Sonoma Clean Power moving ahead on contract

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Officials with Sonoma County's startup public power agency are taking final steps geared toward entering into a primary power supply contract.

The move, which could come as soon as next week and would make for Sonoma Clean Power's biggest business decision yet, was authorized Thursday by the agency's board of directors.

The board gave its staff and Chairwoman Susan Gorin the go-ahead to execute a deal if any of the final bids meet an approved price target and fulfill other terms.

Several directors called the step a "milestone" in the agency's 32-month development and its planned rollout to customers in May.

Gorin, a Sonoma County supervisor, said a signed deal "is going to be a significant reason to have a big hoot and holler."

If none of the final bids equal or come under the agency's price target, the board would meet again to discuss a different approach, including possibly a higher price cap that could push customer rates above those proposed by PG&E for 2014.

Supervisor Shirlee Zane, the other county representative on the power board, stressed that beating the utility giant was crucial to the venture's launch.

"To be at or lower than (the rates for) PG&E is, I believe, the real incentive for the public initially to make sure that they don't opt out," Zane said. "I do want the greener energy, absolutely. But we've got to build our business and we've got to convince people that this is a better deal than PG&E."

The public power program is designed to offer a higher share of energy from renewable sources than PG&E, both to reduce greenhouse gas emissions and as a way to spur demand for local clean energy projects.

So far, only one other effort like it exists, in Marin County, where about 80 percent of customers once served by PG&E now get their electricity from a public agency. A similar venture in San Francisco has become bogged down in controversy.

At Thursday's meeting, Sonoma Clean Power representatives revealed that one of the four large energy companies in contention for the primary power contract apparently has dropped out.

Officials from ConEdison Solutions, a New York-based subsidiary of Consolidated Edison, have not responded in the past several months of correspondence, said Geof Syphers, interim CEO of Sonoma Clean Power.

"We're interpreting the tea leaves that they're not interested," Syphers told the board.

The other final bidders are: NRG Energy, based in Houston and Princeton, N.J.; Direct Energy, a Canada and U.S.-based subsidiary of the British multinational Centrica; and Constellation, a subsidiary of the Chicago-based energy producer and distributor Exelon.

The proposed three-year deal could be worth up to $130 million annually by 2017, based on current enrollment from the county and five participating cities and a 20 percent customer opt-out rate.

Unlike the Marin program, where officials first selected their supplier — Shell Energy North America — and then negotiated a final price, Sonoma Clean Power officials have sought to keep competition going among the companies until the last minute in hopes of achieving the best deal.

Michael Kyes, Sebastopol's mayor and representative on the power board, asked probing questions about that process but in the end joined others in voicing his support.

"We're not going to out-game them because they're sharks and we're guppies," he said of the energy companies.

"They're going to squeeze every hundredth cent out of us that they can," he said in an interview. "But they know there's competition and that they need to come under (the price cap). That's our protection."

Much of the board discussion focused on another recurrent question — how clean the public venture's power will be, especially compared to PG&E.

Under the proposed contract, 70 percent of the electricity purchased in the initial period must be from carbon-free sources, with no nuclear power allowed. By comparison, PG&E's emission-free power amounts to 51 percent of its supply.

Such comparisons have been a target of critics because about half of the power agency's renewable energy portfolio — which accounts for 33 percent of its overall supply at the outset — will come through credits that critics say are a form of greenwashing.

They allow suppliers to package a premium payment for undelivered green power with contracted electricity from a conventional source.

According to a PG&E spokeswoman, less than one percent of the utility's renewable power portfolio comes from credits. Renewable sources make up 19 percent of PG&E's overall supply.

Under California law, renewable sources include wind, solar, geothermal, biomass and small hydroelectric projects. Large hydroelectric projects are excluded.

Sonoma Councilman Steve Barbose, whose questions Thursday prompted the discussion about renewable energy credits, said his take-home message was still that Sonoma Clean Power would be greener, its carbon-free load equating to a smaller emissions footprint than for the power PG&E puts on the grid for local homes and businesses.

"What we are doing with the 70 percent carbon-free supply is guaranteeing that no matter what you think of renewable energy credits, we have lower emissions, period," Syphers said. "That's critical."

"I just need to be able to explain that to my constituents," Barbose said later in an interview.

Santa Rosa Councilman Jake Ours followed up with a related question, asking who verified that renewable power is actually purchased and supplied to the grid for the agency.

"How do we know for sure where we're getting this stuff from?" Ours said.

The terms in the proposed contract spell out sources to some degree, agency consultants said. Also, such transactions are tracked by a centralized system for the western U.S. grid, known by its acronym WREGIS.

"There are literally serial numbers associated with these electronic certificates," said consultant Kirby Dusel. "There's a lot of checks and balances, (and) no opportunity for manipulation."

In other business, the board approved a $7.5 million line of credit from First Community Bank to help with power purchases.

It also signed off on a five-year, $9.7 million deal with San Diego-based Noble Americas Energy Solutions for data management, billing coordination and call center operation. The firm performs similar functions for the Marin power program and is set to use an existing call center in Santa Rosa.

You can reach Staff Writer Brett Wilkison at 521-5295 or

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