Marin Energy Authority (community choice aggregator) Zaps PG&E Agitation: The Magazine Interview with Alexander Bischoff, Principal -, Mill Valley, CA


Marin Energy Authority (community choice aggregator) Zaps PG&E Agitation: The Magazine Interview with Alexander Bischoff, Principal -, Mill Valley, CA

Please download the Marin Clean Energy brochure at the end of this post.

“It is a desperate shame to see oil interests interfering in this obvious statewide and national interest. This to me is where government must intervene in the greater interests of the state and the country.” AB

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What actions by PG&E regarding the Marin Energy Authority (MEA) application are costing them credibility?

To answer this I think we need to separate prop 16 from Marin as community choice aggregation. I have not been following prop 16 closely, and although I hear that there is resistance, I speak mostly to people against PG&E. It is a common mistake to think that everyone thinks like yourself.

A recent survey of PG&E in Marin County would suggest that most people know PG&E as the company that provide callout services and delivers electricity. For this they have a high satisfaction rating.

PG&E strategy has been to leverage fear of change, and the lack of information on the separation of energy generation and energy distribution for the average consumer. As consumers find that the actual issue is about energy generation, which will remain reliably delivered by PG&E I think there will be a backlash against their deception and monopolistic practices. People fear change, they fear financial risk, but they also fear a large corporations which is not being honest.

PG&E have not been honest in their marketing against MEA. If PG&E loses prop 16, the combination of attempting to manipulate the legislation, and the unseemly marketing practices in Marin will harm their brand.

What was your role in developing Marin Clean Energy?

I had no part in the process at all. In fact I'm ashamed to say that my first introduction to MEA was when I misunderstood both the law and its ability to facilitate local energy generation.

My relationship with them began when I realized I has made an error and called to retract what I had written. This saga remains published on my web site.

However, I believe I have brought a strong economic perspective to the generation of local energy and its delivery as an economically sustainable and sound solution to the County. I understand the environmental implications of carbon emissions, but I do not subscribe to the idea that solving this problem must cost money. In fact I strongly believe that the only way to solve our environmental problem is to find economically sound solutions that are good for business, and that they will adopt.

What’s up with the Grand Jury report?

The grand jury report was based on the business plan of April 2008. It was prepared as a document to persuade the cities of the County to enter into a joint powers agreement, and commence the process to develop a community choice aggregation plan. As a document produced on the various and wide ranging the speculative nature of the business plan, it was most selective in finding the more negative to criticize, but was reasonable.

It is a pity that the criticism followed so closely the talking points from PG&E. But, assuming that the role was to critique, it did a fair job.

However, in December 2009, the business plan had been superseded by the implementation plan, the one approved by the CPUC. Speculation about local energy generation, was now replaced with actual data of how energy would be procured, and the ratepayers of Marin adopted into the CCA according to the legislation of AB117.

It is hard to understand why the grand jury would base their critique on a document 18 months out of date, when they were in possession of an actual implementation plan. Many of the criticisms raised were not applicable to the plan. And they were a number of criticisms you would expect doing a basic financial analysis of the plan.

I have heard it suggested that the lack of focus on the implementation plan was persuaded by PG&E interfering in local politics. I think it is likely that it was nearing Christmas, a lot of work had been done on the earlier document, and it was assumed that the implementation plan would follow the business plan. The grand jury on not energy experts, and in some ways it was an unfair task to ask them to review this highly technical topic. I have little doubt that PG&E were not unhappy about the process and the interpretation followed.

What ensued was plain diabolical in my opinion. The County Treas. Michael Smith, went public with an opinion which he has both admitted, and retracted, but which is clearly a repetition of the grand jury's findings. As an accountant in an earlier life, I believe it's fair to say that it is impossible for his opinion to have been based on the then current implementation plan. PG&E were quick to jump on the opportunity to base their marketing in the County on the cumulative financial doubts being raised by the grand jury and now the treasurer.

But this process took a decidedly unpleasant turn when a short while later 11 passed Mayors wrote a letter to the Mill Valley city Council, essentially restating the grand jury report and Michael Smith's comments. Etiquette suggests that passed mayors do not comment on the incumbent Council's decisions. But despite this the letter was drafted by an inside threesome (so rumor has it) and eight people signed on to trusted peers.

It's hard to know exactly what motivated this particular activity. But PG&E thought Christmas had arrived early. The playbook strategy, which some suggest was the basis of this letter being constructed in the first place, states that one establishes a trusted source to discredit to the plan, known local people to confirm the statements made, and to build on this by people in the community. PG&E's mailings used these three activities as a basis of building a watertight case in the community of financial fear and financial risk.

Few people in the county understand the details of the electric bill, most have heard one off the comments regarding financial risk from one of these trusted sources.

What is planned for the May 7th “power transfer” party?

It is a long time since a local government agency had a resounding success in the community. The Marin energy Authority on May 7 is the result of legislation passed in September 2002 to bring competition in energy generation to the state the California.

Competition brings innovation, and I think it's fair to say that the existence of this local agency has already been off significant benefits to many of PG&E's customers. They certainly have heard more from the account reps in the last few weeks and possibly in the last few years.

Three months of mail carpet bombing throughout the county, with statements by the grand jury treasure and respected individuals have taken a toll. The opt out rates is nearly 25%, which is as high as five times what might be expected in normal times.

The local authority does not have the money or the wherewithal to run television ads in the County, or to run an equally sized marketing communications plan. It is estimated that PG&E spent over $7 million dollars in Marin. This is nearly 3 times the total costs of establishing the local authority.

On May 7, over 200 businesses across Marin will announce their support for local energy generation, independence from fossil fuels, price stability, clean power, meeting the California environmental goals, and the value of competition in a market. Businesses range in size from the largest consumer of electricity in the County, MMWD, to the smallest one-man practitioner, across almost every industry segment. This is ultimately the only way for a community to tell the community that this is a good thing.

Community choice means exactly that. What better way than for the community to speak out on the first day of the first energy supply of the first community choice aggregator in history of California.

And for some of these businesses it has not been easy. There is an understanding that emotions are running high. Politicians have made statements aligning the local agency with green fiscal responsibility in a down economy. Others have talked about risk. I applaud each of the businesses that has been willing to get off the fence and to make a statement as to why the community must rally together and support the community's decisions.

So, please clarify what happens with PG&E’s power supply and services on 5/7/10?

On May 7 the electricity consumed by phase 1 customers in Marin county will be matched to electricity supplied to PG&E from Shell energy North America. This energy will be 78% of greenhouse gas free, and a minimum of 25% renewable. This compares to some 14% renewable from PG&E. But this is only the first step. The wholesale energy discounts available for the supply of electricity to these consumers, will be retained by the local agency rather than retained by PG&E and its corporate profits. As a nonprofit local agency, the surplus may only be used for energy efficiency and the local energy generation programs.

These are difficult times, and it takes money to invest in local energy generation. This may be one of the first times that a local agency has raised money without taxing its residents in some manner. There are some who questioned this redistribution of corporate wealth. But this is why competition is good, ratepayers have choice, and for the first time will have a say over what happens to the energy surpluses available on the generation side of the electricity question.

Are rates going up per the “old” PG&E rat schedule?

This is a board decision for MEA, which will be taken in the public forum including public debate by the board of MEA . However, unlike PG&E who have a number of rate increases applied for with the CPUC, the local authority has a five year contract with Shell energy North America.

The board at its discretion may choose to increase prices in line with PG&E, which will result in ongoing surpluses being retained in the county for ongoing investments. Alternatively it might choose to hold prices and pass the surpluses to the ratepayers.

The good news is that the board has no purpose to exist other than to serve the eight cities that comprise its membership. It is reasonable to assume that it will make this decision in the community's best interests.

Do you foresee rates coming down?

I think anticipating energy rates coming down in United States where the rates are already so low is unlikely.
But if we are to avoid ongoing rate increases driven by a global market for fossil fuels is critical that counties and states free themselves from fossil fuel indexed electricity. Distributed local generation is the only way to do that. Right now the cost of solar energy, wind, fuel cell match that of central energy generation and distribution. But this is only the case because the distribution charges are eliminated.

In order for local renewable energy to be generated, and distributed within the community's boundaries the cost of generating local energy must continue to come down. The good news is that technology will improve following Moore's Law each year. We are at the inflection point right now where the cost of a marginal kilowatt hour of electricity off the subsidies is similar to the cost of a centrally generated kilowatt hour. A local authority that is in business to encourage local generation and distribution is critical to unleash the imagination and potential of the emerging renewable generation technologies. At the same time local demand will go up as electric vehicles substitute fossil fuel energy for electric energy.

I believe that we will see a progressive downward pressure on generation prices as we transfer the source of electricity to renewables, and apply innovative technologies to efficiently convert them into electrons we can use.

What has MEA learned from the first two community power entities?

Unfortunately both of MEA's predecessors operated in an environment of elaboration and not hostile competition. Many of the challenges faced in California have been unique, and I think it is more likely that MEA will act as the front-runner to other California states in providing examples and guidance to them.

One of the lessons I have learned is how few regular residents actually understand the nature of energy generation and how they are charged for it. This creates a rich ground for sowing fear and false marketing by the incumbent. I think future CCA's will do well to invest in educating their communities about electricity supply in general.

I'm also surprised at how few people have seriously changed the behavior when it comes to consuming electricity. We may seek to be energy conscientious, but there is a mindset shift to put that into action.

I would encourage any authority exploring this process to make sure they understand the impact of change on the community they serve. In some ways Marin is a mixture, we are close to Silicon Valley where change is embraced daily. At the same time there is considerable retired old money, where change is resisted. I think that the culture to change will significantly impact both the adoption of clean energy by the residents, and the willingness to embrace the efficiency changes and local generation changes required. In many cases this may acquire the city Council to invest monies in energy generation projects, which is not something they can look to past councils for guidance on.

MEA is not alone in making the cultural and behavioral changes that are required for the consumption of electricity if savings are to be made on both the generation side, and on the efficiency of the consumption side. PG&E are taking some unfair criticism for the implementation of smart meters and the resultant increase in electricity bills. Smart meters are simply an enabling technology that allows consumers to be presented with a menu of what things cost at what time. We are all familiar with playing different prices for different wines we drink. But we are not familiar with playing different prices for the amount of electricity we use at different times of the day. Ultimately we do need to become responsible for the costs of what we consume. Smart meters provide the mechanisms by which we can be informed of what we are doing. Once we are informed, our costs will go up if we continue to behave in the same way as before.

It is not fair to blame the meter, which did nothing more than measure what you consumed, when you consumed it, and send that information to whomever was billing you that you might be billed on the new basis of charging. If it is a gripe on smart metering, it should not be aimed at the meters, but rather at the rate schedules and how they are applied as consumer behavior is changed.

What advice will give other communities who want to take control of the utility grid?

I do not think it is a good idea for a community to take control of the utility grid. Operating grid requires economies of scale, technical people, management, and service levels that are not the remote of a local government agency.

I think the most exciting part of community choice aggregation is the partnership between the owners of the grid, the local authority who are empowered to make decisions in the interest of the community, and creative innovation in the capital markets that brings new energy generation solutions reliably delivered to the table.

Is community power production a revolution?

Yes I believe it is. The incumbent utilities can be likened to the old mainframe computer suppliers. At one level they wish to retain the status quote. In fairness to them they are concerned that emerging unproven technologies might put the reliable supply of electricity at risk .

Electricity is a critical resource and lives are lost if it goes wrong.

The revolution is similar in its nature to that the computer industry went through as we moved from mainframe computers with IBM and proprietary communications protocols , to a Google like infrastructure of independent wirelessly connected computing .

But the stakes are many times higher. If we fail the economy of the United States will be severely prejudiced as energy costs skyrocket. If it is too aggressive with could face an unreliable grid.

The hope is for the next wave of technological innovation that could alter the dynamics of the US energy economy. To have a low cost reliable infinite supply of electricity is critical to an energy-based economy like what we have here in California.

It is no wonder to me that those who supply fossil fuels will go to extraordinary lengths to ensure California's continued addiction to energy, but an energy required by the conversion of fossil fuels.

“Marin Clean Energy (MCE) is a renewable energy alternative to PG&E's electric supply that will soon be available to Marin customers. MCE is responsible for sourcing the power and purchases the energy supply while PG&E continues to deliver the energy, maintain and repair transmission lines, and provide customer service and billing.”

How do you see the future relationship between PG&E and MEA working?

It will be testy at first, but in the long-term change will be embraced. PG&E may have stooped to some unpleasant tactics to retain control of the market. But once it is clear that they distributed energy generation model is in place, they will want to participate in the moving of electricity from place to place, and will want to participate in the investments and opportunities that making it locally will afford them.

The computer industry has many examples of co-petition, where partners and competitors work together to find the best solutions for the customers.

I do not believe in excessive government, but neither do I believe in an entirely free market economy when it comes to a resource like electricity. It is not possible for it to be competition in the distribution site. The duplication of infrastructure is just not feasible. This is one of those clear cases where regulation, innovation, and corporation must get together and work it out.

The stakes are too high for ideological positions to provide. Over the next 30 years California must become energy independent of fossil fuels if it is to name a viable energy-based economy.

It is a desperate shame to see oil interests interfering in this obvious statewide and national interest. This to me is where government must intervene in the greater interests of the state and the country.

What is the Light vs. Deep Green Product from Marin Clean Energy?

Light Green is the regular product at the same price as PG&E. The energy mix is 78% carbon free and a minimum of 25% renewable,

The deep Green product, which for phase 1 customers costs and additional cent per kilowatt hour, is 100% renewable.

For so-called early adopters, there is an early deep Green product, the cost is one cents per kilowatt hour plus an additional $10 per month to pay for the administration charges of early adoption. As early adoption fee will fall away when the rate payers normal adoption time arrives.

How can we get folks to reduce their energy consumption?

This is a cultural and behavioral issue. I wrote on it here!

I believe we need to educate our society to be more responsible for what they waste. It is politically correct to say save energy. But I believe we need to stop wasting.

Using energy is good, the issue is using what we need and no more! We need to engender a sense of loss when we waste a natural resource, like losing a small part of ourselves. It is not about the money, its is about us wasting and yet caring so little. This lack of caring is subtle, and as we do it it creeps into everything we do. Energy is with us all the time.

I see it as my conscience, a constant reminder to be thinking of who made it, and what right I have to consume it.

Connections –

Alexander Bischoff
bischoff.alex at open4energy dot com

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