Same Price, More Renewables. San Diego’s Fight for Community Choice – Episode 23A of Local Energy Rules Podcast

Date: 5 Jun 2014 | posted in: Energy, Energy Self Reliant States, Podcast | 0 Facebooktwitterredditmail

“San Diego and its community choice energy district would be able to offer a diverse energy mix with all of the solar, biodiesel, biogas, and energy storage resources that we have in San Diego.  A product that is price competitive and yet at the same time would strive for and achieve a higher level of renewable content.”

See how this southern California city is striving for more clean energy and more local control in this interview with Lane Sharman, co-founder and chair of the San Diego Energy District Foundation. This podcast was recorded via Skype on May 21, 2014.

Lane Sharman: San Diego and its community choice energy district would be able to offer a diverse energy mix with all of the solar biodiesel, biogas, and energy storage resources that we have in San Diego, a product that is price competitive, and yet at the same time, would strive for and achieve a higher level of renewable content.
John Farrell: Can San Diego follow in the footsteps of other community driven power efforts in California and Illinois, or will a new monopoly protection act moving through the California Legislature put an end to city’s ability to control their energy future? Joining me this week to explore the possibilities is Lane Sharman, co-founder and chair of the San Diego Energy District Foundation. I’m John Farrell and this is Local Energy Rules, a podcast sharing powerful stories of successful local energy and exposing the policy and practical barriers to its expansion. Lane, welcome to the program.
Lane Sharman: Thank you so much, John, for having me on the program. It’s a real pleasure.
John Farrell: Now you founded the San Diego Energy District Foundation in 2011, as I understand it, to help fight the solar taxes that have been proposed by the incumbent monopoly utility San Diego Gas and Electric. How did that fight turn out?
Lane Sharman: Well, it was successful in the end. The state of California ruled that the application by San Diego Gas and Electric was illegal. It had been a law that had been proposed by San Diego Gas and Electric that would have retroactively assessed new fees on customers in San Diego Gas & Electric service territory that had put solar on their rooftops with the understanding that the energy provided would be credited under current net metering rules. And this would have rolled back that the probation of net energy metering for those customers.
John Farrell: You know, that was a great first step in, I think one of many fights that is happening around the country, but I, I understand that your foundation has some higher aspirations than just, you know, defeating the utilities efforts to tax solar customers. You’re looking at this notion of community choice aggregation. There are other ones and some that we’ve interviewed for this program, like Marin Clean Energy or Sonoma County also in California, where the local folks are in charge of the utility. Is that effort moving forward in San Diego too?
Lane Sharman: It is it’s moving forward beautifully. As a result of the San Diego Energy District Foundation’s early efforts in 2012, a nonprofit by the name of Protect Our Communities dedicated $50,000 to a technical feasibility study, which the city of San Diego has now absorbed and is bringing to publication in the August, September timeframe. And that study, it’s my belief will show that a community choice aggregation district in San Diego will be cost effective and offer the citizens of San Diego an opportunity for energy choice and competition.
John Farrell: And the evidence seems to be from the other CCAs that have launched in Marin County and in Sonoma County that you can in fact be competitive on price, and yet still have a significantly higher portion of renewable energy than incumbent investor utilities.
Lane Sharman: That is correct John, as the Marin Energy Authority offer as a baseline product, an energy mix that’s 50% renewable. And at the same time, now lower than Pacific Gas and Electric. Sonoma Clean Power is offering a product, a baseline product that has 30% renewable content and is priced just a tiny bit of fraction lower than Pacific Gas and Electric. Lancaster, the city of Lancaster is planning its community choice aggregation unit as we speak. And therefore it’s safe to assume that San Diego and its community choice energy district would be able to offer a diverse energy mix with all of the, solar, biodiesel, biogas and energy storage resources that we have in San Diego, a product that is price competive, and yet at the same time, would strive for and achieve a higher level of renewable content and therefore be a safer energy product for the citizens of San Diego.
John Farrell: It raises kind of an interesting big picture question in this conversation, you’ve sort of implied that there are some benefits to a not for profit utility structure, like you have with community choice aggregation, but the sort of conventional wisdom is that in the for profit world, the profit motive drives innovation. It drives competition. Why might we be better off with power in the hands of the public sector or the people directly?
Lane Sharman: Well, that’s a great question, John, and it raises the larger philosophical question of what belongs in a public agency and what belongs in a for profit company. And if you have energy in a for profit company, the question is, will the company pursue the lowest cost energy source in order to maximize its profits? I mean, that’s just as a logical thing to do. Luckily in the state of California, the energy is not a, by the IOUs is not actually a source of profit realization, is actually the maintenance of the hardware network. But when you in law, large, the hardware network to buy and procure more energy, you increase the profits of the industrial utility. So there is an indirect reason for increasing the quantity of energy. And I think it just raises the question of energy is the source of our problems with climate change, combusting fossil fuels, and therefore like water and education, it may be that energy is better managed as a publicly accountable resource, like education and water.
John Farrell: Well, and I have to add too, this came out actually in the municipalization effort in Boulder, which you referenced the investor owned utility there had really been hammering down on this notion of public ownership, suggesting that the public sector couldn’t in fact, do a good job of managing energy services. And I believe it was a president of the American Public Power Association, which is the trade group representing all these municipal utilities, kind of stepped out and said, you know, we have 2,000 municipal utilities in the United States. We serve, you know, one in seven electricity customers across the country. We’re not for profit. So we have community interests at heart. We don’t pay taxes, but we put money into the general fund of the cities that represent, you know, I think he did a fairly good job mentioning a lot of the upsides and why, whether or not you would argue that one is better than the other, that there’s certainly at least plenty of evidence that both are workable models.
Lane Sharman: I think that’s exactly right. And I I’d also would just like to point out where energy is concerned, we do have a clear understanding that combusting fossil fuels is externalizing a cost that the public is now being asked to pay for John. We’re seeing tremendous drives in the transformation of the energy model and paradigm from unsafe energy to safe energy. And that’s where we’re headed and that’s where we need to go. And all of the policies and regulations ought to be focused on recognizing the cost of combusting fossil fuels and the socialization of those costs ought to be internalized within the fossil fuel companies that are profiting from the mining and sale of that material.
John Farrell: Well, and I think there’s some other good evidence out there too, in, in doing some research about the work you’ve done in San Diego, I came across a 2010 study done by the county, San Diego County, showing a route toward a hundred percent renewable energy and all of the available resources there. Costs have come down dramatically since then, especially for solar energy. And I understand you’ve got another study coming out later in 2014, that is also going to, I think make the case fairly well that even when we’re talking about costs, uh, there’s a lot of, uh, good reason why we should be shifting toward renewables because we cannot only save the environment, but save money as well.
Lane Sharman: Absolutely. John is a, a great segue into the fact that in Texas, the most bare knuckle of markets, which is all cost based there, there’s not really any pressure on any of the utilities to procure energy at anything other than the lowest possible cost. Several utilities recently went, let out a, a contract for the procurement of new energy and the energy that was being sold by a new energy that was being sold by new power plants came in at under $50, a megawatt hour by solar, significantly less expensive than energy that could be produced by natural gas plants, new natural gas plants. So yes, in San Diego, we see the future as being a hundred percent safe, renewable energy and not dependent any longer on fossil fuel based, combusted energy.
John Farrell: Yeah. I wanna hop back from the technology to the policy issues for a minute. You know, as you said, the, the, the city is moving forward in a conversation about community choice aggregation. You got this study coming up and, and some good conversation, but the investor owned utility San Diego Gas and Electric, hasn’t been, I, it, it seems like they among other investor owned utilities are back at the legislature trying to undo the opportunities there. And as I understand it, they’ve got a bill that would change local aggregation. And instead of being able to, by default, everybody joins this new local utility and folks can opt out, the bill that they’ve proposed would require people to opt in. Can you explain why this is a, essentially a poison pill for community choice aggregation? And are you confident that you’ll be able to overcome that?
Lane Sharman: Well, I’m hoping that we will be able to overcome AB 2145, which is a bill that was put forward by a Democrat, Steven Bradford, an assembly member in Sacramento, who also worked for 12 years for Southern California Edison, and happens to be the greatest recipient of utility money in the assembly, in the assembly of California. So it’s no wonder that he would produce a bill would, severely in fact, actually, in my opinion, be the poison pill for community choice aggregation law. Imagine forming a cooperative and you have no members. That’s exactly what this bill does, is it says, look, you, you guys can form a cooperative, but you can’t have any members until each one of them individually opts in. That’s not my idea of choice. That’s my idea of limitation. And that’s exactly what this bill is designed to do, is designed to limit the ability of a jury and then to form a community energy district and have all of its citizens opted in at once. So that the buying power of that cooperative is viable on day one. It’s designed for one and only one reason. And that is to protect the investor owned utilities. And that’s why we called it the monopoly protection act in California.
John Farrell: That was John Farrell, ILSR’s director of Democratic Energy speaking with Lane Sharman, co-founder and chair of the San Diego Energy District Foundation. You can learn more about San Diego’s fight for its energy future at senergydistrict.org, and learn more about the policy tool it’s hoping to use — community choice aggregation — at leanenergyus.org, or at ilsr.org, where you’ll also find 22 other episodes of our Local Energy Rules podcast. Until next time, keep your energy local and thanks for listening.


A Fight Against ‘Solar Taxes’

The rise of the San Diego Energy District Foundation was in response to fees proposed on solar customers by San Diego Gas and Electric in October 2011.  Thanks to the efforts of Lane, Bill Powers, and others in and outside of the foundation, the solar-crushing “Network Usage Fees” were not adopted. It was a particularly important win, because the fees would have applied to those customers who had already installed solar, with the expectation that they wouldn’t pay extra for going solar.

Pursuing More Local Energy Control

The Energy District Foundation wasn’t satisfied with stopping their monopoly utility from implementing bad policy, it wanted to create an energy system that put the community in charge of implementing policy that was positive for the economy and the environment. In 2012, members of the Foundation worked with Protect Our Communities, a nonprofit organization focused on using California’s community choice aggregation law, to create a local entity in charge of greening up the city’s energy supply with local power. They hope to follow in the footsteps of Marin County and Sonoma County in prioritizing local control of a cleaner energy system, at competitive prices.

Why Public Power?

The interest in local control over energy purchases is rooted in the inherent conflict of interest between ratepayers and their existing for-profit utility. Utilities in California make money by investing in hardware (power plants, power lines, and the like) and not finding the cleanest, lowest cost power for their ratepayers. In part, this is because taxpayers pick up the tab for pollution from fossil fuels.  A public entity is more likely to incorporate those externalities. Water, sewage, and education all provide examples of where the public sector provides excellent local service.

How Renewable Can San Diego Be?

A 2010 study called the San Diego Regional Plan for 100% Renewable Energy outlines the technical potential for clean energy in the region. But it’s the market prices for clean power than are most encouraging.  Open bids for new energy in Texas, for example, had solar bidding in at 5¢ per kilowatt-hour compared to retail energy prices of 15¢ or more. The county has approved (in 2013) a comprehensive energy plan that will include an investigation of a local energy aggregation.

A ‘Monopoly Protection Act’

Incumbent utilities don’t much like the San Diego Energy District Foundation and its plan for local control of the energy system. The big three corporate monopoly utilities in California are behind a new bill (AB 2145) that would completely undermine community choice aggregation by changing a key provision of implementation.  Currently, when a local government establishes a local aggregation to purchase power on behalf of its residents and small businesses, these individuals may opt out. If AB 2145 passes, all potential participants would have to opt in. It effectively shields the monopoly utilities from competition, requiring a yet-to-be-operational local utility to spend thousands of dollars to attract customers before it sells a single kilowatt-hour. Furthermore, it would make energy procurement nearly impossible for the local utility, which would be unable to effectively plan and purchase power without a reasonable estimate of their market share.

For more information on community choice aggregation, Lane recommends the San Diego Sierra Club, the local 350.org, the Local Energy Aggregation Network, and the San Diego Energy District Foundation

This is the 23rd 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.

Photo credit: Rick Naystatt
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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.