As PG&E faces uncertainty, Sonoma Clean Power sees a bright future in green energy

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The troubling saga of PG&E has been well chronicled along its path that led to a bankruptcy filing in January. Massive liabilities from wildfires caused by transmission lines. A push to increase already high energy prices to ratepayers. Public outrage over bonuses paid by executives during a period of turmoil.

Yet during the same time, the fortunes of Santa Rosa-based Sonoma Clean Power could not be more different while much less heralded.

Five years since first providing electric service to customers, the nonprofit public agency now has 87% of its eligible customers in both Sonoma and Mendocino counties, totaling 224,000 accounts. It claims to have saved approximately $80 million for its customers in reduced rates compared to the investor-owned PG&E, which still provides natural gas locally.

The local company — which has only about 25 employees — also has made tremendous strides in curbing carbon emissions. It sources green energy with a standard service that now provides 91% carbon-free power and has almost 2,000 customers enrolled in its premium EverGreen service, which offers 100% renewable energy sourced locally from solar panels and geothermal plants at The Geysers. Two years ago, it got into the production side by breaking ground on two solar-panel projects in rural areas located in Petaluma, and it is on a course to have a total of six such projects in the region. It also purchases power from a wind farm in the Altamont Pass.

“We’re undergoing something remarkable right now,” said Mark Landman, the board chairman of Sonoma Clean Power who also is a city councilman in Cotati. “This is a huge change. I think bullishness is an understatement.”

Indeed, Sonoma Clean Power officials said they believe their agency is nicely positioned to play a leading role in curbing carbon emissions at the local level while also serving as a role model for other Golden State communities to accomplish that same goal. In fact, the company more resembles a small tech firm trying out various research-and-development pilot projects to determine what can take hold rather than acting like a traditional staid utility. Its next ambitious idea? A downtown storefront that will open next year to display the latest household products that can dramatically reduce energy usage.

This activity is occurring at the same time of tremendous uncertainty over the future of PG&E. Meanwhile in Sacramento, policymakers continue to grapple over a major debate on the role of utilities, the state’s power grid, and efforts to further address climate change.

Sonoma Clean Power wants to help fill the void.

“There is a lot at stake. PG&E will probably be restructured. They will probably sell off their gas division. They will probably make other major changes. Some of those changes may be positive for the state. Some of those may not be. We need to be actively involved,” said Geof Syphers, the CEO who has led Sonoma Clean Power since 2013.

Sourcing clean energy

Sonoma Clean Power is a so-called community choice aggregator that was created by the state Legislature in the aftermath of the energy crisis in the early 2000s. The law allowed communities to create alternatives to source clean energy in areas that are under the jurisdiction of investor-owned utilities — like PG&E, Southern California Edison and San Diego Gas & Electric.

CCAs procure the energy for their customers, while the investor-owned utilities handle the maintenance of the transmission lines, meter-reading and billing services.

Both business structures are different than municipal-owned utilities such as ones in Healdsburg and Ukiah and Los Angeles Department of Water and Power, the largest one in the country.

Sonoma Clean Power was the second CCA formed in California after Marin Clean Energy was created in 2010. However, their popularity has taken off in recent years and there are now 19 such public agencies in the state serving 10 million customers. When a new CCA emerges, it becomes the default energy provider in the local area; homeowners that want to stay with the investor-owned utility must opt-out from the new agency.

The UCLA Luskin Center for Innovation estimates that these CCAs are likely to have at least 16% of the overall energy load in California by next year. At the same time, the energy load carried by investor-owned utilities should decrease from 78% in 2010 to 57% in 2020. Those numbers, in turn, have created some conflict between the two systems.

Kelly Trumbull, project manager at Luskin Center, said the PG&E bankruptcy has raised a lot of questions in the industry and around the future role of CCAs and IOUs.

She did caution that it would be “a big step” for a CCA to go from its current authority of procuring energy to taking over all of the services of a utility like PG&E does.

San Francisco officials are considering buying the local power lines from PG&E, but Syphers said Sonoma Clean Power is not interested in taking over local PG&E operations. He is more concerned about maintaining the success it has already achieved, noting that 90% of renewable energy in California is now procured by CCAs.

“How do we make sure those gains don’t get jeopardized? That’s my core question,” he said.

Working with PG&E

That focus has Syphers wearing many hats besides overseeing Sonoma Clean Power. He has been active in attending bankruptcy hearings in the PG&E case with his legal team. “We are meeting with everyone there in the room. We are talking about how to protect ratepayers and the public throughout their whole process,” he said.

But that’s not all of his policy work. Syphers serves as the legislative lead for the state CCA trade association in lobbying at the state Capitol, including monitoring bills that would affect the energy sector.

Such work never ends. His company and other CCAs have raised objections to a proposed $2 billion gas and electric rate increase by PG&E that is being heard in front of the California Public Utilities Commission. That battle comes after the CPUC last year approved an increase in the exit fees that CCA customers now have to pay investor-owned utilities to offset their losses from previous commitments like long-term power contracts.

Yet Syphers has noted a change of tone under new PG&E CEO William Johnson, who he met with on July 22. During the meeting, Syphers said Johnson asked him to work with PG&E in its advocacy role to rebuild neighborhoods in Paradise in Butte County without using natural gas as an energy source. That stance marked a contrast as PG&E officials previously had fought SCP on such a similar proposal after the 2017 North Bay wildfires — even though Syphers noted that homeowners can save as much $18,000 in construction costs without installing the infrastructure for natural gas.

“That’s a huge change. That’s a 180,” Syphers said. “That’s a tipping point.” He noted local communities in Sonoma County are also likely to consider a natural gas ban on new housing developments in the future.

Amid the wrangling over policy and politics, Sonoma Clean Power also has begun more of a pivot into making further inroads into energy conservation efforts on a local level. To help in this effort, Michael Koszalka, a longtime energy executive who started his career at PG&E, was brought in as chief operating officer in May.

“It is really interesting to see how quickly we can move to meet local needs,” Koszalka said, noting that projects typically in the energy sector take some time to implement.

Advanced Energy Center

The biggest test will be next year when it opens up its Advanced Energy Center on Fourth Street, where the public will be able to test and purchase energy-efficient products for the home, such as induction ovens and cooktops and heat pumps that serve as an alternative to furnaces and air conditioners. The center will build on a pilot project that allows local residents to test portable induction cooking units in their home to get a feel for preparing meals with the system, which relies on electromagnetic fields rather than electric coils.

“A lot of what we are doing is taking away the myth you have to cook on gas to have a gourmet experience,” Syphers said.

The store, which is sponsored by a $9 million grant from the California Energy Commission, also will be a place where customers can connect with contractors and developers that are building homes with such items.

The center follows a program for 2017 fire victims to provide up to $17,500 in costs for rebuilding a more energy efficient home, an effort for which PG&E and the Bay Area Air Quality Management District also participated. The program has received a 6% participation rate from fire survivors who have applied for a rebuild permit. Many fire survivors cited that they were too stressed in the rebuilding process to consider the offer, which would likely add more complexity to the rebuild, Syphers said. But he noted that PG&E is pursuing a similar program now in Paradise.

Consumer programs

Sonoma Clean Power will stop a program if it believes that its resources could be better served elsewhere. A key test case was its popular program that provided up to $13,000 toward the purchase or lease of an electric vehicle or plug-in hybrid. The program financed the purchase of 1,258 electric vehicles over the past three years, but Syphers and his team pulled the plug on it because they decided that the marketplace had caught up in offering a wide array of such vehicles for consumers.

“Our board is constantly demanding what is the value we are getting for the money we are spending?” Syphers said. Sonoma Clean Power has bought in $158 million in revenue from July 1, 2018 through May 31, while spending $145 million — resulting in an operating income of $13 million.

The company determined that resources could be better spent in installing more charging stations for such vehicles, given the overall lack of such spaces in many areas of the two counties. Syphers knows this firsthand as his housing complex in Cotati had to wait a year and half to get its 48 chargers installed, which came through from a grant by the Bay Area Air Quality Management District.

“We are always trying to work on what is the real problem right here as opposed to just riding success,” he said.

You can reach Staff Writer Bill Swindell at 707-521-5223.

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