tv [untitled] January 31, 2011 7:30pm-8:00pm PST
shell. there are a few aspects of that contract i want to go over with you here today and highlight, especially as they related to the flexibility i was just describing on the previous slide. one is the price that's marin set in their contract are for specified energy volumes. what i mean by that is there's specified amount per year of energy that's expected to be sold and there's a dead band around that volume for which to customers use more or less energy outside of that dead band than marin is responsible for making the supplier whole, either by bying excess energy and making whatever losses shell may have and selling excess energy. to start out, the government agencies -- the government entities in marin as well as a few generous supporters guaranteed start-up loans. these were loans needed for working capital to get started
and marin found it was critical because in the beginning marin -- and this was described by don weiss, their interim director when she was presented before you last month -- they had no -- they had no track record of revenues from customers. and so they need to have the more established entity in the form of the government in marin step up and provide those guarantees. and the exciting news is that marin was now since may able to demonstrate with the prack record of -- track record of revenues, use that futechull stream as collateral and was able to refinance the loans. so was able to take the governments of marin off the hook there. some of the costs in the marin contract such as price of renewables were not guaranteed at the signing of the contract but marin was able to work with shell to bring renewables in at a price that worked for their initial phase. and one of the ways we expected
a similar thing there, there also was no development of new resources as part of the initial contract with ha marin. but marin had a close and it's one we have spoken to here before and will be key for us, a clause allowing for resource substitution, so as renewables can get built over time for the program they can be used to substitute for existing generation in the portfolio. that's something we'll want definitely to make. those are some of the key things on moving forward for the program. but i also since this is my opportunity to give you all an update, i wanted to highlight quickly a few activities that were taking place in the regulatory environment. one major action was us managing to make sure that the cpuc didn't take an adverse reaction for us. this is where the cpuc was poised to produce a settlement between the c.c.a. entities and
those no longer pursuing c.c.a. and this was going to set a mechanism for calculating what the bond amount would be for c.c.a.'s -- like a clot ral c.c.a.'s would have post to cover the potential cost of re-entry fees such the c.c.a. suddenly cass troskically -- catastrophicically no longer exist. this is part of the legislation requirement in 117. this is going to be -- that mechanism we thought would be very adverse to not only our program but other c.c.a.'s and we were able to be successful in having the cpuc pull that decision from consideration and they're going to be -- they've reopened the record to example of the points that we along with our allies have put forward. so we're hoping to have a better outcome there. we've also been very active along with other c.c.a. parties in the generation rate flattening proposal that we have
before cpuc. we've been keeping a record there as to how such a rate proposal could be harm to c.c.a.'s ability to set rates appropriately and lastly with more prodding, we've been rather pesty at the cpuc and prodding of our allies, cpuc is taking considerations about revisions to the exit fee mechanisms so these are the charges the customers would pay -- c c.a. customers would pay every month back to pg&e for, quote, stranded energy costs and from what we're seeing in workshops and our participation there, the cpuc is very receptive to our arguments and looks like we'll be able to have movement there as well w that, that's my update. thank you very much for your attention. i can answer questions. i don't know if miss miller wants to follow up. >> thank you, mr. campbell. miss miller, anything to add to
mr. campbell's presentation? >> i just want to add kind of the next steps and a couple of clarifying points. the next steps would be for mr. campbell to go to the sfpuc commission and seek authorization to begin negotiations. and those negotiations, what mike has been talking about, is the flexibility in some of the terms for our original c.c.a. implementation plan and those are in the four key areas that are potential to phase as opposed all in when we start the program. the only on obviously we're going to negotiate the rates and our original goal would meet or beat -- that's still our goal but based on what we've seen from these bidders, we h from these bidders, we have some negotiating to do in terms of that and there's some flexibility that we talked about in our last r.f. narks we would have flexibility in that area as
well. the third is the risk allocation . obviously, if you go all in, it's very risky. if you phase, let's risk. there will be risk allocation discussions flexibility there. finally on the issue of the resource mix son we will still be planning the phase two, our in-city renewable, the most exciting part of the program, i think, and the other renewables that are the development that we will be doing ourselves. and that will be part of those negotiations as well about when we layer that in, which will be as quickly as possible. so i think with that, i will take any questions. >> colleagues, do we have any questions on the presentation? i do have a couple of questions that i wanted to just follow up on. thank you for your presentation, mr. campbell, thank you miss miller. in terms of the two ways forward you described, so the decision
of which one or combination thereof to go with that's left to the p.u.c.? >> yes, sir, it's left to the p.u.c., the staff's recommendation will be to go with direct negotiations. that's what will be planned for being presented at the meeting on february 8th. >> and in making that choice, is there any change to the legislation that was passed by the board of supervisors essentially creating lafco and creating the program? just wondering what the parameters of what the p.u.c. can do or not do are. >> i think there would be a significant change if there was direction from the commission to try to go forward with the sfpuct would be significant change from the ordinance that the supervisors passed. >> that would require that it go back to the board of supervisors? >> i believe so. >> and in terms of the two
options that you listed, is there a third option? i mean, is there a hybrid of the two? or is that you take one or the other? trying to understand that a little bit more. >> sure. thank you for the opportunity to clarify on that a little bit. there really always is that -- the sfpuc is going to be involved in the program no matter how it's structured. and to be clear what i'm talking about what i'm saying begin a bilateral negotiation, it's that we would be seeking really the key part of the industry language for it as full requirement supply. so this is an entity that would be relied upon to procure all of the energy for the customers we need, figuring how to map that to how the loads fluctuate over time and have them take on some of the risks of managing the portfolio hour by hour or day by day. if we weren't to go with that approach, then we would be
entering into all of the very myriad of smaller contracts basically whoever the supplier would be, so it's just more to manage. and that's really the big key difference. that's one of the main benefits i think of going with this approach of seeking a full requirement supplier. so thanks for the opportunity to clarify that. >> thank you very much. colleagues, any other questions? commissioner avalos? >> just a question you touched upon briefly in your presentation mr. campbell and that is this last bullet point in your power point, cpuc has been responsive to san francisco and c.c.a.'s allies to exit mechanism. can you elaborate on that a bit? does that mean there is action taken in the responsiveness? or there's openness to hearing it or changes at the cpuc that
would make this a little more flexible? >> sure. no official action has been taken to date in terms of a policy change but there have been indications of willingness to have a policy change. one of the key ones is this is an issue that direct access entities of for-profit firm that's sell energy directly to large industrial customers predominantly have been clamoring to get revisited for years and the commission hasn't even had a workshop. we've been very interested in doing much about that through various procedural mechanisms, we've been requesting along with our allies, that the commission relook at that and start developing more of a record and see if the rules for setting the -- the mathematic method for calculating what the exit fee should be, if that should be revisited. and the commission has been interested in that enough so it's held workshops with all
parties, utilities, ourselves and our allies and there's been discussion about the way that the exit fee has been calculated, what goes into that, is it appropriate and is it unbiased unfairly in favor of utilities, and from participating in those myself along with our regulatory staff and others, there definitely seems to be i would say a broader consensus certainly on staff at the cpuc and just the higher level cpuc by, you know, having staff be looking at this question that there's interest in moving forward on that. >> and would any changes require any statewide legislation that could be done in the cpuc? >> this is within the pevey of the cpuc and regular setting of rules. it's not the type of thing you generally would see in state legislation, i believe, because it's fairly wonky.
it's the type of things we're arguing about is what type of factor should be included in reaching the benchmark portfolio price for the cost of renewable energy and how do you figure out what is a fair benchmark renewable energy and how do you subtract that out of the overall price benchmark that then is utilized to set the exit fee structure. >> is there basing some of that on the number of customers they have and you eliminate customers, they're losing what their estimate revenue income stream would be? >> it has less to do with that, commissioner, has much to do with using a estimate of what their average -- what they think they can procure energy in the market would be and having that be a price that is unfairly biased too low. so -- i'm sorry, i'm messing that all up.
that's probably why they don't want to do it to legislature. the -- one -- >> it's something we can come back to another time. >> i can take one more crack at it and if i just whiff there, we can just move on. sweating too much in my suit. one of the big elements we're arcing about are discussing politely amongst friends there when we talked about here terms of right now the -- the utilities are required to have a certain amount of their portfolio met through renewables so they are going out in the market and they are procuring renewables that -- prices, prices that are above their general average price. and one of the odd quirks is as customers would sign up for c.c.a., that would reduce their overall load and therefore increase their compliance percentage but the way the mechanism works currently, those prices for thirt portfolio
include the price of these renewables as being, quote, uneconomic. so that would be factored into making the exit fee amount for a c.c.a. customer. so in effect a c.c.a. customer is having to pay a little bit of a fee on their bill to help pg&e's portfolio be a little greener. and those type of arguments just on their face, they're unintended, negative consequence that has no real policy value for california. and that type of leverage we're finding there. i hope i didn't whiff too bad on that one. >> no, that was good. >> thanks for your patience. >> thank you plrks campbell. why don't we open it up to public comment. if there is any member of the public who would like to speak, please come up. >> good afternoon. i think most of you don't know me. my name is al winerub. i'm representing here the local clean energy appliance, which is an organization of about 70
organizations in the bay area that has been pushing for community choice energy for many, many years. and largely out of a conference that we held last february i believe it was, grew very spirited, active movement to pose prop 16 because of the except to which it threatened community choice. so i just wanted to thank you for the opportunity to speak here. we've been following what's been happening in san francisco fairly closely and we're somewhat dismayed a number of months ago when san francisco sort of took the move of separating out the procurement part from the build-out part of community choice. and from the perspective of most of the advocates of community choice and the activists who have been involved, the real meaning of community choice is what it means in terms of
community development and jobs and local buildout part, those of energy efficiency as well as new renewables. so the judgment that the marin model has been successful is somewhat questionable in our minds. certainly marin has managed to exist under pg&e brutal attack. it's been able to refinance its loans and it's been able to secure a certain amount of energy at competitive base for the 10% to 20% of the rate base that they already have in there. but to call marin clean energy successful and the amount to follow is somewhat questionable, if that we don't feel the verdict is in on that. there are still a number of hurdles. there's very little of the marin clean energy that's actually local buildout energy right now. it's all procurement on the market, largely competitive because of some very special kinds of circumstances.
so we're a little bit wary given that there's all the conversation about trying to make the procurement part work. a lot of risk involvement and so on without any clear expression of what the phase two i think that was referred to or local buildout part is without any clear commitments of what that might be and how exactly that's related to the procurement part. now, it's not a surprise that the procurement part is very risky and questionable at this point. even the update of the san francisco electricity resource plan states very clearly that procurement on the open market is very questionable and difficult. i can refer you to page 63 where the rocky mountain institute basically -- >> thank you. >> oh, am i out of time? >> thank you very much. >> i didn't realize there was a three-minute time. i apologize.
>> next speaker. >> good afternoon. commissioners, eric brooks representing san francisco green party and the local grass roots organization, our city. i kind of want to give a more wonky version of what you just heard laid out from another organizer, and i sent you all an e-mail. please do take a look at that. it is more detailed on what i'm about to say. and both the green party in our city, first of all, would take very strong issue with the direction that the sfpuc staff wants you to go. very strong objection to any profound amendments to the 2007 ordinance. besides perhaps the -- what supervisor come pass raised last meeting of exploring at least the start-up and some of the procurement at the beginning being rolled out by the agency
itself. but with that said, both local power and the contractors that know most about c.c.a. and a lot of us as advocates for years have been hammering on some key points for the r.f.p.'s that have gone out. those points have not been included in the r.f.p.'s and it is our opinion that the reason the r.f.p.'s are not succeeding is not because of a problem with the 2007 ordinance, it's because of problems with the r.f.p.'s. zwroust quickly go over those, reweapedly asked for the extensive preparatory work that needs to be done to locate the assets, locations and any regulatory hurdles that contractors need to be secure about before they know what they're bidding on in r.f.p. that work was not done before any of these r.f.p.'s. the need for actual mandates in
the r.f.p.'s for renewables of specific amounts and efficiencies of specific amounts once again so the contractor that -- contracts that are bidding will see there's going to be a revenue stream coming from renewable efficiencies that they can count on. otherwise it's not economic for them to respond in a good way. locking in the h bond authority that we passed in 2001 for revenue bonds so that once again, contractors can see that the city is seriously dedicating that rev few bonds are going to be a fact and if they don't see that revenue stream coming in, how are they do bid on an r.f.p. not knowing that security will be for them? and then the last one, which others will repeat, i'm sure, is that having procurement and a buildout locked in with the roll out together because we're not going to get a revenue stream
that will support this again without actually building things and having specific amounts. contractors need to be able to count on that as well. >> thank you, mr. brooks. next speaker, please. >> good afternoon, commissioners. josh with brianline. how are you doing? i wanted to speak to the same issue which is just the commitment to the buildout of the local renewable generation and efficiency of community choice. i think it's a lot of what attracted many of us to this program to support it all of these years and i know we want to move forward with the program. i think we all do. but we also want to get to the buildout. we want to get to the local and it's something that marin has finally realized there talking about now getting to the local and i think as an advocate for the local renewable generation efficiency, job components that that brings, the ability of further environmental justice through this program, i think that's something we have to hear as a clear milestone in this program and i think it's not
enough just to say let's go on the market and procure. i think we need to hear that commitment that we're going to commit to the 2007 ordinance that we all still support. i want to also mention with respect you heard from al winerub of the local clean energy alliance. he and the alliance just published a report that i think is essential to making the case why we need to commit to the buildout component of community choice. it's called community power decentralized renewable energy in california. we may even if we're lucky have a couple copies for some of the members because it shows why it's so important to commit to that buildout. so as it goes forward, i'm deferring i think to some of the process and commitment we're hearing commitment to not only move forward with the program but i hope there's some openness to really committing in a very certain way with dates and actual commitments to that buildout. because i think that's where you really have a program people
have been behind for som years and where we want to see this go. particularly we're eager to apply the new avalos local hiring law to that buildout because i think that's the genesis of a lot of local hiring movement is out of environmental justice, guaranteeing opportunities for folks that grew up in disadvantaged communities with decades of power plant pollution from them dirty power plants in the southeast working on the renewables, lowering our demand for dirty power and that's something that i think we're real excited about doing as long as we do the buildout. thanks. >> thank you. next speaker, please. >> good morning. aaron israel, sierra club and member of the citizens advisory committee at the p.u.c.. this is a big deal what's being proposed, and wish new members of this commission were seated today. this is a big deal to change a key aspects of the ordinance, and i really hope that our staff
at p.u.c. and lafco really do, do a good job in reaching out and explaining to the community your logic about really going back and upending a lot of the key pieces of the 2007 ordinance. we all need to understand your logic and its -- it's ideal if we don't hear it after the fact. thank you. >> thank you very much. is from any other member of the public who would like to speak on this item? seeing none, public comment is closed. colleagues, any comment or questions? commissioner mirkarimi. >> thank you. i agree with the last public comment that i think for p.u.c. staff in particular and lafco staff, i would strongly encourage that you take this show on the road in explaining i
think the -- in how the experiences of dealing with the r.f.p., r.f.q. process has now taught the city government as to the parameters of what we're dealing with in why there may need to be some flexibility in dealing with what the c.c.a. program looks like in san francisco. it's been a sobering exercise in dealing with i think the universe of companies who have been responding both formally and informally to our different phased requests that is reflective of the ordinances of which i had been the author of. and c.c.a. and then before me then supervisor ammiano. and i think it's important that if there are networks of
advocates who are unclear about the hiccups or the impediments or the challenges, then i think the message is sound that both lafco and p.u.c. should be together in having the strategy discussions and members of lafco's commission maybe can participate in those as well too. but as far as i understand in talking very closely with our colleagues in other counties around the state of california, with their ongoing experiences about dealing with their interest in trying to pursue c.c.a. and then what ultimately were the half baked and products that came out of it and then ultimately torpedoed, whether in san jaquin valley or whether in the east bay, and to see only one municipality so far in the state of california really begin to flourish at best out of an
incubation stage, that being marin, there are no other examples that are i think striving in the state of california. so we are creating as we go along, and i think that that creativity and the mechanics of those economics have got to be well explained so that p.u.c. doesn't continue to come to lafco into p.u.y. commission meetings -- p.u.c. commission meetings, disappointing people because there might have been a different set of expectations, hopes and dreams to what it is we expect to see happen. and lafco's staff i think is obligated to do the exact same thing. that's why i think that this next six-month period is going to be an absolutely critical period about locking in what the plan is going to look like based on what the potential vendor, service provider, is going to be
able to do to implement that plan. and the city government, especially p.u.c., going to be able to feel that relaxation on the question of risk liability since it seems to be a high bar for the city government to be comfortable about this particular transaction and venture. so i'm hoping that, that happens soon enough. people from the environmental community, et cetera, need to be at the able and there needs to be i think that thoughtful discussion. and until we get that i think that support from sacramento in terms of strengthening our municipality's ability to stave off the predatory tactics of the private utilities industries to underminus and to constantly keep changing the rules of what it means to try to meet or beat or even try to i think subvert
our ability of providing a real product to customers only to see the utility unregulated to go ahead and just take the rug out from underneath c.c.a. efforts, then we are left to fend for ourselves. that conversation has got to take place. in my opinion it's immensely naive for anybody to think that until the rules are highly upgraded and strengthened from sacramento to have our back or any city's back in california, that we're going to just continue to see more prop 16's come down the pike even tailored locally to municipal ballots, not just state ballots, in order to literally decimate every effort of where there's a c.c.a. so hoping those conversations start soon. >> thank you, commissioner. colleagues, any other comments or questions? i do have a question for miss miller. in terms of te