From the North Bay Business Journal
By Eric Gneckow

After months of debate concerning Santa Rosa’s say in the governance of a renewable energy-focused public power agency under development in Sonoma County, representatives of the county’s largest city voted Tuesday to become the latest municipality to allow the agency to serve its residents and businesses.

Representing nearly 34 percent of power customers countywide, the Santa Rosa decision marks what many consider to be a significant advancement of Sonoma Clean Power‘s goal to ultimately displace Pacific Gas & Electric Co. as the predominant supplier of electricity to Sonoma County.

Leaders in developing the agency expressed willingness to consider a number of conditions that Santa Rosa had demanded before joining the agency’s joint powers authority, signaling an intention to adopt those provisions during the next scheduled meeting of its joint powers authority on July 25.

The council spent several hours discussing those provisions, ultimately directing city staff to return with a resolution that describes those precise conditions for a consent vote during its next meeting.

In joining Cotati, Sebastopol, Windsor and the combined unincorporated areas, the Santa Rosa vote means more than 75 percent of the more than 200,000 ratepayers in the county will be eligible to receive service from Sonoma Clean Power as it plans to begin serving a limited customer base on January 1.

Leaders in developing the proposal have said that the agency’s survival was not contingent on Santa Rosa’s membership, with existing members representing 44 percent of ratepayers and already rivaling the current customer load of California’s first community choice aggregation power agency, Marin County’s Marin Clean Energy.

Yet Santa Rosa represents a significant potential pool for customers, nearly equal to the combined unincorporated areas and cities and a significant portion of the $172 million in estimated revenue if all potential cities were to participate.

The majority of that revenue would be allocated to power purchasing and rate control, but adding Santa Rosa gives the agency additional clout with wholesalers while increasing the potential funding pool for programs to spur renewable energy development.

“The business case for including Santa Rosa in Sonoma Clean Power is strong,” said Geof Syphers, interim chief executive officer for the agency.

A list of conditions

While city staff recommended that the council allow Sonoma Clean Power to serve customers in Santa Rosa, Tuesday’s resolution included a number of recommended conditions for its participation.

Those requests included:

  • Equal representation for Santa Rosa as the unincorporated areas on the agency’s board of directors
  • A unanimous approval requirement for future changes to the governing structure
  • Specific provisions for public access to all related meetings for the agency
  • Mandated participation by a ratepayer advisory committee for any rate-related changes
  • A strategic plan for power generation projects in Sonoma County
  • Clarification of any liabilities for municipalities that later chose to leave the authority
  • Elimination of a charge for individuals who return to Pacific Gas & Electric Co. after a mandated opt-out period

The council had developed those requests after an extensive internal review of the Sonoma Clean Power proposal, hiring an outside consultant to assist a process capped by a July 2 study session and the associated 140-page document.

The document, which includes reports and correspondence between an ad-hoc committee and leaders in developing the agency, includes dozens of questions from Sonoma County’s most populous city. High among them is any potential liability for participating municipalities, along with the nature of renewable energy sources in Sonoma Clean Power’s portfolio and plans for future programs that would incentivize renewable energy development.

Leaders in developing Sonoma Clean Power, which has occurred largely under the Sonoma County Water Agency at the behest of the Sonoma County Board of Supervisors, sought to address those questions while extending a June 30 deadline for municipalities to join. Participants would be shielded from liabilities if the venture were to fail, they said, with the only liability being the county’s collateralization of the $2.5 million in expected startup financing.

Those planners have cautioned that further extensions could jeopardize the ability to secure the currently low rates offered for long-term contracts with power wholesalers. Yet in speaking to the council today, Mr. Syphers said that his discussions over the weekend with Mayor Scott Bartley had helped to inspire a willingness to ease the rigid deadline in exchange for the city’s membership.

With the city of Sonoma scheduled for a final vote next week, all final votes would still occur by the July 30 deadline that Sonoma Clean Power has envisioned before pursuing final contracts with power wholesalers, according to Mr. Syphers.

Planners had in the past refused to ensure those changes prior to Santa Rosa’s joining, calling it unfair to the other municipalities that have joined under the current joint powers authority structure. Currently, cities receive a seat on the board after agreeing to allow the agency to serve its customers, though Santa Rosa could receive two seats if not all municipalities participate. Empty seats are currently held by the Board of Supervisors.

Yet due to the schedule for seating new members, only Windsor will be able to cast a vote on the conditions requested by Santa Rosa in the upcoming meeting, with the other four voting seats still held by the Supervisors. Mr. Syphers said that he has reached out to representatives in Cotati and Sebastopol for input on those changes, finding some complaints but no major “red flags” to share with the council.

While Mr. Syphers said that the joint powers authority is expected to approve the requested measures from Santa Rosa, he noted that it was still technically possible that a “no” vote could derail the process and force the city to consider coming on board without those provisions later this month. Plans are currently going forward with the tentative expectation that Santa Rosa will join, raising the stakes for each coming vote and reading for both the joint powers authority and the city council.

“It would really complicate things if they did not approve it,” he said.

Potential for future membership

Santa Rosa and other cities could have chosen to join next year or later, but leaders have cautioned that it would lose the opportunity to have a close role in guiding Sonoma Clean Power’s rollout during its earliest stages.

“It’s not a finished agency,” said Councilwoman Erin Carlstrom. “Like any new venture, we’re going to need to meet and improve this committee over time.”

As is currently planned, Sonoma Clean Power would roll out to an initial 10,000 customers during the first phase of its launch, and an additional 65,000 accounts in the following year. Remaining customers would be added in the third year.

Planning documents assume that 20 percent of potential customers will elect to remain with PG&E, an option that will be possible for all ratepayers in areas served by Sonoma Clean Power. Under the community choice aggregation structure, Sonoma Clean Power will purchase electricity and deliver it over the grid largely maintained by PG&E.

The agency would launch with a minimum 33 percent renewable energy portfolio, gradually ramping up to a baseline of 50 percent.

The city of Healdsburg operates its own utility under the Northern California Power Agency, and is not considered a potential player in the Sonoma Clean Power proposal.

The Water Agency has spent $1.2 million on researching Sonoma Clean Power since talks first began over two years ago, with documents describing the feasibility of the agency and its implementation over time. That expenditure is expected to be paid back through the agency’s revenues.

While a firm picture of how rates would compare to PG&E is impossible to determine before power supply contracts are finalized, estimates show that a business consuming 15,000 kilowatt-hours per month could expect to pay between 3.1 percent less per month and a half-percent more than conventional utility rates expected in 2014. Residential customers likely would pay between 1.8 percent less and 1.1 percent more than PG&E rates.

Additional work is required before the agency rolls out to its first round of customers, including the hiring of a full-time CEO, around 15 additional staff members and the securing of long-term contracts with power wholesalers.