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May 23, 2014
Viewpoints: Bill favors monopoly utilities over electricity customers

POWER.jpg(May 23 - By Gayle McLaughlin and Jeff Byron, Special to The Bee)

Assembly Bill 2145 aims to undo perfectly good law and smother local clean energy initiatives to favor monopoly utility corporations that should be focusing on safety and their customers' interests.

Dubbed by businesses and environmentalists as the "Monopoly Protection Bill," AB 2145 by Assemblyman Steven Bradford, D-Gardena, seeks to preserve the status quo of California's three largest, private energy corporations. This would make Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric the default providers, even in communities that form local public power agencies offering more renewable energy and consumer choice.

Is this what's best for consumers: no choice and more corporate monopolization?

The debate over AB 2145 reveals how literal the battle for California's power has become. Local governments eager to advance sustainable development and restrain ever-increasing electricity prices are under attack by the state's best-financed influencers: monopoly utilities.

Per existing state law, California's cities and counties can pool their constituents' demand for electricity and buy it wholesale from resources outside the control of the private monopolies. These small, public power agencies - known as community choice aggregators - supply their own, individually sourced electricity through existing distribution lines on behalf of their customers. These distribution lines are still owned and maintained by the utilities.

Consumers in other states have been served by community choice aggregators for decades, and they have cleaner, more competitively priced energy. CCA customers in California have the same opportunity under current law with the provision to opt out. This new bill would reverse that provision and effectively do away with community choice aggregators in California.

Marin Clean Energy, or MCE, which became the first community choice aggregator in California in 2010, serves electric customers in the city of Richmond and Marin County. They had to overcome deceptive, unethical attacks by PG&E to provide benefits to customers that are undeniable.

MCE customers purchase more than 50 percent renewable energy by default - more than double what PG&E offers. Customers can also "opt up" to 100 percent renewable energy.

Last month, the county of Marin met its greenhouse gas reductions goals - eight years early and while saving tax dollars.

The city of San Rafael saved more than $30,000 in 2013 as an MCE customer and looks to save about $47,000 in 2014.

Similarly, the city of Richmond expects to save almost $60,000 on its energy bills this year. And the public school district anticipates an even greater savings of approximately $66,000.

This is because MCE's electric generation rates are currently cheaper. Collectively, MCE customers will save about $5.9 million in 2014.

This validates a fundamental tenet of free market economics: Competition is good.

Competition is also contagious. This month, Sonoma Clean Power, or SCP, became California's second operational community choice aggregator. Sonoma Clean Power also offers cheaper rates than PG&E, and its default product already meets California's 2020 renewable supply requirement of 33 percent. These successes may reveal why the bill's author, a former executive at Southern California Edison, drafted such an anti-competitive bill.

Countless communities are exploring ways to join or form local, community choice programs. The city of Lancaster recently announced plans to create one, the first in SoCal Edison's service territory. Napa County and the city of San Pablo are conducting feasibility studies to join Marin's energy program, along with the city of Richmond. A number of Silicon Valley cities are also investigating community choice aggregators.

Community choice offers a compelling roadmap for progress. It allows California's local governments to become self-directed laboratories of innovation. Each community can develop its own energy policies with objectives customized to local values, circumstances and aspirations. Imagine the innovation Silicon Valley could bring to its own community choice aggregators.

Marin and Richmond provide examples of how local ingenuity can blossom with community choice. Marin Clean Energy helped develop Marin County's largest solar facility. It did so guaranteeing an above-market purchasing price for renewable energy projects built within its service area. Marin Clean Energy also supports job creation by partnering with local workforce development programs.

Every aggregate customer continues to pay his or her private utility for electric distribution charges. These are distinct from electric generation charges, and represent as much as two-thirds of a typical energy bill. Put simply, a community choice aggregator takes electric generation out of the equation for monopolies, like PG&E, so it can focus on the safety and reliability of the grid.

This distinction between energy generation and distribution is critically important. Instead of interfering with local governments eager to accelerate their renewable energy supply, PG&E and the other two monopolies should be focusing customer revenues, political influence and corporate resources on public safety - not protecting their monopoly status.

The future of who has the power in California - corporate monopolies or local communities - will depend on what happens next to the Monopoly Protection Bill.

Gayle McLaughlin is the mayor of the city of Richmond. Jeff Byron, a former member of the California Energy Commission, co-chairs Cleantech Open, a nonprofit for clean technology startup companies.