we’re really excited about this program because it will allow customers to take advantage of that great benefit with solar.

John Farrell: So there are communities in Illinois, you know, Southern California and elsewhere that are exploring more local control of their electricity system. There are even some in states that don’t have this community choice aggregation capability yet. What’s your one best piece of advice to share with folks in those communities that are looking to have more of this local control and to, you know, be able to pursue more renewable energy that way?
Dawn Weisz: Yeah, well, I think there, there are a few pieces of advice that I would give. Probably the first one is to walk before you run and don’t let the perfect be the enemy of the good. I think that it’s, you know, while we were very eager to have a renewable program offered to all customers right away. We, we started with a small subset of the customer base and phased in the remaining customers after we’d had a year of operational history. We also built a strong team of smart and conscientious folks. And I think that’s really important. You know, building a team that is good at what they do and committed to the process is really a cornerstone of what makes our program successful. And last of all, I think educating and communicating with the community is really important because, the way that energy flows and the way the energy market works is not really commonplace in community discussions. And so being able to explain how it works and explain what the program offerings are is, is really important to make a program successful. So I think that launching this type of program is really a lesson in balancing patients and eagerness so that from a practical standpoint, you can get a program off the ground that’s achieving really big results.
John Farrell: Dawn, I have one other question for you in particular about the opposition that you faced from PG&E and thinking about other states that might try to enact legislation allowing for community choice aggregation, do you think that, given how it finally turned out and how Marin County was finally able to establish its program and other cities in California are now moving ahead, do you think that there’s hope that other communities and other states won’t have to have such a big fight that utilities might be a more amenable to this notion? Or do you think that no matter what, they’re going to look at this as coming in and trying to take part of their market share and fight it tooth and nail?
Dawn Weisz: What we’re seeing in California is a real change with the incumbent utility. And hopefully that is a sign of what’s to come in the future. I think we have a, we’ve developed a nice partnership with the incumbent utility on an operational basis, and we aren’t seeing the same types of misinformation and other tactics that were used to squelch our efforts in the beginning. So hopefully that’s what we’ll see going forward. I think that now that we have a working model in place in California that really does pave the way for a lot of new programs to launch. And already we have a couple of programs that are getting very close just to the north of us. Sonoma Clean Power is a community choice aggregation program that will be launching service to customers next May. We’re very excited about that program.

It has a lot of similarities to ours as far as a high renewable content and a choice of two products with different levels of renewables in each product. And then there’s a long list of cities and towns and counties throughout California that are exploring community choice aggregation, and some are, are getting close to launching their own studies and looking at whether they wanna launch a program of their own or in some cases join an existing CCCA program. Ours and maybe potentially Sonoma’s program might be able to expand a little bit in the future, but because we offer a choice where without a CCCA there really is no choice in California, it’s a very compelling concept. And, and because of the state goals around greenhouse gas reductions, there’s a lot of momentum to try and find ways to get these programs off the ground to get more renewables onto the grid and to reduce greenhouse gas emissions.

John Farrell: That was John Farrell, ILSR’s Director of Democratic Energy, speaking with Dawn Weisz, executive director of Marin Clean Energy in February, 2014. You can learn more about the story of Marin Clean Energy on their website, Marin clean, and more about the policy called Community Choice Aggregation from ILSR’S 2009, where you’ll also find 18 more episodes of our Local Energy Rules podcast. Until next time, keep your energy local and thanks for listening.


Why is Local Aggregation Worthwhile?

I began by asking Dawn if the effort to form an aggregation in Marin County, almost 10 years in the making, was worthwhile.

Definitely, she said: “We’ve been able to achieve many of the goals we set out…purchasing more than double the amount of renewable energy…offering rates that are competitive and in many cases lower.”  Marin Clean Energy has prices that are competitive with incumbent Pacific Gas & Electric, and also advertises power that is 50 or 100% renewable.

When Did you Know You’d Beat the Utility?

Dawn said that it wasn’t clear they’d made it until they finally offered electricity service on May 7, 2010. “It was a down to the wire development.” The incumbent utility, Pacific Gas & Electric, had financed a ballot campaign to kill community choice aggregation by increasing the vote threshold from a majority to two-thirds, fought them at the Public Utilities Commission, and set up phone banks to dissuade potential customers from signing up.

“There’s really not a level playing field,” says Weisz.  The incumbent monopoly provider has “brand recognition, an army of lawyers” and other resources that it deployed to stop the locals.  Ultimately, Marin Clean Energy won, and about 75% of customers in their service territory now take electricity from Marin Clean Energy.

What Makes Local Aggregation Competitive?

Dawn notes that the local aggregation has several factors in their favor in offering competitive energy service to, and more renewable energy than, the incumbent utility.  As she says, “we have low operating costs – we are a small and nimble shop – we procure in a very prudent way, maximizing renewables within our portfolio, and we don’t have shareholder profits.”

More Local Energy?

Marin Clean Energy only has about 1 megawatt of local renewable energy, a solar array at a local airport, but they have big plans for more. The mechanism for more local energy is a Deep Green fund, money from customers who have opted for 100% renewable electricity.  Half the revenue from that fund will help finance pre-development for renewable energy built within the utility service area.

The utility also offers a feed-in tariff program, long-term contracts for buying solar or other renewable energy projects 1 megawatt or smaller that are built locally.

Dawn says they also have plans to support community solar or “syndicated solar,” allowing customers to buy energy from solar arrays built locally.

Advice for Other Aggregators?

Dawn has two pieces of sage advice for communities jumping into local aggregation:

  • Walk before you run
  • Don’t let the perfect be the enemy of the good

In particular, the first piece of advice refers to the desire of Marin Clean Energy organizers to offer a high renewable energy share to everyone right away, but that they phased it in slowly in order to make it work. Also, she notes that it’s really essential to get community buy-in with lots of local conversation and that taking the time to do so is what ensures all the pieces fall into place.

What’s Next?

Dawn says they’re seeing a real change with the utilities in California that may indicate a smoother road for future community choice aggregation efforts. Sonoma Clean Power is planning to launch in the next year, and many other communities in California are moving forward, offering customers “the only real choice they have” over their energy future.

You can learn more about community choice aggregation from our coverage of Marin Clean Energy’s launch, our 2009 report, or from the Local Energy Aggregation Network, a nonprofit based in California that provides information and technical assistance to states and communities considering local aggregation.

This is the 19th edition of Local Energy Rules, an ILSR podcast with Senior Researcher John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies. It is published twice monthly, on 1st and 3rd Thursday. Click to subscribe to the podcast: iTunes or RSS/XML

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Thanks to ILSR intern Jake Rounds for his audio editing of this podcast.

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John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.