HomeMy WebLinkAboutSPCC Minutes 2008-06-24SRCC Minutes (Special) 06/24/2008 Page 1
IN THE COUNCIL CHAMBER OF THE CITY OF SAN RAFAEL. TUESDAY. JUNE 24. 2008 AT 6:00 P.M.
Special Meeting: Present: Cyr N. Miller, Vice -Mayor
Greg Brockbank, Councilmember
San Rafael City Council Damon Connolly, Councilmember
Barbara Heller, Councilmember
Absent: Mayor Boro, due to potential conflict of
interest.
Also Present: Ken Nordhoff, City Manager
Linda Jackson, Principal Planner
Esther C. Beirne, City Clerk
1. MCE AND RENEWABLE ENERGY FOR SAN RAFAEL: - FILE 271
Vice -Mayor Miller called to order the Special Meeting of the San Rafael City Council. He reported that at the
May 19, 2008, City Council Meeting, following the requirements of Political Reform and Brown Acts, Mayor
Boro excused himself from the Council discussion and vote on matters of the MCE JPA (Joint Powers
Authority) as he has financial interest in Pacific Gas and Electric. Consequently, Vice -Mayor Miller noted that
only four Councilmembers would participate in the discussion and vote on the MCE JPA. In addition, with a
Council membership of four and a quorum being two, Councilmembers could not speak to one another or
communicate with each other through any means about this subject outside a public meeting. As Vice -Mayor
he would act as Chair of all meetings about the MCE JPA.
Vice -Mayor Miller reported that the purpose and order of this evening's meeting was for all four
Councilmembers to receive at the same time an overview and necessary background information about the
MCE JPA proposal. To accomplish this goal, the meeting would proceed accordingly. First, City Manager
Ken Nordhoff would have ten minutes to make introductory remarks about the context and processes of this
evening's proceedings. The County of Marin, proponent of the MCE JPA, would have forty-five minutes to
make the principal presentation of the evening. Having heard the proposal, PG&E and the California Public
Utilities Commission (PUC) would offer their perspectives, with thirty minutes each. Each Councilmember
would be given six minutes to ask questions for written answers from each presenter at the conclusion of
each presentation. When necessary, for purposes of understanding, Councilmembers would be free to very
briefly dialogue with presenters during the presentation; however, the interruption should come through the
Chair. After the presentations, Council would hear comments from the public, with up to three minutes for
each speaker.
Prior to this meeting, Vice -Mayor Miller stated that the four Councilmembers met in public session on April 22,
2008, at a luncheon with Dave Orth, General Manager of King's River Conservation District, representing the
San Joaquin Valley Power Authority.
In addition, they had been issued from the County of Marin a study binder with the following materials:
• Executive Summary of Business Plan
• MCE Presentations of Overview and Risks
• Business Plan for Marin Community Choice Aggregation (CCA) proposal
• Peer Review of Business Plan
• Renewable Resource Supply Plan
• PG&E Review of Business Plan
• Public Education
• Further Reading and Resources
• Frequently Asked Questions Pamphlet
At the City Council meeting of May 19, 2008, all considered a proposed review schedule of the MCE JPA
leading to a vote in November. Furthermore, Councilmember Connolly and he, Vice -Mayor Miller, served on
a local government task force that was part of over a year-long process in the development of the Marin CCA
Business Plan.
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Introduction — Ken Nordhoff, San Rafael City Manager:
Mr. Nordhoff stated that the purpose of this meeting was for the City Council to consider, on behalf of the
electricity rate paying residences and businesses of San Rafael, whether to become a Charter Member
of the Joint Powers Authority (JPA), for the agency known as MCE. This would be the first in a series of
meetings regarding this subject. Tonight's meeting would be the first opportunity to hear directly from
the three major players that would be involved in the MCE Program, were the JPA to be established.
The Council would also hear about the successive steps that would need to be completed to initiate this
public enterprise.
Mr. Nordhoff noted that speakers this evening would include Marin County staff - serving in the role of a
possible new electric energy provider for San Rafael and its residents, PG&E - current energy provider,
who would retain responsibility for transmission, distribution, metering and billing, as described in this
program, and the California Public Utilities Commission (CPUC) - regulatory agency over both the
electric and gas providing enterprises in the State, as well as Community Choice Aggregators.
Councilmembers would be allowed to ask questions of the presenters, and a record of this meeting
would be kept by the City Clerk's efforts. Linda Jackson would ensure questions were codified, became
part of the record and answers provided back from the presenters, hopefully by mid-August, would be
made part of the public record with the information provided to the City Council and the public. Mr.
Nordhoff stated that this session was the beginning of an extensive public review process that would
allow for an exchange of information in order to assist the City Council in making this JPA determination
in the Fall.
For the benefit of the audience, Mr. Nordhoff mentioned three additional meetings scheduled in various
community centers:
• Wednesday, September 3rd at Pickleweed
• Monday, September 8th at the San Rafael Community Center on B Street
• Monday, September 22nd at a location to be determined in North San Rafael
He noted that all three sessions would commence at 6:00 p.m. and would have a very strong focus on
public input. Planning of those meetings would include a summary presentation of the Business Plan,
results of the work this evening, including responses from questions raised, and possibly interactive
stations by County staff and PG&E in an open house format for people to ask questions specifically of
those organizations.
Mr. Nordhoff stated there would be opportunities for additional public presentations besides this evening.
Dawn Weisz and her staff and PG&E both agreed that if organizations, home owners associations, etc.,
were interested, they would be prepared and willing to have additional meetings to present their
materials. Mr. Nordhoff also offered assistance from staff to ensure they were directed to the right place.
His office had already received comments, suggestions and public input which was being captured in the
City Clerk's Office. This information would be available to the City Council and members of the Public
when it came time this Fall for decision-making.
Mr. Nordhoff explained the information placed before the City Council this evening, which could be used
as a reference for this evening's meeting. Information included a PG&E packet, Frequently Asked
Questions provided by Dawn Weisz of issues that had been raised in the last couple of months, and an
annual report from the PUC. A new web page would be established to provide links to the MCE site and
make all presentations available in one location for public access.
Indicating that this work would culminate around the October timeframe when the City Council would
receive a summary report from him based on all of the meetings and work done to date, Mr. Nordhoff
stated that there would be a final public hearing and decision around the November timeframe when a
determination would be made by the Council on whether to join the JPA. As those dates and times got
set, they would be made available to the Public as well. Mr. Nordhoff concluded his opening remarks
and asked if there were any questions.
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Councilmember Heller inquired about the role of the PUC and if they were going to give a general
overview of their entities that had programs, such as this, in the State.
Other than the San Joaquin Valley case, Mr. Nordhoff stated there were not any other CCAs established.
He believed a lot of their focus was on what was happening in the area of climate change and mandates
and what they were seeing from their regulatory perspective. He did not believe this was limited to a
Northern California or PG&E view, rather they were actually responsible for the entire State. He
suggested that the question be directed to the PUC.
MCE — Dawn Weisz, Marin County
Dawn Weisz, MCE, County of Marin began by stating that she will give an overview of the MCE Plan,
then an update of work done over the last five years or so, followed by answering specific questions by
the Council.
Ms. Weisz reported that historically in California, energy had been supplied in two different ways. First,
the Investor -Owned Utility model, referred to as the IOU model. In that model the investor-owned utility
purchases the power, maintains the transmission lines, wires and distribution system, and provides the
customer service. The other model is the Public Utility, also known as a Municipal Utility. SMUD was
probably the best known example in this area of a municipal utility. About one-quarter of all energy
customers in California were customers of a public utility.
Ms. Weisz reported that in 2002, AB117 passed allowing for a mix of these two ways of supplying energy,
called Community Choice Aggregation or CCA. Under a CCA, the government entity purchases the
power but the IOU continues to maintain the transmission and distribution system, and continues to
provide customer service. In Marin, CCA is called MCE, which is easier to grab onto and explains the
approach being taken. She explained that a JPA would be created and the earliest this could happen
would be the end of this year or early next year. An energy service provider would be selected some
time in 2009 to provide the services to the JPA and the customers. Power would be purchased initially
from outside of Marin but over time, local generation assets would be built and the ultimate goal would be
to own a lot of the underlying assets to achieve more rate stability.
Ms. Weisz explained that customers would have a choice between MCE and PG&E for their power
source. PG&E would continue to deliver the electricity, maintain the transmission lines, and provide
customer service.
Explaining the reasons why MCE was being explored, Ms. Weisz stated the first was personal choice.
Currently there was one choice and this would add another choice for customers of where they get their
energy from. A number of financial and environmental advantages mixed together included rate stability
and local control for businesses and residents, keeping more dollars in the local economy, fostering
renewal based businesses, reducing dependence on fossil fuels which would in turn, reduce greenhouse
gas emissions, and increasing use of renewable resources. She explained that renewable resources
referred to such things as solar, wind, small hydroelectric, methane capture and biomass.
Ms. Weisz reported that Marin County was not the only community that was looking at getting a CCA
program going. In fact, a number of communities outside of California had Community Choice programs
up and running since the late 90's, with Massachusetts and Ohio being the best examples. Those
communities were serving between 200,000 and 600,000 customers each. In California, the community
that was ahead of Marin currently was San Joaquin Valley. They had formed a CCA and would begin
serving customers later this year or early next year. San Francisco completed its business plan and was
currently exploring energy service providers. A number of communities in the East Bay were drafting
Business Plans and others were in the exploratory stages.
Ms. Weisz stated that in 2003, after the law was passed allowing communities to buy power, the County
joined with Marin Municipal Water District (MMWD) and North Marin Water District and received a grant
from the California Energy Commission to conduct a feasibility study to decide whether it would be
worthwhile for Marin to pursue this idea. The study came back looking favorable. The next step was to
do a Peer Review of that feasibility study by a third -party independent economist firm. That was
favorable and also double checked the assumptions and analysis. Next, there was a Bond Counsel and
Legal review of the feasibility study and then a risk analysis. All of this information is available on the
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website and in the packet this evening
Shifting into Phase II, Ms. Weisz reported that at the beginning of that process, the County went out to
each of the cities and towns to invite their participation in the exploration. Each of the cities and towns in
Marin County chose to participate, so a Local Government Task Force was formed. Three key documents
were produced:
o Business Plan;
o Alternatives Analysis looking at local renewable potential, and
o Peer Review of Business Plan.
Providing the basic overview of the Business Plan Ms. Weisz stated that two energy products would be
offered to customers:
o Light Green Energy - starting at 25% renewable energy and growing to 50% in a five-year
period. It would keep cost at or below PG&E cost; and
o Dark Green Energy - 100% renewable which would come at a premium so it would cost between
8-10% more than PG&E's cost, at least for the first few years. She identified on a graph how the
cost would diminish over time as more of the underlying assets were bought and owned.
Using a graph, Ms. Weisz explained that the dark dashed line indicated PG&E's projected costs. The
dark green line on the top denoted the Deep Green Option and as could be seen, in about year nine or
ten the dark green line dropped underneath PG&E's costs and continued to stay below them while
maintaining that 100% renewable content. The Light Green option stayed below PG&E's costs but
dropped further below as time went on. She explained that the assumption used for PG&E's rate
increase was a 3.4% increase in their generation rate. That reflected the historic increase of their rate
over the last ten years; however, last week, PG&E went to the CPUC and requested a 10% increase in
their generation rate.
Using a slide, Ms. Weisz identified what the costs would be projected out over five year increments for
the three options for customers: PG&E, Light Green or Deep Green. The slide also outlined the
renewable content of each option and the projected greenhouse gas reduction from each option - Light
Green was between 6-12%, Deep Green was between 12-20%.
Ms. Weisz reported that a community survey was conducted last Fall and looking at the participation
rates of other CCAs in Massachusetts and Ohio, based on those numbers expected participation in the
program was estimated: 16% would remain with PG&E, 34% likely to choose the Light Green option, and
about 50% likely to choose the Deep Green option. She noted that the Business Plan works no matter
the choice between Light Green and Dark Green. The first draft of the Business Plan only had the Light
Green option but the Deep Green was added in at the suggestion of a Ross Councilmember. She
indicated that the added premium for the renewable energy was included in the price; therefore, the
Business Plan was neutral to what people chose.
Ms. Weisz reported that an important part of MCE's Business Plan was to do more energy efficiency,
which was the cheapest way to reduce the impact and was great for customers also. The initial goal was
to double energy savings beyond the status quo achieving a five megawatt reduction. Also, new
programs would be developed to enhance existing incentives related to energy efficiency, such as
rebates, energy liens, and other incentives.
Referring to a slide, Ms. Weisz stated that the existing residential housing stock had a lot of potential for
energy efficiency, as did the existing commercial stock; therefore, these would be targeted first.
Regarding the Alternatives Analysis, Ms. Weisz referred to a chart which showed technically what would
be feasible locally in Marin County as far as renewables. Noting the load in Marin was 250 megawatts,
she stated this shows Marin could generate as much energy as would be needed in the County. It did
not, however, look at financial impacts and political difficulties with getting some of these up and running
and they realized these were factors that played into the deployment potential. Solar, clearly, had the
highest deployment potential politically and Wind could become more accepted in the near future.
Methane Capture had a very high potential for deployment and Ocean or Tidal power had great potential
but technologically was still a ways off.
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Ms. Weisz stated that some ways to stimulate local solar were to get large installations up and running. A
solar map of Marin was completed several years ago that showed the best sites for solar, i.e., large mall
rooftops, large parking lots. There also was the possibility of owning and leasing solar, cooperative solar
for communities, e.g., communities that were renting. They were also considering incentives such as
slightly higher net metering rates than what solar producers were currently getting and possibly, rebates
to cover those who wanted to oversize their solar system and sell additional power back. She stated it
was important to mention that MCE customers would retain the rights to net metering and the California
Solar Incentive rebate.
Ms. Weisz reported on the impact of greenhouse gas reductions. Customers departing from the current
utility would not result in decreased use of hydro, nuclear, or renewables, but would result in reduction of
natural gas use. PG&E uses greenhouse gas avoidance rate of 561.6 tons per gigawatt hour. The
Business Plan uses a range 400 to 700 tons per gigawatt hour, depending on the efficiency of the gas-
fired generators. The Business Plan also assumes a shift from 20% to 81 % renewables, because the
existing utility was in the process of ramping up to 20% renewable energy, based on renewable portfolio
standards, and their analysis was making the assumption that that had already occurred.
Providing a sense of the impact of the Greenhouse Gas reduction, Ms. Weisz reported that the chart she
displayed was taken from the County's Greenhouse Gas Reduction Plan. They had a wide range of
programs they wanted to initiate, e.g., starting a community car sharing program, extending local or
regional bus services, installing solar panels on municipal facilities, performing energy efficient lighting
retrofits and they had quantified what the greenhouse gas impact would be of each of these programs,
compared to the impact of MCE. She explained that a 350,000 ton reduction in 10 years would put Marin
first in the State for this type of reduction and second in the Country for such a dramatic greenhouse gas
reduction.
Ms. Weisz discussed the following key issues and anticipated questions:
First, how could MCE Light Green rates stay at or below PG&E rates, the existing utility?
She explained that the low overhead and not-for-profit structure reduces costs in a couple of ways:
o Fewer staff;
o Lower overhead
o Fewer facilities to maintain;
o Would not have to pay shareholder profits;
o Lower regulatory costs;
o Lower borrowing cost - because of being tax exempt and having bonding authority. This ability
could be used in a couple of ways. First of all, it could be used to prepay for an energy purchase.
An energy supplier could be found indicating to them that MCE wanted to buy 20 years of energy
from them and they would be paid tomorrow. Doing this would generate an approximate 5%
discount in the market compared to other buyers.
Another way to use their tax exempt status and bonding authority was to build and own
generating assets. Coupling that with the strategy of making them renewable assets was
unhooking from the cost fluctuation of fossil fuels; therefore, taking a more conservative
approach where it would be known what costs would be in the long run because of controlling
them. Maintenance costs would be known going out into the future without the worry about a
source of fuel to fuel those facilities.
Most of all there was a slight advantage in the ability to create long term contracts from scratch
and not be paying off expensive contracts that started around the time of the Energy Crisis.
With regard to the assumptions used in the Business Plan, Ms. Weisz stated that since 1998, the
existing utility's generation rates increased about 3.4% per year with an up and down cycle over the last
few years. The projected rate was depicted at both a 4% growth rate and 3% growth rate. 3.4% was
used because it reflected what happened in the past and this might need to be modified based on the
recent request for a 10% increase.
Ms. Weisz reported that a question often raised was why did the energy fluctuations in 2000 impact the
costs for the IOUs? She indicated that in 1996, the utilities were prevented from entering into long-term
power purchase contracts. The idea there was to stimulate market competition; however, what
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happened instead was that costs on the Spot Market, which is the Short Term Market, skyrocketed and
were manipulated by a number of players. So the CPUC changed their regulations since that time to
avoid this happening again, and it was important to note that MCE would buy no more than 15% of its
power on the Spot Market which is really an industry standard at this point. The strategy of having long-
term contracts, coupled with the ownership of assets, was just a more conservative approach that de -
risked this whole issue.
With regard to the question of whether local governments provide power competitively, Ms. Weisz stated
that to answer this question rates of municipal utilities and IOUs were looked at, including the City of
Palo Alto at $.07 per kilowatt hour, Los Angeles Department of Water and Power at $.09 per kilowatt
hour, SMUD $.09 per kWh, Alameda City $.12 per kWh, PG&E and Southern CA Edison at $.12 per
kWh. While all were very close, the slide denoted that local governments could provide power efficiently
and effectively and had been doing so for many years. One question related to this was whether they
were doing this because they owned large hydroelectric plants for 100 years, had been in the business
for so long and owned all their assets. Ms. Weisz reported that in some cases that was the case and in
others it was not. Alameda City was an example where they had a high renewable content and were not
dependent on large hydroelectric.
With regard to who would administer this program, Ms. Weisz stated there were at least two options:
1) A new organization could be created to administer the program. Obviously there would be a
JPA setting policy but under that JPA there needed to be a staff body to oversee the day-to-day
operations. Something new, like the Transportation Authority of Marin could be created, an
executive director and staff could be hired - the Business Plan actually calls for about 20 staff.
2) Another option would be to use an existing organization with experience or interest in public
utilities, such as MMWD, which had expressed interest.
In addition to the administrator of the program an energy service provider would also be necessary. This
would be a company, probably from outside of Marin County, that had experience selling power on the
market. Indicating that a lot of companies were out there, she explained that they sell power to public
utilities and IOUs. Some owned more generation assets and traded more power in a day than Southern
California Edison and PG&E combined. The IOUs did not necessarily own a lot of their underlying
assets, rather they buy a lot of it on the market from these energy service providers the same way that
MCE would. Some offered a green portfolio , i.e., Alameda City is an example, purchasing 70%
renewables. MCE would be going out to the market to find an energy service provider before going
forward.
With regard to the availability and cost of renewables, Ms. Weisz gave a few examples of what was
found in the market. San Joaquin looked for renewable energy last year. They were looking for 400
megawatts of renewable energy. They received bids worth 1,400 megawatts for their renewable
projects, so they had a lot to choose from and ended up getting a pretty good deal. PG&E and other
IOUs. had received strong responses from their solicitations. In 2007, there was a doubling in
responses that year which demonstrated a maturing of the market.
Ms. Weisz reported that the cost of renewable energy and conventional power was going up; it had gone
up about 30% in the last five years. What had not changed was the difference between the two — there
was an approximate a 1.5 -cent premium on renewable energy, depending on the type of renewable
energy under discussion. To get into more of the details, Ms. Weisz referenced a report, put out in May
by the California Energy Commission, called the Renewable Energy Transmission Initiative (RETI),
which looked at the price of energy. She had included this in a slide alongside some projections which
came from a PG&E slide, and as could be seen from the RETI Report by the CEC, the Navigant
(Navigant produced the Business Plan) projection was right in the middle of the range for wind, while
other projections could be on the high end of the range. Also, for biomass, there was a range of sources
and the Business Plan again was within the range of this California Energy Commission Report. There
were a couple of other reports and she could provide more information that looked at projected and
current costs of renewables.
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With regard to whether there were economic benefits beyond local renewables, Ms. Weisz stated there
were a few, including green image marketing for local business. There were a number of businesses on
the Stakeholders Committee as this had been explored over the last couple of years and a few of them,
i.e., Autodesk, were paying more every month to green up their energy, by buying renewable energy
credits. They liked the idea of being able to buy direct and not have to keep paying another supplier to
buy their renewable energy credits. Green image marketing was important for a lot of local businesses.
Also the likelihood of having more stable rates in the future was a help for local business and local
residences and helped support our local economy. Lastly, because the JPA would have rate -making
authority, MCE would have the ability to offer economic development or low-income rates, depending on
local need.
On the question of what would happen should the CCA terminate and customers needed to go back to
the existing utility, Ms. Weisz explained that the customers would return to the IOU in their jurisdiction.
They would go to a category called Transitional Bundled Service for a six-month period and would be
paying the current cost of power on the Spot Market during that six-month period. If the cost of power at
that time was higher than the status quo, there would be a bond set aside that the CPUC was requiring
that would cover that additional cost for customers. After the six-month period customers would become
regular customers of the IOU as they were before the CCA started. There also was a $3.94 per
customer charge that the IOU is allowed to charge for the administrative burden of integrating them back
into their load. This cost was set aside in the MCE Business Plan so that it would be covered by MCE
and would not be charged to the customer. The CPUC regulations do not allow IOUs to charge extra to
returning customers.
With regard to exit fees, Ms. Weisz explained that this was a cost that could be used if there was a cost
fluctuation and lots of customers shifted out of a provider at one time. Using the example of MCE
purchasing power on a customer's behalf and a year later the cost of power actually went up and the
customer decided to part at that time, this would be a benefit to MCE because they could take that
excess power and sell it on the Spot Market. If however, the cost of energy has gone down during that
year period, MCE would need a way to recover its cost. The exit fees are used when the cost of power
was dropping and typically used when there was an end mass pullout from a utility, and there was a
need to protect the remaining rate payers from having to absorb the cost of the customers that were
leaving.
Ms. Weisz explained that the JPA would have the ability to impose exit fees if it wanted to. A typical exit
fee would be a few dollars a month spread out over a year. Exit fees had been imposed before, and in
fact if MCE got started, the cost of exit fees would be covered for all of the customers departing PG&E's
load, if there was a need for an exit fee at that time. Also, expensive investments by MCE or existing
utilities could increase exit fees because it would be based on current costs.
With regard to working with the existing utility to explore some type of partnership, Ms. Weisz explained
that should MCE go forward it would continue to be in a partnership with the existing utility, PG&E.
PG&E would come out and repair lines if they fell down. PG&E would still provide customer service in
storm events and they would take care of the lines. However, MCE had also been looking at other ways
to partner in the context of a CCA. A recent proposal from PG&E was to offer a 100% green tariff to all
customers in their territory. This sounded similar to what MCE would offer but had some key differences.
Ms. Weisz explained that firstly, it would be using renewable energy credits for a large portion of the
energy. It would not be direct supply; therefore, energy would continue to be received from the same
sources as now, just paying a little extra to buy renewable energy credits; therefore, MCE would not be
unhooking from that cost fluctuation of fossil fuels. This idea would require CPUC approval which could
take three months to two years optimistically, so the outcome would not be known for awhile. Lastly, one
of the objectives local government has been articulating was the local benefit of ownership and stability
of rates. MCE was still in dialogue with PG&E hoping to come up with something that did meet local
objectives.
With regard to the analysis of the Business Plan conducted by PG&E, to shed light on some of the
numbers because it could be confusing, Ms. Weisz reported that PG&E conducted an analysis of the
Business Plan in March. In that analysis they used different assumptions than MCE used in the
Business Plan which resulted in a very different outcome, which showed MCE's costs were going to be
much higher than projected. To break down the assumptions, she indicated they used a gas forecast
that assumed gas would be 14% cheaper in 12 years than it was now. She noted that gas costs had
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increased about 30% in the last five years; therefore, this was seen as possible but unlikely. They also
shortened the term of wind financing from 30 to 20 years. This resulted in about a $6.00 per megawatt
hour disparity. Indicating that they reduced the capacity factor of wind, Ms. Weisz explained that a wind
turbine does not turn all the time; with current technology they turn about 35% of the time. Older
technology was about 23% of the time. The reduced capacity factor of wind resulted in about a $6.00 per
megawatt hour disparity. They assumed above market purchase of natural gas generation capacity
resulting in a $10.00 per megawatt hour disparity and assumed a below inflation increase in rates which
resulted in an $11.00 per megawatt hour disparity.
With regard to next steps, Ms. Weisz reported MCE was just now launching into Phase III of this
exploration. Between now and November, each city and town and the County would have the
opportunity to vote on whether to participate in the JPA or not. This is typically happening through a
number of study sessions, with subsequent adoption of an ordinance, and in December 2008, the JPA
would be formed.
Ms. Weisz reported that Phase IV would then be launched and explained that a Request for Proposal
would be issued out to the market to energy service providers to find out who could meet the
requirements in the Business Plan. If cost estimates were wrong, if projections were wrong, if
renewables were not out there, there probably would not be any respondents and that would be the end.
No commitments could have been made that could not be walked away from. However, should there be
responders, the list would be honed down, to ascertain who to work with and develop a contract. Around
mid -2009, hopefully there would be a contract the cities, towns and JPA members were comfortable
with, and at that time, the JPA members would go back to their respective cities, towns and County and
ask for a decision on whether to go forward or not with the draft contract. That would be the final go/no-
go decision. The cities and towns would make a recommendation to the JPA members, and the JPA
members would then vote on whether that city or town wanted to participate and go forward. Individual
cities and towns could walk away at that point if they were not comfortable with the terms of the contract,
but those that did participate would go forward and be a part of the MCE JPA. Ms. Weisz noted that
communities that did not participate in the MCEJPA would not be able to offer the MCE choice to their
customers in their town. In other words, residents and their businesses would not have a choice of
buying power from MCE unless their city or town was a member of the JPA.
With regard to off -ramps, Ms. Weisz stated that obviously there was a couple between now and next
Summer or Fall for the cities and towns. There were also a number of customer choice off -ramps. She
explained that having gone forward and when MCE was getting ready to launch, there would be a lot of
publicity material and information going out. There already had been quite a bit of information in the
news and lot of people were present this evening because they had been hearing about this. MCE
would continue to do as much outreach as possible to let people know about this choice so that they
could make an informed choice. Sixty days before the launch of serving customers, all customers would
receive their first opt -out notice letting them know if they wanted to continue getting their energy supply
from PG&E they would need to check the box and send the card in and opt out of MCE. Customers that
did not choose to opt out would automatically remain part of MCE, which was the way state law was
structured. Ms. Weisz reported that 30 days before the launch, customers would receive a second opt -
out notice. With their final PG&E bill before the launch they would receive their third opt -out notice.
Their first bill with MCE Generation listed on it would include a fourth opt -out notice. After enrollment in
MCE, customers could still return to PG&E. If they went back and forth a lot of times an administrative
fee of a few dollars could be imposed. Should customers move from one place to another or are new to
the community, they of course would get a free start.
Vice -Mayor Miller thanked Ms. Weisz for providing a very clear and very nice presentation. He wanted
everyone to know that the City Manager and the City Clerk has assured him that all questions raised
would be listed and provided to the presenters.
Thanking Ms. Weisz for her presentation, Councilmember Connolly stated that some of these questions
were answered; however, he would like to get her further thoughts on some of the issues. One issue that
had emerged, which was also in PG&E's response to the Business Plan, was the idea of the available
supply of renewal resources in the marketplace. He inquired as to the basis for PG&E's assumption that
there was some sort of limited supply out there, or whether MCE had done research to test the
availability of the supply in the marketplace.
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Responding, Ms. Weisz stated that market projections could come from many sources and they could
include a variety of factors and sensitivities. She indicated there were two sources that she believed
were considered pretty neutral. The Renewable Research Development Report produced by the
California Energy Commission a couple of years ago, which she had not shown, looked at the cost of
wind, solar and biomass, and had more as far as projections in the future. The one she showed in the
slideshow looked at current cost. Looking at reports that compile information from around the State and
coming from a neutral source such as the California Energy Commission she believed was the best
place to go for information. The information from PG&E's slideshow came from other sources.
Councilmember Connolly stated that Ms. Weisz raised the issue of how the JPA would be staffed and
one issue that came up was the extent to which City resources or City personnel would need to be
utilized in connection with the JPA. He inquired whether the City would have to devote a lot of its
resources as part of joining this and what she foresaw happening in that regard.
Ms. Weisz stated that the great thing about this JPA was that it had a revenue stream, which a lot of
JPAs did not have. The intent of the MCE Plan was to supply not only staff to keep Councilmembers up
to speed on what decisions needed to be made, doing research for them and helping to prepare them for
meetings and setting policy, but in addition to that, a couple of staff positions had been set aside to work
on energy efficiency and other greenhouse gas and sustainability initiatives that a lot of the cities and
towns and the County were struggling to find staff for. The hope was that this would actually provide a
way to help the cities and towns with that dilemma, while at the same time, providing the type of support
the towns supply. The burden was another meeting a month or another couple of meetings per quarter,
and having to read materials to get up to speed and meet with those staff, but as far as doing a lot of the
leg work and research, that would be handled by the paid staff.
Councilmember Connolly stated that a lot of cities like San Rafael were looking at other ways of
increasing the use of renewable energy, whether that was something like a Berkeley -type idea where
cities look for ways to finance, help neighborhoods or help residents finance solar projects for example.
He inquired whether MCE took away from those programs or added to those programs and how did it
affect a city's ability to pursue other types of initiatives for renewable power.
Ms. Weisz stated that they spent a bit of time looking at that as part of the local alternatives analysis.
They looked at how they could achieve a much higher rate of renewable installations in Marin County,
either with MCE or without MCE. They found they would be able to continue doing what they were doing
as far as energy efficiency was concerned - they had an energy management team already working with
the cities and towns to help with energy efficiency — they had the CREB (Clean, Renewable Energy
Bond) Program to help install solar on a lot of local public buildings and schools and they would continue
to do that. Ms. Weisz stated that doing all of these and making them more successful and with a
Berkeley -First type program, they could see a continued increase in the amount of local renewables;
however, it would still be somewhat incremental compared to an overnight shift to MCE.
Indicating that she would explain what the Berkeley -First idea could look like, Ms. Weisz noted San
Rafael was fortunate because of it was the only Charter city in Marin County and therefore, could do
this right away. She commented that the County was waiting for some state legislation to change so
they could do this also. She stated it was an opt -in program; therefore, it would be a little more
incremental. It was a financing tool and, was optional and she believed there was great potential in the
program and it could see some significant increases in the amount of solar installations in Marin. She
indicated that the highest one could hope to see might be four or five megawatts a year, which could be
overly optimistic.
Ms. Weisz stated that in 2002 when tracking solar installations in Marin was started there was not even a
megawatt. In 2005, the three megawatt mark was hit and currently, this was almost five megawatts.
Noting a huge increase in Marin County, she stated this had been voluntary and there had been a lot of
programs to incentivize and provide technical assistance but it was incremental versus all at once.
Should a city join a JPA, Councilmember Connolly inquired whether it then became exposed to any type
of liability and what kinds of protections were built in.
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Ms. Weisz stated that forming a JPA gave the city an automatic firewall. The purpose of having a JPA
was to create a firewall for the General Fund so the debts and the liabilities of the JPA were only the
debts and liabilities of the JPA, which was what state law indicated. There should not be any obligations
or debts that could impact the city in any way financially or otherwise.
Councilmember Connolly stated that if the City did join, the concern would be whether any potential
liability was being greatly expanded, and he believed this had been answered.
Councilmember Heller stated she understood what the JPA wanted would result in a net reduction of
greenhouse gas emission by 2019. San Joaquin Valley Power Authority had theirs up and going but
Greenhouse Gas reduction was not their mission. Their mission was to sell electricity to other entities
and they would probably have problems. The City of Fresno, unless they changed their mind, refused to
join the San Joaquin CCA because of pollution concerns. She noted Ms. Weisz discussed briefly MCE
building its own generating facility, and requested that she expand on that. Councilmember Heller
stressed that she needed to be persuaded because she was concerned with the safety of the San
Rafael residents and what they would be getting from this, together with the safety of the City. She
noted the question about the firewall had been answered and the General Fund was protected under
law.
Councilmember Heller noted several other cities were looking at putting together a CCA and inquired as
to their focus. Was their focus a reduction in greenhouse gases or were they in it for a profit, or to sell
energy to other people? Councilmember Heller stated it appeared as though San Rafael was the only
participant with a green mission, which meant being all alone.
She noted the start-up costs were expensive, initially borrowing $16 -million, with a staff of 30 plus an
executive director, and the JPA would be set up with all cities and the County, which was a huge Board
to operate with. This could make it difficult to move through the rules and regulations of government and
this needed to be looked at.
Councilmember Heller stated she would like to know the number of paying customers in San Rafael and
how many subsequent to being offered this choice would stay, how many would go from PG&E to MCE,
When personally questioning people who indicated they would "go green" or whether they would pay
more money for the opportunity, they stated they would not.
With regard to what was in this for PG&E, Councilmember Heller noted they would still be expected to
transmit everything and take care of the lines, and she inquired whether they would be paid for this. In
an emergency she inquired whether those who were not PG&E customers would go to the back of the
line when lines needed to be fixed.
Responding, Ms. Weisz stated that with regard to the intentions of San Joaquin Valley, they were at the
tail end of the distribution system for PG&E, and their intention was local control and rate stability. In the
same way a JPA firewalls a General Fund, it did not allow taking revenue to be plugged into the General
Fund. They were not out to make a profit for activities that did not relate to energy, which would be
against state law. With regard to the intentions of the others, she indicated that all of the other
communities she was aware of in California that were exploring this were looking at renewables,
including San Francisco, Emeryville, Oakland, Palo Alto, Davis, Beverley Hills and West Hollywood. In
Massachusetts and Ohio, those CCAs that started in the late 90's, were interested in expanded energy
efficiency and slightly cleaner forms of energy, albeit coal - they were looking for cleaner coal. The
focus there was to protect the public good, not to make a profit.
With regard to generating facilities and their locations, Ms. Weisz stated that initially the location for a lot
of the supply would be outside of Marin County because there would need to be immediate access to it.
MCE would be signing a contact with an energy service provider and using the same structure as San
Joaquin Valley of having a substitution clause that would allow substitution of MCE's supply of power
once up and running. Should permits take too long, or the site fell through, and another was needed, it
would not be a big deal; however, as soon as MCE's own assets were up and running this could be
switched out for the power the energy service provider was supplying. At the end of the contract,
whether eight years or ten years into the future, 30% or 40% of the assets could be up and running.
Ms. Weisz stated that the locations had not been decided, nor what the mix would be; however, too
much constraint would prevent good decisions.
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Vice -Mayor Miller stated that the remainder of Councilmember Heller's questions could be answered in
writing and would be shared immediately. Councilmember Heller noted that these questions and
answers would be available to the public through the website.
Councilmember Brockbank thanked Ms. Weisz and told her he appreciated the presentation. He noted
Ms. Weisz indicated there was a 10% increase in PG&E's rates recently and indicated he had read that
it was 6.5% after their 1.5% annual projected increases.
Ms. Weisz explained that this was the generation rate. The bundled rate included transmission costs
and distribution costs and since Main Clean Energy would not be doing those, the customer would pay
PG&E for the transmission and distribution. Therefore, bundling the transmission costs and the
generation costs together resulted in an average of a 6% rate increase. However, removing the
generation piece, the piece that mattered to Main Clean Energy, because generation is what they would
be buying, it was actually a 10% increase, and that was the number being used in MCE's business
planning.
Councilmember Brockbank noted Ms. Weisz indicated that one of the ways MCE could save money was
pre -purchasing energy, perhaps getting a 5% discount, which he indicated appeared pretty low for 20
years worth of energy. On the other hand, he assumed the real savings came from buying 20 years
worth of energy which would save all those cost increases that would come over the years, which would
be far more than 5%, so the 5% was insignificant compared to the savings of the future costs increases.
Ms. Weisz stated that their consultants and technical experts had been very conservative on most of the
numbers, so the 5% might just be a very low figure, being conservative. Councilmember Brockbank
stated that regardless of whether there would be a cost savings, what scared him about pre -purchasing
energy was that one did not have to be a financial analyst expert to know that the number of energy
companies which go bankrupt were numerous, and should he wish to purchase 20 years worth of energy
from some company, he would have to be pretty well assured that the odds of that company's going
bankrupt were pretty slim.
Councilmember Brockbank stated that 20 staff appeared to be a lot. While it could be appropriate
proportionally, he inquired how this overhead could be built in.
Ms. Weisz stated they were being conservative and wanting to plan for as much as could possibly be
needed. 20.5 fulltime equivalent staff that was being planned for, not 30, and of that 20 four staff people
were dedicated to energy efficiency activities only, and this was to help reach the goal of doubling
energy efficiency to get to the five megawatt target. Four staff would be working only on energy
efficiency, which left 16, one of them being an executive director. While it could be more than needed,
the JPA could determine this in getting closer. Ms. Weisz stated it afforded the ability to take on more in-
house if necessary. It could be determined that the energy service provider chosen was capable of
doing a lot more and a lot more could be left in their control.
Councilmember Brockbank believed Marin was looking for 240 megawatts and San Joaquin Valley
wanted about 400 megawatts, and when they went out to bid they got 1400 megawatts, and he inquired
whether this was unduplicated in that they were literally separate sources. He indicated for example,
that when general contractors go out a bunch of bids is received; however, they often use the same sub-
contractors.
Ms. Weisz stated that it was unduplicated and was within their existing transmission territory. It was not
cost sensitive in that they did not set a bar for what the costs of the bid could be but it was not
duplicating at all. They ended up getting a great rate for a Concentrating Solar Farm.
Councilmember Brockbank noted Ms. Weisz indicated that in the last five years both conventional
energy and renewables had both gone up 30% but what remained the same was the 1.5% premium for
renewables, and yet there would be an 8-10% premium for the Dark Green Option. He inquired whether
the difference between the 1.5% additional costs for renewables and the 8-10% for the Dark Green
Option was to pay for the 20 full-time equivalent staff.
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Ms. Weisz stated that it was not a direct apples to apples. It was a 1.5 -cent per kilowatt hour but a
customer pays between 10 and 11 cents per kilowatt hour for their energy currently. They were not
buying one kilowatt hour at a time; therefore, it was just a mathematical difference and the 8-10%
increase was the result of that premium.
Should someone fail to opt out, Councilmember Brockbank inquired whether they got Light or Dark
Green.
Ms. Weisz stated it was likely that the JPA would choose to make it Light Green so that customers were
not being left with an extra added on to their bill.
Councilmember Brockbank suggested Ms. Weisz was predicting that 50% of the people would
affirmatively choose Dark Green as opposed to the 34%, most of whom presumably, might not do
anything, which meant they were automatically slotted into the Light Green.
Ms. Weisz stated this was what the results of the survey showed; however it did not make a big
difference if everyone chose Light Green - a statistically valid survey that was done last Fall of a
thousand Marin residents came up with those results.
Should San Rafael choose to join the JPA and an RFP was issued for an energy service provider, which
indicated it could provide the amount of energy required, Councilmember Brockbank inquired whether
the provider would be requested to indemnify and assume all risk.
Ms. Weisz stated this could be done, which Citigroup had done for San Joaquin Valley. They had
assumed most risk; however, there were some risks that it made more sense for the King's River
Conservation District to absorb and they chose to absorb them because they already had them and they
were easy to mitigate; however, the bulk of the risks had been taken on by Citigroup, particularly the rate
risks. In their contract they guaranteed an initial 5% discount from their existing utility costs and a
guaranteed 2% escalation each year throughout the term of their eight-year contract, and should the
costs go up or down beyond that they would absorb the risks.
Councilmember Brockbank stated that someone approached him last week and stated: "Why can't we
have a larger region than Marin?" He understood originally there were discussions with San Francisco
and the East Bay. Smallness and nimbleness would be lost; however, these costs could be amortized
out. While the region would be three or four times bigger, three or four times the 20 employees would
not be needed, and it appeared as though money could be saved. At some point he would like to hear, if
indeed there were originally discussions on this, why they were broken off, why Marin only was being
looked at and what the odds were for joining in with other groups, whether it be San Francisco, the East
Bay or Sonoma County.
Finally, Councilmember Brockbank stated that at some point he would like, preferably in writing, a
detailed analysis of what the odds were and the likelihood of paying exit fees. He noted Ms. Weisz
made it sound as though there really was not very much risk because if energy was going up, which it
nearly always did, there would not be any exit fees. Noting that perhaps energy goes up most of the
time, in the worse case scenario of getting caught at a time when it was going down and having to pay
exit fees, Councilmember Brockbank inquired as to who could be on the hook, for how much and what
the odds were of this.
Vice -Mayor Miller stated he would explain where he was coming from in the questions, which would show
why the questions were being asked. A lot had already been covered.
With regard to the position of the City of San Rafael, with limited resources, limited finances and limited
services to meet core and essential functions of the City and the demands of the unfunded mandates
from State and Federal governments, Vice -Mayor Miller stated this was the constraint he came from. He
also came from the context of the City of San Rafael's Climate Change Action Plan where renewable
energy is considered a tactic and a plan to achieve reduction of greenhouse gases.
Vice -Mayor Miller stated he would like to have very concise written answers, one page each at the
maximum because he wanted to use these as stepping stones in his own decision tree.
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Questions from Vice -Mayor Miller:
1) Please give a clear, concise description of the problem of Marin Greenhouse Gas Emissions and
specifically as this problem relates to the City of San Rafael.
2) Please give the four major solutions to the greenhouse gas problem including that in the MCE
JPA Business Plan, and why each was ranked in the four best.
3) Please explain why for San Rafael the solution described in the CCA Business Plan is the most
efficient, effective, economical and feasible among the four solutions in encountering the problem
of Greenhouse Gas Emissions in San Rafael.
4) Please also give the chief accountable measures that would demonstrate that the MCE JPA
proposal would be successfully implemented.
5) Please provide a snapshot of what it cost the MCE JPA in the preparation and implementation of
the governance, operations, energy source development, financing, who pays, and when.
6) What are the major risks to the MCE JPA, and to the City of San Rafael and ratepayers, in having
MCE JPA buy for them stable, reliable green renewable energy?
7) Compare and contrast the larger regional San Joaquin Valley Power Authority with the proposed
MCE JPA as to goals, government, operational capacity and experience, customer base,
geographic area and location of resource development, and give benefit statements to both.
8) Finally, with regard to budgets, he requested as soon as possible the start up cost estimates and
the City of San Rafael's share of the MCE JPA before the JPA receives sufficient revenue to
carry the full burden of its prepatory activities and implementations, together with backup data.
Vice -Mayor Miller expressed thanks to Ms. Weisz.
Renewable Enerpv Program for Marin — Jennifer Weber and David Rubin, PG&E
Vice -Mayor Miller introduced presenters Jennifer Weber and David Rubin from PG&E.
Ms. Weber stated that PG&E supported the intent and objectives of MCE. PG&E had been committed
and was a leader in its industry and in business in terms of advocating for Greenhouse Gas (GHG)
Emissions reductions and plans to make that happen. Noting that sometimes the best of intentions had
unintended consequences, she indicated they spend some time talking about this tonight in their analysis
of the MCE Plan.
Ms. Weber reported that during the Energy Crisis and directly following, PG&E learned from their
customers that they expected PG&E to let them know what was happening in the market and what to
expect. In their analysis of the MCE Plan they were letting their customers and decision makers know
what they saw as the risk to the plan so that the City Council could make a decision with all the
information in front of them.
Before making a decision about MCE Ms. Weber stated it was important to know about PG&E. She
explained that PG&E was an industry leader on environmental issues and in combating climate change.
On average more than half of PG&E's electricity portfolio, electricity that PG&E provides its customers, is
carbon -free. For a long time PG&E has believed that climate change is real and the time for action is
now and this was the reason PG&E was working in its operation and in the electricity it provides its
customers, and working with those customers on how to efficiently use that energy. Chairman and CEO,
Peter Darby, testified in front of the U.S. Senate on two occasions and recently participated in a
Conference of the United Nations on climate change. They were incredibly proud of that leadership that
PG&E has taken. PG&E was an early supporter of AB32 and worked hard to make that legislation real.
Ms. Weber reported that PG&E had some concerns about the MCE Business Plan. They believed the
plan did not reflect the high energy costs currently seen in the market for both renewables and
conventional supplies of energy. The fact that the plan is opt out, that people are automatically put into
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the plan, was concerning in the context of what they saw as unsupported information. She indicated they
would also discuss the risk to the customers if the CCA were to fail.
As stated, using slides, Ms. Weber reported that PG&E's electricity mix was on average more than half
carbon -free and as could be seen those carbon free sources included the existing nuclear, the large
hydroelectric that PG&E has, and also the qualifying renewables under California State law. This is one
of the cleanest electricity portfolios in the country.
Ms. Weber pointed out from a slide that PG&E's greenhouse gas emissions for the electricity that it
delivers were very low compared, not only to the U.S. average, but also to California's average GHG
emissions. GHG emissions were compared across the country and as could be seen California's
footprint was incredibly low compared to the rest of the country. From a societal perspective, the most
impact that there would be on climate change would be taking a bite out of the black dots (slide) which
was where the coal was, and of course, it was important to take those steps everywhere. She indicated
this was the reason PG&E advocates at the Federal level for climate change legislation to address this
because there were other places in the country where a greater impact was needed.
Ms. Weber reported that some of the energy sources used by California uses came from the black dots,
i.e., Coal, Gas, Oil (depicted on a chart). Los Angeles Power had 44% of its portfolio in coal, which
brings lower prices but also bigger dots on that map.
Noting a sampling of programs that PG&E offers its customers, Ms. Weber explained there were rebates,
incentives, and energy efficiency programs they work to penetrate with as many customers as they could,
both residential and business. They had local government partnerships — they had a partnership with the
County of Marin which was one of the more successful. They had a very highly vetted offset program
called Climate Smart which was a way customers could offset the footprint of both their electric and gas
usage to make their homes or businesses carbon neutral. They offered incentives through the California
Solar initiatives and for Self -generation Incentive programs for solar or other onsite self -gen programs.
They had a growing percentage of Renewable Portfolio Standards (RPS) electricity in the portfolio. Their
2008 projection was 12% moving toward the State mandated 20%, and they were scouring across the
market to find renewable energy sources to keep increasing that percentage. Ms. Weber noted that Ms.
Weisz mentioned the green tariff in development and corrected one aspect in that the green tariff had not
been proposed in response to CCA, rather it was a program that PG&E had been analyzing for quite
some time and which they planned to file with the Public Utilities Commission, hopefully in the coming
weeks, and be able to offer across their service territory. That would be an opportunity for customers to
opt in to a program to receive more renewable energy.
David Rubin, Director of Service Analysis, PG&E stated he would address specifically some of the
comments they expressed so far with respect to the Business Plan. He underscored what Jennifer
started out with by both stating their ongoing commitment to continue to provide customers with a very
clean power portfolio and continue to add new renewable resources to the mix as required under State
law, and also as a general matter because this was something the Company believed very strongly in.
He indicated that a lot of their activity in that area had informed them well with respect to what the supply
and cost characteristics of renewable supplies were in the marketplace. He indicated that it was from that
perspective they viewed the proposed Business Plan with a bit of both skepticism and concern, because
they believed that the underlying assumptions in the Business Plan did not fully reflect the costs of
acquiring power, both conventional supplies as well as the renewable supplies, that were laid out in the
Business Plan as a goal of the MCE entity.
As described by Ms. Weisz, Mr. Rubin stated the proposal provides for a Deep Green/Dark Green, 100%
renewable option as well as a so called Light Green option. He believed Ms. Weisz indicated this evening
that customers would be automatically defaulted on to the Light Green option, and that really was not his
understanding of the Business Plan. The Business Plan as far as he read it would have customer default
into the Dark Green option which would provide 100% renewable supply except for customers who were
Care Customers - those receiving a rate discount because they qualified under low-income criteria, and
he requested clarification on this point.
Mr. Rubin reported that they had analyzed the Business Plan based on the way it was written which
stated the customers defaulted automatically into the Dark Green. They had a choice of going to the
Light Green or opting out and remaining with PG&E. One of their major concerns was that the analysis
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underpinning the Business Plan did not seem to provide a realistic reflection of the cost of power and in
particular, the Business Plan refers to an 8.8 cent kilowatt hour cost for a full requirements contract with
a third -party provider for at least the early years of the proposed program - 2010 through 2013 - at which
point the plan proposes that the JPA would go ahead and invest in significant amounts of renewable
supplies that it would own. It would then blend into the contract supplies; however, the 8.8 cents a
kilowatt hour was extremely low relative to what the cost of power was on the market today, both
conventional supplies as well as renewables.
Mr. Rubin reported that slides he would now present showed a sampling of different articles that have
been available lately that highlight the fact that both locally and nationwide, prices for power had gone up
very substantially - renewable supplies as well as conventional supplies. He noted recent Wall Street
Journal articles from late May that highlighted the same phenomenon. The last one referred to events in
Texas where power costs had gone up dramatically, and under their market structure, the energy service
providers that had been providing customers with power in a manner similar in some respects to how the
CCA would work, had returned those customers back to the utility provider, so called provider of last
resort, under a regime where costs had gone up very substantially, the consequences being that those
customers had to bear those much higher prices.
Mr. Rubin stated the next slide discussed in more detail the results of an analysis that PG&E performed
with consulting firms that supported them in this endeavor, PA Consulting and Global Energy. They
modeled what they believed to be the costs associated with the MCE proposal around the amount of
power that would come from various types of renewable resources as well as power from conventional
supplies. The slide identified the PG&E generation rates as estimated to be in 2011, 2012 and 2013.
Indicating they shared this slide with the Board of Supervisors on June 3, 2008, Mr. Rubin stated it
provided an update of the analysis they prepared and submitted to the County back in March. It reflected
the proposed request made to the Public Utilities Commission to increase the generation related rate
which again, reflects the extremely high gas prices currently in the market.
Mr. Rubin noted that Ms. Weisz mentioned that PG&E had made assumptions about gas prices that were
out of sync, and the update they provided to the Board of Supervisors brought the power prices up to
reflect the natural gas prices available in the market as of late May, so they were reflective of current
market conditions. He identified PG&E's estimate of what the so-called Light Green tariff would be -
about a penny and a half, roughly speaking, to 2 cents a kilowatt hour more. The top line on the chart
denoted what they believed to be the cost of the Dark Green tariff, and then in between would be the
blended rate, based on the mix that was specified in the Business Plan.
Presenting a further slide Mr. Rubin reported this showed the PG&E generation rate as estimated using
recent natural gas prices relative to the cost of the MCE blended rate going out through 2020. Their
assumptions in the PG&E generation rate were the gas prices that were available on the NYMEX (New
York Mercantile Exchange) as of the 20th of May, when they did their updated analysis, as well as
renewable costs that were consistent with the costs they presented in detail to the County back in March.
He indicated that they used a number of different assumptions about the cost of wind, as well as the cost
of biomass, because those were the two major forms of renewables that were identified in the Business
Plan. Ms. Weisz, in her presentation, showed there was a rich mix of potential renewable resources in
the County; however, he pointed out that in order to get the production characteristics around when Ms.
Weisz had mentioned 35% capacity factor, those regimes would not be found anywhere near either
inside Marin or close outside Marin, rather one would have to go into the Mojave Desert in order to get
much higher wind capacity factors because all of the good sites within the central part of California had
been spoken for. Mr. Rubin stated that in order to get those supplies, it would be necessary to stand in
line with a number of other entities that were looking at mining the available resources in the Mojave and
get transmission access, which was standing in the way of all to quickly meet renewable goals. Mr.
Rubin stated that looking locally meant identifying higher price resources, and while it could possibly be
available quicker, it would be at a price premium. Getting to the resource rich areas required transmission
investments which were in the planning and hopefully would be made available soon so that all could
take advantage of the solar and the wind in the Mojave Desert; however, there was a long list of entities
trying to acquire those resources.
Responding to a comment from Ms. Weisz regarding other reference points presenting lower costs
renewable resources, than for example what PG&E was assuming, Mr. Rubin noted one of the sources
mentioned was the so-called RETI (Renewable Energy Transmission Initiative) Report. They inquired at
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Black and Veatch, which was the consultant on the RETI Report, exactly what assumptions they used for
some of the biomass costs. The response stated that in the course of doing their optimistic cost
projections, the low ones, they presumed a biomass project would combine low capital costs, free fuel,
low operating and maintenance costs and high capacity factor. In reality, such projects were exceedingly
rare and most likely, had already been developed. He indicated that PG&E believed a realistic set of cost
assumptions needed to reflect what a new entity stepping into the marketplace today would actually be
able to realize in terms of the cost of renewables, and that underlies what they put into their estimates
reflected here.
Recalling that the PG&E generation rate line from the prior graph reflected the request they recently
submitted to the Public Utilities Commission and reflected the higher gas prices being seen in the
marketplace today, referring to a bar graph, Mr. Rubin stated it showed the average generation rate being
paid by the various communities within Marin more broadly. Some were fairly well below the average,
and then a number of communities based simply on the usage characteristics, were paying more. San
Rafael was noted as below the average. Although these were 1998 numbers it did highlight the fact that
San Rafael was paying less than the average generation rate in the County, based on usage
characteristics and a higher percentage of customers on Care Rates. Depending on how MCE fashioned
its rates it could end up blending the rates in a different way that could produce a different outcome than
was evident here.
Mr. Rubin noted that Ms. Weisz mentioned the fact that one of the objectives of MCE was to pursue
additional levels of energy efficiency programs. He stated that could be done as part of the CCA, or
could be done without a CCA, and as mentioned by Ms. Weber they had a successful partnership with
the County in terms of pursing energy efficiency opportunities together, and they proposed to continue
that type of program. He pointed out that it was not necessarily a given that a CCA provided any
additional advantage with respect to pursing energy efficiency, or demand response, or solar -types of
programs. The impact on the greenhouse gas emissions, shown on one of Ms. Weisz's earlier slides,
they believed were unrealistic, again getting back to the cost side because it presumed that customers
would have to be willing to pay the higher prices they believed would be associated with the program. In
other words, the assumption would have to be that the costs of the program would produce different
types of much richer green rates than those PG&E provided, with little or no cost premium in order to get
to that significantly higher amount of greenhouse gas related reductions.
Mr. Rubin noted Ms. Weisz made the comment that there was a number of Energy Service Providers
(ESP) that were available in the marketplace that would be able to provide the type of full services
contract, specified in the Business Plan, that would bring into focus much greater levels of renewable
supplies. From a slide he identified the renewable characteristics of energy service providers that were
already providing service to some of their direct access customers that historically received power from
third -party providers, as part of the original deregulation that was put into place in the late 90's. These
entities were required, as the CCA would be required, to abide by the same renewable portfolio standard
requirement PG&E had, and they would need to make regular submissions to the Public Utilities
Commission. He masked their names to maintain confidentiality. Mr. Rubin stated that with the exception
of ESPI, all of the other ESPs were providing renewable percentages that were basically in the single -
digit range, and they were required to meet the RPS target PG&E had of 20% by 2010. Mr. Rubin stated
it was not necessarily the case that another entity could be easily found that would be able to provide the
type of renewable characteristics required.
With regard to the legacy of a number of public entities that do provide fully bundled electric service within
defined geographic areas, Mr. Rubin stated that even though a lot of them had renewable percentages
that were about, at, or above in some cases, PG&E's renewable percentages, not much could be read
into the rates they charge relative to PG&E's rates, because they had been in business for quite some
time. Ms. Weisz's slide denoted the bundled rate, which included not only the generation part of rate,
but the transmission and distribution service, which the County would not be providing. The
characteristics of their power supply in many cases included a very healthy dose of federally subsidized
hydropower that was allocated many years ago, and would not be available for new entities stepping into
the market or providing greater percentages of coal fire power which is not consistent with the MCE Plan.
Mr. Rubin stated PG&E had been looking at Alameda where 23% of their portfolio was comprised of the
low cost hydropower and 8% of coal, neither of which would be a part of the mix of MCE. Other entities
across the board were providing much larger percentages of hydro and/or coal.
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Regarding whether it was necessarily true that the administrative costs would be lower for MCE, Mr.
Rubin stated it was difficult for PG&E to reach that conclusion based on the information in the Business
Plan. In particular the amount of individuals within PG&E's Procurement Team that were buying power
that matched the amount of load representative of Marin, which was roughly six, and the Business Plan
called for 20 FTEs (Full -Time Equivalent Employees)— Ms. Weisz mentioned that four would be working
on energy efficiency and he was unsure whether the other 16 would all be doing power procurement;
however, that was more than the number of people within PG&E's Procurement Department, that again
on a pro rata basis, could really be reflective of the amount of power that Marin would be looking to buy.
Regarding the tax exempt financing issue, Mr. Rubin stated that the public agencies were in a position to
issue tax exempt debt. All things being equal, tax exempt debt would be less expensive than taxable
debt; however, these were renewable technologies, they had some experience in the market, albeit it
could be that a financier or rating agencies would look at the financing associated with the $475 million of
bonding identified in the plan in perhaps a different way. In other words, the MCE entity was not exactly
like a SMUD or Palo Alto in terms of them serving captive customers, because customers could opt out of
the MCE program; therefore, there would be a certain amount of riskiness associated with it. Even
though, as Ms. Weisz mentioned, a JPA structure did set up a separate legal entity, depending on what
the marketplace was looking for at the time at the time of borrowing, the lenders might want to see more
than essentially a JPA, with the only assets being the renewable projects being financed in order to
provide security for that financing.
Regarding the question of whether a third -party entity could be found that would provide the type of full
requirements contract that was being sought, Mr. Rubin stated there had been some discussion with
respect to the San Joaquin Valley Power Authority and King's River Conservation District and the
agreement that they were negotiating and pursuing with Citigroup. PG&E looked at the draft contract,
provided extensive comments to SJVJPA and to the County, and used outside consultants to help inform
them on this point, and they did not see that contract as providing the type of risk assurance or
guarantees that had been discussed in that particular community, specifically with respect to whether the
rates would necessarily start out at 5% below those of PG&E and Edison's generation rate, or whether in
fact it would guarantee no more than a 2% per year increase in those rates.
Mr. Rubin stated they looked at some of the terms that only provide the power under the schedule of the
contract within a certain band of usage; therefore, should usage be above or below that band, those
amounts would be charged at higher market prices or market prices prevailing at the time. There were a
number of provisions in the contract that allowed Citigroup to reopen the contract based on certain
external events which they believed were almost guaranteed to occur. He indicated that PG&E
welcomed the City Council to review that contract and would be happy to provide the comments they
submitted to SJVJPA; however, it was difficult to look at that agreement and see how it lined up with the
concept of shifting the risk to some third -party supplier.
With regard to whether some of the polling results that had been done with respect to whether customers
would be willing to pay more could be trusted, Mr. Rubin stated they evaluated the polling information that
was presented and used as part of the determination of how many customers would actually pay the
higher amounts associated with the green tariff. He indicated that the detail behind the poll noted that
quite often what customers stated they were willing to do in response to a survey like this relative to what
they actually did were quite often different things. He indicated that the detail behind the survey noted
and de -rated a lot of the estimates of customer willingness to pay, based on that fairly well known
phenomenon.
Mr. Rubin stated the reason they believed there could be more risk to this proposal than perhaps met the
eye, was because under CCA there was an opt -out type of program so customers did need to
affirmatively step off the program if they wanted to remain with PG&E. If they did not, they remained
customers of the CCA. There would be opportunities for customers to be notified of the pending change.
There would be two notices before the County or the JPA would provide power and two afterwards. From
experience, it was known that customers did not always read bills, and depending on the form of
communication, if it sounded like a very good program where additional supplies of power, at no
additional cost relative to PG&E, could be obtained, being a Marin resident, Mr. Rubin stated he would be
inclined to sign up; however, based on their analysis, they did not believe that would come to fruition,
and there was the risk that customers would find themselves on a program costing them more money,
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which was not what they believed they had signed up for by not doing anything
Mr. Rubin stated that should the CCA fail, higher costs would be incurred most likely. PG&E was the
provider of last resort and they took that obligation seriously, to the extent that if customers returned to
bundled service they would need to scramble to get power supplies to help satisfy their needs, which
could come at a time when power costs in the market were very high.
Using a slide with a quote by CPUC President Peavey at a Commission Decision Conference regarding
this issue in part where he stressed the fact that: "These rules hold CCA customers largely, if not
exclusively, accountable for any increase in cost the utility incurs on their behalf; thus under these rules
the risks and costs associated with CCA failure are largely borne by CCA customers not utility bundled
customers, (meaning the rest of the customer base). It is also incumbent on CCAs to make sure that
customers that elect to switch from utility bundled service fully understand the implication should they be
forced back to utility service for whatever reason." Mr. Rubin emphasized the fact that this could be an
outside possibility risk; they hoped it did not occur; however, they wanted to ensure there was full
understanding and disclosure.
Mr. Rubin stated they believed, based on their evaluation of the Business Plan, that the case was not
made, the costs did not reflect the cost that the CCA would end up incurring and they did not believe the
risks were adequately addressed. PG&E preferred to continue to work with the communities on the types
of partnership programs already established before. Mr. Rubin stated that should the County and cities
chose to participate in this program, PG&E would still continue to partner with them on a wide range of
energy programs.
Councilmember Connolly stated that Mr. Rubin mentioned in his rebuttal to the Business Plan that natural
gas prices would be 14% cheaper in about 12 years than they were now and it appeared as though he
was revising that assumption tonight. From the chart it looked like he was assuming, and he believed
most would agree, that it was likely that natural gas prices would increase over time.
Mr. Rubin stated they never did assume that natural gas prices would be lower in 2020 than they were in
2010. PG&E prepared their initial analysis to the County, presented it in March and they had commenced
the analysis, which was required as part of the production simulation, in the January timeframe. As a
result, they picked numbers that were available of natural gas prices in December, 2007. In December
they used NYMEX, which at that time in December of 2007, only provided futures prices through 2012.
NYMEX had now started providing futures prices out to 2020; however, at the time it only went to 2012;
therefore, for the out years - 2013 through 2020 - they used something that the Public Utilities
Commission had produced back in October, called the Market Price Referent. These were the gas price
forecasts they had at their disposal when they started the analysis.
Mr. Rubin explained that when the County's consultant came in, and critiqued their critique of the
Navigant Analysis, gas prices had changed by then. That was then late March so there were significantly
higher than the numbers they had picked from December. His numbers at the time were higher in 2010
than PG&E's numbers were from 2020 based on the earlier forecast used. When they went to the
County as part of the June Workshop, they updated their analysis, they used NYMEX all the way through
2020. Noting this was a snapshot in time, he stated that going to NYMEX today, a different price regime
would be evident that what they saw on May 20th. Mr. Rubin pointed out that using NYMEX was helpful
for the early years because those were actual futures prices; however, in the latter part of the forecast
period there were no volumes behind these prices. He indicated this did not necessarily provide a lot of
confidence, and when the Public Utilities Commission revised their Market Price Referent, which he
believed would be in the August timeframe, they would revise their analysis accordingly.
Councilmember Connolly noted that over time PG&E's rates would increase, because of presumably, the
new assumption about natural gas prices; however, they were also showing consistently over time, that
both the Light Green and Dark Green options had higher prices than the PG&E rates, which led him to
believe PG&E was assuming essentially that the cost of renewables would track an increased price over
time. Councilmember Connolly suggested it was likely that improved technology over time would
increase the supply of renewables and he inquired as to the basis for his assumption that those prices
would increase over time as natural gas-fired plant prices would increase.
Referring to a chart already shown, Mr. Rubin stated that this chart contained the PG&E generation rate
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forecast relative to MCE rate - MCE rate was a composite of the Light Green and the Dark Green. He
explained that the Business Plan did not produce a separate forecast of each of the two past 2013, and
this was the reason they were showing again, apples to apples, their estimated generation rate relative to
their estimate for the MCE. From the chart he identified 2011 through 2020; 2011 through 2013,
according to the Business Plan, would have the County buying power under a full requirements contract
from a third -party supplier. PG&E made estimates of what the renewable costs would be during that
period of time, and it was not abundantly clear exactly what that third -party provider would supply. Ms.
Weisz mentioned that PG&E's proposed green tariff would use a lot of RECs (Renewable Energy Credits)
or all RECs and that's not what they were proposing. It was not at all clear what the third -party provider
that would be supplying energy under this proposal would be providing. It could well be RECs, and RECs
would be added on top of an otherwise conventional mix, and/or could include real renewable supplies.
They estimated wind at a certain price, as well as biomass, and from the chart it could be seen that in
2014, it stepped up between 2013 and 2014, which, based on the Business Plan assumptions, would
have the JPA owning significant amounts of wind and biomass. They estimated the cost of those
technologies, and noted that at that point the line for the JPA flattened out.
Mr. Rubin stated that whether this was a realistic assumption to make or not was subject to some
discussion, because even if at that point one owned significant amounts of renewable supplies, they
would not necessarily operate consistently. Renewable characteristics change from year to year,
equipment needed to be maintained, it could break down, depending on the type of technology and
conventional supplies would be needed in order to firm up the renewable supplies, i.e., a system could
not be run entirely on renewable, conventional supplies would be needed to support and firm it up;
therefore, those costs would be increasing also. He explained that in some sense the flat line on the
graph was an optimistic perspective of what an entity's costs would look like if it owned certain types of
renewable technologies, and he believed they had used realistic estimates of what those technologies
would cost in the 2014 timeframe.
Mr. Rubin stated they were working hard because they purchase a lot of renewable supplies and would
like to see lower costs; however, this was not consistent with what the marketplace had held for the last
several years. Should they be wrong, and the renewable costs were lower, their costs would be lower
also because they built the same assumptions of renewable costs into their forecast also.
Councilmember Connolly stated his understanding was that previously PG&E had been assuming a
scarcity of renewable energy supply, in other words, that Marin would have difficulty going out in a
competitive marketplace and procuring the 250 megawatts it needed, and as he did not see that this
evening, he inquired whether PG&E was backing off that assumption. Noting everyone agreed on being
subject to the same competitive forces as other participants in the market he inquired on what PG&E
based their assumption that there was some type of scarcity to be faced.
Mr. Rubin stated that the scarcity really simply translated into price. They never assumed that the
supplies would not be available in some form. They never constrained their analysis to state one simply
could not get there. They had noted, however, that tight supplies, and again it was a very tight
competitive market, simply meant that the prices would be high for everybody, including sources of
resources. He noted comments about MCE to the effect of being more adept and capable of mining
smaller renewable supplies than PG&E. Mr. Rubin stated they had been in the marketplace for a long
time and worked at both ends of the size spectrum. They recently got approval from the Public Utilities
Commission to have a short form contract they could use with smaller providers. They had executed a
number of those contracts and would continue to pursue the smaller ones, under standard terms so that
the suppliers did not have to participate in their competitive bids. While supplies were available, it
became a question of what price one was willing to pay in order to acquire them.
Vice -Mayor Miller invited Councilmember Connolly to pose his questions now for the record to be
answered in writing.
Councilmember Connolly stated he was interested in more information on the proposed green tariff which
sounded like it would be coming online. His understanding at this point was that customers would be
offered some type of renewable energy credit through PG&E at a higher price, i.e., voluntarily paying
more for more green credit. He requested PG&E's perspective on how that was different from what was
being offered here, which essentially was more green power for a slightly higher price with the Dark
Green option. He requested a comparison and contrast.
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Councilmember Connolly stated he would be interested in PG&E's perspective on Ms. Weisz's point that
the Dark Green option rate would even drop below PG&E's rate over time. This was the one that would
initially start 8 to 10% higher. He noted the County's contention was that even that would drop below
PG&E's rate over time.
Councilmember Connolly stated he would be interested in PG&E's perspective on what downside there
was to proceeding with this process, if as was heard tonight, even getting to the point of submitting a
request for proposal, going out in the marketplace and gauging supply and price in a competitive
environment, participants in the JPA could opt out. From PG&E's standpoint Councilmember Connolly
inquired as to the downside in going forward with that process.
On the safety issue, Councilmember Connolly stated his understanding was that, and he would like this
confirmed in writing, should transmission lines go down, PG&E would still be out there with their trucks
even if San Rafael entered the JPA, and should there be a blackout, PG&E would deal with it.
Councilmember Heller commented jokingly that in such an event she needed it in writing that PG&E
would take care of Marin first, noting Mr. Rubin lived in Marin.
Indicating this was the first time she had seen any of this information Councilmember Heller stated it was
a lot to try to get through. Returning to the question she posed to Ms. Weisz earlier, Councilmember
Heller noted PG&E would still be furnishing all of the services to customers here, even if they chose to
buy their energy elsewhere, and she inquired whether they would be paid or whether CCA required
PG&E to do this at no cost.
Councilmember Heller inquired whether PG&E would raise their rates to customers to make up for loss of
a group of customers, i.e., would there be a need to balance out the charges to the rest of the customers
and raise their rates to make up for loss, noting they had a lot of fixed costs.
Councilmember Heller indicated she liked the comment about captive customers, such as Palo Alto, and
customers that were not captive. She found that interesting and would be looking at it. With regard to the
May 15 letter to Marin County Supervisor Charles McGlashan in which PG&E indicated they currently
offer this green tariff program, Councilmember Heller inquired whether it was in effect, rather than
something that was coming.
Mr. Rubin stated that they did offer a voluntary green tariff called Climate Smart which allows customers
to mitigate the greenhouse gas emission characteristics of their energy usage. What was described
before is now a renewable green tariff for customers who wanted to get additional renewable supplies
beyond just simply a carbon mitigation tariff. Councilmember Heller confirmed that it was a different
green tariff.
Thanking PG&E for their presentation, Councilmember Brockbank stated that it was very helpful and he
had learned a great deal. Expressing thanks for Climate Smart, he reported that he had signed on to it
immediately it was offered. While a far cry from using renewable energy he believed it was better than
nothing and a nice thing to do. He indicated that he would like more details on Climate Smart, i.e., what
the marketing had been and how many people were taking advantage of it.
Councilmember Brockbank reported that he started studying this topic in detail about six months ago and
was somewhat concerned to hear that while there are plenty of examples in history of industry not being
able to meet government mandates, corporate caf6 standards among many, and he could understand
that PG&E might not meet the 20% renewable standard by 2010; however, he was distressed to hear
they went down from 13 to 12% in the last year — the pie chart showed 14% - and he would like to know
why that was.
Councilmember Brockbank understood PG&E had some disputes with San Joaquin Valley Joint Powers
Authority as it did with MCE, and that these disputes eventually wound up with the SJPA filing a
complaint against PG&E in the PUC. That complaint resulted in a settlement whereby PG&E agreed to
no longer engage in certain kinds of marketing tactics or other tactics. Understanding that those
settlement terms would not be applicable in this case, he requested that PG&E provide in writing and in
as much detail as possible, an assurance that these same tactics would not be used here as they
SRCC Minutes (Special) 06/24/2008 Page 20
SRCC Minutes (Special) 06/24/2008 Page 21
subsequently agreed not to use any longer with San Joaquin Valley.
Indicating that lawyers are used to filing, writing, and reviewing lots of briefs, Councilmember Brockbank
stated it was nice to see the plan, PG&E's response, and the responses to PG&E's response. The most
current response he had was JBS's response to PG&E's response dated March 31, 2008 and he inquired
whether PG&E had provided a response to this, as he would like to see it because otherwise, one tended
to believe the most recent material, which basically stated that PG&E's numbers were all wrong.
Councilmember Brockbank noted that PG&E had a very nice reception here a few months ago at an art
gallery that he attended with a few dozen other City Council members. He stated that it was nice chatting
with a lot of PG&E staff and he was probably making a pest of himself asking more and more difficult
questions. Finally he was referred to the top person to whom he stated something perhaps too blunt -
"Gee if everybody eventually over the next few years joins a CCA of some sort in order to get all
renewable energy, PG&E would be left just with delivering power and billing" - for which he understood
they would get half the cost — "Are you prepared to do that?" He indicated there was no disrespect
intended; however, the lady's response was "We have a right to fight for our customers." Councilmember
Brockbank's question was "do you really?" because his understanding of the law was that PG&E was
required to support a CCA, and he appreciated Jennifer's first line that they supported the goals of MCE.
It appeared as though they had been fighting it with the King's River Conservation District and were not
happy with MCE's numbers either; therefore, he reiterated his question on whether they really had a right
to fight for their customers.
Mr. Rubin believed it important to respond to the questions regarding the SJVJPA dispute and whether
they had a right to fight for their customers. He explained they were communicating in the King's River
Conservation District area, the SJPA area, with elected officials, largely in response to their request to
know what PG&E thought about this, and when they looked at the Business Plan provided by Navigant,
the same consultant that was working here, they were looking for the beef and they frankly could not find
it; therefore, they provided comments accordingly. He indicated they let the elected officials know they
did not believe that that particular Business Plan had the foundation in order to be able to provide a lot of
confidence that they could actually do what they were proposing to do. Confirming the SJVJPA filed a
complaint with the Public Utilities Commission that claimed PG&E was funding those activities using rate-
payer funds, meaning the funds that are broadly supported through their rates, that they were providing
misleading information (which they later backed off on) and they argued PG&E was using employees that
were essentially customer service employees to provide the PG&E perspective in a way that would lead
customers to be a little bit confused about whether, on the one hand, "Gee I'm here to give you a check
for your energy efficiency rebates and oh, by the way, are you familiar with the CCA proposal? - here are
the problems that we see with it." Mr. Rubin stated that what they ultimately ended up agreeing with
SJPA and filed with the PUC, and the PUC just recently approved the settlement, was that PG&E needed
to provide a disclaimer at the outset of various types of meetings, that explained that customers did not
need to take service from PG&E nor obtain their generation supply from PG&E in order to continue to get
these other types of services, and that the communication was being paid for by PG&E's shareholders
and did not necessary reflect the views of other customers. Mr. Rubin indicated that he could provide a
copy of the disclaimer. He noted that SJVJPA needed to make a similar type of disclaimer when they
were having communications if they were out competing for the customers' generation supply. He noted
the SJVJPA was not necessarily the same as city and county governments; therefore, there was a
parallel disclaimer requirement. He indicated that they had always been funding these activities from
shareholders not rate payers, and they now had a protocol where they needed to separate people, PG&E
staff, between either providing basic customer services on the one hand or communicating about CCA.
Mr. Rubin indicated they responded to the protest by both pointing out where PG&E felt they were wrong
and they were never inaccurately communicating. In discussing tactics he wanted to make it clear that
nowhere did the tactics involve PG&E providing anything less than fully truthful and accurate information.
The issue was around how it was being paid for, whether they were providing this upfront disclaimer, and
then again, whether they were using personnel that were involved in two different sets of activities.
Mr. Rubin stated he would be happy to provide a copy of the settlement agreement they executed with
the JPA, and have a similar discussion here should Council feel there was a particular reason.
Vice -Mayor Miller thanked Mr. Rubin and requested that all questions be responded to in writing, which
would be shared with all present.
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Regarding which position he came from in terms of the City building a Climate Change Plan, Vice -Mayor
Miller stated he was looking for very concise answers in a page so that he could use them in his decision
tree.
Questions from Vice -Mayor Miller:
1) From the Pacific Gas and Electric energy supply perspective, please give a clear concise description
of the problem of greenhouse gas emissions in the City of San Rafael.
2) From your perspective, please give the four major solutions to San Rafael's greenhouse gas
emissions, why each one was ranked in the four best and the basis of the ranking.
3) Please suggest the one that is the most efficient, effective, economical and feasible for San Rafael
encountering the problem of greenhouse gas emissions.
4) Please give a clear impact statement of present services and opportunities that PG&E employs to the
City of San Rafael and the rate payers to stabilize affordable rates and significantly reduce
greenhouse gas emissions from residential, commercial and industrial properties.
5) Finally, how can PG&E positively cooperate with MCE JPA strategic objectives to further the goals of
reducing substantial greenhouse gas emissions to local energy independents shifting to a 100%
green renewable energy by providing stable affordable electricity prices to San Rafael rate -payers
and build renewable energy resources in San Rafael that improve the economics and capital value of
the properties in the City?
Vice -Mayor Miller thanked Ms. Weber and Mr. Rubin for their presentations and for enlightening
everyone.
Vice -Mayor Miller called for a recess at 8:30 p.m. and reconvened the meeting at 8:45 p.m.
Vice -Mayor Miller stated that as mentioned by City Manager Nordhoff at the beginning of the meeting, in the
event someone wished to leave they could submit their questions through the website.
Mr. Nordhoff stated that currently a form was not set up to submit questions to the website; however, should
there be comments or concerns these could be sent to the either the City Manager's or City Clerk's office.
Renewable Energy Supply and Programs for Californians — Kristin Raiff Douglas —
California Public Utilities Commission:
Kristin Ralff Douglas stated she was invited to discuss some of the programs being conducted at the California
Public Utilities Commission for energy efficiency, energy reduction and climate change issues. She
understood the City Council had been provided with a copy of the California Public Utilities Commission Annual
Report for 2007 and she would touch upon what she believed to be the most important points for discussion.
Ms. Douglas stated she would discuss the following:
• California Public Utilities Renewable Portfolio Standard;
• California's Solar Initiative;
• Energy Efficiency Programs; and
• Climate Change Proceeding.
Ms. Douglas reported that California's Renewable Portfolio Standard Policv (RPS) was something that required
all of the retail energy providers in the state to meet 20% renewable energy by 2010 — originally this was by
year 2017. Indicating that all utilities would be required to do this, including CCAs, ESPs (Energy Service
Providers), she stated that that obligation would continue past 2020 because once they had met the 20%
obligation by 2010 they would have to continue; therefore, as the load increased, their renewable purchases
would have to increase. Ms. Douglas stated that municipal utilities were not entities the PUC had any
oversight over; therefore, they had set their own targets which they were pursuing on their own.
With regard to where the utilities were to date in terms of their targets, Ms. Douglas stated it should be kept in
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mind that of the 57 contracts approved for new capacity, only fourteen contracts had been brought on line.
She noted a lot of delay in terms of transmission, failure for contracts and a lot of issues needing to be
addressed in terms of getting from the contract to the actual delivery of the energy, and this was one of the
main reasons they were not likely to hit the 2010 target until 2012. Depending on the rules they would have
contracted for potentially more than 20% by 2010 but would not be delivering in the mix by then.
Ms. Douglas showed a chart depicting an equal amount of very high risk, medium risk and low risk contracts.
High risk denoted perhaps risk of not getting the financial backing needed, the tax credit would not go through
and therefore, part of the financial package would fall through, the transmission lines would not be built, etc.
She explained that for each project there was a number of things that for each project were different in terms of
the risks.
Having looked at all of the barriers to reaching the 20% target, Ms. Douglas stated they had evaluated
streamlining some of the transmission processes, noting the top three issues were: Transmission, Site Control
and Permitting. She explained that a lot of this was not directly within the PUC jurisdiction; therefore, they put
together a multi -agency approach. She noted the RETI issue discussed by the PG&E representative was
actually a PUC initiative to address some of the hold-ups to transmission. Because there was a long time
between getting a new facility sited and subsequently building the transmission, they were looking at ways to
shorten that timeline. Similarly, with site control and permitting, a lot of this was out of their control, and they
were trying to work with those in control to expedite the process.
Ms. Douglas stated that when Governor Schwarzenegger was running for Governor he indicated that he would
like to increase the RPS standard to 33%; however, current legislation states that more than 20% cannot be
required. While a utility could deliver more if they wanted, they cannot be required to deliver more than 20%.
She noted that by increasing the RPS goal this could be increased up to 33%. Ms. Douglas stated that for a
number of years they had been exploring whether or not this was possible, and looking especially at the issues
being faced with 20%, they were looking at another entire magnitude of problems in approaching the 33%.
The RPS team was working very carefully with this, working with the California Energy Commission and
looking at the CAISO (California Independent System Operator) in terms of how each one of these agencies
would respond and how they felt it could be approached. She believed that issues with KISO included
reliability and local "must take" issues and there was a lot of infrastructure that needed to be coordinated. They
were exploring doing a report to figure out how they might do this and she believed this report would be
available this year.
Indicating that prices were increasing on renewables, Ms. Douglas stated it very much was a supply and
demand market where the higher the demand was pushed, the more came online, albeit with higher prices,
because currently, it could not be brought on line as fast as they would like. She indicated it was very difficult
to make projections of prices out to 2020. No one appeared to know where natural gas would go because
everyone was looking at its past history, which made predicting prices very difficult. Ms. Douglas stated that
the low hanging fruit of RPS eligible renewables had been picked, and they were trying now to figure out where
the next generation would come from, and it appeared the prices would be higher.
In terms of the 33%, Ms. Douglas stated that "wind does not blow all the time." She noted earlier discussions
about whether it was a 23% or 35% capacity rate; however, either way, the majority of the time, the wind was
not blowing; therefore, some other fossil fuel or some other renewable or type of power would be needed to
make up the difference of the power, which at most, was two-thirds of the time. She indicated that this was
one of the big struggles for the PUC and all of the IOUs (Investor Owned Utilities) were looking at this grid -wide
mix of fossil fuels and renewables and how they would all be integrated.
With regard to the PUC CSI (California Solar Initiative) program, Ms. Douglas explained this was their
derivation or implementation of the Governor's million solar roofs program. She stated that essentially, it was
3,000 megawatts of new distributed solar generation by 2016. It was a statewide goal, applies to all the IOUs;
however, the Municipal Utilities were also involved. The PUC's goal for IOUs is 1,940 megawatts by 2016.
Using a graph Ms. Douglas stated the program was designed to have declining incentive as the demand grew.
With regard to market transformation she stated they were trying to provide more supply of solar, increased
demand of solar, have the prices go down and have it be an independent industry not needing subsidies any
more. Noting a lot of issues would impact whether or not this worked, Ms. Douglas stated that supply was
currently constrained because of a constraint on silicon. When certain supply targets were reached, the prices
would go down. She stated that in general, it was starting off small and in getting to the end of the program,
the jumps would be larger and the incentives smaller.
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With regard to budget, Ms. Douglas noted that at the PUC, the IOUs had the majority of the responsibility;
however, the CEC (California Energy Commission) and POUs (Publicly Owned Utilities) had some. She was
not exactly sure what the CEC was responsible for as this was not her program; however, they were looking at
the New Homes Program, which would require all new homes after a certain date to have an option of having
solar and she believed this was where their 360 megawatts came from.
Referring to a slide, Ms. Douglas explained this was a quick snapshot of where they were earlier this year,
noting PG&E had residential, 11 %, and non-residential 18%, programs.
Looking forward, Ms. Douglas stated it was expected to have 100 megawatts installed in 2008 — double
installed capacity within the next two years. They were watching for a decrease in the price of installed solar,
which they hoped would be a combination of the actual price of the solar units and installation prices
decreasing as more installers learned how to do it, could do it faster and generated business models that could
reduce the prices. Ms. Douglas noted that worldwide demand for PV (photo voltaics) affected the California
market. Federal ITC (Income Tax Credits), Credit Markets and financing also impacted whether or not they
would be able to complete these tasks in the timeframes they would like.
Ms. Douglas reported that the website www.GoSolarCalifornia.ca.gov contained all the programs and
information on all of the California programs was available on the PUC website.
With regard to Energy Efficiency, Ms. Douglas presented a slide that everyone at the PUC and CEC liked to
show. She identified where California's per capita energy use had been over the last thirty years or so,
whereas the United States had gone up significantly per capita. She indicated that this was a direct result of
the energy efficiency programs they had been working on for the last thirty years.
Ms. Douglas reported that most savings came from the utility programs that each of the three investor and
utilities implement. This paid for approximately 1 % of everyone's electric bill. There also were Building and
Appliance Standards implemented by the CEC, which had resulted in a lot of savings. The need for ten new
power plants had been eliminated, the equivalent of 1.8 million cars had been taken off the road, resulting in
billions of dollars in savings to Californians because while rates were higher than a lot of other states overall,
due to the mix of energy chosen to develop, the actual bills were lower because of less energy use.
With regard to the sources of funding, Ms. Douglas stated that as mentioned earlier, there was a public good
charge which was approximately 1 % of everyone's electric bill. $540 million is spent annually to fund the
energy efficiency programs. There also was a connection through the Procurement, which she could not fully
explain, but had to do with the commodity pricing. She indicated there was a decoupling of energy sales from
energy from delivery, i.e., the utilities still got paid and there was no disincentive for them to do energy
efficiency as they got paid based on the load they were serving and the energy efficiency resource was
counted as part of that load.
Ms. Douglas explained that they wanted to create an incentive for the utilities to go out and do energy
efficiency and not have it take away from their profits.
Ms. Douglas displayed a slide identifying the programs in terms of rebates available to customers. She
indicated that the Advanced Metering Program was an ambitious plan to replace the conventional customer
electric meters throughout California. Essentially they wanted to make customers aware of how much energy
they were using and how much it was costing them at certain times. They wanted people to be aware of peak
power times and use power later.
With regard to their Big Bold Initiatives, Ms. Douglas stated that they had been working with all the utilities to
generate the following initiatives:
• All new commercial construction in California would be net zero energy by 2030
• All new residential construction in California would be net zero energy by 2020
• Heating, Ventilation and Air Conditioning (HVAC) industry would be reshaped
• All eligible low-income homes would be energy-efficient by 2020
With regard to Demand Side Management (DSM), Ms. Douglas reported that they were expanding a lot of the
whole building approaches and looking at plug loads. In looking at the whole building approach, she stated this
was generally looking at how to design a building so that it used less energy as a whole building, also
evaluating the plug load. She noted that televisions and appliances in general were using more energy, which
was increasing the plug load, and they were trying to work with industries to reduce the plug loads for all these
various appliances. She displayed further information on the HVAC program.
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Ms. Douglas reported that the PUC was also working with local governments in an attempt to increase their
capacity to lead by example, to ensure they had integrated the offerings of the IOUs with theirs, the Stretch
goals with Title 24, implementing Green Building Standards. Also expediting permitting, enhanced compliance
programs and pilot "point of sale" (POS) programs. She commented that all of these issues were outside the
PUC's jurisdiction; therefore, they were basically trying to look at ways to leverage their programs with the
existing local government programs and save more energy.
With regard to Climate Change — the program she works on — Ms. Douglas explained that the PUC was the
agency in California responsible for looking at what the reductions should be from the electric sector. ARB, the
Air Resources Board, was responsible for the overall program and their recommendations to the ARB would be
made in August, 2008. From a chart, Ms. Douglas noted that California was the ninth largest emitter in order;
however, California's per capita emissions were 12, and while less than Canada, at 13, it was far more than
India or China, at 1 or 2. While their total emissions were higher than California's, California's per capita
emissions had a lot of room to reduce.
Ms. Douglas displayed a graph on where greenhouse gasses emanated from within California:
• Transportation at 41 % was the largest contributor
• Industrial Facilities -23%
• In -State Electricity Generation — 10%
• Out -of -State Generation — 10%
• Other — 16%
She noted that 20% of the emissions were from electricity generation, both In -State and Out -of -State.
From a further slide Ms. Douglas explained that California's imports accounted for 23% of the emissions that
came in because a lot of this was coal. She noted the recently passed Emissions Performance Standard
meant that no new coal contracts or contracts above 1,100 lbs of emissions could be signed for longer than a
five-year period.
Ms. Douglas stated that the California Global Warming Solutions Act of 2006 (AB 32) required that the 2000
emission levels be met by 2010 and the 1990 levels by 2020. She noted that an earlier executive order threw
out the 2050 goal, which was something they were looking at and planning for, but which was not specifically
part of their current exercise. With regard to emissions levels, she indicated they were looking at a reduction of
approximately 25% overall economy -wide.
Ms. Douglas displayed an AB 32 Timetable which indicated that GHG limits become operative in 2012, and
that a scoping plan would be adopted by January 1, 2009, a first draft of which would be released by the ARB
on June 26th
Ms. Douglas stated that the CPUC had been doing their proceedings for the last two years — the first part of the
proceeding was looking at the emission performance standard. They were now engaging in the remainder of
it, looking at what the opportunities were from energy efficiency, from renewable, from the CSI (California Solar
Initiative), from fuel switching and anything else they could think of.
Ms. Douglas stated that the Climate Action Team composed a report a couple of years ago, which concluded
that the GHG targets could be met. They took every agency in California through where the opportunities were
for reductions.
Regarding the Electricity Sector, Ms. Douglas explained the two ways this would be approached:
Regulatory Programs —
• Energy Efficiency
• Renewables Portfolio Standard
• CSI Program
• GHG Emissions Performance Standard
She indicated that these were a regulated number of emission reductions based on goals set.
Market -Based —
• Largest emitters would be in the program. They assumed these would be refineries, cement sector and
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the electric sector, all of which would be required to reduce by a certain number
With regard to the Western Regional Climate Action Initiative, Ms. Douglas explained this consisted of 6
western states and 2 Canadian Provinces. There also was a number of observers — several of the bordering
Mexican states were a part — and the PUC was looking at doing a broader cap and trade market which would
be good for all in that it would bring the price down significantly because of more people participating in the
market. She hoped this would be launched at approximately the same time as the California program, and
perhaps supersede the California program; however, at this time it was all in development.
Contact Information: Kristin Ralff Douglas, Policy and Planning Division
California Public Utilities Commission
415 703-2826
KRD(a)cr)uc.ca.aov
www.couc.ca.aov
Expressing thanks to Ms. Douglas, Councilmember Connolly stated this was a great overview of the general
opportunities and challenges being faced as a state.
With regard to the Community Choice Aggregation concept, Councilmember Connolly inquired whether the
CPUC had evaluated the CCA concept at this time, either generally or specifically with the one example so
far, the San Joaquin proposal.
Ms. Douglas stated she did not know.
Councilmember Connolly stated he would be interested in that. He inquired as to what role the CPUC would
ultimately play in approving a plan, i.e., should Marin decide to go forward.
Ms. Douglas stated she did not know.
Councilmember Connolly stated he agreed with Ms. Douglas' point that distributed solar generation would be
a big part of the solution, particularly in the Marin communities. He believed the Business Plan anticipated
that. There was not a lot of room for a big wind farm or a solar farm; however, there were a lot of rooftops.
He stated he would be interested in her thoughts, divorced from the CCA, on how distributed solar generation
could be incentiveized. He was aware that net metering was one concept.
Ms. Douglas stated that in looking at the California Solar Initiative, one of the things they were trying to do was
to create higher performance systems; therefore, a lot of the rebates and incentives being provided through
the CSI program had to do with how well the system performs. It had to meet certain requirements, had to be
installed properly, could not be on a roof that was shaded, so they were trying to move away from incentives
to everyone and to incentives to high performance systems. She indicated they were trying to create systems
that actually returned to people's investments because of the provision of more power. She indicated that a
lot of the programs they were trying to tie into were federal programs. The cost of solar was still expensive
and even in looking at the highest rates, it would take a third of the homeowner's investment. Adding the
federal tax and state systems would bring this down significantly; however, currently, it was still a significant
investment for the residential customers. She expressed the hope that in creating a demand this would create
incentive for more investment in technology.
Councilmember Connolly stated his sense was that net metering would also be a step in the right direction in
providing incentives.
Ms. Douglas stated that the CPUC was looking at it. She was not aware of the numbers or actual return to
customers because in order to do net metering, less power had to be used than was produced. In order to
place a system on a house that produced more than used, it would have to be a fairly large investment.
Indicating that the information Ms. Douglas provided this evening was brand new to her, should a MCE be
created, Councilmember Heller inquired whether it would be regulated as PG&E is by the PUC.
While Ms. Douglas believed so, she indicated she would need to research this issue. She was aware of
several programs MCE would be obligated to participate in, such as the RPS and others, and she was
unaware whether this translated into an equal regulation.
Councilmember Heller stated she wanted to get this question out so that it could be answered.
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While he needed to learn a lot more about MCE, Councilmember Brockbank stated he really needed to know
a lot more about the PUC, noting no material was provided in advance. He had the impression that PG&E
had to go before the PUC for rate increases; however, it was not quite the same with the CCA, although
PG&E was bound by the renewables standards just as CCA would be.
With regard to the question he raised earlier, Councilmember Brockbank, hypothetically speaking, suggested
that if virtually everyone in PG&E's territory joined a CCA and they all were going for large renewables which
left PG&E only with distribution and billing - about half their business - they would still go to the PUC for rate
increases, they would still get a fair rate of return and their stockholders would still not be hurt.
Ms. Douglas stated that she could not answer that question.
Vice -Mayor Miller requested that Ms. Douglas respond to these questions, and those he was about to pose, in
writing.
Vice -Mayor Miller requested responses to the following questions:
• How would the California Public Utilities Commission regulate the MCE JPA's generation procurement,
reliability, and operations, and approve the financial aspects of the Community Choice Aggregation?
• How does the California Public Utilities Commission propose to work with MCE JPA and the Pacific Gas &
Electric Company to collaboratively solve the problems of creeping rates and the availability of green
renewable energy to San Rafael?
• As a State Agency, do you foresee either legislation or regulation that would significantly affect or change
CCAs established under AB117?
Vice -Mayor Miller thanked Ms. Douglas for her presentation.
Indicating that public comment would now be taken, Vice -Mayor Miller issued a reminder that there would be
three subsequent meetings at which public comment would be taken. He commented that he had received a
copy of "Moms Love MCE" which he had distributed to Councilmembers. Vice -Mayor Miller stated he would
allocate up to three minutes to each speaker, noting the most helpful questions should be those to which they
would like answers, especially those questions speakers believed the City Council did not ask or might have
overlooked.
Vice -Mayor Miller invited speakers to provide their names and addresses.
Bernie Stephan, Point Reyes Station, stated that he worked for Pacific Bell for twenty-one years and when
divestiture came for them they were not in favor of losing their yellow pages. They recognized however, that
they had to go with the changes in technology and today, Pacific Bell was indeed perhaps, the
telecommunications provider of last resort; however, technology had forced such changes that many did not
have land lines any more. A new era in energy was being faced, together with a lot of changes in technology.
Fossil fuel, oil, and natural gas peaking was forcing people into new technologies, less centralized and more
distributive. Understanding that PG&E had been a green investor owned utility, Mr. Stephan stated they had
certainly been a leader in many ways; however, one could understand their resistance to losing this part of
their business.
Mr. Stephan stated that the investors, for whom they were definitely speaking, would get a rate of return but on
a smaller base if that did not include the power component. Therefore, it was understandable where PG&E
was motivated to not lose this part of the business such that ultimately if they were just distribution they would
still have their nuclear, and probably still have the large hydro; however, for the citizens of San Rafael with
regard to their gas, they had the choice to turn off the natural gas and use wood for heating. With electricity,
the only current choice was to get off the grid or stay with PG&E and he believed that having the choice of
MCE could only help to provide a future where citizens were not stuck. While all of the costs could not be
foreseen, he could foresee that fossil fuels had no choice but to go up because they were by definition, limited,
and the newer technologies and solar gave a lot of promise for less expensive energy; therefore, he requested
the City Council to join with the rest of Marin and give the citizens the opportunity to be leaders.
Katherine, volunteer activist with the Sierra Club, stated she had been attending Farmers' Markets trying to
educate people about this program and obtain reactions, and overwhelmingly, the response had been that
something along these lines needed to be done to improve renewable sources of electricity. She indicated that
most people with whom she had spoken had been in favor of this program.
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Having conducted some research into the background of PG&E, specifically along the lines of the 2001
bankruptcy and the time of the rolling blackouts, Katherine reported that according to the San Francisco
Chronicle, at that time the citizens of California paid rate increases of approximately 40% to cover soaring
power prices. When the bankruptcy settlement took place in 2003, customers received a modest break;
however, unfortunately, power costs remained above the regular cost of power to finance the bulk of the
settlement, and these costs were still being passed on to consumers today.
Katherine stated that the majority of the reason she believed the MCE campaign would not be much of a risk in
comparison to PG&E was because PG&E had its risks also, as evidenced by the bankruptcy. She indicated
that because PG&E was a for profit company it needed a lot of profit to finance its costs, etc., and the MCE
campaign / Business Plan would be non-profit; therefore, those costs would not be passed on to the consumer.
Kellv Smith, volunteer activist with the Sierra Club, concurred with Katherine with regard to the overwhelming
support for MCE. She attended the Farmers' Market each Sunday for the past three months talking to and
educating people for three hours at a time, and there was an overwhelming amount of support for MCE and
people wanted to see it to become a reality in San Rafael.
With regard to the comment that people were not willing to pay more for clean energy, Ms. Smith stated this
simply was not true. Looking at the purchases of hybrid cars as well as membership of various environmental
organizations, it was obvious that people were more than willing to pay for clean energy.
Jacob Bauch, volunteer activist with the Sierra Club, stated he also had been educating the public at Farmers'
Markets in San Rafael and other areas in Marin County. He also had done a lot of research on this subject and
found it interesting that two weeks ago the Contra Costa Times reported that electricity rates for PG&E would
rise 4.5% in October and an additional 2% in January, 2009. He noted the community was aware that prices
would continue to rise if these increasingly scarce resources continued to be used. He had seen first hand that
San Rafael wanted MCE implemented so that residents could do their part to help the planet while stabilizing
rates.
Rae Schindler, volunteer activist with the Sierra Club, stated that she had been attending the San Rafael
Farmers' Market where there had been an overwhelmingly positive response to MCE. Time and time again
people had been worried about energy prices, the cost of foreign oil and clean air for future generations, and
people were extremely excited about the prospect of 50% - 80% clean energy in five years, and in fact, people
had been inquiring as to why it could not be done sooner. Having talked to a number of people with solar
panels on their houses, they really wanted the County to follow suit. San Rafael should be a leader in the fight
against global warming, not only for Marin County, but also for the country. Ms. Schindler stated it was time to
listen to the community and it was also time to implement the plan.
Forest Debroff, invited the City Council to consider where the City could be ten or twenty years from now and
to think about when there was only one phone company to provide service. He stated many would remember
that thirty years ago it was illegal to connect an electronic device that was not approved by AT&T into phone
sockets. He invited the City Council to think of only having IBM supplying computers and a world without
Google, Microsoft or Yahoo. He stated the City Council had an opportunity to consider something that was
much bigger than anyone in this room and it could start in Marin County — it had already started in other places.
Mr. Debroff stated there were legions of contractors who would love to get a crack at those customers who
were paying 37 -cents a kilowatt hour. He was not suggesting that hoards of people all of a sudden approach
clients in Marin County, this could be controlled; however, the idea was that a CCA could share that
information with the community of people who were ready to start implementing energy efficiency, load
management and operations and maintenance efficiencies. He was aware of hundreds of contractors who
would like to have that information, which PG&E, for perhaps very good reasons, would not share.
Mr. Debroff stated the idea with a CCA was that those customers consuming the most energy could be
targeted and begin to implement those energy efficiency steps, load management, operations and
maintenance that would provide the reductions.
Having worked in the industry analysis division of an oil company for ten years, Mr. Debroff stated they learned
a very hard lesson in the early 1980s. It was not just about production, rather it was about demand. It was a
balance and not just about supply. He stated the CCA's strongest advantage was the ability to share the
information about customer data with the community of contractors.
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Polle Pratt, Women's Energy Matters, stated that one of the requirements of the settlement with the San
Joaquin Valley was for PG&E to identify themselves at the start of the meeting as speaking on behalf of the
shareholders, and she inquired why they were not required to do that here. Her question was whether the City
Council would require that they do the same as in San Joaquin or whether they would continue to allow PG&E
to show up at these meetings posing as though they care about their customers. She stated it needed to be
made clear that this was a monopoly utility and everyone was aware they were completely invested in
protecting that monopoly.
Larry Russell, Marin Municipal Water District (MMWD), stated they were the largest power user in the county
spending approximately $3.5 million annually. They had invested in this program in phase I, allocating
approximately $10,000 to it, and $133,000 last Wednesday, to finance phase II of the program. As they saw it,
Mr. Russell stated this was the only way they would be able to control long term power costs, which were very
important to the Water District because water and power were directly tied together.
Mr. Russell stated that MMWD was basically the same as East Bay MUD except a lot smaller. They had 100
pressure zones, just like East Bay Mud; however, they had to spread their costs over 200,000 people instead
of 1.2 million, which obviously was a little more expensive. He indicated that rate stability and holding power
costs down was a priority at MMWD. Greenhouse Gas Emissions were also very important and they were
determined to meet the 80% reduction of 1990 goal.
Indicating that they were going forward one way or another, Mr. Russell strongly encouraged San Rafael to
support the program. They would build their own alternative power supply if necessary; however, it was far
most cost effective for the citizens of Marin to have it done in a large organized system, as opposed to, even
though the largest user, still having to build their own. They were in the process of building $3 million worth of
solar, which was a small chunk of what they needed; they would have to go to $40 million to go the whole way,
which they would do if necessary. Mr. Russell stated he lives about one meter off the water in Tiburon;
therefore, global warming had potentially a big impact on him.
Mr. Russell requested that the City Council keep in mind that the PUC does not have a role in this long term.
Secondly, the risk of power cost increase was solely borne by the consumer, not by PG&E or any IOU. This
risk was passed on directly to the consumer because when PG&E's power costs rise, they obtain an increase
from the PUC, which goes directly to the consumer. He encouraged the City Council to support MCE.
Gordon Bennett, Sierra Club, requesting transparency, stated there had been a lot of disparate information
presented and it was not clear to him whether the PG&E representatives were representing the customers or
the shareholders. His understanding from the CUP settlement was that they were required in the San Joaquin
Valley instance to disclose which they were representing, and it was not clear they had done that this evening.
He hoped the City Council would make this request as he believed it bore on the information being presented
this evening. Mr. Bennett believed it important for the public to understand whether those presenting
information had a financial interest in the outcome of that information. While he was not stating their
information was wrong, he believed it important for the public to understand that. On the other hand should
they be representing their customers, it appeared to him in their presentation this evening, that they were in
violation of the San Joaquin agreement, even though it did not exactly apply here. He believed it important for
the PUC to understand that what was happening in San Joaquin was happening in other places also — it was
happening here — if they were representing their customers here. If they were representing the shareholders
here, it was important for the public to understand that.
Mr. Bennett requested clarification on who was paying the PG&E representatives' salaries.
David Schonbrunn, stated that specifically he wanted to assist the City Council analyze what they heard from
PG&E this evening, which he would do from a psychological perspective.
Mr. Schonbrunn stated there was more sub -text to what the City Council heard than just the "we know what we
are talking about and you don't" and that certainly was there. However, underneath that was another level of,
he took it personally, "I'm your mother, I'm going to try to prevent you from ruining your life by going ahead and
either marrying this girl or becoming a hippie, or whatever it is you do." He believed this was in their
presentation and he would like to make conscious in Council's minds the recognition that this was not an
altruistic organization, it was an organization that went bankrupt this century, but before doing so, shipped off
$4 billion or $5 billion to their holding company, and then would not return it because of the bankruptcy. Mr.
Schonbrunn stated these were people taking care of themselves and not taking care of their customers, and
there was no reason whatsoever for the City Council to assume that anything they heard this evening from
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them was truthful. To assume that would assume too much, again, because they were not altruistic
Mr. Schonbrunn stated that the purpose of their presentation was to sow fear and dissention and the question
he posed to Councilmembers was whether they were going to allow that to influence them or would they stand
above it, know where it was coming from and discount it.
Juliette Anthonv, Marin County, stated she was a professional ratepayer advocate, she had been in the
renewable energy business for twenty years and worked for SBG Solar in San Rafael for six and a half years.
She attended all of the legislation in Sacramento, every PUC hearing for solar and this was her life and her
work. She was present as a citizen and was not on anyone's payroll.
Indicating that she had been studying this issue very carefully, Ms. Anthony reported that she had been
reading a fantastic CCA program — the San Francisco CCA — which was excellent, and she urged all present to
read that draft implementation program. She stated it had all the elements of success, which alas, Marin
County did not have. It had been in the energy business for a long time, had its own CPUC, was used to
managing plants, had H -Bonds with a revenue stream from Hetch Hechy, already had a solar plan, which
would supplement the CSI, it had everything going for it, plus a big population.
Quoting from their webpage, Ms. Anthony stated: "CCA represents significant opportunities for the City to
increase the use of renewable energy here, while maintaining reasonable prices for the electricity supply.
There are substantial risks to developing CCA, meaning that careful planning is required for the City to proceed
successfully." Ms. Anthony stated they understood the risks but had so much more that was not risky, e.g.,
they could do a transmission line from Hetch Hechy.
Ms. Anthony reported that she spent all day yesterday in Sacramento with the suppliers of renewable energy —
big solar and wind people - (she works at the Center for Energy Efficiency and Renewable Technology, a non-
profit organization) and they informed her of the severity of the transmission problem. Quoting from several
experts, Ms. Anthony stated: "While the ISO's new policy will let you get any green electrons you want from
anywhere in the state, if they are on the wrong side of transmission bottleneck, and many are, you will pay a
hefty congestion toll. The ISO very candidly stated that it would be next to impossible to build a 100% green
portfolio that met Marin's load because of the need for backup power and the intermittent nature of wind and
solar." The message she heard was that you could probably do much better than PG&E, but 100% or anything
close to it was not a realistic goal at this point. She quoted from another expert: "It's certainly true that Marin's
load could be ..... with renewables, especially if Marin is willing to buy gas fired power and green it up with
RECs and whether the resources needed are as readily available and just waiting around for Marin to buy
seems doubtful, but sooner or later they could probably be acquired for a price." She assumed Marin would
contract with some company to provide scheduling and balancing services and be the interface with the ISO.
Ms. Anthony stated that Marin had not really addressed the net metering problem. While that bill was off the
table they still had to provide energy at night and those net metering customers, of which there was only 20%,
PG&E paid over $700,000 to subsidize. She believed in a regional energy plan with other cities, in the East
Bay, Contra Costa and Solano, to have a customer base big enough to absorb both the bureaucratic costs and
the customer costs of putting in a lot of solar to zero out bills and cut the revenue stream down.
John Slaaq, Novato, stated he serves as an at -large Board Member of Sustainable Marin and currently
President of Sustainable Novato, and he issued the standard disclaimer that his remarks may or may not
represent those groups; however, he thanked the City Council, particularly Vice -Mayor Miller, for reminding him
to ask questions, rather than proffer answers.
Questions:
1) "What is the cost of doing nothing?" - Mr. Slagg stated that should Vice -Mayor Miller wish to build a
decision tree he would advise him to take a long, hard look at the cost of doing nothing.
2) "What are the safety implications of climate change?" — Mr. Slagg stated that should Councilmember Heller
like to provide for the safety of the citizens of not just San Rafael, but Marin County, he would advise her to
do everything she could to protect them from climate change. Likewise, the Police and Fire Departments
in Marin County needed MCE as much or more than the residential citizens.
3) "What is our vision for the future?" — Mr. Slagg stated it was a hackneyed saying that had entered the
popular lexicon "If you build it they will come." Noting someone alluded to this earlier, he commented that
in this market it worked the other way round: "If you come, they will build it." He urged taking a big step
back from the argument about whether supply was available today, rather ask "What is the supply that we
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want to have in the future and how do we structure our incentives to make that happen?"
4) Mr. Slagg stated that it he were to go before the City Council and state "Well you shouldn't build anything
else in town, and further I don't want you to cut services either" he would expect to be asked "What's your
plan — we can lower services, we can raise revenues or both." Likewise, Mr. Slagg stated he would ask "If
you are not signing on to MCE, which is part of a plan for addressing climate change, then what is your
plan?"
Misha Rashkin, organizer with the Sierra Club, stated he wished to point out two issues he believed were
wonderful about the plan that had not been talked about quite so much yet, which were some social justice
aspects:
a) There was no place in the economy for clean energy currently to get involvement in solving these critical
issues that does not involve paying a large premium, such as solar power or a hybrid car; however, MCE
allows everyone who wants to not send the opt out card in, to participate in this program. This meant that
the issues could be solved by the entire community, which was very impressive.
b) Green jobs could be created. Mr. Rashkin noted there was no big push from PG&E on local rooftop solar.
As people had to be paid to erect those solar roofs, schools could be created for such and it was a big
opportunity for integration of tax bases to give jobs to the local community. He hoped the City Council
would keep in mind that this was something people could get together behind.
Mr. Rashkin invited those in attendance this evening to raise their hands if they supported the program. As he
also attends Farmers' Markets, he stated the voters were behind MCE and the issue could be solved as a
community.
Bob Spofford, Sustainable San Rafael, issued a reminder of a point made earlier by Dawn Weisz, which he
believed was the most critical point, i.e., after five years and hundreds of thousands of dollars of County and
MMWD money researching this issue, it was down to dueling estimates and dueling projections. Having been
through the process he had a lot of confidence in Marin County's projections and estimates; he had somewhat
less in PG&Es, having seen some of the analysis and distortions. Mr. Spofford stated the key issue was what
the City would be voting on in November was whether to take the next step and get past dueling estimates and
dueling projections and actually see the real numbers. All the City was voting to do was move to the step of
putting out an RFP (Request for Proposal) and actual electric suppliers come in with actual numbers, at which
point it could be decided whether these numbers worked or not. To have come this far and not turn over the
last card and not see the real numbers, basically meant the City Council had allowed PG&E to bluff them into
folding, which he believed would be a tragedy when looking at the implications of global warming. He recalled
Ms. Weisz's chart with the big bar on the right, which indicated the savings and the cut in greenhouse gases
this program would produce. Everything else the City, County, State and people in this room could do was
trivial compared to that saving.
Barbara George. Women's Energy Matters, stated that her organization was a public interest party at the
CPUC, being one of only four or five parties in these proceedings, statewide, that work in the public interest.
She had been in energy efficiency since 2001 and had participated in the procurement proceeding last time
around from 2006-2008.
Indicating she would provide history about PG&E's Green Image, Ms. George stated she also wished to
request that each Councilmember make time to meet as she would be very happy to share with them what she
had learned in her years at the CPUC in these proceedings.
Ms. George reported that in 2002, they heard from Ms. Weber that PG&E was not into coal these days;
however, this was a pretty recent development as they actually owned the dirtiest coal power plant in New
England, which was in fact, the reason for their going bankrupt, so that they could hold to those dirty coal
power assets in this country and even in Asia. Indicating that PG&E lost those plants in their second
bankruptcy — they went under in the first because of not wanting to cash in those assets, albeit they lost those
assets also in 2003. Ms. George stated that then, suddenly, PG&E declared itself Green.
Ms. George stated that PG&E now indicates they have 50% green energy; however, in looking at the fine print,
23% was in nuclear power. The last she heard was that nuclear was not considered green and there was a
misunderstanding as far as the carbon footprint of nuclear power — it had a high carbon footprint if one looked
at its whole cycle, mining, refining fuel, building the plant and cleaning up the waste — so if this was compared
with the lifetime of a natural gas plant, or even coal plant, nuclear did not look so good any more.
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Noting PG&E was a member of the Nuclear Energy Institute, Ms. George stated they therefore, managed to
get the Climate Action Registry and others to allow them to call nuclear power green, which was how they
could ever recover if they claim they are a solution to climate change, which she did not believe to be the
desired solution in Marin. She noted the CEO of PG&E stated he wanted to pursue more nuclear investments.
Noting that PG&E was currently planning to build a pipeline up to Oregon to import liquefied natural gas, which
was extremely dangerous, explosive, corrosive, etc. There was a lot of controversy about the terminal they
wanted to build on the pristine Oregon coast; however, PG&E wanted to build the pipeline so that they could
bring it down here. She noted that in the procurement proceeding PG&E indicated they wanted other options —
they did not want to go over 20% renewable energy. She indicated she would be happy to discuss further the
energy efficiency work done by PG&E, which had been miserable in the last few years, with them getting less
than half of the goals. Receiving a huge profit on energy efficiency, she noted they wanted 30% but only got
12%.
Kiki LaPorta expressed thanks to John Slagg and Bob Spofford, and Larry Russell, MMWD Board President.
Quoting Jennifer Weber, PG&E, Ms. LaPorta stated: "Customers expect PG&E to let them know the risks of
any new plant" and requested a written response about what those risks are, not in vague terms, but rather the
actual dollar projections of increased costs to customers through MCE JPA procurement plan. She also
requested a written idea of how they believed those costs would play out on a chronological basis.
Ms. LaPorta inquired of City Manager Nordhoff whether there was a plan or some collaboration that could be
developed with regard to community outreach. Noting the proposed outreach meetings with San Rafael
communities she commented that after four hours this evening, many people had learned a lot; however, they
could not make a decision and provide support to the City Council if they had not known something about this
already. She suggested that it would be helpful to have community outreach and education before the City
Council community input meetings.
Invoking Jennifer Weber and Al Gore, Ms. LaPorta noted Jennifer Weber stated that climate change was real
and the time to act was now, which she wholeheartedly endorsed. The risks to the economy, to the
communities and environment were far too great to ignore. From Al Gore's standpoint she recalled the
moment in his presentation where he stated: "There's a gold brick on one side of the scale and the earth on the
other — which one shall be choose?"
David Haskell, San Rafael, stated he missed the beginning of the meeting because he was attending Board of
Supervisor Adam's Solid Waste workshop in Novato. Indicating there was a degree of commonality, he stated
that in many ways a system had been devised where it was easy to throw things away. There was a large
landfill and good collectors, and in some ways energy in trying to abdicate one's own capacity to solve a
problem by giving it to someone else. He believed the MCE project was such a wonderful community
empowerment program. It gave everyone a sense of ownership of the solution and in some ways, it was that
lack of connection to solution that probably drove everyone into despair. Mr. Haskell stated he was delighted
to come into the room when Mr. Debroff was discussing conservation and demand side management because
that was his forte. The one thing he was concerned about CCA was that it did not fully address that issue;
however, on hearing Mr. Debroff he understood that it was the key to creating the next step, the conservation
kilowatt was the largest single supply source available, which would drive down the City's ratepayers costs and
CCA would be the lead in that process — it was the first step.
Mr. Haskell stated that as a Charter City, San Rafael had the capacity to raise money to help citizens resolve
their resource consumption habits. He strongly encouraged support and expressed thanks for having this
meeting.
Thanking everyone, Vice -Mayor Miller stated it had been a very industrious and enlightening evening.
Noting Dawn Weisz had offered many times to make presentations to groups, City Manager Nordhoff stated
that if Ms. LaPorta and her group, or others, were interested he believed she would be glad to do that. Not
having spoken to the PG&E representatives, he imagined they would offer likewise. He indicated staff was
encouraging groups to hold their own meetings in whatever form would make sense for them, hopefully
between now and the end of August, prior to the community meetings. Mr. Nordhoff stated that whatever
coordination was necessary, staff would be glad to assist.
Mr. Nordhoff stated that a lot of information and questions were taken this evening and as soon as possible, he
would review the minutes, work with Linda Jackson and ensue they were distributed to the respective
presenters. He noted that all of the questions would be sent to all presenters, being specific about who was
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asking which, and as soon as the questions and answers were documented, this information would be
provided to the City Council and the public.
Mr. Nordhoff stated this information would be put on the website as soon as it was available. The website was
in progress and hopefully, would be ready by mid-July.
There being no further business, Vice -Mayor Miller adjourned the Special City Council meeting at 10:04 p.m.
ESTHER C. BEIRNE, City Clerk
APPROVED THIS DAY OF 12008
VICE -MAYOR OF THE CITY OF SAN RAFAEL
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