Sonoma Clean Power: From startup to profit in two years
Two years ago, Sonoma Clean Power launched as a public startup in a business dominated locally by PG&E, a private-sector energy giant that has served households and businesses in Sonoma County for more than a century. The new venture’s supporters promised consumers a greener brand of electricity built upon greater use of renewable power, from solar, wind and other non-fossil-fuel burning sources.
For consumers, that basic service has been cheaper than PG&E’s, shaving an average of 2 percent off monthly electricity bills and saving customers as much as $50 million since its start in May 2014, according to Sonoma Clean Power.
The agency, which includes the county and eight of its nine cities, now serves 196,000 residential and commercial accounts, representing 89 percent of eligible electricity customers. It has reached profitability faster than projected, paying off startup loans and stockpiling reserves amounting to 10 percent of its $165.5 million annual budget. As of March 31, its net income - revenue from customer bills minus electricity purchases and operational costs - was $21 million for the fiscal year, a threefold increase over projections.
“I’m incredibly proud of the fact that we’ve moved from starting with borrowed money to paying off all our debt. We set really strong goals, and we’ve beaten every one of them,” said Geof Syphers, the agency’s chief executive officer.
The venture now finds itself at a crossroads. Its financial stability, in part, has fueled a debate over where to invest its windfall. Should it sock away that money for long-term reserves, spend it now to reduce rates, or use it to launch new green energy programs?
Any fundamental shift away from the core electricity service could put upward pressure on costs, ratepayer advocates warn, leading to higher customer bills and eroding support for the venture. They have urged a conservative approach to spending on green power projects, and especially smaller, local sources, where scale, land-use restrictions and other factors make electricity costlier.
Electricity from a large new Central Valley solar supplier, for example, is about half the cost of locally produced solar energy.
“You can’t have clean energy, cheap energy and local energy all at the same time,” said Don Schwartz, Rohnert Park’s assistant city manager, who serves on the agency’s board of directors. “I think there is a misunderstanding that we can have it all. Someone is ultimately paying for all of this, and it turns out it’s going to be the ratepayers subsidizing local clean energy projects.”
But Syphers and some supporters within Sonoma Clean Power argue that the agency must expand to remain competitive with PG&E, which is under state mandates to increase its use of renewable energy. They also are promoting the agency as a key actor in local efforts to address climate change.
“We need to have local investment in renewable energy, we need to reduce greenhouse gas emissions and we need to have competitive rates. All three of those things are going to have huge benefits for our customers,” Syphers said. “If we only focused on rates, we’d have a bit lower rates, but we wouldn’t be achieving our renewable energy goals or investing in the local economy. We’re making good progress on all three fronts, but there is tension.”
The debate over the future of Sonoma Clean Power is set to resume today, when officials from the county and eight participating cities who comprise the board of directors are set to decide how much of the budget to invest in stabilizing rates, boosting financial reserves and growing new programs. The outcome has implications that could ripple across the county, affecting the amount hundreds of thousands of people pay monthly on their electricity bills, as well as action on the promise two years ago to spur local job creation in the renewable energy sector.
The discussion has been fueled in recent weeks by proposed revisions to the agency’s governing document. One proposal up for consideration would solidify its focus on the broader effort to address climate change in Sonoma County, rather than work simply to curb emissions tied to power use and generation.
Another controversial proposal by Syphers would have stripped a provision that emphasizes local energy development and job creation, a key component in the public pitch that led to the formation of Sonoma Clean Power. Syphers quickly tabled that proposal after hearing strong opposition last month from representatives of the solar energy industry.
The most significant proposed change moving forward is to grow electricity sales by expanding into the transportation sector, a market that extends beyond homes and businesses and accounts for a majority of the county’s greenhouse gas emissions.