■ Membership OK’d in community choice energy group; manager calls for more review
Benicia has been approved by the board of Marin Clean Energy to join the community choice aggregate agency that buys power from renewable sources, but the city must agree to join by Dec. 2, City Manager Brad Kilger will tell the City Council on Tuesday.
But before the Council decides, Kilger wrote in a Sept. 29 report, the city should pay for an additional analysis of the financial and legal risks of membership in the agency.
Kilger wrote that community choice aggregation (CCA) lets governments buy or develop clean power on behalf of residents, businesses and municipal accounts.
The agencies, which answer to a board and members rather than to stockholders as do such utilities as Pacific Gas & Electric, put the power from those clean sources into the electrical grid.
Marin Clean Energy (MCE) subscribers can choose whether to pay for 50 percent renewable-sourced energy, which usually costs less than PG&E power, or 100 percent green energy, which costs slightly more.
Under current California provisions, when a governmental agency, such as a city, joins a CCA, power users are enrolled automatically to the new electrical source unless individuals choose to keep getting power from the original utility company, which in Benicia is PG&E.
The utility continues to maintain the lines through which power is delivered, and handles the billing to CCA customers.
The Council agreed June 17 to allocate $18,000 in Valero-Good Neighbor Steering Committee settlement agreement money to apply to join MCE, Kilger noted. That money paid for MCE to examine whether Benicia’s membership would either benefit its members, result in no change or have a negative impact. It also looked at whether Benicia’s membership would meet MCE’s own goals of reducing greenhouse gas emissions.
The report, sent to the city Sept. 10, concluded that Benicia’s membership would have a net beneficial impact on MCE customers and reduce near-term electrical energy costs for Benicia subscribers, Kilger wrote.
But he has recommended the city hit the pause button and pay for its own risk studies before joining the agency.
It would not be an unusual move, he said: Other cities that have joined MCE have commissioned independent reviews prior to becoming members. The Council will receive copies of those reports, but Kilger is recommending the Council have the reports examined and updated.
He explained that independent reviews would give the Council fresh opinions on the matter and provide “an opportunity for a third and neutral party to assess the risks and benefits of joining MCE.”
Among the risks determined during an independent study performed for Mill Valley during its deliberations about joining MCE, that city’s consultant, Davis Wright Tremaine (DWT), listed future retail rates, exit fees if the city chose to withdraw from MCE, regulatory changes and whether MCE customers would be liable should the agency fail.
Other risks the consultant listed were whether the city would be liable for MCE legal obligations, how those who opt out of MCE would affect the agency’s economic future and impacts of MCE’s future investments.
Kilger wrote that Benicia’s analysis could look beyond a financial evaluation of MCE to include earning expectations, the ability to maintain net metering credit payout program and investment, debt and reserve goals and how the change could affect Utility User Tax and franchise fees collection and remittance, as well as how the city’s 10 solar sites would affect rates and the anticipated impact to city electric bills.
Kilger wrote that city staff has interviewed several consultants, and that if the Council authorizes the hiring of MRW and Associates, with SAGE Renewables as a subcontractor, the work could be done for no more than $15,000 and be completed by Oct. 21.
City Attorney Heather McLaughlin told Kilger that DWT would update its own report for up to $15,000.
“While risks can be identified, there is no simple ‘bottom line’ conclusion to its assessment, and staff does not expect a different conclusion from an updated report,” Kilger wrote.
He explained there is no way to tell how joining MCE would affect customers in the long run when compared to staying with PG&E, and the Council must weigh risks and benefits before deciding on MCE membership.
“Should the Council direct the city manager to complete the additional analysis suggested by staff, staff believes it can be accomplished fairly quickly,” he wrote.
Though money for the review could come from the settlement agreement fund, Kilger wrote that it would be difficult to get a recommendation from the Community Sustainability Commission in time for the studies to be completed and a Council vote held by the December deadline.
“Even if the Council requested a special CSC meeting to expedite the funding recommendation, it would not be possible to have the funding approved in less than four to six weeks, and the city would not be able to accommodate MCE’s deadline,” he wrote.
Instead, he will ask the Council to use money from McLaughlin’s department budget.
If Benicia joins MCE, residents will receive official notice of the change and be given the opportunity to opt to remain with PG&E.
“Despite the extensive MCE and city outreach efforts, including legally required direct mailings, to inform potential customers about an upcoming change, some customers who are not paying attention will effectively become MCE customers without their knowledge or consent,” Kilger advised.
The Council must approve on two separate readings an ordinance allowing the city’s membership, and must sign the joint powers authority agreement as a new member, he wrote.
The Dec. 2 deadline to get that accomplished would allow MCE to meet deadlines to procure power to satisfy its load for about half a year. The agency buys power twice a year, Kilger wrote. Once it completes its latest round of purchases, it won’t be buying electricity again until the middle of 2015, he wrote.
If the city delays, Kilger wrote, MCE may accept other members instead of Benicia, or decide to “take a ‘time-out’ to absorb new members before it offers membership to others,” he wrote.
He has recommended the Council make its decision on MCE membership Nov. 4.
The Council will meet at 7 p.m. Tuesday in the Council Chamber of City Hall, 250 East L St.
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It appears the city manager is trying to do the right thing. I would suggest that there is no hurry. Use CSC money like you did for the feasibility test. It does appear MCE does not turn anyone away. If the city believes by delaying this issue they will be shut out someone is blowing smoke. Do it at the pace that is best for the customers and the city not MCE. I have given facts on this issuer but is seems some are stubborn and will vote for it under any circumstances. The have already got one council member recused. Very vicious tactic to get an agenda driven ideal approved at any expense. Again I suggest you take the timetable that is best for the city. We are willing to spend the money on something that is not good for the residence and the city. I urge the city to takes its time on this issue.. You talk about upping the sales tax by 1% now are willing to spend $30,000 on this. Something is very wrong. Wait and let the CSC approve the money and do it the pace that is best for everyone not just MCE.. At this point I am willing to urge the voters to vote no on the one percent. I urge the City Manager to think this out very clearly and not ryr to satisfy the mayor and the CSC only. Very bad move.
I want all voters to watch who votes for the $30,000 for these studies. When they just as easily could get it from CSC if not, then reconsider down the Road. CSC will not cut off their nose. Remember if the council votes for the $30,000 these are the same members that voted to put the 1% measure on the ballot. Now they expect you to approve that measure while they recklessly spend $30,000. These members if the vote to spend that money will be making a political move that will be remember by the voters. Yes some could move on but it will be an issue. I will be here to help the voters remember.
Benicia is finally getting around to talking about exploiting the winds that rip through here most of the year. ED Director Giuliani has brought a major wind energy developer into these discussions;
http://www.exeloncorp.com/energy/generation/wind.aspx
Exelon was going to pay us to quantify the extent of available wind resources, but the discussion was pulled from last meeting. Hopefully, the terms of a new agreement with Exelon will include measurement of wind at all potential turbine sites, not just North of Lake Herman Road.
Should we join MCE, and decide to install turbines at multiple sites after the studies, the output would be banked to MCE’s account and sold back to us, with associated transmission costs. Would the transmission costs be billed for just the two miles from the grid on our property to the sub-station at E. Second and Industrial Way, where the voltage is stepped down from 230kv transmission voltage to 12kv distribution voltage, or be a part of an aggregate transmission formula from MCE?
We could get a better deal with a 20 year Power Purchase Agreements with Exelon for turbine output at multiple sites. MCE is going to adjust rates right along with PG&E’s increases for transmission costs on a burdened grid. Is MCE going to ding us with surcharges for peak demand periods?
IMO, Exelon has more experience in the energy business than the contractors pegged to study the implications of joining MCE, and should be engaged to provide the information council needs to make a decision on this deal. I don’t like that MCE has given us a deadline to join. Once we’re in, there will be substantial fees associated with getting out or modifying terms when we determine that hooking up with Exelon would give us a substantial amount of energy cheaper, especially for municipal water processing operations, our biggest load centers.
MCE is into Solar
MCE is looking to spread risks, costs and liabilities associated with electric procurement to Benicia. The City of Benicia should not assume any of these burdens. All burdens should be on those Benicians who don’t opt out
What percent of Benicians want electricity from MCE?
Very good point. 75% of folks in Richmond do not even know trhe belong to MCE. So much for MCE outreACH. It is a bad deal
Now that the first step has been taken to possibly deploy wind turbines on Benicia properties, joining MCE would jeopardize a future agreement to buy the output of turbines for our own direct use. instead of going through a third party.
We are about to start quantifying the wind resources that turbine developer Exelon will extrapolate into annual kilowatt hours production times a value per kilowatt hour, for a range of turbine sizes. This can be compared to annual kwh consumption for municipal operations, one of the biggest eroders of our general fund. There is no doubt in my mind a significant savings can be demonstrated, again. We have already seen this to be the case in a previous study we paid for to examine possible turbines at both water treatment plants.
Exelon just wants to sell the output, that’s what they do. They won’t care if we buy it, MCE, or even PG&E. I have not read all the documents about MCE, but I suspect any renewable energy production on our properties would be contractually obliged to be banked to MCE’s accounting processes. I don’t think there are provisions that would allow us the latitude to buy energy later under a Power Purchase Agreement with Exelon. Why would MCE agree to dilute their revenue stream from Benicia? There is no good reason to rush into MCE membership if the downstream consequence is to jeopardize significant savings with wind turbines on our properties. And why would we decide to deploy wind turbines in our city so a third party can benefit from the output? There just is not sufficient information available at present to compare the CCA approach to one or multiple Power Purchase Agreements from wind turbines.
I did note one thing in some the MCE documents I looked at. They reserve the right to apply “peak demand” surcharges later. PG&E owns all the transmission lines, they are not going to give MCE or any other CCA a free ride during peak demand periods, and member tariffs are sure to see adjustments later. Once we’re in, it’s going to cost us an undetermined amount to get out.
Stan i do agree with you on MCE. It is a bad deal. On wind I disagree. The future in renewable energy in Benicia is off the grid production. Produce it, store it, sell it. In Benicia’s case a provider could very well partner with PG&E, Valero, Benica residents and the city itself and sell the balance to whoever it chooses. That is the future. Off the grid production storage and selling or providing. The city someday as prices go down will do this. But they jumped into this current project and it never penciled out. Take out the street light bulbs AND it is a very bad deal. That is why you are correct that there is no hurry. Just think of the grid and we all will be going in the right direction. I do know where i think it could happen in this city but not wind.
We have two reliable renewable resources in our city, wind and offshore current. We don’t have the land for a utility scale solar project, but we have plenty of potential sites where wind turbines could be deployed. As a land use issue alone turbines are very efficient. Sure there will be protests about wind turbines as visual blight and shredding birds like a cartoon fan, but at least now we are embarked to measure the value of the wind resources, and assess site environmental impacts so that informed decisions can be made by a council of the future.
As I stated previously, joining MCE now would serve to complicate any future effort to buy power from local wind turbine projects, and that some community members who oppose wind turbines North of Lake Herman Road or anywhere else will rally behind the effort to join MCE just for that reason.
Stan wind turbine will never happen in Benicia. Even if MCE is in there will be no wind turbine. It will be all about solar. You may not like that but that is what will happen. Get off wind and start talking about solar.
We have two reliable renewable resources in our city, wind and offshore current. We don’t have the land for a utility scale solar project, but we have plenty of potential sites where wind turbines could be deployed. As a land use issue alone turbines are very efficient. Sure there will be protests about wind turbines as visual blight and shredding birds like a cartoon fan, but at least now we are embarked to measure the value of the wind resources, and assess site environmental impacts so that informed decisions can be made by a council of the future.
As I stated previously, joining MCE now would serve to complicate any future effort to buy power from local wind turbine projects, and that some community members who oppose wind turbines North of Lake Herman Road or anywhere else will rally behind the effort to join MCE just for that reason.
The spokesperson for MCE at tonight’s meeting indicated they recently partnered with a 100mw wind farm.
It would only take 3 votes of this or future council to proceed with production wind turbines in Benicia. Sounded like 3 members expressed skepticism about joining MCE. As their spokesperson said, they procure energy with Power Purchase Agreements. We could do the same thing without a broker to sell it back to us. At this time we don’t have the comparisons to consider. Vice-Mayor Campbell tried to get an answer about how much energy MCE actually produces and never got one. That is because, like he said, they are a broker.
Keep in mind there was an item on last meetings Consent Calendar to enter into an agreement with a major wind energy developer where they would pay us to install met towers on our properties to quantify the wind resources. The item was pulled, but typically an item on the Consent Calendar indicates agreement of all 5 to proceed without discussion. Now that tells me there is at least the initial interest to measure the wind resources for possible future turbine sites.
I believe there are at this time 3 or 4 votes supportive of wind turbines and that the 2016 council election will sustain those views
Stan I do know at present MCE has very little of their supply from solar. You are correct about their wind procurement. The key is where does that wind energy come from meaning state etc. But at the same time they hsave san agreement for solar from Google in Kern County and will develope two solar farme in Richmond. The councilmember is correct they are a broker at present but are trying to move in the direction of producer of renewable energy along with being a provider. I get the feeling they are going to split the company and go to for profit. They cannot get enough money as a non-profit. Yes wind will be a part of the energy but not as much as solar. Remember I am talking about California. MCE is a bad deal for the citty. MCE has moved to quickly and a risk assessment will reveal that. I am not against renewable energy but the method how it is produced. The Seeno property is a good example of a furutre off the grid place. I will go no further on that.