The CCA "conundrum"

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PG&E mailers are ubiquitous. And somewhere, a forest is missing....
Rebecca Bowe

The negotiations for the city's green municipal power program still haven't resulted in a finalized contract, and time is running out.

In 42 days, voters will decide whether Prop 16, the ballot initiative dubbed the “Taxpayers Right to Vote Act,” ought to be enshrined into state law. If a simple majority votes yes, the state constitution will be changed to require a two-thirds supermajority vote at the ballot before any municipal electricity program can move forward, effectively making it impossible for local governments to offer alternatives to investor-owned utility companies. Pacific Gas & Electric Co., the 105-year-old utility that gained infamy with the movie Erin Brockovich after it was accused of causing groundwater pollution which led to a cancer cluster in Hinkley, Calif., is poised to spend $35 million to pass Prop 16.

Here in San Francisco, where the vision for a green municipal power program goes back at least half a decade (and PG&E’s monopolistic grip dates back much farther), the plan’s most dedicated proponents have come to view Prop 16 as “the grim reaper.” At a meeting in City Hall last Friday about CleanPower SF, the community choice aggregation (CCA) program that could provide San Franciscans with 51 percent renewable electricity, Sup. Ross Mirkarimi repeated a mantra he’s intoned since approximately last year at this time: “All hands on deck.” Mirkarimi’s face looked tense, and his anxiety about the closing window of opportunity was plain even as he tried to display optimism. If a CleanPower SF program contract is not signed before June 8, when Prop 16 is decided, years of hard work and effort could be lost. With $35 million worth of carefully crafted PR messaging that reveals nothing about the sole financier of the measure or its anti-competitive intentions, Prop 16 has a decent shot at voter approval.

The race against the clock has been intensified by the fact that the San Francisco Public Utilities Commission, the city agency tasked with implementing CCA, has been unable (or unwilling, some critics charge) to broker a deal with Power Choice Inc., the energy service provider selected for CCA. Negotiating sessions have been ongoing since February, with SFPUC staff members, SFPUC General Manager Ed Harrington, three city attorneys, and staff of the Local Agency Formation Commission devoting hours to negotiations. “We are continuing to work hard to secure a contract,” SFPUC Assistant General Manager of Power Barbara Hale told the Guardian.

Yet as the days pass, the absence of a signed contract in hand has program advocates increasingly worried, frustrated, and suspicious of the SFPUC. “My sense, and my fear quite frankly, has been that the level of commitment [from the SFPUC] isn’t there, and if it were there … then we would have a finalized contract,” Sup. David Campos noted at a joint meeting between LAFCo and the SFPUC on Friday.

John Rizzo of the Sierra Club told the Guardian that Harrington approached the environmental group last week requesting that it join the SFPUC in issuing a press release blaming PG&E's Prop 16 for marring CCA's prospects. Harrington was ready to announce that the CCA had reached a preliminary contract, but not really a contract at all, since key terms such as a rate structure would not be hammered down till after the June 8 election. The Sierra Club declined to go along with that idea. Such a move would have jeopardized the program’s shot at success. Campos highlighted this problem at the meeting, saying, "Even though there are risks associated with CCA, the risk of not doing this and not having as concrete a contract by the election is greater."

Green power advocate Eric Brooks noted that he had received a call from Nancy Miller, the executive director of LAFCo, notifying him that the SFPUC felt that Prop 16 had created a climate that made it too difficult to negotiate, and that a press release would be issued explaining as much. In the end, the SFPUC agreed to stay the course at the negotiating table. At Friday’s meeting, there was no mention of pushing the contract back to a later date. Instead, everyone nodded in polite agreement that all hands were, indeed, on deck.

But during his presentation to commissioners, Harrington emphasized the difficulty in meeting the twin program goals: green power on one hand, and competitive pricing on the other. He displayed charts showing how much more expensive wind and solar were than “brown power,” the fossil fuel and nuclear variety currently offered by PG&E. When challenged on the SFPUC’s commitment, Harrington responded tersely, “Staff commitment does not change the economic reality of the world.”

Brooks, who has weighed in and watched the process unfold since the beginning, later charged that Harrington was presenting a wholly different picture from what was originally agreed to as a way of subverting the program. “He purposely showed the numbers so that they would look worse," Brooks said. "His key trick was ... allowing the contractor the option of a 3-to-5 year contract. No one thinks you can pay renewable energy off in three years, that's ridiculous. ... He knows that the plan was to pay this off over 15 years. There's no way he didn't know that the idea is to pay it off in 15 years."

Harrington was not available for comment. But Hale, who did speak with the Guardian, told us, “We’re absolutely open to a longer-term contract.” The problem, she said, has been determining a rate that makes sense both to guarantee the long-term viability of the program while meeting the renewable-energy program goals and the financial commitment necessary to make it worthwhile for the service provider. It’s like a big control board with multiple dials, and the problem seems to lie in twisting the knobs to find the appropriate setting. So far, they haven’t hit the sweet spot.

Meanwhile, the political backdrop of this "conundrum," as Harrington called it, is that Mayor Gavin Newsom, now a candidate for Lieutenant Governor, would be placed in an awkward position if a Board-approved contract for the CCA program landed on his desk before June 8. If he endorsed the contract with his signature, he would earn the ire of PG&E, a moneyed political ally that could help him reach the office he aspires to. But if he vetoed CCA, it would amount to a stunning display of hypocrisy, since he would be a green mayor rejecting the greenest municipal power program ever attempted. Newsom, who wants to name a street after former Mayor Willie Brown even as Brown is publicly arguing in favor of Prop 16, could avoid that dilemma altogether if the contract negotiations just imploded, or were at least delayed till after June 8.

Comments

Just one short added comment to fully connect the dots..

The 15 year pay back period is precisely what allows the CleanPowerSF program to pay for itself and give Power Choice a reasonable profit, and still meet or beat PG&E rates. The CleanPowerSF plan was -designed- over 6 years ago to do exactly that, and everyone involved has been fully aware of this ever since.

So what Harrington was doing, was purposely and absurdly, utterly leaving out this key mathematical factor of the long term pay back period, so that his charts would falsely show that solar and wind power are more expensive, when over time they are actually cheaper, especially when combined with broad scale energy efficiency programs.

Harrington's presentation was nothing but a magician's parlor trick designed to dupe commissioners and the public into believing the program couldn't work. Fortunately, the commissioners didn't fall for it, and I doubt the public that was watching did either.

So the really important question is.. Why would Harrington play such a desperate and absurdly transparent shell game in an attempt to mislead us?

Who benefits Mr. Harrington?

Posted by Eric Brooks on Apr. 27, 2010 @ 4:14 pm

With the Newsom/PG&E SFPUC delaying the CCA, this just seems like more of the same. I'll be surprised if San Francisco is EVER able to end the PG&E monopoly, and I have no hope that it's going to happen this time. Doesn't mean I'll stop fighting for public power, but I have no realistic expectation that it will ever happen.

Posted by Jeff Hoffman on May. 02, 2010 @ 10:28 am

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