The Salinas Taxpayers Association is one of numerous groups in Monterey County concerned about the direction of Monterey Bay Community Power, the new “community choice aggregation” public agency that will obtain and supply electricity to most of Monterey, Santa Cruz, and San Benito counties as an alternative to the investor-owned utility Pacific Gas & Electric.
On September 6, 2017, the Operations Board of Monterey Bay Community Power voted unanimously to issue a Request for Offers (RFOs) for a “portfolio” of short-term electricity supply for the region. This portfolio was selected from several options and is NOT the most economical choice for ratepayers.
See the September 6, 2017 Meeting Agenda and Staff Reports for the Operations Board of Monterey Bay Community Power and an extract from the agenda package for the staff report entitled “MBCP Procurement Plan and Power Supply Mix.”
Below is a summary of the staff report and notes from the meeting as prepared and distributed widely by Salinas Taxpayers Association President Kevin Dayton. The summary and notes do not necessarily reflect the views and opinions of the Salinas Taxpayers Association or any other organization or individual. He also spoke twice during the meeting as a potential customer of Monterey Bay Community Power.
Summary of Staff Report – “MBCP Procurement Plan and Power Supply Mix”
September 5, 2017
To: Interested Parties in Service Area of New Monterey Bay Community Power (MBCP) Public Power Agency (Most of Monterey, Santa Cruz, San Benito counties)
From: Kevin Dayton, Resident of MBCP Service Area
Re: Where Will Monterey Bay Community Power (MBCP) Get Its Electricity in the Short- Term and the Long-Term; How Much It Will Cost Ratepayers in the End?
In response to various requests, I am summarizing a staff report to be presented to the Monterey Bay Community Power (MBCP) Operations Board at its September 6 meeting. I am also proposing six questions based on the staff report content.
This is a volunteer project that does not reflect the views or positions of any organization or other individual.
Tom Habashi, Chief Executive Officer of the new Monterey Bay Community Power “community choice aggregation” public power agency, has written a staff report for the agency’s Operations Committee meeting on September 6 entitled “MBCP Procurement Plan and Power Supply Mix.”
“MBCP Procurement Plan and Power Supply Mix” outlines options for the agency’s electricity procurement in the next three years and introduces long-term planning for electricity procurement. It notes that “long-term” renewable energy contracts must comply with state laws related to the California Renewables Portfolio Standard (RPS) program.
Three types of energy portfolios are identified in the Renewables Portfolio Standard (RPS) program:
- Portfolio Content Category 1 (PCC 1 or Bucket 1) – renewable energy produced by resources located within or connected directly to the state of California (or resources located outside of California that schedule electricity deliveries to defined areas within California).
- Portfolio Content Category 2 (PCC 2 or Bucket 2) – renewable energy produced by resources located outside California that “bundle” related renewable energy certificates (RECs) with other sources of regionally produced electricity.
- Portfolio Content Category 3 (PCC 3 or Bucket 3) – renewable energy certificates (RECs) that are produced by a generator eligible for the Renewables Portfolio Standard but sells them separately from renewable electricity.
Monterey Bay Community Power intends to exceed percentage requirements for renewable energy in state law as well as the percentage achieved by PG&E. However, renewable energy prices tend to be higher than energy generated by fossil fuel, nuclear, and large-scale hydroelectric facilities, which are not regarded as renewable. Monterey Bay Community Power must be careful not to establish renewable energy portfolios that are so ambitiously high in renewable energy content that rates are unreasonably higher than PG&E and thus uncompetitive.
Higher reliance on Portfolio Content Category 3 (PCC 3 or Bucket 3) would allow Monterey Bay Community Power to provide lower rates than other options, and thus be best positioned to compete with PG&E. However, the staff report notes “there has been considerable resistance from certain stakeholders” to this portfolio choice. These “certain stakeholder groups” believe that reliance on PCC 3 hinders new development of new renewable energy development and encourages schemes to circumvent or cheat the California Renewables Portfolio Standard (RPS) program.
Portfolio Content Category 2 has its own challenges related to how the California Energy Commission will measure emissions under planned regulations. This portfolio may not be a viable option in the end and therefore was excluded from consideration.
Staff therefore is recommending Monterey Bay Community Power to adopt a short-term (1-3 year) portfolio made up of Portfolio Content Category 1 and regionally produced hydroelectricity. According to the staff report, “This combination of resources will likely result in somewhat higher costs” but will avoid resistance from “certain stakeholders” and possible future derailment by new state regulations. It will also achieve a 70 to 100% carbon-free resource mix.
In addition, Monterey Bay Community Power is preparing now for adopting a procurement plan of long-term (10 years or more) energy contracts. This advance planning is needed because of the length of time needed for planning, permitting, and construction of new renewable energy generation facilities.
The staff report briefly references a portfolio option to “maximize the use of local (Monterey Bay region) renewable resources, namely solar.” I believe the unidentified “certain stakeholders” see this option as the most ideal, as it would allow energy self-sufficiency within the Monterey Bay Community Power service area, preclude any private entity from profiting from a public good (electricity), and lead quickly and decisively to 100% renewable energy (solar with a little bit of wind or even tidal power along with battery energy storage). Of course, this option would probably be the most expensive option of all for ratepayers, especially if the solar generation facilities are owned and operated by Monterey Bay Community Power.
Cost Considerations: The chart of “Recommended Revenue and Expense Projections with Staff Recommended Portfolio” in the staff report indicates a total revenue increase for Monterey Bay Community Power (MBCP) from $173 million in 2018 to $241 million in 2019. The staff report does not explain why that amount increases 39% in one year. There are also charts showing several other options, but total revenue is not indicated in those charts, thus making it unclear how much each option will cost.
Questions for the Monterey Bay Community Power (MBCP) Operations Board on September 6, 2017 (and Policy Board on September 13, 2017)
- Could Monterey Bay Community Power prepare more comprehensive charts for the public that show the power cost, operating expenses, and the total revenue for all six portfolio options considered by staff? Most of the charts only show the percentages of renewable energy (with and without large hydroelectric) and the “residual funds.” Please add “power cost,” “operating expenses,” and “total revenue” rows for all of these considered options:
- Maximize the use of local (Monterey Bay region) renewable resources, namely solar
- Maximize the use of Portfolio Content Category (PCC) 1 products
- Maximize the use of Portfolio Content Category (PCC) 2 products
- Maximize the use of Portfolio Content Category (PCC) 3 products
- Maximize the use of carbon-free resources (mainly regionally produced hydroelectricity)
- A mix of Portfolio Content Category (PCC) 1 and regionally produced hydroelectricity (the staff recommendation)
- Please identify the “certain stakeholders” who object to Portfolio Content Category 3 (PCC 3) products. Are their concerns valid? If Monterey Bay Community Power decided to proceed with PCC 3 products to limit the cost increase to ratepayers, how would these stakeholders respond? Would they use the California Environmental Quality Act (CEQA) to block the development of the short-term and long-term portfolios? Are these stakeholder groups willing to reach a compromise that allows some PCC 3 product with assurances that the product will be renewable? If so, what would those terms and conditions be?
- Why does the chart of “Recommended Revenue and Expense Projections with Staff Recommended Portfolio” indicate a total revenue increase for Monterey Bay Community Power from $173 million in 2018 to $241 million in 2019 – a 39% increase in one year? Does that reflect rate increases resulting from dependence on Portfolio Content Category (PCC) 1 products?
- Do you believe Monterey Bay Community Power can compete successfully with PG&E using the Portfolio Content Category (PCC) 1 products? Would the use of Portfolio Content Category (PCC) 3 products allow for rates close or lower than those charged by PG&E?
- As pressure grows from “certain stakeholders” for Monterey Bay Community Power to adopt the option identified as “Maximize the use of local (Monterey Bay region) renewable resources, namely solar,” how will Monterey Bay Community Power evaluate that option and provide a reasonably objective and neutral assessment of it? Are there any plans to consider public-private partnerships or procurement of energy from privately-owned larger- scale electricity generators?
- To what extent has Monterey Bay Community Power heard from stakeholders who are primarily concerned about ensuring reasonable rates for customers and rates that are competitive with the still-viable existing competition (that is, PG&E)? Will there be a Community Advisory Committee with robust participation from local business and taxpayer organizations?
Notes from the September 6, 2017 Monterey Bay Community Power Operations Board of Directors Meeting (in Watsonville)
Approval of MBCP Procurement Plan and Power Supply Mix
This item was moved up on the agenda. CEO Tom Habashi summarized his staff report and the staff recommendation to procure most electricity from the “Portfolio Content Category 1 (PCC 1). This is “renewable energy produced by resources located within or connected directly to the state of California (or resources located outside of California, which schedule electricity deliveries to defined areas within California).” There will also be hydroelectric power in the mix.
Habashi said “we’ll see where the prices land” and then the agency will have further discussion in 2018. A board member asked for confirmation that MBCP would be 100% carbon-free.
Another board member expressed concern about how construction and operation of local solar farms weren’t proposed as a way to provide electricity. “There is an expectation in some communities for local benefits & local jobs,” he said. (Those communities weren’t identified.)
Habashi seemed to discourage this idea. “Building a solar farm in town is not the only thing we can do for local jobs,” he said. He cited the construction and operation of electric vehicle charging stations as an example and noted that MBCP would get revenue from that local charging. “We need to get away from the mindset that local jobs must come from solar farms.”
Heidi Zamzow, Legislative Liaison for “Communities for Sustainable Monterey County,” objected to the inclusion of large hydroelectric power in the planned power purchase. She noted the “history of problems with dams in our county” and how large hydroelectric power generation is susceptible to flooding and drought caused by climate change. She talked about the need for salmon restoration and the current dam demolition on the Columbia River. She asked how much hydroelectric power would come from in-state sources as opposed to out-of-state sources.
A man whose identity I did not get called for the “creation of local jobs,” urged MBCP not to buy power “on the market” and instead support “small community generation” such as a project proposed in San Juan Bautista.
Identifying myself as a Monterey resident and potential customer of MBCP, I was able to make six comments before my time expired:
- Let’s not forget the ratepayers in this discussion.
- Staff needs to create charts that show the power cost, operating expenses, and the total revenue for all six portfolio options considered by staff, so the public can compare options.
- Who are “certain stakeholders” who object to Portfolio Content Category 3 (PCC 3) products? Are their concerns valid? Have these stakeholders threatened to use the California Environmental Quality Act (CEQA) to block the development of the short-term and long-term portfolios?
- Do you believe MBCP can compete successfully with PG&E using the Portfolio Content Category (PCC) 1 products? Shouldn’t that be a major consideration?
- As pressure grows for MBCP to adopt the option identified as “Maximize the use of local renewable resources, namely solar,” will MBCP consider public-private partnerships and procurement of electricity from local larger-scale renewable energy generation facilities?
- Will there be a Community Advisory Committee with diverse, broad, robust participation from local business and taxpayer organizations?
One board member acknowledged these comments from the public but said the people wanted this program to start promptly and it was too late to provide such information. “We have a short time” to make a decision so move to do this, he said. There will be time to tell the public about is going on.
Then there was a unanimous vote of the Operations Board to adopt the staff recommendation.
Approval of MBCP Staffing Plan, Compensation/Benefits Schedule, and Employment Policies
During this discussion, a board member asked for the establishment of a Community Advisory Committee in which each Policy Board member would appoint someone to the committee. This would allow environmental groups to provide input into MBCP decisions.
CEO Tom Habashi said both the Policy and Operations boards have discussed a Community Advisory Committee but decided not to proceed because there aren’t enough people on MBCP staff to administer such a committee. There will be opportunity for public input as MBCP moves forward.
I spoke again in public comment, urging the prompt creation of a Community Advisory Committee. I pointed out that other community choice aggregation Community Advisory Committees are overwhelmingly dominated by environmentalists and unions, but MBCP should ensure broad, diverse representation like the Transportation Agency for Monterey County (TAMC) Citizens Oversight Committee for Measure X, which has 20 members and is inclusive. I noted that business and ratepayer interests need to be heard as well as environmental and union interests. I noted that there appeared to be a lack of attention at the meeting to the rates paid by commercial and residential customers and the customers needed a structure for formal input.