Tag Archives: M.Cubed

Building Drought Resilience in California’s Cities and Suburbs from PPIC

Then And Now: California's Drought Officially Declared To Be Over

M.Cubed partner David Mitchell is the lead author on this PPIC report that reviews the responses by urban agencies to the California’s recent drought and looks at the lessons learned. He’s speaking during a webinar on June 16 at noon. In addition, he co-authored an opinion article for the Sacramento Bee.

Advertisements

Thoughts on “California’s Water System Built for a Climate We No Longer Have” | KQED Science

We just looked at the frequency of different water conditions over the last 15, 35 and 110 years. Over the longer period, wet, “normal” or average, and dry years have occurred in about equal shares, at about one-third each. But over the last 35 years dry conditions have occurred in about half of the years. Over the last 15 years, wet conditions have declined to less than 20% of the years.

We’re also working with Sustainable Conservation on a program that will incentivize growers to use diverted floodwaters to recharge groundwater aquifers below their fields.

California is likely to see more extreme floods and drought with climate change, but the state’s water infrastructure may not be ready.

Source: California’s Water System Built for a Climate We No Longer Have | KQED Science

What lessons should we take from the last wave of California utility reform?

h7main2d

We’re now in the midst of the “third wave” of electricity industry reform in California. The first was in the early 1980s with the rise of independently-owned cogeneration and renewable resources. Mixed with increased energy efficiency, that led to a surplus of power in the late 1990s, which in turn created the push for restructuring and deregulation. Unfortunately, poorly designed markets and other factors precipitated the 2000-01 energy crisis. The rise of renewables and distributed resources is pushing a third wave that may change the industry even more fundamentally.

I wrote a paper in 2002 on how I viewed the history of California’s electricity industry through 2001 and presented this at a conference. (It hasn’t yet been published.) I identify some different factors for why the energy crisis erupted, and what lessons we might learn for this next wave.

 

Will ‘Independence’ from PG&E Bring Cleaner and Cheaper Electricity? | Davis Vanguard

cce-picThis summarizes expected advantages of the Yolo-Davis Community Choice Energy (CCE) and how it will proceed.

By Leanna Sweha City staff briefed the Council at its last meeting on the timeline for the Joint Davis and Yolo County Community Choice Energy (CCE) progra

Source: Will ‘Independence’ from PG&E Bring Cleaner and Cheaper Electricity? | Davis Vanguard

Community choice spreading across California

Yolo County and the City of Davis became the latest community to approve a CCE (for community choice energy, an alternative moniker to the legalistic community choice aggregation). I sat on the advisory committee assessing options and the business case is strong for the viability of this option. This is the leading edge of a wave of CCEs across California. The combination of market conditions, falling renewable power costs, recognition of changes in the electricity market, and dissatisfaction with the incumbent utilities is pushing broad community coalitions to take the leap.

ca-cca-map-solo-10-10-16-e1476219431587To date three communities have operating CCE’s, with MCE starting first in 2010. MCE is made up of not only Marin County, but also Napa County, and the City of Richmond and Benecia. It also is considering adding new members. It currently has 17 voting communities. Sonoma Clean Power followed in 2014, and is considering adding Lake and Mendocino counties.  The City of Lancaster started in late 2015 in SCE’s service territory. Peninsula Clean Energy, composed of San Mateo County and its cities, kicked off service in 2016.  In addition, San Francisco has approved a CCE but has had various political barriers to getting off the ground.

Here’s a couple websites that show maps and lists of what counties and cities are pursuing CCAs (the lists are slightly different).

 

Other communities in the midst of either approving or implementing new CCEs include:

Alameda County

Contra Costa County – considering joining Alameda or MCE, or going it alone

Humboldt County as Redwood Coast Energy Authority – considering joining SCP or going alone

South Bay Cities of Los Angeles County as South Bay Clean Power

Los Angeles County

Monterey, Santa Cruz and San Benito Counties and their cities as Monterey Bay Community Power

Riverside and San Bernardino Counties – issued RFP for joint study

San Diego County

City of San Diego – issued RFP for a study

City of Solana Beach

Santa Clara County and 11 cities as Silicon Valley CCE Partners – starting late 2016

City of San Jose – exploring joining SVCCEP or going alone

Santa Barbara CountySan Luis Obispo County and Ventura County – released study on feasibility and options

City of Walnut Creek – considering joining with Contra Costa or going alone

 

All of this activity has serious implications for IOU purchasing and contract management going forward, CPUC regulation and overall procurement transparency. The IOUs and CPUC have operated in black box to date claiming that confidentiality is necessary to prevent market manipulation. Yet with all of these CCEs likely operating as open books, everyone will have the market information that the IOUs claim is so vital to protect. This is likely to open up IOU PPAs to greater scrutinty–attention that neither the IOUs or the CPUC probably want.

Reaction to Is “Community Choice” Electric Supply a Solution or a Problem?

Severin Borenstein at the Energy Institute @ Haas wrote a good summary of the issues around community choice aggregation.

Source: Is “Community Choice” Electric Supply a Solution or a Problem?

I am on the City of Davis’ Community Choice Energy Advisory Committee and have been looking at these issues closely for a year. I had my own reactions to this post:

First, in California the existing and proposed CCEs (there are probably a dozen in process at the moment to add to the 3 existing ones) universally offer a higher “green” % product than the incumbent IOU, most often a 50% RPS product. And although MCE and SCP started out relying on RECs of various types to start out, they all are phasing out most of those by 2017. I think most will offer a 100% product as well.

The reason that these CCE’s are able to offer lower rates than the IOUs at a lower RPS is that the IOUs prematurely contracted long for renewables in anticipation of the 2020 goal. In fact, the penalty for failing to meet the RPS in any given year is so low, that the prudent strategy by an IOU would have been to risk being short in each year and contract for the year ahead instead of locking in too many 20+ year PPAs. At least one reason why this happened is that the IOUs require confidentiality by any reviewers and no connections to any competing procurement decisions. As a result the outside reviewers couldn’t be up to speed on the rapidly falling PPA prices. The CPUC has made a huge mistake on this point (and the CEC has rightfully harassed the CPUC over this policy.)

CCE’s also offer the ability to craft a broader range of rate offerings to customers–even flat 20 year rates that can compete with solar roofs on the main issue that customers really care about: price guarantees. In addition, CCE’s are more likely to be to nimbly adjust a rapidly changing utility landscape. CCE’s are much less likely to care about falling loads because their earnings aren’t dependent on continued service.

It’s also to recognize the difference between local government general services (e.g., safety and public protection, social services, regulation, etc.) and enterprise services (e.g., utilities of all sorts). In general, the latter are as efficient as IOUs (except LADWP which illustrates the INefficiency created by overlarge organizations). So one can’t make a broad generalization about local government problems and how they might apply in this situation. The fact is that almost all of the existing and new CCEs are or will be JPAs, which are often even leaner. (Lancaster is the exception.)

Finally, Severin made this statement:

“Whatever regulatory mandates, managerial mistakes, or incompetence occurred in the past, customers switching to a CCA should not be allowed to shift their share of costs from past decisions onto other ratepayers.”

I have to disagree to a certain exent with this statement. Am I forced to pay for the past incompetencies of GM or GE or any other corporation? Yes, utilities have a higher assurance of return on their investments, but no where is it written that it is “ironclad.” Those utilities had an assurance first as the sole legal provider and then as the provider of last resort, but that’s eroding. In California, the CTC was a political deal to get the IOUs out of the way. The fact is in California that the CPUC abrogated its responsibility to oversee these decisions on behalf of ratepayers with the encouragement of the IOUs. If the IOUs want to retain their customers, then they should be forced to compete with the CCEs (and DA LSEs.) It’s time to reopen this matter.

And to add a bit more:

The logic of this statement is that ANY customer who leaves the system, including moving to another area, state or nation, should have to continue to pay these stranded costs. Why should we draw the line arbitrarily at whether they happen to still get distribution services even though the generation services have been completely severed? Particularly if someone moves from say, San Francisco to Palo Alto, that customer still relies on PG&E’s transmission system and its hydro system for ancillary services. Why not charge that Palo Alto customer a non-by-passable charge? And why shouldn’t it be reciprocal? Relying on “political practicality” is not an answer. Either ALL customers are tethered forever, or no customers are required to meet this obligation.

 

Getting to the harder question about stranded assets

diablocanyon

John Farrell at the Institute for Self-Reliance argues that existing utility fossil-fuel plants should not be given “stranded assets” status. While his argument about “stranded assets” makes sense from a society wide economic sense, it doesn’t conform with the utility regulation world in which “stranded assets” is actually relevant. Having gone through California’s restructuring and competitive transition charge (CTC) (I’m the only person outside of the utilities to conduct a complete accounting of the CTC collection through 2001), it’s all about what’s on the utility’s books and what the regulatory commission agrees is an acceptable transfer of risk. And based on what happened with Diablo Canyon in 1996 (the correct treatment would have recognized that PG&E had collected its entire investment at the regulated rate of return by 1998—I did that calculation too), it’s not promising.

So I suggest focusing on the shareholder/ratepayer risk sharing arrangement and how that should be changed in the face of the oncoming utility 2.0 transformation as a more fruitful path. We have to change the underlying paradigm first. That there are benefits from retiring generation assets is not a hard argument to win—that was the case in 1996 in California. The harder one is that the past regulatory compact should be changed and that it won’t somehow impact future investment in the distribution utility.