HomeMy WebLinkAboutCC Resolution 12916 (Grand Jury Response; Clean Energy)RESOLUTION NO. 12916
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SAN RAFAEL APPROVING AND AUTHORIZING THE
MAYOR TO EXECUTE THE CITY OF SAN RAFAEL
RESPONSE TO THE 2009-2010 MARIN COUNTY GRAND
JURY REPORT ENTITLED "MARIN CLEAN ENERGY:
PULL THE PLUG"
WHEREAS, pursuant to Penal Code section 933, a public agency which receives a Grand
Jury Report addressing aspects of the public agency's operations, must comment on the Report's
findings and recommendations contained in the Report in writing within ninety (90) days to the
Presiding Judge of the Superior Court with a copy to the Foreperson of the Grand Jury; and
WHEREAS, Penal Code section 933 specifically requires that the "governing body" of the
public agency provide said response and, in order to lawfully comply, the governing body must
consider and adopt the response at a noticed public meeting pursuant to the Brown Act; and
WHEREAS, the City Council of the City of San Rafael has received and reviewed the
2009-2010 Marin County Grand Jury Report, dated December 2, 2009, entitled "Marin Clean
Energy: Pull the Plug" and has agendized it at this meeting for a response.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San
Rafael hereby:
1. Approves and authorizes the Mayor to execute the City of San Rafael's response to
the 2009-2010 Marin County Grand Jury Report entitled "Marin Clean Energy: Pull the Plug", copy
attached hereto.
2. Directs the City Clerk to forward the City's Grand Jury Report response to the
Presiding Judge of the Marin County Superior Court and to the Foreperson of the Marin County
Grand Jury.
I, Esther Beime, Clerk of the City of San Rafael, hereby certify that the foregoing
Resolution was duly and regularly introduced and adopted at a regular meeting of the San Rafael
City Council held on the 16`h day of February, 2010, by the following vote, to wit:
AYES: Councilmembers: Brockbank, Connolly, Heller, Levine & Mayor Boro
NOES: Councilmembers: None
ABSENT: Councilmembers: None
ESTHER C. BEIRNE, City Clerk
RESPONSE TO GRAND JURY REPORT FORM
Report Title: Marin Clean Energy: Pull the Plug
Report Date: December 2, 2009
Response By: City Council of the City of San Rafael
Title: Mayor and City Council
FINDINGS:
• We agree with the findings numbered F3, F4, F12, F13 (See Attachment A
incorporated herein.)
• We disagree wholly or partially with the findings numbered Fl, F2, F5, F6, F7, F8, F9,
F10, F11, F14 (See Attachment A incorporated herein.)
RECOMMENDATIONS:
• Recommendation numbered R3 has been implemented.
(Attach a summary describing the implemented actions.) (See Attachment A
incorporated herein.)
• Recommendations numbered N/A have not yet been implemented, but will be
implemented in the future.
(Attach a timeframe for the implementation.)
• Recommendations numbered N/A requires further analysis.
• Recommendations numbered R1, R2 will not be implemented because they are not
warranted or are not reasonable. (See Attachment A incorporated herein.)
DATED: L l / �" �� Signed:." `
/ALBE J. BO RO; Mayor
ATTEST: �ZSca1Z� .
Esther Beirrne, City Clerk
Number of imues attached: 7
ATTACHMENT "A"
RESPONSE OF THE CITY OF SAN RAFAEL TO GRAND JURY REPORT
"MARIN CLEAN ENERGY: PULL THE PLUG"
Findings:
F1: Disagree.
The Marin Energy Authority which will be overseeing Marin Clean Energy is a
new government agency, but is not a new "level of government," and Marin
Clean Energy is to be financed solely with ratepayer revenues that do not cost
the member agencies or the Marin Energy Authority any general funds. The City
of San Rafael is currently reducing some municipal services; however, other than
paying the City's proportionate share of two independent reviews procured for
the business plan and the power purchase agreement with Shell Energy of North
America, the City has not been required to contribute any funds to the Marin
Energy Authority.
F2: Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference. At its meeting of May
19, 2008, the San Rafael City Council specifically discussed whether an advisory
public vote should be required prior to the City's decision to join the Marin Energy
Authority, and the majority of the Council opposed such a public vote. The issue
was raised again at the Council's meeting on December 1, 2008, but the Council
proceeded to act to join the Marin Energy Authority without requiring a public
vote.
F3: Agree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
F4: Agree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
F5: Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
F6: Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
F7: Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
F8: Partially Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference. It is true, however that
the City of San Rafael has successfully partnered with other local agencies in the
community to work towards reduction of greenhouse gas ("GHG") emissions.
The City partnered with PG&E, the Central Marin Sanitary Agency ("CMSA") and
Marin Sanitary Service to conduct a feasibility study for a "Food to Waste"
program to convert local food waste to energy. The study was accepted by the
City Council in 2009, and CMSA has commenced work on the design phase in
coordination with Marin Sanitary Service.
F9: Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
Despite its involvement in the Marin Energy Authority and Marin Clean Energy,
the City of San Rafael has continued actively to pursue other avenues to reduce
GHG emissions. In addition to the "Food to Waste" project mentioned in
response to Finding F8, in April 2009, the San Rafael City Council adopted a
Climate Change Action Plan ("CCAP") for the City that is intended to guide the
City of San Rafael's government and community in complying with governmental
requirements for the reduction of GHG emissions, and in responding to climate
change generally.
The CCAP includes programs to increase the proportion of renewable power
offered to residents and businesses, including supporting the efforts of the Marin
Energy Authority. However, the CCAP has nearly 50 other recommended
programs for reduction of GHG emissions in such areas as transportation,
building standards, materials reuse and recycling, and business development.
The City has been working and continues to work diligently on the
implementation of the goals and programs set forth in the CCAP. For example,
a task force of local agency representatives has labored extensively over the
past year to develop a model green building ordinance with detailed green
building standards for residential and nonresidential construction, which the San
Rafael City Council adopted on February 1, 2010.
F10: Partially Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
2
F11: Disagree.
As of the date of this response, the Grand Jury's finding is no longer current. On
February 4, 2010, the Marin Energy Authority Board approved a power purchase
agreement with Shell Energy of North America for Phase I, which includes
pricing, and notice to customers has commenced. Details on the approved
agreement may be obtained from the staff reports for the Marin Energy Authority
Board meeting of February 4.
F12: Agree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
F13: Agree.
F14: Partially Disagree.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference.
Recommendations:
R1: This recommendation will not be implemented.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference. For those reasons and
others, the San Rafael City Council, at its regular meeting of January 4, 2010,
elected not to opt out of Marin Clean Energy and the Marin Energy Authority.
R2: This recommendation will not be implemented.
See Marin Energy Authority Response to Grand Jury Report approved January
7, 2010, attached hereto and incorporated by reference. As noted above, the
City of San Rafael continues to work cooperatively with PG&E and other local
agencies on various efforts to reduce GHG emissions, and the City's participation
in Marin Clean Energy will not diminish those ongoing efforts.
R3: This recommendation has been implemented.
In addition to other public meetings held by the Marin Energy Authority Board,
the San Rafael City Council has held several public meetings, and its staff has
worked extensively, to review and clarify the documentation for Marin Clean
Energy and to educate both the Council and the citizens of San Rafael about the
workings of the program. As noted above, on January 4, 2010, the City Council
held another public meeting and received extensive public comment. The City
Council declined to take any action to opt out of the program.
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RESPONSE TO
marin energy GRAND JURY REPORT
authority Approved by the Board of Directors of the Marin Energy Authority at its
Regular Meeting on January 7, 2010
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F1: Partially Disagree.
The Marin Energy Authority (MEA) is a new government agency, but is not a 'new level of
government', and is to be financed with ratepayer revenues that do not cost the member
agencies or MEA any general funds. The implied argument that general funds are at risk
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is false.
City of Belvedere
F2: Disagree.
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MEA, per the enabling legislative statute (ABI 17), does not submit its Marin Clean Energy
(MCE) program to a direct vote of the public on the program itself in advance of the
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program's implementation. The representative vote is through the publicly elected
cuunty of Marin
representatives who serve on the MEA Board. Furthermore, the MCE program has been
submitted to a vote of the public's elected representatives in their constituent cities, towns
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and in the county.
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Via the extensive hearing process used to evaluate risks and opportunities from the Marin
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Clean Energy Program, the standards of transparency and consumer protection have and
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will be honored and preserved. In addition, information about the MCE program will be
provided to every ratepayer (homes and/or businesses with an electricity bill), using 4
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notices of their individual right to vote themselves out of the program. Extensive
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information on MEA, MCE, energy products, and ratepayer rights will be provided to each
residence and business in the service area during this period of time. All documentation
has been available to the public on a 24 hour basis on the agency's website,
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www.marinenerovauthoritv.oro.
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The voting public has been participating in the process through dozens of public meetings,
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and ratepayers have the additional opt -out opportunities provided during the official opt-
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out period. This process will occur over a 120 day period with 4 opportunities to vote for
each ratepayer. Once enrolled in the MCE program the ratepayer can still opt out at any
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time, but there is a possibility they will pay a nominal exit fee to the agency to cover any
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stranded costs of prior energy procurement made on their behalf.
F3: Agree.
Only the cities that did not join MEA have denied their ratepayers the opportunity to vote
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on whether to participate in the program (via the opt -out procedure).
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AB 22.
With respect to cities that do not opt -out, their residential and commercial customers will
be transferred to the MCE program, at which point they will have 4 ballots to vote
themselves out if they choose. Only cities that remain in the agency allow their ratepayers
this choice.
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Clean
F4: Agree.
Energy
See item F2 and F3 above.
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F5: Disagree.
The Board of Supervisors as well as the staff and Chair of MEA have held numerous meetings
with PG&E over the last four years to explore and determine whether PG&E could or would offer
programs to 1. decrease greenhouse gas emissions on a level comparable to that offered by the
MCE program, 2. increase focus on energy efficiency programs in Marin County, and 3. offer
special partnership programs to help Marin meet its AB 32 obligations and internally, locally
established goals. No substantive proposal was ever submitted to the Marin County Board of
Supervisors or to the staff, Chair or Board of Directors of MEA.
PG&E stated that they would only partner with the County and other jurisdictions if the
jurisdictions left the MCE program, and if there was no Request for Proposals (RFP) process.
PG&E refused to participate if they were required to compete with other bidders. Discussions with
MEA were terminated by PG&E in April, 2009.
F6: Disagree.
The Business Plan is an extremely detailed document, prepared in cooperation with energy
industry experts. The Business Plan underwent two independent peer reviews. Both peer reviews
found the plan to be comprehensive and containing no fatal flaws. In addition, the draft
Implementation Plan, dated November 18, 2009, was made available to the Grand Jury as
requested and provides an even higher level of specificity and detail, as it is more current. The
Grand Jury's Report does not make reference to the detailed Information contained In the draft
Implementation Plan, approved by the MEA Board on December 3, and submitted to the CPUC
on December 4. The implementation Plan is, in effect, an update to the Business Plan.
F7: Disagree.
The MCE Business Plan does not state that the construction of owned assets is a requirement for
the success of the Marin Clean energy program. While potentially advantageous, it is neither
necessary for "owned" facilities to be used for program success, nor is it "highly unlikely" that
MEA will be able to successfully locate and support projects within Marin County to meet its local
generation goals. Distributed generation, for example, has tremendous potential in Marin County,
and is a stated goal of the program.
Future energy sources could be developed by private companies which sell to MEA, by joint
projects between MEA, other governments and private companies, or via public financings by
MEA Each specific project proposal will be analyzed for economic feasibility, land use issues,
and environmental impacts at the appropriate time in the future. With a potential renewable
energy source capability over five times the size of maximum electricity demand within the
borders of Marin County, MEA is confident that some projects will be located in Marin over time.
Others will benefit our entire North Bay economy.
F8: Partially Disagree.
While neighboring communities have launched successful programs, the quantity of greenhouse
gas reduction projected by MEA is over 50 times greater with MCE than by using all other
programs combined, including the implementation of a Solar and Energy Efficiency District
(SEED) Program in Marin (using AB 811 property -based financing mechanism), and all other
locally based energy efficiency and renewable energy initiatives.
The major obstacle with all the other possible greenhouse gas reduction initiatives is that they
require General Fund monies. Only the MCE program offers non -General Fund revenue to
support efficiency and renewable energy programs at no cost increase to the ratepayer. The
costs to all jurisdictions to address AB32 goals are projected to be $394 million (California Air
Resources Board data), and the establishment of MCE avoids 2/3 of that cost.
F9: Disagree.
There has been no slowdown in Implementation of County energy efficiency programs (quite the
opposite), nor has there been a slowdown of CREBs and other energy programs within the Marin
communities; and MEA staff has applied for multiple federal, state, and local grants for renewable
energy and energy efficiency projects, all while exploring the feasibility of the MCE program. MFA
is not a distraction but the most significant tool for local agencies to employ as the costs and
challenges of meeting AB 32 requirements are considered. In fact, the Investigation and analysis
of CCA within Marin has been a complimentary process in developing these other energy
programs that may reduce greenhouse gas emissions. A significant portion of the analysis
completed throughout CCA investigation has informed discussion and analysis focused on other
complimentary energy programs and has heightened Madn's overall analysis to climate
mitigation, greenhouse gas emissions reductions and renewable energy promotion.
F10: Partially Disagree.
There are risks associated with any new venture, but MEA staff and board members have
identified and worked to mitigate all major rate payer risks and all risks to member jurisdictions.
The remaining risk is that at sometime during MCE program operation, a ratepayer may identify
an opportunity to purchase cheaper electricity (with less renewable energy content) by
transferring generation service back to the incumbent utility. While this circumstance is not
anticipated, Marin residents will be afforded a choice with respect to electric generation service
and may base their service preference on any factor (such as price and/or renewable energy
content), they so choose. If ratepayers so desire, they may, at any time, opt out of MCE (but may
have to pay a nominal exit fee In the event of certain market conditions, similar to that charged by
PG&E).
F11: Disagree.
The Contract elements are complete for both Phase I and Phase 11 ratepayers. Pricing
methodology is stated and understood, based on indicative bids submitted in July, and will be
finalized prior to contract execution by the Executive Director and Chair of MEA in the Spring of
2010 and again in early 2011 for Phase Il. It is not possible for anyone, including PG&E, to know
in advance of the execution of any power supply contract, what the price of energy will be on any
given day because of the nature of the business of energy supply.
MEA's default position is that its costs of its energy in Phase I and Phase II must be "at or below
PG&E's projected costs", or there will be no executed contract. The MEA Board passed a
resolution at Its November 4t' meeting assuring that MEA will NOT execute the contract unless
Light Green Customers' (who will enjoy a minimum of 25% qualifying renewable energy content
as compared to the 15% provided by PG&E) costs are at or below PG&E's projected costs. It is
worth noting that California's current Renewables Portfolio Standard requires all electric utilities to
provide a minimum of 20% of energy deliveries from qualifying renewable generating resources
by 2010, and PG&E will not meet this target until at least 2012.
F12: Agree.
Most residential customers will not be enrolled into MCE until Phase If which is scheduled to
occur in early to mid- 2011. The pricing for Phase II customers will be known prior to execution of
the Phase If confirmation agreement.
F13: Agree.
F14: Partially disagree.
With the exception of the County loan of $540,000, and any other potential loans or loan
guarantees provided by public agencies, taxpayers have no risk associated with the MCE
program. Elected representatives manage the policy formation for numerous complex issues in
their respective cities and In the County, including land use, public works projects, transportation,
and energy. Furthermore, 1 In 4 Californians receive their electricity from public utilities. which
generally charge their ratepayers 20% less than the investor-owned utilities and are governed by
elected boards. MEA and the MCE program is only 'new' in the sense that it is a hybrid model
between the public utilities and investor owned utilities that supply all energy, that is gas and
electricity both. MCE will only be responsible for the procurement of electricity, and PG&E will
remain responsible for transmission, distribution, and maintenance. Taxpayers will actually have
less risk because MCE will provide rate stability and rate -setting control at the local level. There is
considerable risk to the taxpayers of each jurisdiction of not doing MCE, as the costs associated
With implementing AB32 mitigations will constitute a considerable drain on every jurisdiction's
general fund.
Recommendations
R1: This recommendation will not be implemented
The risks of implementing MCE are understood and manageable, and the opportunity to reduce
green house gas emissions, pursue energy independence and long term price stability, and reap
the local economic benefits of this program should not be abandoned out of fear, political
opposition or lack of understanding. In fact, the MEA board believes that it may be significantly
more risky to forego consideration of MCE program implementation in consideration of projected
AB32 compliance costs burden on general funds and highly volatile natural gas markets (which
are currently favorable for the CCA program). Furthermore, the MEA Business Plan anticipates,
In addition to the on-going use of the expert technical advisory committee, the formation of an
Energy Commission comprised of local citizens with technical expertise in rate -setting,
generation, procurement, energy efficiency, renewable energy generation, etc.
R2: This recommendation will not be implemented.
As described in response to F5 above, cooperative approaches have been tried and, In some
cases, are continuing. For example, PG&E has worked with local Marin governments, including
MEA representatives, to implement an Energy Efficiency Partnership program detailed in a
previous Grand Jury report,(2008) on the County Sustainability Team. PG&E is unable to provide
additional service and funding in Marin County without violating CPUC requirements for fairness
across the PG&E territory.
The so-called bureaucracy of MEA is not expensive, and costs nothing to member jurisdictions'
general funds, unlike all other energy programs suggested by the Grand Jury. MEA estimates
that the fully -loaded staff cost will comprise only 3% of the annual budget.
No other possible programs that reduce greenhouse gas emissions, such as SEED, Energy
Efficiency, solar panels on public buildings, etc., approach the projected level of greenhouse gas
emissions reductions that can be obtained by MCE.
R3: This recommendation will not be implemented.
The Councils and BOS are following proper analytical, public notice and public hearing
procedures for the County and the other governmental member agencies of MEA to approve or
reject membership of their respective agencies in the MEA. As previously stated, the final
decision on participation rests with the individual ratepayers, who will have four opportunities to
opt out in the 120 day opt -out period.
R4: This recommendation will not be implemented.
To avoid compromising the negotiation process, to avoid abrogating the confidential nature of the
bidding process, or of the Information submitted by the bidders, and/or MEA's pricing strategy, the
final contract will only be released publicly after execution. As stated previously, pricing will be
refreshed and will be known with certainty prior to the execution of the contract for both Phase
and Phase 11.
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