We have received some questions about PG&E's recent proposal to offer a new "Green Option" program in 2013 that "will give electric customers an opportunity to support 100 percent renewable energy for an average of a few dollars a month." Some view this program as potentially harmful to emergent CCAs or as undermining the value of CCA. We respectfully disagree. PG&E's Green Option is a marketing program of a large investor-owned utility, whereas CCA is an energy business model that allows local jurisdictions to take control of their power supply. In an effort to clarify key differences between the two, we offer the following analysis and request that you share it with your municipal colleagues, staff, elected officials, and local energy advocates.

 

1. PG&E's Green Option is a marketing program; CCA is a local/regional business opportunity. Communities considering CCA should bear in mind the significant environmental and economic benefits of opt-out energy aggregation that simply can't be achieved through PG&E's Green Option. PG&E's program is elective, and history has shown that enrollment in voluntary green energy programs is extremely low, limiting the programs' impact and overall value. (PG&E's Climate Smart program, introduced in 2007, garnered less than one-fifth of its goal participation rate--just 0.3 percent of customers--and was so overpriced, at $16 million, that it was terminated in 2011.) By contrast, CCA offers a robust, ratepayer-driven revenue stream and provides a local channel for new energy programs and renewable energy production. CCAs can deploy tax-exempt revenue and project bonds and enter into long-term power purchase agreements that help attract private financing for new power projects. These projects bolster the regional economy and create new jobs. In addition, clean power CCAs significantly reduce greenhouse gas emissions and help local governments comply with state mandates. The Green Option program helps PG&E comply with these mandates and add to its bottom line, but these benefits don't extend to local governments.  
2. When a jurisdiction forms a CCA, the redirected electricity revenues that flow back into the community are in the many millions of dollars, even for small communities. These revenues cover the cost of energy and CCA operations, but they also support local energy programs like solar PACE and solar gardens, EV charging stations, home energy efficiency audits and retrofits, energy job training programs, and demand response technology. In this time of government cutbacks, important programs like these are difficult, if not impossible, to fund through tax dollars. CCA provides a revenue stream to pursue local energy and economic development goals. PG&E's Green Option provides no such revenue stream.
3. PG&E's Green Option is based on the purchase of 100 percent renewable energy credits (RECs). Although RECs are a legitimate market tool to indirectly subsidize renewable power and help keep energy costs down, they are not equivalent to the actual purchase or development of new renewable supply. So, from an accounting and compliance standpoint, the Green Option RECs simply "green up" PG&E's underlying power supply, 80 percent of which is based on fossil fuels.   
4. PG&E's Green Option is more expensive (by 0.01 cent/kwh) than the 100 percent Deep Green option offered by California's only existing CCA, the Marin Energy Authority. In fact, PG&E's Green Option is double the cost of MEA's Deep Green program.  

 

According to Dawn Weisz, executive director of the Marin Energy Authority, PG&E's Green Option does not diminish the value of CCA. She notes that power purchased for MEA customers is at least 50 percent renewable power by default, whereas PG&E offers only a 20 percent default renewables mix. "The GHG impacts of a default green product greatly overshadow the incremental benefits of a voluntary program based on energy credits," says Weisz. "In addition, PG&E's Green Option cannot provide the local control, local programs, or other benefits of CCA."         

 

Other organizations have weighed in on the comparative value of CCA and PG&E's proposed Green Option program. In a comparison of Green Option and Sonoma Clean Power, the Climate Protection Campaign notes that the PG&E program will do nothing for Sonoma County specifically.

Matt Freedman, an attorney with The Utility Reform Network (TURN), believes that PG&E should be making long-term commitments to spur construction of new facilities rather than buying credits generated by existing wind and solar. (Freedman elaborated on this point in a San Francisco Chronicle article.)

Al Weinrub, a coordinator for the Local Clean Energy Alliance, considers the program an effort to undercut CCAs in emergent CCA cities and counties by diverting attention from CCA's multiple value propositions.

Charles Sheehan, a spokesman for the San Francisco Public Utilities Commission, says that San Francisco's CCA, now in the works, will offer a 100 percent renewable default product and local distributed generation benefits that PG&E's program doesn't offer.

City of Richmond Mayor Gayle McLaughlin is focusing on those benefits: "We are very much interested in local energy projects that offer our residents much-needed jobs as well as developing small-scale energy projects that can serve the supply needs of our CCA."                

    

If you have questions about this analysis or about CCA issues elsewhere in the United States, please give LEAN a call at 415-888-8007, and please share this bulletin widely. Thank you for your assistance.