Utilities: ‘community choice’ power users get off too easy
Every time a California community starts buying electricity on behalf of its residents — as San Francisco does with its new CleanPowerSF program — the state’s traditional utilities get stuck with excess electrons that they’ve already bought but no longer need.
Customers of such “community choice aggregation” projects pay a monthly fee to the utilities designed to cover the costs of that excess power.
Now the utilities want to raise it.
On Tuesday, the state’s three big, investor-owned utilities filed a formal proposal with California energy regulators to change the way the fee is calculated, arguing that the current system no longer works.
Instead of spreading the costs of unneeded power fairly between utility customers who join a community choice program and those who don’t, the current system places too much burden on the latter, according to the utilities.
“At some point the customers who are left behind are going to face a really unreasonable burden, said Steve Malnight, PG&E’s senior vice president of strategy and policy. “We have to think differently about this.”
California’s first such program, Marin Clean Energy, launched in 2010. Now community choice programs account for 13 percent of all the electrical demand on PG&E’s grid, and the company estimates that figure could grow to 38
a program, as do a group of cities on the Peninsula, as well as San Francisco.
This year, PG&E customers who don’t belong to a community choice program will pay $180 million more to cover the costs of excess electricity than those who do, the company estimates. And as the popularity of community choice programs grows, that imbalance could grow to $500 million by 2020.
In other words, the company believes, customers outside of community choice areas such as Marin and San Francisco, as well as people in those communities who decided not to join, are paying a disproportionate amount to cover those costs.
PG&E joined Southern California Edison and San Diego Gas & Electric in Tuesday’s proposal to the California Public Utilities Commission. Any change in the fee would require the commission’s approval.
PG&E did not have an estimate Tuesday for how much the proposed changes would raise the fee faced by community choice customers. The typical CleanPowerSF customer currently pays about $8.35 per month to cover this fee, according to the San Francisco Public Utilities Commission.
Executives of community choice programs agree that the current system needs to change. But they argue that PG&E and the other utilities should also do a better job of selling off their excess electricity, which would lower costs for all customers.
The unneeded power comes from long-term power purchase contracts signed when electricity prices — particularly for solar and wind power — were substantially higher than they are now.
But Barbara Hale, president of the California Community Choice Association, said the utilities have been selling their excess electricity in the short-term, spot market, rather than trying to sell the power under longer-term arrangements that might fetch a higher price.
“If you’re holding onto something that’s costing ratepayers a lot of money, you should try to extract as much value as you can out of that,” she said.
Under community choice aggregation, a city or group of cities working together buys power on behalf of citizens. But those citizens still remain customers of the traditional utility company in their area. They pay the community choice program for electricity, while also continuing to pay the utility for maintaining the power grid and, in PG&E’s case, supplying natural gas. All of those charges, for both the utility and the community choice program, are paid on one bill. David R. Baker is a San Francisco Chronicle staff writer. Email: dbaker@sfchronicle.com Twitter: @DavidBakerSF