HomeMy WebLinkAboutSPCC Minutes 2008-11-24SRCC Minutes (Special) 11/24/2008 Page 1
IN THE COUNCIL CHAMBER OF THE CITY OF SAN RAFAEL, MONDAY, NOVEMBER 24, 2008 AT 7:00 P.M.
Special Meeting:
San Rafael City Council
Also Present: Ken Nordhoff, City Manager
Robert Epstein, City Attorney
Esther C. Beirne, City Clerk
Present: Cyr N. Miller, Vice -Mayor
Greg Brockbank, Councilmember
Damon Connolly, Councilmember
Barbara Heller, Councilmember
Absent: Mayor Boro, due to potential conflict of
interest.
1. MARIN ENERGY AUTHORITY (MEA) AND MARIN CLEAN ENERGY PROGRAM: - FILE 271
Vice -Mayor Miller called to order the Special Meeting of the San Rafael City Council. He noted that only four
Councilmembers would participate in the discussion and vote on the Marin Energy Authority (MEA) JPA
because of Mayor Boro's financial interest in Pacific Gas & Electric, where he must recuse himself.
Consequently, Vice -Mayor Miller would chair the meeting.
Noting no action would be taken this evening, Vice -Mayor Miller stated that the focus would be for the City
Council to receive final new materials before the final vote, which would take place on December 1, 2008.
Outlining the order of the meeting, he stated that Ken Nordhoff, City Manager, would provide a brief introduction
regarding matters to this point. Mr. Nordhoff would then introduce in turn Greg Stepanicich, who would address
the ordinance and JPA agreement, Mark Fulmer, MRW & Associates, who performed an independent review for
City Managers, Joe Nation and Larry Simi from PG&E, who had provided an alternative partnership plan to the
County, and which San Rafael would hear about this evening. Subsequent to each presentation, each
Councilmember could ask questions of the presenters. Public comment time would then afford anyone in the
audience wishing to speak on the subject to do so.
Introduction — Ken Nordhoff, San Rafael City Manager:
By way of introduction Mr. Nordhoff reported that staff had been working through this public information and
outreach process regarding Marin Clean Energy (MCE) and Marin Energy Authority since last spring. A plan was
put into place to intentionally conduct a series of meetings to hear from constituents and obtain important
information, all leading up to the Public Hearing of December 1, 2008.
Highlighting the events to this point, Mr. Nordhoff reported that the first big meeting was held on June 24, 2008,
where the Business Plan developed for MCE was presented. There was an opportunity to hear from PG&E to
receive their comments and perspectives on the Business Plan. The California Public Utilities Commission
offered their perspective on renewables and some regulatory requirements with which they had been involved.
Mr. Nordhoff noted that this meeting was not meant to rehash or recant the details of the Business Plan. It was
available on the City's website and dozens of other places and would not be the focus of this evening's meeting.
Mr. Nordhoff reported that during late summer and early fall, three neighborhood meetings were held in three
distinct parts of the community with the intention of providing basic information about what MCE was proposing to
do, and hearing from ratepayers. Tonight's meeting would be the last piece of the public outreach and
information effort with formal consideration before the Council on December 1, 2008.
Mr. Nordhoff highlighted the following exhibits and supplement included in this evening's packet:
■ Exhibits A and B - proposed Ordinance and related Joint Powers Authority Agreement
■ Exhibit C - MRW and Associates report, put together at the request of city and town managers across
Marin
■ Exhibit D - PowerPoint presentation provided to the County Board of Supervisors
■ Supplemental item received by the City dated November 24, 2008, entitled, "Proposed Greenhouse Gas
Reduction and Renewable Energy Partnership Plan"
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To present the proposed Ordinance and Joint Powers Agreement, Mr. Nordhoff introduced Mr. Greg Stepanicich,
City Attorney for Mill Valley and Legal Council for Joint Powers Authorities such as the Marin Telecommunication
Agency, and Marin Emergency Radio Authority. Mr. Stepanicich was familiar with the entity of Joint Powers
Authority, how they got established and a lot of the accompanying law.
Proposed Ordinance and Joint Powers Agreement — Greg Stepanicich, Attorney
Mr. Stepanicich noted two documents were before the City Council this evening, the first of which was the
adopting Ordinance for the Joint Powers Agreement, and the Agreement itself. Explaining the purpose of the
ordinance, he stated that typically a Joint Powers Agreement would be adopted by a Resolution; however, this
JPA would be done by Ordinance because under Public Utilities Code §366.2, which establishes CCAs
(Community Choice Aggregation) there was a requirement to make an election on whether to implement a CCA
program. Therefore, Section 13 of the ordinance both approves the JPA and authorizes execution by the City;
however, it also makes the following election:
Explaining, Mr. Stepanicich stated this was not a final cast in stone type of election. In drafting the agreement it
was made very clear that by approving the Agreement there was no pre -commitment to approve a CCA program.
Additional steps would be needed in order for that to occur. At this point, Mr. Stepanicich stated that the Council
would be making an initial implementation, which was a decision to have the Authority decide whether or not a
CCA program would proceed, or whether other energy programs would be considered. In terms of timing,
because the JPA was being adopted by ordinance, if adopted at the second reading, it would not become
effective for thirty days.
Mr. Stepanicich reported that currentl�, the County of Marin, Tiburon, and Fairfax had all conducted second
readings. On or about December 20' , their Ordinances would become effective and could be executed. Mr.
Stepanicich explained that the Agreement itself would be sufficient to establish the Joint Powers Authority, which
would be known as the Marin Energy Authority.
Mr. Stepanicich referred to the terms of the agreement which were the critical provisions being reviewed this
evening. In terms of the philosophy, in this JPA and in most JPAs, including those done in Marin, such as MERA
and MTA, the purpose of the document was to provide the constitution for the new entity, which was an
independent, legal entity, separate and apart from each of the members that made up the Joint Powers Authority.
It was meant to be a broad governance document with the operational details for decision later by the Authority
Board itself, in particular, as referred to in the Agreement, the adoption by that board of operating rules and
regulations, which would deal with many of the details, both of day-to-day governance and also of the operation of
programs that could be approved by the Authority in the future.
In terms of some of the key provisions in the Agreement, Mr. Stepanicich stated that when the ordinance is
adopted by two or more parties and the Agreement is executed, the Joint Powers Authority would be formed and
become a new entity. Within a 180 -day period thereafter, there was a timeframe within which other cities and
towns in Marin could join the Authority without any conditions being imposed by the Authority Board. He
anticipated the 180 days running from approximately December 20, 2008, assuming two of the current entities
that had approved it would sign on that date or shortly thereafter. The initial form of the operating rules and
regulations would be adopted early on; however, those documents would take some time to review and approve.
They would be in place before the key document, Program Agreement 1, would be approved.
In terms of the purpose and scope of the JPA, Mr. Stepanicich stated that in looking at the original documents,
the focus was entirely on a CCA program. It spoke of electricity programs; however, its focus was CCA. The
decision made through discussions of the Governance Committee was to expand the scope to include energy
and climate change, and energy-related programs. The purpose was to give the Authority more flexibility in
dealing with a broader range of programs, not just CCA. Mr. Stepanicich noted that if CCA was not approved by
the Authority, there could be any number of other energy programs that could be approved that would be
applicable and beneficial to the cities and the County of Marin. This was particularly important in the context of the
PG&E proposal, because by expanding the scope of the Authority to consider a wide range of energy programs, it
gave the Authority the opportunity to compare CCA to the PG&E proposal, and to evaluate what would be most
beneficial for Marin residents. Mr. Stepanicich also noted that the Authority would have legal authority to adopt a
partnership agreement with PG&E that would apply within all the jurisdictions of members who were parties to the
JPA. Overall, there were pros and cons with the issue, but in the end it was well received to expand the scope to
provide the CCA with a broader scope of powers that could deal with a wide range of energy programs.
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Mr. Stepanicich stated a key issue for all the cities and the County was the debts, liabilities and obligations of the
Authority, specifically whether they could be put on the hook for contractual obligations or tort liabilities if
somewhere down the road the Authority owned property. He explained the way the JPA was set up was that the
debts, obligations and liabilities of the Authority were those of the Authority. For any party to become personally
liable for any of those debts, obligations and liabilities, they would have to decide to take on that responsibility.
There could be no debts, liabilities and obligations of the Authority for San Rafael unless directed by the Council.
As had been seen with some JPAs, where a member would decide, either alone or in concert with other
members, to provide some extra contribution or additional obligation to further the purposes of the JPA, Mr.
Stepanicich noted this was permissible, but each member would have to personally agree to approve it before
there could be any personal liability. There would be a separation of the debts, liabilities and obligations of the
Authority from each of the members. In order to ensure that for tort liabilities there was protection for all individual
members, an indemnification provision was added.
Mr. Stepanicich reported that the Authority had the obligation to firstly, obtain insurance that would cover
everyone and its potential liabilities from tort liability. It was also required that the Authority would defend,
indemnify and hold harmless each member from any of the liabilities that could arise from the operations and
activities of the Authority. On this important issue, Mr. Stepanicich confirmed that there was very strong
protection for each participating member. This was consistent with what had been done with other JPAs within
Marin County.
With regard to how powers were exercised, Mr. Stepanicich stated that as referenced in the document, the
powers would be exercised in the manner exercised by the County of Marin, which was standard with all JPA
agreements done in Marin. Explaining, he stated that the procedural limitations on exercise of power would be
those that are placed on the County of Marin, such as with MERA, MTA and the other JPAs. There was also a
new provision he believed had not yet appeared on any other JPA agreement in Marin, regarding a limitation that
requires compliance with all local General Plan, zoning and building laws. Mr. Stepanicich pointed out this issue
came up with MERA with the construction of antenna sites, as to whether or not local building laws had to be
complied with. Mr. Stepanicich stated that without this provision they did not have to be, and in fact, it would be
possible to build facilities within any jurisdiction that would not have to comply with local zoning. There was a
provision in this agreement that required that if the Authority decided to construct or cause to be constructed any
facilities in Marin County, they would have to comply with the local General Plan, zoning requirements, and all
building laws before such a facility could be constructed.
Mr. Stepanicich reported that the Board of Directors of the Authority would be comprised of elected officials —
each member would have a representative, i.e., representative from the Board of Supervisors and from each of
the participating City or Town Councils. The alternate must likewise be an elected official from each of the
governing bodies. He indicated that provision is made for the creation of committees and commissions to assist in
the operations of the Authority, and in terms of Board voting, although somewhat complicated, he believed what
was done was based on a formula developed by the only other CCA currently in place in California, The San
Joaquin Valley Power Authority, which provided for weighted voting in relation to the CCA programs. Mr.
Stepanicich indicated there was an attempt to balance out the interests of the large cities versus the smaller cities
and the County to come up with an equitable voting methodology.
Mr. Stepanicich reported that Section 4.9 of the Agreement applied to all decisions that specifically related to the
CCA program. He explained that a two-tier vote occurs for CCA program items: a majority of all directors must
vote in favor of the motion or measure. Passing that first test moved to weighted voting, which contained a
formula that took into account a pro rata share of each member, also taking into account the energy load within
each member's jurisdiction. Those with a higher energy load would have greater voting power. An exhibit to the
Agreement showed a sample of the voting spread if everyone participated based on past energy loads. This
would be updated once the agreement was formed and operational.
Mr. Stepanicich explained that the energy load for the first three years would be the existing within that city and
would be based upon distinguishing CCA versus PG&E customers. After three years it would be recalculated and
based upon CCA load; therefore, the energy load would be based upon the number of CCA customers that
particular jurisdiction had. Mr. Stepanicich stated there also was provision that under weighted voting no single
member had veto rights; he cautioned that decisions would be consensus -based and vetoing any item would take
at least two votes. Once the scope of the JPA was expanded there would be a need to add more flexibility to
the voting because the idea of having energy -load based voting was premised on the fact that the JPA would be
providing electricity to customers. He questioned what would happen should there be other more general
programs, not based on energy load There it was felt more appropriate to have the more traditional voting, i.e.,
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a majority of the quorum voting on the matter.
Under Section 4.10, as with other JPAs, voting was based on a one member, one vote basis; however, a
provision was added that stated: "except as otherwise provided by the agreement, or the operating rules and
regulations." Explaining, he stated that amending the agreement would take a two-thirds vote, and also it could
be that for the approval of certain large programs, a dollar amount threshold could be set, or perhaps when new
energy programs were approved, it could be desirable to have a higher threshold, maybe a majority of all
directors, not just a majority of those voting on the measure. Mr. Stepanicich stated there was flexibility in the
document to allow for differential voting requirements for special circumstances, which could be provided for in
the operating rules and regulations; however, the basic principle under Section 4.10 was one member, one vote,
based on a majority of those voting. This would apply to non -CCA programs and also general administrative
matters, including the adoption and amendment of the operating rules. In dealing with plain administration of the
entity or non -CCA programs, this more standard method of voting would apply.
Mr. Stepanicich reported that a concern arose when the scope of the JPA was expanded. Concerns were
expressed by some who were worried that perhaps by having many different programs involved, the CCA could
be sidetracked whereby the majority of the members could prevent another substantial minority from actually
proceeding with the CCA program. Assuming there was less than a majority that had a sufficient energy load to
go forward with CCA, but did not make up a majority of the voting power, before a change was made (Section
5.1.3) the majority voting power could prevent the other agencies from proceeding with CCA. He indicated it was
felt that that probably was not the intent because the objective would be that those wishing to do CCA should be
allowed to because it was economically feasible. Mr. Stepanicich reported there now was a provision, Section
5.1.3 refers to the "Effect of Vote on Required Implementation Action." He explained that when it became time
to vote on a required action in order to implement the CCA, if two or more members voted in favor of CCA and the
other members who made up the majority, voted against it, a transformation would occur within CCA. At that
point there would be a spin off; those members wishing to pursue CCA would be allowed to do so within the
scope of the Authority and those opposed to CCA and who did not wish to participate in the program would be
terminated without penalty from the Authority. He stated it was felt that this was an attempt to not prevent those
wishing to do CCA from going forward with that program, and at the same time not force anyone opposed to CCA
to go along with it. This was considered to be a fair resolution of the issue; it was endorsed by the Governance
Committee and was part of the current Agreement being proposed this evening.
Mr. Stepanicich stated that the key document to focus on was Program Agreement , an agreement between the
Authority and energy services provider. Therefore, until there was such an agreement that provided the energy,
there would be no program and that would become a critical vote. It would be at that point, subsequent to the
Authority having gone to bid, received proposals and negotiated a contract, that the financial impacts, benefits or
detriments of the program could be fully analyzed based upon that particular contract. The market would then
dictate whether the program would be feasible or not.
Mr. Stepanicich stated that when there was a draft agreement, the Authority must distribute it to all its members at
least 90 days in advance of the consideration of the Agreement by the Authority Board. The purpose would be to
allow each member to bring it back to their City Council or Board of Supervisors so that each body could have its
own discussion to decide whether they wanted to proceed. Incorporated into the Agreement under Section 7.1.1.1
was a "Right to Withdraw" if notice was given 30 days prior to the execution of Program Agreement 1. That
withdrawal would be without any conditions imposed, and a party could withdraw without consequences. Mr.
Stepanicich commented that this was termed the final "exit ramp" of an ability to get out of the CCA should it be
approved by the Board, and without any consequences to the agency that decided not to participate, which was a
key part of the process. He noted that nothing prevented members from discussing draft agreements as they
emerged during the bidding process; however, there was a required 90 -day period that could not be shortened
for the consideration of the agreement by all members to the JPA. This was a very critical part of the entire
process, as it ensured there was no prior commitment, rather it was a purely discretionary decision. There would
be no limitations placed upon the discretion of the Board to either approve or reject the CCA agreement at that
point. Similarly, under state law there was a requirement to adopt an Implementation Plan which must be both
approved by the Authority Board and PUC after being submitted to the PUC for approval. Mr. Stepanicich stated
that legally, the Implementation Plan could be adopted before Program Agreement 1; however, most likely, what
was being contemplated was that they pretty much would be occurring at the same time, or possibly the
Implementation Plan would be adopted right after the Program Agreement; the reason being that if the Program
Agreement did not go forward, there would be no reason to follow with an Implementation Plan of the PUC, and
likewise, the Implementation Plan could not be finalized until the details of the Energy Services Provider
agreement were available. He reiterated that the key decision would be the vote on Program Agreement 1.
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Mr. Stepanicich went on to report that subsequent to execution of Program Agreement 1 and approval of the
Implementation Plan, any withdrawal from the CCA could have financial consequences, depending on how the
contract was drafted with the energy services provider. At that point the withdrawal could be a little more
complicated. Although there would be a right to withdraw, it would be subject to whatever conditions were
necessary to facilitate the removal of that agency from the CCA program. He noted that if a CCA program was not
approved, just dealing with other energy programs would probably be more straightforward; nonetheless, there
would be an evaluation of what obligations an agency might have incurred that could be conditioned upon their
withdrawal. Noting this was similar to other JPAs with obligations, upon withdrawal there would be no further
obligations and no more obligations could be placed upon an entity once out of the agency and that entity would
be entirely free from any further decisions or later actions that the Authority Board might take. Noting an
amendment to the Agreement would require a two-thirds vote, while it was not something that could easily be
done, there was such a provision.
Lastly, addressing the funding and financial aspects of the Agreement, Mr. Stepanicich reported that as reflected
within the financial sections of Article 6 of the Joint Powers Agreement, the County agreed to fund the start-up
costs up to $500,000, or such other higher amount the Board of Supervisors could approve. Noting Dawn Weisz
could address this in more detail, he indicated this covered the contemplated budget for start up of the JPA to get
through the approval of Program Agreement 1. The County funding would come forward to the Authority and
there was no recourse against the individual member cities and towns. Should the CCA program not be
approved, the County would absorb their full investment and start-up costs. If the CCA program was established,
an agreement stipulated that those costs would be passed on to customers, although not immediately. Mr.
Stepanicich stated the Authority Board could set up a time frame under which those costs would be recouped
from customers and the County, over time, would recoup its investment of $500,000 as part of the operations
from the program. The CCA program was premised on the idea of being self-funded through revenues from
customers. There were provisions within the Joint Powers Agreement indicating that for non -CCA related
programs the general costs would be allocated among members and would be contributions from members if
approved. At this point there was no commitment to these additional costs. They would be subject to approval by
the Authority Board before any other programs could be brought into place. CCA costs however, were
segregated out from other program costs that could be approved in the future.
Mr. Stepanicich stated he would be happy to answer any questions about either the ordinance or agreement.
Councilmember Connolly thanked Mr. Stepanicich for his comprehensive presentation. With regard to the
expanded scope of the Agreement he inquired how this fit into the CCA component of the proposed JPA. He
requested clarification on his understanding that it was impossible for members to participate in the overall JPA
without also participating in CCA.
Responding, Mr. Stepanicich stated this was correct in the very beginning. In order to become part of the JPA,
the Ordinance needed to be adopted that made that election. Also, there was a requirement that participating in
CCA made it possible to participate in other programs; however, it was not the other way around. He explained
that if a CCA program was approved, parties could not elect not to do CCA but participate in other energy
programs. On the other hand if CCA was not approved, the rules would change and all parties could participate
in various energy programs. In addition, if there were members who had not yet joined, they could join at that
time without adopting the PUC required Ordinance set forth in Section 3.1. He clarified that in the beginning there
was an obligation to participate in CCA, if in fact CCA was approved by the Authority Board.
In terms of the expanded scope of the JPA, Councilmember Connolly inquired whether there were any legal
parameters on how far expanded the scope could be, or was it simply whatever the JPA decided to take on,
whether at some point PUC approval would be needed for certain types of programs versus others, i.e., what the
legal parameters were for the expanded scope.
Responding, Mr. Stepanicich stated that it only spoke in terms of energy programs. When first discussed with the
Governance Committee, there was discussion as to the range of Climate Change Programs they should be
dealing with, as it seemed very beneficial to have a program with an Authority that could implement AB 32
programs to meet the requirements under that statute. The decision however, was made to narrow it down to
energy -based programs because others could be involved in other types of Climate Change Programs. Indicating
it was only energy -based, which was broad, Mr. Stepanicich stated that in terms of whether or not PUC approval
would be required (generally it would not be required for municipal programs) he could not be sure, depending on
the nature of the program, as to what other approvals could be required in the future. He contemplated that most
programs done by the JPA could be those approved by the JPA itself. If there was a partnership with PG&E, there
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could be a question as to what approvals PG&E could need for their own programs. PG&E would have to address
this as part of any partnerships they would have with the Authority.
Should the City go forward with the JPA and the program was implemented, including CCA, Councilmember
Connolly inquired whether there was anything legally precluding participation or partnering with PG&E.
Mr. Stepanicich responded that there were none. The idea was to maintain that flexibility to allow the Authority to
either partner with PG&E in lieu of a CCA program or in connection with a CCA program.
Councilmember Heller stated she was concerned with the costs. She understood the County would front
$500,000, which appeared to her to be a small amount considering it would take one to two years to put the
program together. Hiring staff and going through the expenses of running a small business would become very
expensive very fast. Should the $500,00 be spent and Marin County decided not to proceed because of not
knowing how long it would take, she inquired whether the JPA could go to their individual towns and cities with a
request to contribute perhaps $25,000 - $100,000 to keep it going.
Indicating that would be possible, Mr. Stepanicich explained that at that time each agency could decide whether
they would go forward. There would be an ability to withdraw if there was a desire not to front money, otherwise
there would be a need to come up with the money from each member or from some other source to pay for
continuing in the program.
Mr. Stepanicich explained that what was being contemplated currently was an approximate 9-10 month time
frame for bringing Program Agreement No. 1 to the Authority Board, with the idea that staffing would not be
ramped up unless the CCA program was approved. Therefore, there would be an ability to finance the more
expanded staffing with a customer base. The time frame was in the window of the first year of operations to get
to a decision on whether or not to proceed with the program. He understood the Business Plan addressed the
types of costs that would be envisioned during that period of time; however, if for some reason those moneys
were fully expended, a decision would need to be made on how to fund the continued study of the options.
Councilmember Heller remarked that hiring an expert at a $200,000 salary range, plus benefits, would spend the
$500,000 right there.
Mr. Stepanicich stated that Dawn Weisz would be able to specifically address the issues of budgeting and what
the costs were contemplated to be in the short term.
If, for instance, San Rafael decided not to go into the JPA and pass the Ordinance, Councilmember Heller
inquired as to whether the City could then buy green energy from PG&E without being a member of the JPA.
Mr. Stepanicich stated that this would have to be addressed with PG&E.
Councilmember Heller noted that it would be a lot quicker, a year, compared to the others being two years.
Mr. Stepanicich clarified that the idea was to work with PG&E from the Authority's perspective in developing the
information necessary to fully evaluate their program. This information would come forward prior to or at the
same time that Program Agreement 1 came forward so there could be a comparison and a fuller choice between
the two different options for electricity service.
As to the voting, Councilmember Heller noted there would be one vote per city and inquired as to when
percentage voting would be used.
Mr. Stepanicich stated, for example, in voting on whether or not to approve Program Agreement 1, the Energy
Service Agreement, it would be weighted as it would be an approval of the CCA program, and would consist of
two steps. There would have to be a majority of all the directors voting yes, followed by weighted voting, where
San Rafael or the County of Marin would have a greater voting share than the smaller cities.
Councilmember Heller noted that San Rafael's share would be about the same as the County's.
Councilmember Brockbank apologized for being a few minutes late, for the first time.
Councilmember Brockbank thanked Mr. Stepanicich and remarked on the impressiveness of the document. As to
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the liabilities, he noted it was anticipated that insurance would be purchased to cover tort liability and not
contractual liability.
Mr. Stepanicich explained that it would be a general liability policy and would cover whatever obligations that
arose, primarily tort liability. In terms of a contract dispute, typically, insurance would not come into play. The
Authority would be solely on the hook for any contractual obligation, and anyone contracting with the Authority
would have to understand that that was their only recourse, i.e., action against the Authority for any breach of the
Agreement.
With regard to the contractual liability, Councilmember Brockbank stated his understanding was that the odds of
incurring any contractual liability would be very slim, at least initially, because for the first six to nine months it
would just be Program Agreement 1, hopefully, looking for someone to incur all risks. Even so, Councilmember
Brockbank indicated he had heard talk about the need to purchase a bond, and inquired as to whether anyone
would have a problem entering into a contract with a brand new JPA, with no track record, history or assets.
Mr. Stepanicich stated he was not in a position to answer that question and deferred to the consultant and Dawn
Weisz.
As to the issue of weighted voting, Councilmember Brockbank thought there were four potential thresholds for
voting. On non -CCA related voting, a simple majority of the directors present; however, on the other end of the
extreme, voting for Program Agreement 1 was all or nothing. In between there were two possible kinds: one was
that it was possible under the operating rules and procedures to adopt some type of weighted voting for things
other than CCA; however, finally, actual CCA votes, other than Program Agreement 1, would be both by majority
of directors and by a majority of the weighted voting pro rata shares. Questioning how that would work, he noted
there probably would be no evidence in the agenda, in the way the meeting was held or the vote; however, if
suddenly San Rafael, Novato and the County voted "no" and six cities voted "yes" someone would indicate that
that motion lost.
Mr. Stepanicich stated that it would be necessary to specify the applicable voting requirements in an agenda so
that everyone was aware in advance how they would vote on that particular item. He noted that Provision 5.1.3
allowed parties to proceed with CCA even if others were opposed to it, but if the entire Board decided not to do
CCA or there was only one member that wanted to do CCA, then that would be a vote down of the CCA program.
The JPA would then stay in effect and focus on other types of energy programs; therefore, it was contemplated
that there could be a vote that would actually be a rejection of the CCA program.
Councilmember Brockbank noted that other Marin JPAs required a pro rata contribution, usually based on
population, and as Mr. Stepanicich stated earlier, in deciding to do other non -CCA related energy programs, the
City might be assessed on some kind of pro rata bases, perhaps by energy use rather than by population.
Should a City decide to do such programs, which it would increasingly be required to do like any business under
AB 32, rather than pay for it out of General Funds, he inquired whether it would be possible when the CCA was
up and running and rates had fallen below PG&E as predicted, whether some of that money could be used for
other AB 32 implementation programs without having to assess the cities.
Mr. Stepanicich stated that was a possibility. It would have to be evaluated at that time as to whether it would
violate any requirements applying to the CCA program; however, the potential existed that moneys generated
could be used for other energy-related programs, as there could be programs that would relate to CCA. He
believed there were possibilities of funding those types of related programs. While no restrictions were placed in
the Agreement itself, he noted a question arose as to whether or not in general, should the JPA begin to generate
excess moneys, those moneys could be returned to the members. He believed there was nothing to state this
was not possible; however, the legal requirements would need to be reviewed to ensure that, based on those
circumstances, it could be done.
In reviewing the wording in Section 1 of the ordinance, Vice -Mayor Miller inquired whether it would be correct to
state that through this ordinance, the City of San Rafael would provide electric services to constituents within its
service area by joining the Marin Energy Authority Joint Powers Agreement and authorizing the implementation of
a Community Choice Aggregation Program.
Mr. Stepanicich explained that the City Council would be authorizing the Authority to implement and institute such
a program. The City of San Rafael itself would not be doing the program, rather the Authority on the City's behalf
could carry out such a program. The City of San Rafael, however, would have the authority under State law to
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do this itself and the JPA Agreement and ordinance were transferring that authority to be exercised by the JPA
Authority.
Vice -Mayor Miller noted he was having difficulty with the wording and could envision people reading this as
adding another service.
With regard to the recitals of the Agreement, Vice -Mayor Miller noted it had been morphed from a CCA, now into
AB 32, and possibly AB 375 also. He inquired whether the prime purpose of the mission of the JPA was to
reduce greenhouse gas emissions by joining with the other cities and towns and the County of Marin in
responding collectively to the regulations and mandates of AB 32, SB 35, and the California Resources Board,
and that the Marin Energy program was a tactic within that purpose or mission.
Mr. Stepanicich responded affirmatively. Referring to Recital 3, he noted that in addition to addressing
greenhouse gas emissions under AB 32, there also were the goals of securing a stable energy supply, price
stability and an economic benefit that could be derived.
Vice -Mayor Miller inquired as to the requirements at the local level of AB 32 or SB 35 and whether those should
be explicitly expressed in the Agreement so that the City would be aware that the agreement would accomplish
those requirements.
Mr. Stepanicich responded that the difficulty of timing currently was that CARB (California Air Resources Board)
had approved a scoping plan; however, the actual regulations were not yet adopted and would not be seen until
2010.
With regard to the opt-in/out option, Vice -Mayor Miller noted that basically the ordinance prohibited a city or town
from participating in Marin Energy Joint Power Authority without participating in the Community Choice
Aggregation Program.
Mr. Stepanicich responded affirmatively.
Vice -Mayor Miller inquired as to whether or not this made the CCA superior to the mission of the JPA and work
against those towns and cities who opt not to join the CCA program but had the need and desire to properly and
collectively respond to state mandates. He commented that he was having difficulty in finding out the mission, as
it seemed that a tactic became the determining process, and he inquired as to how this should be handled.
Mr. Stepanicich stated that the challenge was in deciding whether or not it would be workable to have some cities
do CCA and some cities within the same organization not doing CCA but other energy programs. The question
then became how the Board of Directors would function in that situation. Since it seemed there would almost
have to be a dual Board to do this, the Governance Committee ultimately decided that everyone should
participate in the CCA program under the Authority. However, the alternative was that if CCA was not pursued
then it would be wide open with respect to the types of energy programs everyone could try to achieve.
Concurring with Vice -Mayor Miller, Mr. Stepanicich noted that the document evolved from one that was focused
entirely upon CCA to one that had an expanded scope. What was being attempted in the Agreement was to
combine both approaches into one, and in focusing the JPA initially on whether or not it should do a CCA
program; therefore, this was the reason for language in the ordinance that spoke in terms of priority, initially to
address whether or not to implement a CCA program. The intent was to create the flexibility to state at the end of
the day that perhaps instead of CCA there was something else that could be done, or CCA would be done,
together with some other energy programs. The desire was not to be too restrictive. Mr. Stepanicich stated that
should there be a CCA program, there was no doubt a lot of effort would have to be directed by the Board of
Directors to that program. The Governance Committee felt it was not going to be very workable to try to divide
responsibilities to some cities involved in energy programs, but not CCA, and others involved in CCA.
Vice -Mayor Miller stated that it did work for a city that was after the mandates of AB 32; that was subservient to
them and even though they had a real need and desire and did not particularly wish to join the CCA, they really
did not have an option.
Mr. Stepanicich explained that in the short term no one was restricted from pursuing programs at a local level,
and if it turned out that a smaller number of cities decided to do CCA and another group of cities decided not to, it
would be very easy to create another JPA that would be based upon non -CCA energy programs. The CCA
provisions could be removed from this document keeping the same basic governance for the new JPA.
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Vice -Mayor Miller commented that there was a possibility of bifurcating it
Concurring, Mr. Stepanicich stated there would be a bifurcation at that point, so those that only wanted to do
non -CCA energy programs could have their own JPA without the obligation to do CCA. Although not specifically
stated in the Agreement, having a spin-off occur automatically was considered; however, the thought ultimately
became that it would be better to leave more flexibility to allow the parties not participating in CCA to decide how
they wanted to go forward. They clearly would have the option of having their own JPA at that time, based upon
the basic documents prepared.
Regarding the scheduling of the various entities coming in to participate, Vice -Mayor Miller stated his
understanding was that after two agencies joined, now three, a city or town could take 210 days in which to mull
over the implications, etc. He requested further explanation on the sequencing.
Mr. Stepanicich explained this was done by San Joaquin Joint Powers Authority for their power authority. In
terms of what would take place within the 180 -day period, in effect 210 days because it takes 30 days from the
180 days for the Ordinance to become effective, during that time the operating rules and regulations initially would
be adopted, but in terms of the schedule, the Program Agreement 1 would not yet be up for consideration.
Vice -Mayor Miller inquired whether at this time staff would be selected.
Mr. Stepanicich stated that staff would be limited initially. County staff would work on the transition of the JPA.
Vice -Mayor Miller commented that during the 210 days it would just be County staff.
Mr. Stepanicich deferred to Ms. Weisz to address the question in terms of actual timing of staffing.
Vice -Mayor Miller inquired whether they could or would select staff.
By joining the Marin Energy JPA, Vice -Mayor Miller inquired as to whether the San Rafael City Council would
relinquish prime control over its budget and programs to a majority or weighted vote of another governmental
entity. In other words, would cash-strapped San Rafael have to give a portion of funds for a program voted by the
majority of the JPA but not wanted by the City Council because it was not in the best interest of the City.
Mr. Stepanicich stated that if the CCA program were pursued it would be entirely funded by customer revenues.
If the CCA were not pursued and other energy programs or other types of programs were done, funding would
need to come from its members. Any city would have the right to withdraw if it disagreed with the actions being
taken. He noted that the right to withdraw was not as difficult as with the MTA (Marin Telecommunications
Agency), which had very delayed withdrawal rights. This was a six-month notice occurring at the end of the fiscal
year; therefore, there was a much more immediate withdrawal right compared to what exists with the MTA.
Vice -Mayor Miller inquired if the City would ever have to encumber or collateralize assets for operations of capital
asset acquisition of the JPA.
Mr. Stepanicich noted there were no requirements to do so.
Vice -Mayor Miller clarified that this could not come about if everyone but San Rafael wanted the JPA.
Responding in the negative, Mr. Stepanicich confirmed that the Agreement required that no one could have a
personal liability unless agreed to by the individual party.
Before voting on the matter, Councilmember Heller inquired whether the City Attorney would have signed off on
the language.
Mr. Nordhoff stated that both the City Attorney and Assistant City Attorney had looked at the ordinance and
agreement; however, he deferred to City Attorney Epstein for comment.
City Attorney Robert Epstein reported that all of the Marin city attorneys had been discussing and reviewing
various iterations of the document over the past six months.
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Councilmember Heller inquired whether any questions had been discussed and resolved
Mr. Stepanicich reported having had three sit-down meetings with all of the city attorneys and County Counsel on
the document, together with numerous emails. He noted he had kept the entire group apprised of changes in the
document as they had gone through it.
Councilmember Heller inquired whether the membership of the JPA could be expanded, as was done with MERA,
as she had read that both Water Districts were interested also.
Under CCA law, Mr. Stepanicich stated that only cities and counties could participate in CCA programs, so
therefore, membership was limited at this time to cities and counties, although not limited by the County. In other
words it could go beyond County boundaries; however, it would be necessary to be either a city, town or county to
qualify to be part of a CCA program.
Mr. Nordhoff added that should the CCA not go forward and AB 32 programs remained, there would be a way to
expand the Board membership because the CCA limitations on expanding the Board membership would go
away.
Mr. Stepanicich confirmed that to be true.
MRW & Associates — Mr. Mark Fulmer
Mr. Nordhoff Introduced Mark Fulmer, MRW & Associates. He reported that he and his colleagues spent a
significant amount of time with the enabling documents, working on task forces, governance committees, etc.,
and considered it could be favorable to get one last perspective into the Business Plan, and Mr. Fulmer had a lot
of experience in the energy field.
Referring to Exhibit C in the packet, Mr. Fulmer explained this was a six-page letter addressed to Peggy Kern,
Tiburon; however, sponsored by the various city and town managers. Using PowerPoint, Mr. Fulmer stated he
would review highlights of that letter and address main concerns of the Business Plan.
In business for 25 years, Mr. Fulmer explained MRW & Associates was located in Oakland with a staff of twelve,
concentrating almost exclusively in California energy markets. With respect to CCA, Mr. Fulmer reported having
participated in a number of peer review studies some years ago for Marin and some East Bay cities, as well as
the San Joaquin Valley Power Authority. Focusing in the peer reviews on issues that could make or break a
program from an economic point of view, Mr. Fulmer reported that those they reviewed that tended to be
important included the underlying price of wholesale power and natural gas and the type of cost resource
acquisitions assumptions being made by the CCA. It was important when looking at these things that there be a
common set of assumptions: they would both be buying into the same power and natural gas markets, and
looking at renewables in the same areas; therefore, it was prudent to ensure these were comparable when doing
a cost comparison between what CCA was offering and what PG&E was offering. Some of the risks and
uncertainties that were identified in the Business Plan and how they might be addressed would also be
discussed.
Mr. Fulmer stated that the current project was to complete a high-level review and look for any fatal flaws from an
economic point of view. That would mean looking at potential costs the CCA would be paying for power and
operating and comparing that against what PG&E rates might be projected to be under similar circumstances.
They were not requested to do any detailed analysis of the Business Plan to try to duplicate their numbers, rather
to just look at the stated assumptions and not get involved with any of the legal issues.
Mr. Fulmer stated they began with a review of the most recent iteration of the Business Plan, together with a
number of comments from PG&E and a hired consultant during the first part of the year. They also spoke with
one of the authors of the Business Plan, as well as Tim Rosenfeld, County consultant, who had been involved.
Based on this review they attempted to identify the important issues or fatal flaws and ascertain whether there
were major problems that needed to be addressed
With regard to key assumptions, Mr. Fulmer noted that towns and cities did not have any financial risk at this
point. Signing on now did not necessarily obligate dollars. In looking at CCA and the revenue streams there
were two proposed rates: Light Green rate, comparable to PG&E but providing more renewables, and one that
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would be a full renewable, at roughly whatever cost that would be. He indicated that with the power procurement
strategy in the near term there would be a contract for a third -party to procure all the power and conduct the
operations.
Mr. Fulmer reported finding no fatal flaw in the Business Plan. He found it a very interesting document because
they were used to people focusing very strictly on the bottom line, and having this dual interest of providing
something the people of Marin were interested in - - a greener portfolio than that being offered by PG&E - - and
making it a key piece. With regard to a major issue encountered, Mr. Fulmer stated that in speaking with Dawn
Weisz and Tim Rosenfeld, they acknowledged and intended to address, the absence of a risk assessment, which
he believed really needed to be included. He noted there were other minor clarifications which would improve the
document; however, not as important as the absence of a risk assessment.
Mr. Fulmer stated that as part of supporting the conclusions that there were no major fatal flaws, the key
assumptions were within the range of reasonable. In evaluating the key costs for renewables, wholesale power,
natural gas, and performance of renewables, looking forward this was not a single number, rather a range of
numbers that could reasonably be expected; therefore, the numbers in the report in his opinion were within the
range of reasonable, albeit on the optimistic range. Mr. Fulmer noted that risk addressed would be to explore the
other end of the range and have a plan to deal with it should some of those assumptions fall on the less favorable
end.
Mr. Fulmer reported that in 2006, Navigant Consulting, authors of the Business Plan, conducted a feasibility study
similar to that being recommended, where key assumptions were looked at and explored, the results of which
indicated that the CCA model employed appeared to have some robustness. The model in the Business Plan
was somewhat different because of the strong green element; therefore the conclusions made in the 2006 study
did not necessarily carry over, which was their reason for recommending that something analogous to that be
repeated. He noted that at a minimum it would be necessary to explore the underlying power prices and what the
bid from the third -party might look like. He indicated that the Business Plan laid out a goal that whatever the third -
party provider offered would provide some element of competitiveness in rates while bearing a lot of the risk, if
not, all of the risk. All of the bids would be reviewed for their creativity, risk sharing, or whether they were bearing
the risk and meeting all of the criteria. Mr. Fulmer also recommended exploring the cost and performance of
renewables that the CCA envisioned developing themselves or co -developing with other public agencies.
Noting that within the CCA customers had a right not to participate, Mr. Fulmer stated that depending on whether
a large portion of a particular customer class did not, this could have some implications. He noted this was
somewhat less so in Marin where there were not two or three huge industries.
Mr. Fulmer noted two rate structures with different procurement cost and revenue implications. Exploring how
many customers chose to go into one or the other, or perhaps switch mid stream after three or four years — - all of
a sudden there was a large migration for some reason — - what this would mean for the CCA with respect to their
revenues and costs, and whether this would cause a major financial problem. He noted that most of these
comparisons were against the baseline of the PG&E rates. He also noted the importance of the assumptions
being consistent, buying into the same market, not one buying low and the other high.
Councilmember Connolly requested clarification on the last bullet point.
Responding, Mr. Fulmer stated it was important that the analysis treat the CRS and CCA procurement costs
similarly. He explained that assuming PG&E was buying natural gas at $6.00 a million BTUs (British Thermal
Unit), and CCA, for whatever gas fire generation it was relying on, was seeing the same price, if CCA was able to
buy wind power at a certain price, PG&E would take into account financing differences and reasonable
differences that could be explicitly counted on, they would be similar and participating in the same market.
Mr. Fulmer stated that some smaller issues needing clarification included how the Light Green pricing would work.
It was generally described as being competitive, perhaps a little bit less than PG&E, but it would be good to have
that explicitly laid out. There was also some confusion over the meaning of 100% green power and what it meant
when someone offered 100% green power. He explained that in the different jurisdictions such a product was
offered, which generally meant that a customer buying 200,000 kilowatt hours over a period, their provider could
explicitly point to having either generated or purchased 200,000 kilowatt hours of green product. It did not mean
that "at 3:00 a.m. on November 24t", your nightlight was running on green power", rather in looking at it on a little
bigger, more aggregated basis, it meant that "if I buy 100% green, and my usage is 100 kilowatt hours" they had
and could demonstrate that they had bought 100 kilowatt hours of that green product.
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With regard to customer risk associated with the transition charge, Mr. Fulmer explained that the transition charge
in question related to a customer opting in to the CCA, participating for a year or two, and then choosing to return
to PG&E service. In principle, CCA had the right to charge an exit fee or transition charge; however, customers
would require a little more detail of what that would be. This needed to be defined up front so that customers
could make an informed choice.
With regard to customers switching between the two products Mr. Fulmer questioned whether there would be any
rules associated. Also with regard to the question of when this would occur, he believed the dates proposed in
some of the earlier business plans were probably already beyond optimistic.
With regard to final recommendations, Mr. Fulmer stated that they believed there was potential to meet the goals
laid out in the Business Plan of providing green energy to those who wanted it at a reasonable price while
offering another product that was competitive with PG&E. While possible, but not guaranteed, he indicated that
given the off -ramps that the cities and towns had between now and having to sign and commit their residents,
they did not see any reason not to move forward with JPA participation. Once there was a risk assessment and
third -party bid with actual numbers, the City would then be in a good position to make a decision. Mr. Fulmer
referred Councilmembers to Exhibit C for the details.
Noting this impressive document was dated almost six weeks ago, Councilmember Brockbank inquired as to why
Councilmembers had not received or heard of it.
Mr. Nordhoff stated he had mentioned it but did not distribute it because he did not know this meeting would occur
on this date. It was timed with the way the County was moving through its process and several of the other cities,
so having had it for a while staff decided it deserved a public airing at this meeting. The benefit was that
Councilmembers, staff and the public would see the results of the report.
Referring to Mr. Fulmer's comment that there were no fatal flaws, Councilmember Brockbank noted his remarks
that a better risk assessment would be needed before recommending that the cities go forward, by which he was
guessing Mr. Fulmer meant before going forward six months from now and signing Program Agreement 1, as
opposed to before going forward and voting on whether or not to form the JPA.
Mr. Fulmer responded affirmatively.
Since the document was written almost six weeks ago, Councilmember Brockbank inquired as to what responses
had been received, for example, from PG&E, who might disagree with the assessment of there being no fatal
flaws, or MICE, who might disagree with the assessment that more risk assessment was needed.
Mr. Fulmer reported that they had not had direct interaction with either PG&E or MCE, with the exception that he
had given this presentation at the Town of Ross some weeks ago where Dawn Weisz was in attendance. In
preparing for the presentation, MRW did speak with the authors, mainly for clarification. No feedback was
received explicitly on the letter from either PG&E or the CCA advocates.
Councilmember Heller inquired whether any of these facts might change in the next few weeks or months as the
nationwide and worldwide turmoil continued.
Responding affirmatively, Mr. Fulmer stated that while things could change, how they would change would be
difficult to answer. He noted that natural gas prices had fallen as much on a percentages basis as oil, and when
natural gas fell, it made renewables somewhat less attractive on a strictly financial basis. If PG&E's rates were
tied more to natural gas, then that could make PG&E rates, in principle, more attractive. Mr. Fulmer believed
natural gas would probably not rebound to what it was in the summer; however, confirming that things could
change, he indicated this supported his suggestion to do some sensitivity analysis.
Assuming the City went forward with the JPA with the idea that the JPA would go into the market, and at that time
be in a better position to conduct a risk assessment, which Mr. Fulmer correctly noted needed to be done, under
that scenario Councilmember Connolly inquired whether Mr. Fulmer felt that an adequate risk assessment could
be done by going out, testing the market and looking at the variables. Noting it was an ever-changing world
currently, on the other hand, given this was the plan, he inquired whether Mr. Fulmer considered this a way of
adequately testing risk.
Mr. Fulmer stated that testing the market and seeing what was available was definitely one piece, but not the only
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piece.
Councilmember Connolly inquired as to what else needed to happen
Mr. Fulmer stated it would be necessary to evaluate the key variables identified and not just look at what the
market forecast currently for energy. Also assume they could be wrong high and low, and run it through some
pro forma models to determine the effects on PG&E and CCA rates, and ascertain whether some combination of
these variables, while not necessarily expected, could happen and could cause some very bad misalignment of
CCA costs greatly exceeding PG&E's rates. Mr. Fulmer referred to the May 2006 Risk Assessment performed
by Navigant on the earlier study.
At the Marin County Board of Supervisors meeting to pass the second reading of the Ordinance, Vice -Mayor
Miller noted Richard McAmish, a San Rafael ratepayer, commented that he was worried about the County and
Marin cities entering into an ambitious venture in the midst of the worst economic crisis since the Great
Depression. Mr. McAmish's worry was now Vice -Mayor Miller's question. In this perilous financial crisis was this
the time to go forward with a new public enterprise that required significant financial resources and whether this
crisis challenged Mr. Fulmer's review of the economics of the program?
Mr. Fulmer stated that in his mind the things the current crisis would affect would be the cost of commodities and
renewables and the availability for financing of those things, which would entail a third -party type financing
system, should it even be possible to obtain that financing. He noted, however, that a municipal agency could be
in a better position than a private one to get this. Mr. Fulmer suspected that by the time the CCA was at the point
of thinking about building and financing, in two to three years from now, they might have a better opportunity.
Given the current economic situation these were the issues he would like to investigate before committing to
anything.
Vice -Mayor Miller requested that the presentation and document be made available to the City Council.
Mr. Nordhoff stated he would also include the May 2006 report.
PG&E — Josh Townsend, and Joe Nation
Mr. Nordhoff introduced Josh Townsend from PG&E and Joe Nation who was working in partnership with PG&E.
David Rubin was also present to answer any technical or energy-related questions.
Josh Townsend, Governmental Relations Manager for the Northern District for PG&E, stated he was
accompanied today by former Assemblyman Joe Nation, now with ENVIRON International, an environmental
consultant firm, and David Rubin, Director of Service Analysis for PG&E. He thanked the City Council for the
opportunity to present the outlines of a partnership between PG&E, County of Marin, and San Rafael for the
purpose of reducing greenhouse gas emissions and providing new renewable energy. He commended the City of
San Rafael for its Sustainability Programs and efforts in reducing greenhouse gases; it truly was a model city for
the rest of the County as well as the State. Mr. Townsend commented that PG&E also shared these goals and
values as seen by being an early supporter of AB 32 and he was extremely proud of standing with a company
that supported AB 32 in its early stages. He noted PG&E had also been a leader in establishing the Federal
Climate Change Act, and they continued to procure renewable energy. Currently, they had 1,100 megawatts of
renewable power operating or under construction and over 2,600 megawatts of new renewables in the pipeline
between now and 2012.
Mr. Townsend stated that PG&E had carefully structured a proposal they believed would reduce the rate of
greenhouse gas emissions from electricity in the County by nearly 40% by 2020. In fact, this partnership would
start in 2010 with lower GHG emissions than MCE's plan and continue to reduce greenhouse gas emissions even
lower than MICE every year through 2020. To achieve these reductions, support was needed from the County
and cites, and participation from the citizens of the County to achieve these goals. PG&E wanted to make the
offer to staff and the community to immediately begin a process:
1) Produce a joint framework between PG&E, the County, the cities, and other Marin stakeholders on a
specific target for cutting GHGs (greenhouse gases)
2) Identify clear timelines and milestones for measuring the progress of the partnership so that the city, its
constituents and PG&E customers, and the Marin community could periodically assess the viability of the
relationship
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3) Identify specific programs that would meet the target and milestones and define mutual responsibilities
and schedules for carrying them out
Mr. Townsend noted examples of the programs that might be mutually agreed upon to pursue included:
- A community renewable energy project, where the County or City of San Rafael would identify local sites
to build renewables on, such as solar or wind
- Additional renewable energy procured by PG&E under a Marin Green Electricity Plan This would allow
customers to choose to subscribe to a 100% green product, at a slight premium
- Energy Efficiency Projects and Programs where there would be joint agreement on specific goals and
programs that would maximize the GHG reductions for the County. All were aware that this was the
most cost effective and best way of reducing GHGs
- Joint marketing and job training with local solar vendors
- PG&E technical support for sustainable communities
- Initiatives in San Rafael and Marin under SB 375 and AB 32. This would include PG&E providing data
analysis on a variety of consulting services
- Accelerated deployment of plug-in hybrid electric vehicles, infrastructure and services
- Green the non-profit sector initiative — working with groups such as Marin Community Foundation and
other non -profits in creating a high-level sustainable program that would allow non -profits to give to the
other non -profits in the area
- Green jobs initiative with organizations such as Marin Conservation Corps, MarinLink, or Marin City
Community Develop Corporation.
Mr. Townsend stated that with these programs they believed these were the types of items that could be
implemented in San Rafael and Marin beginning as early as January 1, 2010. Moving quickly and working
together to hammer out the details would make for extreme effectiveness, and he sincerely hoped PG&E would
be taken up on this offer. He indicated that their partnership proposal included realistic estimates as to the
potential greenhouse gas reductions that could be achieved if the entire package were to be adopted and
implemented. It would provide a pathway for San Rafael and Marin County to meet their climate change
objectives faster, cheaper and with better results, without exposing themselves, the cities and taxpayers to the
uncertainty and risks of a Community Choice Aggregation.
Mr. Townsend introduced Assemblyman Joe Nation, a nationally recognized expert on climate change and
economics of global warming.
Joe Nation explained that he was brought in to help PG&E develop a partnership with Marin cities and hopefully,
Marin County, to reduce greenhouse gas emissions and to develop local renewables because of his unique
perspective on government involvement in dealing with the Energy Crisis. On being sworn into the State
Assembly in December of 2000, less than two weeks later, the lights starting going out across California. The
energy crisis cost the state and ratepayers a lot of money; therefore, it was an area where caution was needed
and he applauded the City's efforts and efforts across the state to reduce greenhouse gases while being very
deliberate and careful about how to proceed. Mr. Nation was also the principal co-author of AB 32 and in his
current position he spends most of his time working with people on ways to reduce their carbon footprints.
With regard to PG&E's commitment through this partnership, Mr. Nation explained that the partnership was one
that would reduce Marin's greenhouse gas reduction target number by about 40% between today and 2020. The
County's own target was about 15% and the PG&E plan, they believed, would reduce greenhouse gas emissions
from electricity by nearly 40%, nearly triple the County's own target. With regard to the Marin target of a 424,000
ton reduction, Mr. Nation stated they believed they could reduce a little over 100,000 tons. Believing it important
not just to focus on utilities, he indicated he would make this comment whether he was representing PG&E or
anyone else. It was important to remember that with the economy in the North Bay, 60% of emissions came from
transportation; therefore, even by eliminating greenhouse gases from utilities, a huge problem would still remain,
and PG&E believed they had the expertise to deal with this broad problem.
Referring to the white paper on community renewables, Mr. Nation noted this was a voluntarily opt -in program,
whereby a customer anywhere in Marin County could opt -in to purchase 100% renewables. Using an example,
he reported that the County consultant actually targeted about 220 megawatts of photovoltaic (PV) solar power,
which worked out to about 316 gigawatt hours — approximately 25% of what the County would need for the
foreseeable future to meet its energy demands. There were good and bad ways to go about doing this, the best
he believed was to focus on big roof tops, commercial buildings, and governments, etc. He had identified the
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megawattage potential existing in public buildings, commercial buildings, institutions, etc., and getting the permits
and moving the process, approximately 11 % of the load in Marin County would be met: approximately 144
gigawatt hours every year; therefore, solar alone could make a significant contribution, albeit it would be more
expensive.
With regard to the cost of renewables, reporting from his perspective from the company he works for with 1,200
employees conducting a lot of work in renewables, Mr. Nation stated that the average rate paid currently was
approximately 10 cents per kilowatt hour. MCE's own documents suggest and report a cost of approximately 33
cents per kilowatt hour for solar PV, which was significantly higher. Mr. Nation commented that the question for
the City Council was how much of that risk and cost could be absorbed. He was aware that the County had
identified a lot of opportunities for wind power; he had met with someone to talk about biomass in Marin County
and believed there was a fair amount of opportunity throughout California for this.
Indicating that PG&E was no stranger to renewables, Mr. Nation noted the County identified overall about 800
megawatts of potential. Referring to a chart, on the left-hand side he noted PG&E had either operating or under
construction over a thousand megawatts of renewables, and on the right were approximately 2,600 megawatts in
the pipeline, under contract and would be online over the next several years. Assuming that after all of PG&E's
projects came online in 2014, PG&E would increase its share of renewables by approximately 11 % beyond
where they were today. Mr. Nation made this point simply to demonstrate that this was something that they do
every day.
Noting there were a lot of other opportunities for energy efficiency, Mr. Nation believed this to be one to really
focus on. He noted the draft CARB (California Air Resources Board) Scoping Plan focused a tremendous amount
of attention and energy on energy audits and energy efficiency because this was the cheapest way to effectively
reduce greenhouse gas emissions.
Mr. Nation indicated that the Climate Smart program had a very small number of people who had signed up,
noting it allowed neutralization of emissions by purchasing offsets in California. He indicated there were a whole
host of opportunities on the transportation front, reiterating that 62% of emissions came from transportation.
Referring to a graph, Mr. Nation discussed the Marin -PG&E Partnership Greenhouse Gas Emissions Rate for
2008-2020.
Referring to a question raised by Councilmember Brockbank recently, Mr. Nation stated that in order for Marin
Clean Energy to meet the PG&E number, MCE would have to have an energy mix of more than 70% renewables.
He commented that this was a very tall order given the financial numbers that MCE indicated they were working
with. Mr. Nation indicated he could further elaborate on this chart if requested.
With regard to the advantages of a Marin/PG&E partnership:
As the principal co-author of AB 32 he favored keeping an eye of the prize, which was greenhouse gas
reductions. The question was how to get there faster, better and cheaper, and based on his work, he
believed a Marin/PG&E partnership would actually reduce greenhouse gases by 102,000 metric tons per
year by the year 2020. On the other hand, MCE would actually end up at an increase. Although the
argument could be made that there would be huge numbers of renewables, he indicated that assumed
getting to over 70% renewable to match the PG&E line. PG&E simply had a huge advantage because
they started at a lower rate, which afforded them the opportunity to end at a much lower rate.
• 318 pounds per megawatt hour for the partnership, and 590 pounds per megawatt hour for MCE.
• New renewables in development that PG&E had already working or were in the pipeline being developed
and would be online in a few short years, approximately 3,700, while MCE did not have any because
they were not up and running.
• County/City debt and liability exposure — Under the Marin -PG&E partnership there was none. He noted
discussion regarding the fact that there would be no cost associated with moving forward with MCE;
however, he believed there were such costs. He believed the cost in the short-term was $22 million and
this was before one new renewable was even developed.
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With regard to modeling the MCE program after the Joaquin Valley Power Authority, Mr. Nation reported
that they actually announced that they would partner with Citigroup to purchase power.
He noted that Citigroup was just bailed out with a $20 billion price tag; their total rescue amount was now
$45 billion and they had $308 billion of bad debt. A counter -party exposure and risk existed, which did
not exist with the Marin/PG&E partnership.
• Customer Choice - Mr. Nation noted automatic enrollment in MCE; however, the suggested partnership
had a 100% choice.
• Customer Base — much more uncertain and unstable with MCE.
Mr. Nation stated that there were a lot of other entities, cities, and counties looking at CCA He quoted from
staff reports from Oakland and Berkeley:
Oakland — "While a JPA could be legally structured to protect member cities financially, it is likely that the city
governments will be required to guarantee the debt repayment as a prerequisite for financing CCA until the
JPA is independently creditworthy."
Berkeley - "Over the past 12 months the global credit crunch and climbing liquidity have had a significant
impact on the municipal finance market. Rating agencies and investors have adjusted standards for which
either a JPA or city can structure financing. Given its tightening of credit it is even more likely that the cities
will be required to substantially support any CCA/JPA financial structure."
Mr. Nation stated that staff from both Oakland and Berkeley recommended not proceeding with the CCA
because they saw it as a financial risk.
In conclusion Mr. Townsend stated he would review the partnership elements and next steps
Partnership Elements -
■ Defining of the shared responsibilities - identifying who would be responsible for what, and how the cities,
County and PG&E could work together
■ Defining roles - County/City target setting for the land use and permitting assistance. PG&E target setting,
supplying technical support and project development
■ Operations - creating regular collaboration and consultation to maintain a threshold of checks and balances
■ Structure — form committees with joint administrative roles, so PG&E, County and cities could work together
to make sure the checks and balances were working and acceptable for all parties involved.
Proposed Next Steps -
■ December, 2008 - PG&E presentations to the County and other Marin cities
■ December, 2008 - PG&E requesting that the County, towns and cities appoint staff to discuss the projects
and programs that would be beneficial, similar to the three outlined earlier
■ January — March, 2009 - PG&E, County, cities and towns to identify projects and programs
■ June 2009 -towns, cities, and County agree on a specific partnership
■ January 2010- Implementation.
Mr. Townsend invited David Rubin and Joe Nation to join him in answering questions about the plan.
Addressing Mr. Nation and referring to the main chart, Councilmember Connolly noted the chart depicted a pretty
significant difference in GHG reduction rates between PG&E and MCE and stated he would be interested in
hearing more about the assumptions built into the graph. Presumably if Marin Clean Energy went forward
primarily with the 100% green option he inquired as to what assumptions were being made that allowed PG&E to
get so much lower.
Mr. Nation stated that PG&E got lower primarily because they started lower. It was like being in a 100 -meter
race; MCE was still at the starting blocks and the competition was already half -way down the track. The
assumption was that the PG&E lines were based on reported GHG emissions data and what the renewables and
other procurement plans were for PG&E between now and 2020.
Councilmember Connolly inquired whether Mr. Nation was factoring in, for example, PG&E's nuclear and large
hydroelectric portfolios.
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Mr. Nation stated that this included their entire mix, including nuclear and hydro, because it was about
greenhouse gases and finding the best, cheapest, fastest way to reduce GHG emissions. Since nuclear and
hydro sources were non-GHGs emitting, PG&E would start off with this much lower level.
Councilmember Connolly inquired whether it was true that another goal, in fact mandated by the state, was the
Renewable Portfolio Standards (RPS) goal, and utilities would have to meet it, noting this JPA aspired to exceed
it. Councilmember Connolly inquired whether the whole point was, excluding nuclear and large hydro, to increase
the production and use of renewable energy in the state.
Mr. Nation stated that the whole point of AB 32 was to reduce greenhouse gases. The bill was very short,
containing only 12-13 pages, with the objective to find a way to meet targets for the year 2020. AB 32 did not
specify that nuclear or hydro could or could not be counted; it simply stated what needed to be done and was
deliberately written vaguely so that people had the flexibility to meet that.
Putting it another way, taking nuclear and large hydro as a given and starting both ideas at the starting line,
Councilmember Connolly inquired whether Mr. Nation's position still was that PG&E would be in a better position
to go out and procure more renewable energy than this JPA.
Mr. Nation stated he would argue that PG&E was better equipped to build and procure renewables than just
about anyone in the country, if not the world, given what they do. He would resist the temptation to talk about
renewables, rather focus on greenhouse gases, which really needed to be the target. He noted that essentially,
Councilmember Connolly was stating that MCE might add more than PG&E would add, and that missed a key
point in that MCE would be responsible for their own footprint by using very liberal assumptions. MCE would end
up with an overall increase in greenhouse gases for the County of about 51,000 metric tons by the year 2020.
Councilmember Connolly believed the main goal over time was to develop more local renewable energy on roof
tops, and wind to some extent, and that the idea was to foster this through the JPA. Putting aside the idea of the
partnership, because he did not think they were necessarily mutually exclusive, the ultimate idea of the JPA
would be to reduce the risk over time, and increase the goal of having more locally generated solar power, etc; he
inquired whether any obstacles could be foreseen that this JPA would have to be producing more local
renewable power or in fact, like it was designed to do, increase it.
Mr. Nation believed that either that or the proposed partnership would increase the number of renewables, and
the question was who would do abetter job of developing those renewables. He noted it was easy to produce a
document that stated "we are going to go to 50% renewables in five years" when actually getting there was pretty
tough; therefore, it would be necessary to have a good partner to get there. The decision for the City Council was
to select the path they had the highest degree of confidence in, the one that would be successful and did not
have the type of risk inherent in any type of start-up.
Councilmember Connolly inquired as to what was stopping PG&E from working with this future JPA and achieving
some of these mutual goals.
Mr. Nation stated that there was nothing that would stop anyone from reaching the goals. He believed Council's
decision was whether to choose the MCE path with the risk and uncertainties it had or whether to go with a
proven alternative. He did not believe they could do both, rather a decision would need to be made to either
partner with PG&E or go down the CCA path. He believed it would be difficult for PG&E to state that they would
continue to negotiate against themselves.
Councilmember Connolly stated PG&E could theoretically provide some of the programs or be the supplier.
Mr. Nation explained that would put them in the position of negotiating against themselves, one he didn't
recommend because it was a lose -lose proposition.
Noting Marin was a very small county with a very small customer base and not 100% of the customers that buy
their energy from PG&E would be in the JPA, Councilmember Heller inquired whether there would be a large
enough customer base to run a JPA. She understood that some of the large companies/corporations in the
County would not come into this because they already had long term contracts for energy with PG&E and she
inquired how many customers that would take out of the customer base.
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Mr. Nation stated it was very difficult to come up with a number. Because of the structure of a CCA, people
could discover along the way they did not want to be a part and would opt -out. This was another inherent risk in
the JPA and CCA because judgments would have to be made about how many people entered and left the
system.
Should San Rafael and one other city choose not to go into the JPA, Councilmember Heller inquired whether
PG&E would be willing to have discussions.
Mr. Nation responded affirmatively on behalf of PG&E. He stated that PG&E was in attendance this evening
because they believed they had a plan that made sense for a partnership for the City of San Rafael and others in
Marin County.
Councilmember Brockbank requested clarification on PG&E's statistic of an 11% increase in renewables by 2014
and inquired whether this was 11 % over what was being done currently, or increasing the percentage of
renewables from what it was now to 21-23%.
Mr. Nation stated that PG&E today was about 13%. The forecast, based on the projects noted, was
approximately 24% by the year 2014.
Indicating he was having trouble with the graph, i.e., the two v -shaped lines that PG&E produces far less
greenhouse gases than Marin Clean Energy ever would, Councilmember Brockbank stated that perhaps looking
at it from a certain perspective that could be true, because that took into account nuclear and large hydro. He did
not believe anyone was proposing that PG&E stop doing large hydro, etc., and clarified with Mr. Nation that today
the figure was 52% of non -greenhouse gas producing energy.
Noting MCE would not go out and seek renewables which were less than PG&E's, which the chart pretended to
portray, Councilmember Brockbank stated that rather they would seek as much renewables as possible to
replace not hydro and nuclear, but the fossil fuel part of the portfolio. Using the example of Marin being 1 % of
PG&E's service area, if 52% of PG&E's power was non -greenhouse gas emitting, the City opting out and
procuring its own power would raise PG&E's rate from 52% to 53%. PG&E's non -greenhouse gas emission
percentage would go up; however, MCE would try to replace the margin. Councilmember Brockbank stated it
appeared to him that over and above nuclear and hydro and the approximate 12% renewables, the additional was
greenhouse gas producing i.e., marginal additional power, which he understood came from natural gas powered
peaker plants and this was what MCE was proposing to replace. Instead of buying that extra little bit for Marin,
they would opt out and get as much renewable as possible; therefore, MCE would be using less greenhouse gas
producing energy by getting 50-70% more than PG&E's additional marginal 100% gas powered peaker plants.
Mr. Nation stated that looking at this at the margin from the perspective of MCE was the wrong perspective to
have, because they would be responsible for their own carbon emissions. "You will not be able to say we did this;
therefore someone else somewhere in California or across the country reduced their GHG emissions." That claim
could not be made to the ARB (Air Resources Board) or PUC, rather it would be necessary to report what was
done here. Although it was easier now, Mr. Nation reported it was still difficult to track electrons to find out which
were green and which were brown. Looking at where PG&E was today, he noted 13% of renewables as defined
by the Energy Commission, et.al, which would go to 24% and in reality significantly beyond that, versus MCE's
plan that had a very lofty aspirational goal; however, there was no guarantee of getting there. He believed
PG&E's greenhouse gas free power by 2014 would be at 63%. To beat that number, MCE would have to have
over 70% renewables in its portfolio and he considered it would be virtually impossible to get to that number.
Councilmember Brockbank stated the reason for the 70% was taking the 52% non -greenhouse gas producing
power and adding in that extra 11 %, and he noted that Mr. Nation indicated MCE would never get there;
therefore, it would be better to stick with PG&E.
Contrary to what some might think, Councilmember Brockbank stated it was not that he or any of his colleagues
had anything against PG&E. Some of its track record did not inspire a lot of confidence; however, on this issue
alone, describing PG&E's response to CCAs generally he stated:
First there was "Let's all go forward and be green together - be green and bless you." They then decided they
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did not like this in what Councilmember Brockbank termed "We would rather fight, than let you switch" which they
had been operating on until a couple of months ago. Now, in deciding to go forward with some form, it was more
like "Well, if you can't switch them, try ours its better."
Indicating that this had been worked on for years, Councilmember Brockbank noted the documentation for just
the last year was almost a foot thick. PG&E had come forward in the last month, having only entered the third
phase fairly recently, with a four-page letter, a PowerPoint presentation six days ago, which was repeated this
evening, and an additional document, which he would read. He stated it appeared to him that there was an MCE
program which had been peer-reviewed repeatedly, and when this issue came before the City Council six months
ago he had inquired as to PG&E's response to the peer reviewer's response to PG&E's comments. This was in
March 2008 and there had not been any to his knowledge.
Councilmember Brockbank commented that the City Council was in possession of a lot of documentation
indicating this program would work, and they were being requested to take PG&E's word for it; however to him it
did not hold up. He indicated he was not unwilling to proceed on a parallel track. Both MCE's track and the track
being proposed by PG&E called for a decision to be made approximately six to eight months from now, which
was fine. However, he did not understand why they recommended not going forward with the JPA. He did not
agree with their analogy about the sprint on the track or the analogy that they would be bidding against
themselves.
Noting all supported SMART, to those critics of SMART who indicated this should be done instead of SMART,
Councilmember Brockbank stated that the answer from many was to do it all, and just as Councilmember
Connolly indicated that it should all be done, he believed PG&E should do many of these programs, and it was
not bidding against itself. He noted that PG&E had been mandated by state legislation a few years ago to bring
renewables onto the RPS up to 20%, and he had learned a year ago that it had gone down from 12% to 11 %,
now at 13%, which was still a long way from 20%. He also heard PG&E's CEO, Peter A. Darbee, indicate that
they would be there under contract or in spirit.
Mr. Nation clarified that the fluctuation related to whether it was a dry or wet year because of different hydro
numbers. It was not as though PG&E was unplugging those renewables every year. In fact, every year they
were adding as much as they could.
Mr. Nation noted that Councilmember Brockbank indicated PG&E was a green utility and if what they had done
was paired with virtually anyone in the state, they outclassed them by huge amount. L.A.D.W.P. (Los Angeles
Department of Water & Power), a municipal utility, still had more than 50% of its power from coal, while PG&E
had less than one percent. PG&E was also the first to support AB 32. From his personal perspective, he
believed there had been a transformation in the company over the last several years and he believed there would
be a continued transformation, not just with PG&E, but with every utility, and anyone who emits carbon in the
state. This was being driven by AB 32 requirements and by the fact that a way needed to be found to increase
the share of renewables.
Mr. Nation believed it would be very difficult for PG&E to recommend going ahead with the CCA and JPA,
because of the new provisions written in the ordinance. A couple of cities and the County were moving forward
with the CCA and it did not make a lot of sense for PG&E to engage in those negotiations because at that point
the negotiations would be over. He believed the choice should be what was best for the ratepayers, and given
the work he does, he was aware of the scientific imperative to reduce greenhouse gas emissions. The focus
should be on what could be done to do this as quickly as possible, and he was absolutely convinced that the
proposed PG&E partnership would get there faster, with less risk.
Having evaluated the Renewables Portfolio Standards report, dated July 2008, from the CPUC, Vice -Mayor Miller
stated he was struck by the amount of green renewables to get to the 33%. He quoted: "Achieving 33% RPS
require careful transmission and resource planning and coordination. The generation needed to reach a 33%
RPS by 2020 will face the same barriers already slowing progress to the 20% target - -transmission, site control,
permitting, developer inexperience, etc. but on a much, much larger scale. In addition, the CPUC anticipates that
a 33% goal will bring new challenges, including transmission grid reliability and integration, increasing renewable
generation costs, and the need for a paradigm shift in the procurement and transmission planning." Pointing out
that this was obviously directed towards PG&E, not counting the large hydro and atomic energy supply, Vice -
Mayor Miller inquired as to whether there was sufficient renewable energy for PG&E, Southern California Edison,
and San Diego Gas & Electric to purchase and contract for to reach a 33% RPS by 2020.
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Mr. Nation believed there was sufficient interest, motivation, desire, and need to get there, but only if the
obstacles cited were removed, transmission being an horrific obstacle. Mr. Nation reported speaking to many of
his friends who suggested building a lot of wind power in Marin to take care of the problem. The County
consultant in fact, identified 384 wind turbines across the County; however, only one had been permitted within
the last five years. While many issues would have to be overcome to hit that 33% target, he believed it could be
achieved if the obstacles that existed could effectively be removed. He cautioned that it would not be cheap to
get there. Mr. Nation stated that he spends a lot of his time dealing in the carbon market and in looking at the
cost of abated carbon through various technologies, going to 33% RPS was a very expensive path. It would cost
approximately $130 a ton versus things that cost $10-20 a ton.
Vice -Mayor Miller paused the City Council meeting at 9:30 p.m.
Resuming at 9:45 p.m., Vice -Mayor Miller invited speakers to address the City Council and to maintain their
comments to approximately three minutes.
Connie Roaers, San Rafael, stated that like many others she wanted green and clean. She was convinced by
someone in the audience that the JPA was the way to go and tried to convince an organization she was with to go
with the JPA, thinking it was free. Indicating that the JPA was not free, she stated that the potential benefits and
risks of a CCA and their compared costs were way too risky for this incredibly fragile economy. Noting this was
the riskiest and worst economy in her lifetime, Ms. Rogers requested that the City Council not risk her money with
a CCA when PG&E had an outstanding plan.
With regard to the start-up costs, Ms. Rogers inquired what it would cost long term to hire experts, and hiring
someone at $200,000 a year, together with staff, placed tremendous risk on the City, adding to the already risky
payroll, pension and benefits.
Noting the City Council had a copy of the Berkeley report recommending not going forward with the CCA, Ms.
Rodgers stated that Emeryville and Oakland recommended the same. She urged the City Council to look at this
logically, not put constituents at risk, and to look at the PG&E partnership seriously.
Joe Kohn, San Rafael, stated that the Community Choice Aggregation was so exciting and compelling, so
environmentally sound and visionary, that he had to address the City Council. He quoted the MRW consultants:
"The towns and cities are not at risk for development costs." The $500,000 pledged by the County was just the
start and to put that money into perspective, he noted that rates went up 10% this month and might go up another
10% in sixty days. Mr. Kohn stated that ratepayers would be paying a lot more than $500,000 collectively. Mr.
Kohn suggested that the estimates presented by PG&E were possibly guesstimates or from the same corporation
that less than three weeks ago spent $5 million dollars defeating CCA in San Francisco. He did not believe those
figures could be trusted, as having been given the choice of attending other community meetings, PG&E showed
up at the last minute, which he believed to be a stalling tactic as the vote must go forward now. Mr. Kohn
believed it important to understand that there were many escape clauses for San Rafael to get out of the CCA /
JPA; however, there was only one opportunity to join them and that was next week. He urged the Council to all
vote yes.
Jim Geraahtv, San Rafael, commented that during the presidential election there was "Joe, the Plummer" and this
evening "Joe, the Electrician" threw a monkey wrench at the last minute into what MCE was doing. He saw MCE
at the 50 yard line at the 100 -yard race, way ahead of PG&E. PG&E's document presented in the last few weeks
was nothing compared to all the work that was done. He believed President-elect Obama planned on spending a
lot of money reinvesting in this country and becoming renewable, and East Bay author Van Jones was working
on getting jobs for people in green. Mr. Geraghty believed there was more opportunity for MCE and advised the
Council to support it.
David Haskell, San Rafael, stated that firstly, it appeared as though PG&E wanted to engage the City in a most
favorite nations agreement, to discriminate against all of the other ratepayers in California so they could come in
and do a special agreement with Marin County, which according to the PUC, was against the law. Noting PG&E
came forward today with a Trojan horse, and a whole bunch of Christmas presents when opened up were empty.
He sincerely believed the PUC would look very disfavorably upon PG&E discriminating against the rest of their
clients, as they had to treat everyone equally.
Mr. Haskell complimented staff on their expansion of the JPA and believed this was an opportunity to regain
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sovereignty and control over the community's destiny. Expanding the JPA protocols would permit extensive
conservation programs. Regarding Mr. Geraghty's comments concerning Van Jones and green jobs, he
believed this was another opportunity; however, expanding that allowed the more comprehensive capacity to be
evaluated In these hard and critical times, ratepayers were learning that sustainability had a lot do to with self-
reliance, rather than relying on PG&E and their track record. Mr. Haskell once again complimented staff on the
expansion and looked forward to going forward with a chance to choose.
Bob Spofford, Loch Lomand, congratulated Mr. Stephonovich on finally extracting from Mr. Nation the meaningful
admission that the only number that really counted was the marginal analysis. The graph, notwithstanding, when
looking at total greenhouse gases, the day MICE started up there would be a reduction in total greenhouse gases.
PG&E would turn down their gas-fired power plants a bit.
Noting they kept calling this a plan, Mr. Spofford noted the most common word used in the plan was "explore."
There was no single hard, factual program in the plan which was understandable, as it took time to develop such
things; however, the appropriate answer was the same as that from the County Board, which was to develop
their real plan, not a promise to explore a list of wonderful ideas, and bring it to the JPA.
Noting the other common words were a "partnership with Marin", Mr. Spofford inquired as to the mythical Marin.
What they really wanted to do was work with twelve different cities/towns - - divide and conquer. The only Marin
he was aware of was the JPA, if it was formed.
Mr. Spofford stated he had not heard a single thing tonight that in any way, shape or form, was a reason not to
move ahead with the JPA. There was no risk to the City to move ahead, to see the real numbers, have experts
make apples to apples analysis, and to see whether the enormous pile of paper was in fact worth a whole lot
more than five pages of a wish list. He believed it was worth moving ahead and look at facts not a lot of opinions.
Rich McAmish, Terra Linda, commenting that it was a great idea and green was great, questioned whether this
was the right time. When this was evaluated two and a half years ago the economics looked different and he
urged the City Council not to spend his taxpayer dollars as if nothing had happened. Having to watch ever nickel
he spends today, he hoped the City Council would watch every nickel of his taxpayer dollar. What did not
disturb him at the County but disturbed him here was the idea of a deal that could not be refused. There would
be no cost to the City or no liability to the City, rather the County would pay the $500,000 — maybe a little more -
210 days of County staff time could amount to a few million and the City could opt -out whenever it wanted. While
the City was protected, Mr. McAmish, as a resident, was not protected, because the City Council could vote and
he could not.
Indicating that he was able to vote for the EMTs (Emergency Medical Technicians) in Terra Linda which saved
his life in March when he had a heart attack, Mr. McAmish stated he could vote on local school bonds to improve
the schools in his area; however, if this was such a wonderful plan he did not understand why he could not opt -in
instead of opt -out. With regard to wind power, Mr. McAmish stated that that would be the day.
Mr. McAmish requested that if the City Council was supporting VICE, they should at least allow the residents to
decide whether they wanted to be a part..
Roger Roberts, San Rafael resident, and representative of Marin Conservation League which had expressed
support for MICE, stated that all the City Council was doing this evening was agreeing to look at the detail of a
program going forward. The JPA does not obligate the City to do anything except to look at some real program
information and a real plan to be implemented down the road. Mr. Roberts stated that it made sense to go
forward with the JPA to see what type of deal would be brought forward. Noting PG&E spoke tonight as though ill
was all or nothing, either go with VICE or there would never be any other option, Mr. Roberts stated it should be
kept in mind that MCE would not be the provider, rather a provider would be hired. Bids would be solicited and
evaluated eight to ten months from now, and bids would only be accepted if the risk was manageable and they
could perform financially. He urged the City Council to form the JPA and then ascertain what the world brought to
the table — if the meal was good, it should be eaten.
Basha Crane, Marin United Taxpayers Association, noted that the distributor would still be PG&E and the person
distributing the power controlled things more than the person who brokered for renewable sources. Marin United
Taxpayers supported the County and the cities in partnering with PG&E, but did not support setting up a complex
bureaucracy that would cost a lot of money, and eventually would cost the ratepayers more. Noting the County
was going to borrow $470 million in bonds, Ms. Crane expressed concern with this in the current monetary crisis,
as this was taxpayer money, eventually.
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Ms. Crane reported that Marin United Taxpayers believed that because the CCA could cost taxpayers more in
higher rates, they urged a public vote on it. Ms. Crane inquired as to what the County and MMWD knew about
purchasing energy since they were not experts, whereas PG&E had been doing it forever. She further inquired
as to why the County and MMWD would be good brokers in purchasing renewable energy and be better than
PG&E. She believed PG&E was perfectly capable of brokering for renewable sources of energy to make Marin
greener, they just needed getting after.
In responding to Councilmember Connolly's comment regarding needing more energy, Ms. Crane stated that the
County would need much more energy: proposed diesel plant, the SMART railroad, and thousands of people
inhabiting workforce housing along the railroad tracks. Inquiring as to why CCA was being pushed, she noted
that perhaps more energy was needed and no one was talking about it.
Jim Sherroni stated he wanted to second the most salient point, which was why not follow the process through to
its logical conclusion and obtain all the numbers and real figures. He felt it a little disingenuous on Mr. Nation's
behalf to suggest, which felt like a little strong-arming, that it was now or never. The City would either have to go
with PG&E now, follow a plan and negotiation with them, or decide to form the JPA. At the Board of Supervisors
meeting last week it was made clear that everybody wanted to entertain and see PG&E's full plan, not the few
pages, but a real substantive plan, which would be reviewed along with whatever numbers came back for VICE,
to have a clearly equal playing field and look at both proposals.
Indicating he hoped he was quoting the figures correctly, Mr. Sherroni stated his understanding was the
discussion centered on the generation rather than distribution side of the business. He believed the revenue from
that side was currently about $150 million. Noting PG&E just instituted a 10% increase, which equated to $15
million a year, whereas currently the figure was $500,000 to $1 million. PG&E and MCE were both talking about
building a substantial amount of assets in the County. When PG&E builds them, for every dollar they invested,
they were paid a guaranteed 11.35% return on investment. Conversely, if Marin invested that money, they would
not have a built-in return on investment; therefore, there was an 11.35% advantage every time something was
built that was an asset in the County. While green energy and increasing renewables was great, it was also
necessary to save money and stabilize rates, and he believed this program had an opportunity to do that;
however, he would like to see the final numbers so that he could have something to evaluate.
Andv Fessel, M Corporation employee, stated he was present because his partners and he believed in the
concept of clean energy, a concept they would like to embody and position on with their clients. Believing the key
theme to follow through with this evening was risk, Mr. Fessel stated he felt at risk today because he received via
email a notice that today was a bad air day; wood fires at homes should not be lit and care should be taken about
breathing deeply. He also felt at risk because oil production had peaked across the world and oil producing
companies were hiding that figure in terms of inflating their reserves; however, oil would be less and less
available, as would fossil fuels. He felt at risk because of being behind the curve in terms of adapting to an oil -
less world. He noted the spigot would be turned off suddenly in the future, and the world was approximately 20
years behind in transitioning over to renewable energies. He felt at risk because someone who should be a
partner in this agenda, the utility that was a monopoly in the area, had basically threatened that by not
participating and working with their program, they would not work with Marin as a partner, and he felt at risk
because his PG&E bill had risen by 10%, and questioning how much it could increase in the future, he indicated
he had no control over those increases and inflations.
As a statistician, Mr. Fessel stated he felt at risk because he saw facts misrepresented in charts, and numbers
distorted and different realities of East Bay municipalities were read into the Marin County area where there was
a very different geographic structure, financial basis, population, etc. From the M Corp perspective, they studied
brands and advised entities about their customers and how they relate to their brands and if customers were the
voters of the area, he offered that what they think of when they hear of Marin and San Rafael were good quality
lifestyle, enlightenment, thinking for the future, being a great place to live, being a place where people could
continue to live, and being a leader in renewable energies and conservation around the United States and around
the world.
Mr. Fessel stated that what he heard tonight, presented in terms of a plan that was nearly a foot thick, had been
well thought through, had lots of exit ramps, little risk, and certainly, allowed key decisions to be made in the
future. If it did not work changes could be made; however, the key issue was that it brought everyone together so
that this program or others could be enacted in the future. He felt at risk when a utility was trying to drive the
community apart. In looking at all the risks this evening, he would take the risk with Marin Clean Energy.
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Bill Carnev, San Rafael, stated PG&E was present tonight for one reason, and that was because Marin had
organized around an issue that was important to San Rafael and Marin, and they were responding to that, and he
thought that was the best argument for proceeding with joining the JPA. He believed in following that
organization, putting the framework in place, and seeing how the reports and programs stacked up, to be able to
move forward with what was a critically important goal for the City and County, to reduce greenhouse gas
missions. Mr. Carney noted the key was that getting a greener grid would allow not only direct benefits to be
realized, but also begin to plug in transportation to that green grid and accomplish some significant progress
towards greenhouse gas reduction.
Mr. Carney believed some fear tactics were used this evening, which he expected for a while. He noted that
President-elect Obama, speaking both on the economic front and at the Governor's Climate Change Conference,
stated that one of the paths out of this economic crisis was through establishing a green economy. It was going
to take some reinvention on how business was done. An endorsement was being received from the leadership of
this country on how to proceed down that road. Mr. Carney believed there was an opportunity to move into
position to set a framework for such a green economy and there would be support from other levels of
government.
Megan Matson, Mainstream Moms, wanted to underscore key points that came from Mr. Fulmer and the
consultant's report, one being that with the upside of CCA, and legitimate off -ramps ahead, it would be important
to take the next step and get real numbers. She took the opportunity to speak with Mr. Rubin and Mr. Nation
about the assumptions behind the graphs presented in their plan, inquiring about the participation rate
assumptions; they were assuming in their own PG&E green electricity a participation rate of 20%. Ms. Matson
stated that they were planning to offer PG&E green electricity at a 20% premium, which was an opt -in program,
and when compared to their existing Green Climate Smart Program, with 1 % participation rate, there were some
very optimistic assumptions in their graph. She also inquired whether their graph reflected on-time compliance
with the renewable portfolio standards and Mr. Rubin explained that from discussion with CPUC and the
regulatory structure, this actually reflected flexible compliance. There was much slide room apparently in the
timeline of compliance with the renewable portfolio standards, and speaking of her own children's future, the
County's future, and the imperative in front of everyone, Ms. Matson did not want sliding in the compliance. She
favored going as far and fast as possible in a responsible and risk -assessed way.
Finally, Ms. Matson stated she was struck when the City Attorney pointed out the revenue stream of the CCA. In
looking at the possibility of bifurcating the JPA, consideration had to be given to whether any of the options at the
table had a revenue stream. Ms. Matson noted it was going to be tough in the current financial climate to finance
compliance with AB 32, and the CCA served that up. In the offering of the PG&E wish list, the question had to be
raised at each one of those points what the revenue stream was, i.e., was it coming from the City or PG&E, and if
it were coming from PG&E, it was the ratepayers and taxpayers. She favored seeing the real numbers all
together and making that decision in a very thoughtful way next year.
Jeff SchoDDert, San Rafael, stated that in giving his perspective as a business owner he would not urge the City
Council to take a position one way or another next week. In considering going forward and implementing the
plan, he urged the City Council to think about whether and how businesses would participate in the energy
initiative. All the businesses he was associated with through professional organizations strongly supported efforts
to reduce greenhouse gases and to make this a greener business environment, as in the end they would be
better served by those policies; however, when it came to actually putting dollars with beliefs, the cost would
make a difference. There was a tendency among government regulated programs to shift the costs of the
programs, so as to keep the costs to voters and residential consumers down, i.e., to shift those costs to
businesses. Going forward, Mr. Schoppert urged the City Council to think about what those costs would be to
businesses and whether it would affect the willingness of businesses to participate in the program, or in
proceeding down the path to adopting Program Agreement 1, whether businesses would take a look at it and
conclude it was a rate structure encompassed by the agreement which was not beneficial to them. It would be a
make or break in this economy and they would not participate.
Mr. Schoppert noted that whether the success or failure of this program depended in any measure on the
participation of businesses had not been discussed. There were significant businesses in the area which would
not be part of the program because they signed up some time ago for direct access with PG&E and it was not
known what other businesses might choose not to take part. He offered these as questions in determining
whether the Business Plan could actually be implemented according to the assumptions developed so far.
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Mr. Schoppert shared Councilmember Heller's concern about the cost of implementation, and wondered about
getting to Program Agreement 1 for a further $200,000. Someone had mentioned earlier about hearing from
representatives at the County about that issue, and he considered this was worth exploring upon moving forward.
Lastly, with regard to the development of the Joint Powers Agreement, Mr. Schoppert noted a part was added
that he believed was not particularly useful, i.e., the fact that all of the local entities participating in the JPA would
have veto power over the implementation of any energy producing sources within their jurisdiction. He was
unsure whether this was a great thing, as the experience with MERA demonstrated that local communities did
not want to have those life-saving communications facilities installed within their jurisdictions, and fought hard to
prevent that. Should the program go forward and the desire was to reduce the County's environmental impact on
the nation and world, he questioned whether it could be done if what he considered the "NIMBYious" provision in
the agreement was adhered to.
Kiki LaPorta whole-heartedly endorsed the comments of her colleagues, some of whom she had never met, in
support of MCE. She believed in the "no free lunch" comment, and should anyone believe that PG&E would do
all of this wonderful stuff at no cost, she encouraged them to look at their bill. Customers were currently paying a
charge that was offsetting the cost of PG&E's bankruptcy. Californians had been paying for it for a long time and
would continue to do so and she did not believe Citigroup was the only organization procuring energy that was
subject to bankruptcy.
Ms. LaPorta noted in PG&E's statement tonight and last week at the Board of Supervisors meeting, comments
related to their plan. She indicated she had a hard time calling this a plan as after six and a half years of Marin
County, cities and towns wading through stacks of documents, PG&E delivering a letter today, which no one had
had a chance to see or discuss, she found offensive. Aside from that, in their presentation they suggested that full
compliance with the entire package, if the entire package was implemented, would result in a 40% reduction by
2020. Ms. LaPorta stated PG&E also stated in their presentation that the key impediment to siting new renewable
facilities was permitting and other issues related to government and municipalities.
Referring to PG&E's letter - Locally Developed Renewables Projects — Ms. LaPorta noted they would explore
financing, procuring, constructing, etc., at facilities identified and approved by Marin, and she did not consider this
was providing much of a leg -up in this particular area. PG&E also mentioned in their letter that with regard to
renewable energy and green electricity in Marin's proposed action, they would partner with Marin to mutually
determine which program elements were best suited for helping Marin to cut GHG emissions and increase
renewables. Ms. LaPorta stated the people of Marin had spoken to the City Council and legislatures throughout
the County, that they wanted MCE and an opportunity to increase renewables. PG&E could spread their
renewables out over the rest of the state where they were needed, as MCE could create its own.
Ms. LaPorta stated that this whole new world would never be the same as in the past; therefore, issues needed to
be evaluated in a new way, and she questioned the cost of doing nothing. To not go forward with the CCA or
JPA on the basis of this document because of fear that it might cost more or something could happen, Ms.
LaPorta's comment was that something was going to happen. The world was changing and people needed to
change in front of it, not behind it. She implored the Council to listen to their constituents and help put this in place
to see if all this work meant something.
Gladvs Gilliland, Loch Lomond, stated she did not support the JPA because she felt at risk. She happened to be
one of those who could remember the depression and a lot of things that took many years to get over. Being in a
deep recession currently, she believed citizens were being put at risk financially, which worried her. She loved
Marin and did not want to see 350 windmills on Bolinas or Mt. Tamalpais. Having been serviced by PG&E for 80
years, she stated they had done just fine by her. She hoped the City Council gave serious consideration to the
issue.
Marsha Cannon, San Rafael, stated she had attended the Farmers' Markets collecting signatures and talking to
people and found people were really eager to go along with the MCE program. They were eager to be able to
have a choice and have an alternative to PG&E. Noting PG&E had indicated people would have a choice with
them while MCE was automatic enrolment, she clarified that MCE would offer a choice between Light and Dark
Green or to remain with PG&E.
Ms. Cannon reported that at the Board of Supervisors' meeting last week, a young man from the East Bay
indicated he was working with a lot of cities in the East Bay to bring renewable. He stated that some cities were
against it; however, several were for it and he thanked the Supervisors profusely for their decision to go along
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with the JPA and make Marin a catalyst for the rest of the Bay Area.
Ms. Cannon noted PG&E mentioned they had 13% renewable energy at this point — they actually projected 14%;
however, they only had 11.5% currently as quoted in the Marin IJ a couple of weeks ago by David Rubin.
PG&E's plan was only a proposal and not carved in stone and she hoped the JPA would go forward. Ms. Cannon
recited a poem she wrote today:
"The green movement is here to stay
it's not going to go away
so let's get clean and vote green
for Marin Clean Energy"
Vice -mayor Miller invited Mr. Nordhoff to summarize the next steps.
Mr. Nordhoff stated:
■ He would complete the staff report tomorrow, and with the assistance of the City Clerk's Office, it would
be published on November 25, 2008
■ Public Hearing to be held at the City Council meeting of December 1, 2008
■ For the benefit of the audience Mr. Nordhoff noted there would be two public hearings that evening; a
Land Use item regarding the Mt. Tamalpais Cemetery would precede the hearing on Marin Clean
Energy
■ Other documents requested this evening would be incorporated as part of the staff report
■ Dawn Weisz had submitted a response to PG&E's proposal that was put forth at the Board of
Supervisor's meeting last week and this would be included with the staff report also
■ The City Council would have an opportunity to hear from the public on December 1, 2008, and then
make its determination.
Vice -mayor Miller thanked all for staying up so late and adjourned the Special City Council meeting at
10:32 p.m.
ESTHER C. BEIRNE, City Clerk
APPROVED THIS DAY OF 12009
VICE -MAYOR OF THE CITY OF SAN RAFAEL
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