Tag Archives: PG&E

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

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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.

 

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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.

Study shows investment and reliability are disconnected

Lawrence Berkeley National Laboratory released a study on how utility investment in transmission and distribution compares to changes in reliability. LBNL found that outages are increasing in number and duration nationally, and that levels of investment are not well correlated with improved reliability.

We testified on behalf of the Agricultural Energy Consumers Association in both the SCE and PG&E General Rate Cases about how distribution investment is not justified by the available data. Both utilities asked for $2 billion to meet “growth” yet both have seen falling demand since 2007. PG&E invested $360 million in its Cornerstone Improvement program, but a good question is, what is the cost-effectiveness of that improved reliability? Perhaps the new distribution resource planning exercise will redirect investment in a more rationale way.

Do we really need more storage for our renewables?

PG&E has been running a series of “advertorials” on clean energy in the Sacramento Bee and other papers. Today’s on the need for electricity storage caught my eye. I’m not sure that we need new storage in California, at least not large-scale, in the immediate future.

The PG&E article describes an event in February 2014 when California generated more energy, much of it from solar and wind, than consumers were using. PG&E raises this as a concern that should be addressed so as not to lose that energy. But PG&E’s premise ignores one critical point–California is not isolated–it’s connected to many other states.

California is the largest electricity consumer in the Western Interconnection (with 10 other states and parts of Canada and Mexico). However the state only represents 30% of Western load. All of those states have weaker directives on renewables and greenhouse gas emissions, and most have much larger portions coming from high-emitting coal-fired plants.

When California overgenerates from renewables, it exports that power to those other states. This leads to a reduction in natural gas and coal use. When California needs power, it imports power as it has been doing for decades. In other words, the rest of the Western Interconnect is already acting like a storage device. The Southwest utilities have long exported excess coal-fired power overnight to California at low prices. Now California can turn the tables. PG&E may not be getting renewable portfolio standard (RPS) or greenhouse gas reduction credits for those exports, but they reduce GHG emissions in other states.

This situation is similar to the recent rise in petroleum production in the U.S. The country now exports refined products thanks to advances in extraction technologies. Congress is considering whether to allow the export of crude oil.  For both California and the U.S., the concept of exporting energy has been inconceivable up to now. Time to rethink our paradigms?