Marin Energy's clean sweep The offers are in--can Marin Clean Energy flip the green switch?

The news swept over the world of energy conservation like a tidal wave. The California Public Utilities Commission (CPUC) released a statement Sept. 24 that it had approved a record-setting $3.1 billion for 2010 through 2012 for energy efficiency programs in the state, which "is the largest commitment ever made by a state to energy efficiency and further confirms California's leadership."

But watchdog groups have been questioning whether the state's energy efficiency program really is efficient and exactly how and where energy efficiency dollars get spent--and perhaps most important, who gets to decide where the money goes.

The Division of Ratepayer Advocates (DRA) is an independent consumer advocacy division of the CPUC. The day after the CPUC released the news about passing its energy efficiency budget, the DRA raised some troubling questions, questions consumer advocates have been asking for years without, they say, getting adequate answers.

The DRA praised the passage of the energy efficiency budget, but in a distinctly backhanded way, saying that while the commitment to energy efficiency represented a significant step, details in the CPUC decision highlighted a need for "stronger mechanisms to ensure transparency and accountability in the utilities' use of the billions of dollars of ratepayer money that is at stake."

Ratepayers contribute to the state's energy efficiency programs through a "public goods charge" on utility bills. The money goes to the state, which then sets energy efficiency budgets in cycles. The CPUC sets the budget.

The problem, says Dana Appling, director of DRA, is that in the record-setting energy efficiency budget, "We are close to doubling budgets for utility-managed programs while dramatically reducing energy savings targets. California needs to ramp up energy savings to address climate change, and we need to be wary of ratepayer cost increases [that] are not expected to help the state meet its energy goals."

The DRA is particularly concerned that the state is failing to adequately monitor administrative costs for energy efficiency programs.

In announcing the energy efficiency budget, the CPUC said the programs envisioned will create savings "equivalent of three 500-megawatt power plants."

But, says the DRA, letting utility companies administer energy efficiency programs without more stringent oversight would create a situation that "would only serve to create the illusion of greater energy efficiency portfolio cost-effectiveness than actually exists and would waste ratepayer dollars that could otherwise be used to save energy."

The issue of how and where the state spends ratepayer-generated money for energy efficiency programs has been on the agenda of a local organization that's been a stubborn watchdog at CPUC proceedings.

Barbara George, executive director of Women's Energy Matters, says San Francisco and an organization called the Local Government Sustainable Energy Coalition (including Marin representation) has asked the CPUC "multiple times" to release energy efficiency funds directly to local agencies rather than to utility company coffers.

Although the utilities are required to keep strict accounting of where the energy efficiency money comes from and on which accounts it's kept, George and other watchdog groups say it's often difficult to track the energy efficiency trail.

The funds come from a variety of sources, including federal stimulus money. The state's energy efficiency programs are set up, says George, to enable the utilities to act as "monopoly administrators of energy efficiency funds."

In what George calls "a complicated web" of source money and energy efficiency administration practice, the utilities have what amounts to control over where and how much of the energy efficiency money gets spent in California.

And how the utilities spend energy efficiency money should disturb people, say George and others.

"What the utilities are doing with energy efficiency money is coming into [local] building departments and drafting codes and standards. Do we want utilities writing our legislation? How do we know what the cities would write on their own?"

Even though cities have the responsibility to enact codes and standards that move energy efficiency forward, "The utilities are in charge of the energy efficiency program," says George. "They run the show."

That represents a clear conflict of interest, she adds, because the codes and standards have a clear financial effect on the utilities. The utilities also write energy curriculum in schools, says George.

The issue of how utilities use energy efficiency money surfaced in Marin, when PG&E mounted an effort to offer its own green energy program to market against Marin Clean Energy. In a recorded public meeting in Novato, a PG&E spokesman said the company was prepared to put on the table an offer Novato couldn't refuse. George says embedded in that offer was an implied expenditure of energy efficiency funds, an inappropriate use. PG&E says its offer to Novato contains no special deal, but George remains unconvinced. She and other PG&E critics brought their concerns to the CPUC during a meeting in July.

In the Sept. meeting at which the CPUC set the energy efficiency budget, the CPUC acknowledged that Women's Energy Matters and other organizations "have expressed concern about PG&E's use of energy efficiency funds to lobby against forming Community Choice Aggregators [local power agencies like Marin Clean Energy]. While we have no clear evidence in the record on this point, we will require utilities not to use energy efficiency funds in any way which would discourage or interfere with a local government's efforts to consider or to become a Community Choice Aggregator."

The CPUC also acknowledged the organizations' discomfort over allowing the utilities to administer "some or all local government partnerships." But the CPUC reiterated an earlier position and stated, "California's investor-owned utilities will continue to fulfill their key role as administrators of ratepayer-funded programs..."

That's a glass half-empty and half-full.

The utilities commission did, after all, acknowledge the discomfort with which organizations view how the utilities may be spending energy efficiency money to market against community choice energy programs. But while the CPUC underlined a strict prohibition against using energy efficiency money toward that end, the agency refused to put any teeth in the admonition.

That prohibition has particular importance in Marin, where PG&E mounted its anti-Marin Clean Energy campaign, which will only get hotter in the coming months.

The Marin Energy Authority is a joint powers agency formed in December 2008. The ability to form the agency is the result of state legislation that allows communities to create their own energy agencies and purchase power--including green power--from any source.

The county and every city in Marin except Larkspur, Corte Madera and Novato joined the Energy Authority, which sent out requests for proposals to 130 energy suppliers to provide electricity to about 80,000 customers who would be served by a new energy agency, Marin Clean Energy.

The criteria in the Marin Clean Energy plan call for companies to provide electricity in a "light green" rate structure that is at or below PG&E rates. Customers in the light green plan would receive 25 percent of their electricity from green sources when Marin Clean Energy starts to provide power, which would still flow through PG&E lines. The aim is to increase that 25 percent to 50 percent green in five years, and to 100 percent green by 2020. Customers who choose a "dark green" option would receive 100 percent of their electricity right away from green sources at a cost 8 to 10 percent above PG&E rates.

After winnowing the bids from a dozen companies interested in providing green energy in Marin, the Marin Energy Authority has chosen a "first-position bidder."

Shell Energy North America came in with the best bid. It may even be better than the initial estimates. Shell Energy's bid includes a proposal that offers the totally green option at rates 6 to 7 percent above PG&E's. In general, says Dawn Weisz, a county planner and interim director of the Marin Energy Authority, "Prices came in just as we expected." Weisz is.

In addition, Shell Energy's bid for the light green option could be slightly less than PG&E. Exact numbers will be determined when the contract gets signed, in much the same way a mortgage contract sets rates the day of signing. One thing is certain: Shell Energy must provide the initial light green option at a rate no higher than current PG&E rates.

Marin Clean Energy currently is taking a draft of the contract with Shell Energy to Marin Energy Authority members for review and comments. The members still can "take an off-ramp." A final contract will go to the Marin Energy Authority board Nov. 4. The final contract will then recirculate among members for final review, a process that should be complete by February. A final off-ramp will be offered in the last part of the process. If everyone signs on the dotted line, customers in the Marin Clean Energy jurisdiction still will be able to opt out and stick with PG&E.

Shell Energy's proposal represents a major milestone in Marin Clean Energy's market battle with PG&E, which claimed it wasn't possible for the Marin agency to offer green electricity and still match or beat the utility's rates.

Weisz says the battle is far from over, and as Marin Clean Energy makes the rounds of city councils, representatives from PG&E aren't far behind. "PG&E is circling."

The Shell Energy bid "is really good news," says Supervisor Charles McGlashan, chairman of the Marin Energy Authority board. It shows, among other things, that Marin Clean Energy can best the state mandate for green energy, by a lot. The state is moving toward a mandate that calls for the utilities to supply just 33 percent green energy by 2020. By then, Marin Clean Energy will be at 100 percent green.

Among the arguments in its arsenal, Marin Clean Energy has another potent item of persuasion: The clean energy created by the power agency will take Marin two-thirds of the way toward meeting the requirements of AB 32, the state law that requires local governments and businesses to reduce greenhouse gas emissions, and the journey will cost the ratepayers virtually nothing.

"We know as a community in Marin, it would cost the public and private sector $50 million to meet the large reductions required by AB 32," says McGlashan. "This avoids the cost we would all have to pony up otherwise."

McGlashan adds that Marin Clean Energy is just one of a handful of initiatives "that will help our local economy" while at the same time pushing "our green vision" in this county. The initiatives include local investment in power generation, implementing an AB 811 solar financing district and providing local rate structures that take into account the high cost of living in Marin. With the opportunity to adjust rates based on the cost of living here, rather than across the broad PG&E service area, Marin Clean Energy could, for example, offer low-income seniors rates less than PG&E charges.

And Marin Clean Energy offers the opportunity to request that the state send those energy efficiency funds directly to Marin and not on a route that takes them through PG&E bookkeeping. Marin will be able to control use of its own energy efficiency funds.

It would be a first. No community choice aggregator has ever requested a direct deposit, so to speak, of energy efficiency funds. That's because no other community choice aggregator in the state has become operational.

Marin Clean Energy would be the first.

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