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Updated: Monterey Bay Community Power charges ahead

Monterey Bay Community Power will take over buying electricity from PG&E soon for the Tri-County area

This article has been updated with more information from reporter Tom Leyde.

There’s a big change in store for electricity users in San Benito County and the whole Tri-County area next year.

Monterey Bay Community Power, a nonprofit agency, will take over power-buying authority from Pacific Gas & Electric Co. By July, customers in San Benito, Santa Cruz and Monterey counties, along with all cities, except King City and Del Rey Oaks, will be under jurisdiction of MBCP.

While PG&E will still transport electricity through its lines (and continue to provide natural gas), MBCP will be buying power from various power-producing companies.

The goal is for consumers to have more local control over power rates and for them to have access to clean, renewable power with little or no carbon footprint.

Sources of renewable power include hydroelectric, wind, solar, biomass and geothermal energy.

Customers can opt out of MBCP and continue to be a PG&E electricity customer, with no additional fee. They can also return to MBCP for a small additional one-time fee: $5 for residential customers and $10 for commercial customers.

PG&E will continue to read power meters, send a bill and maintain the utility grid. The MBCP bill will be attached to PG&E bills.

Fees are expected to be the same as those charged by PG&E.

At the end of the first year, if you continue be a MBCP customer, you will get a small rebate.

You don’t have to sign up for MBCP service. You will be automatically enrolled.

The intent is that carbon-free power will be purchased mainly from hydroelectric plants in California and the Pacific Northwest.

The California Public Utilities Commission must approve MBCP operations.

The plan, said MBCP CEO Tom Habashi, is to bring commercial customers into the program in March and residential customers in July. All customers will receive notifications of the change twice before and twice after they begin.

Community power authorities have been around for some time. They are currently operating in four states, with California leading the way. In California, Marin County was the first to launch a local power authority. That was in 2010. Other San Francisco Bay Area community power authorities operate in Sonoma, San Francisco, San Mateo and Santa Clara counties.

PG&E, Habashi said, has estimated that 80 percent of California will be served by community power authorities in 10 years.

How did this all come about in the Tri-County Area?

In 2013, Santa Cruz County received a grant from the state of California and other agencies to consider forming a community choice energy agency (CCE) in the Monterey Bay area. A development advisory community, comprised of 21 local governments and regional agencies, met for about two years to consider the feasibility of such a move.

In 2016, a technical study was completed. It found MBCP could offer cleaner power at competitive or potentially lower rates. Earlier this year San Benito, Santa Cruz and Monterey counties, along with 16 cities, including Hollister and San Juan Bautista, passed local ordinances to join MBCP. (The following indented section was added as UPDATED because the information was provided by the cities that did not choose to join MBCP after publishing date.)

Not everyone was in favor of forming the MBCPA. A number of concerns were raised during public hearings and government agency discussions.

Among the concerns were:

·      There is no firm commitment that it will create local jobs.

·      It will cause a substantial increase in power rates.

·      There will be pressure to convert agriculture land into green energy projects.

·      It will create more governmental bureaucracy and complicate economic development.

·      By purchasing power outside the area, it will increase greenhouse gas emissions.

·      Creating a multi-jurisdictional government entity will cost more and will be less efficient.

Leaders in King City and Del Rey Oaks, the only two Tri-County cities that did not join MBCP, weighed in on why the cities didn’t not want to participate.

“First,” said Del Rey Oaks Mayor Jerry Edelen in an email, “in our liability pool for the initial CCA (Community Choice Aggregation), we would have been liable for the same amount, if things went south, as cities such as Seaside and Marina which are 15 times our size. It made no sense not to allocate liability based on population.

“If a fledgling CCA goes belly-up,” he said, “Seaside and Marina might be able to weather the storm. It would be catastrophic for us.

“Second,” Edelen said, “when a CCA is adopted by a city, all residents of the city are automatically enrolled. If they didn’t want to be a member, they must go through a tedious bureaucratic process to leave CCA and rejoin PG&E. This is all wrong. If the CCA is such a good deal,” he said, “ then residents should be given the choice, up front, to join, or not. They should not be forced to join.”

Steve Adams, city manager of King City, said the city supported MBCP, but didn’t feel it was right for the city.

“The only reason (for not joining) was because we felt, after research, that we could probably generate a lot more local benefits to the community on our own,” Adams said. “We’re going forward with our own CCA.”

In March, MBCP was formed as a joint powers authority (JPA).

Two boards were formed: a policy board comprised of elected officials, and an operations board comprised of administrative officers. The policy board, of which San Benito County and the cities of Hollister and San Juan Bautista are members, sets power rates and rules on budget and policy issues.

The operations board, headed by Habashi, includes city and county CEOs and managers, and deals with the day-to-day mechanics of MBCP.

MBCP is funded by donations and revolving and non-revolving lines of credit. The revolving line of credit is $3 million. Put up by the three counties involved, it covers negative cash flow during the first months of operation, including payments to power suppliers.

A non-revolving line of credit of $10 million was put up by banks. It is not guaranteed, but could be available if needed. That line of credit has not yet been touched, Habashi said.

On Dec. 14, MBCP began trading for short-term power supplies. MBCP can’t guarantee that the power coming to your home or business is 100 percent carbon free, Habashi explained. That’s because all power entering the giant Western energy grid — the largest grid in the U.S. — travels in the direction of least resistance. It flows to where it’s needed most.

Still, the power MBCP is purchasing will be from renewable energy sources.

MBCP will have a staff of about 25 employees once it is in full swing, Habashi said. He is a 30-year utility company manager. He came out of retirement to take a job in Silicon Valley and was later hired by MBCP at a salary of $330,000 a year, with a $30,000 signing bonus and no benefits.

Habashi, a Pacific Grove resident, said he enjoys the work, especially when an agency is in startup mode.

“The fun thing to do is thinking of a new initiative and making it work,” he said. “Nothing beats a startup for creating new initiatives. It seems like somebody handed you a piece of paper and a bunch of crayons and said, ‘Go at it.’ It just seems to be working very nicely.”

MBCP offices have been in Watsonville but moved to 70 Garden Court on Garden Road, near the Monterey Airport, Dec. 15.

About that rebate on your electricity bill:

MBCP will take three percent of the money it makes and use it for customer rebates. Large- or medium-size commercial customers will receive rebates quarterly or biannually, while residential customers will receive them annually. They are based on an anticipated 3 percent rebate off the power generation rate for 2018.

For residential customers the expected first year rebate, Habashi estimated, will be between $12 to $15. He says you can keep that money or you can donate it.

All MBCP customers will be enrolled in MBCP’s default program, MB Choice, in one of two phases, beginning in March.

If you decide to forego your rebate, you can direct it to one of two programs.

One is called MB Green+. Rebate money will be used to develop local renewable resources in the Tri-County region.

The other program is called MB Share. Rebate funds can be donated in this program as a tax-deduction to nonprofit community foundations. Funds will be placed in a donor advised fund or become part of existing environmental grant programs offered by the foundations.

“All three options,” Habashi said, “will basically assure the customer they’re not going to pay a penny over what they would pay to PG&E.”

For more information on Monterey Bay Community Power, visit http://www.mbcommunity/power.org/about/

NOTE: The UPDATED information was added to this article later and is indented. King City and Del Rey Oaks' comments as to why they elected not to join had not been provided to BenitoLink at time of original publication. 

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Comments

The correct website URL is http://www.mbcommunitypower.org/about with no slash between community and power.

Is this a great deal or what? This organization buys power from difficult to trace sources, claims it is all renewable energy, lets PG&E do all the maintenance and billing, employees at least 30 more people (including a $330K/yr manager), rounds up two lines of credit for $13 million, rents office space, and they will do all this at no charge to the consumer. This is better than selling the Brooklyn Bridge (again).
 

--William McCarey

 

Submitted by Tod DuBois (John Galt) on

LOL, William, great comparison to a monopoly that is too big to kill and has a stack of bankruptcies and high paid executives. Ever try to calculate the pay for the leadership of PG&E? Ever try to break up a monopoly?

The question is will MBCP become real competition in energy production not just procurement?  The delivery system must be centrally managed - it's an attached grid - so there is no sense in dividing it up; production is another matter.

If the only thing that happens is the MBCP ends up bidding for energy on the open market it's going to drive the prices up and the 7 percent you save annually on the their portion of the energy bill will just end on the on the PG&E potion for backup and the mandatory infrastructure-regulatory costs. That's just cherry-picking the system; it never works overall. 

The important opportunity is to generate renewable energy locally, but it won't be in Panoche Valley, the Sierra Club and their wealthy lackeys in the bay area already took care of that.

If they significantly get into the generation business that will be good for national security and, eventually, lower the cost.  Abundance reduces the price. 

Marty Richman

John Freeman's picture

If properly run, the MBCP will help the state and eventually the entire county wean itself off of fossil fuels that are slowly but surely making this earth a harder place in which to live. All electricity is hard to trace, but that is besides the point, accountants can divide it up.  If we have more demand for green or renewable energy that is what the marketplace will produce.  Marty is correct abundance will reduce the price.  The promise of more economic development is also present since facilities and homes with solar will be able to recoup their investment even quicker than before. More people will be able and be willing to install solar on their roofs or on develop small to medium scale solar farms.  Who knows maybe the cattle and solar panels will be able to coexist.  While certain environmental groups certainly did cause problems here in San Benito County that still have not been solved or ironed out, I doubt that this would continue since the power and jobs and money would stay here.  I suggest we embrace the future and plan for it instead of complaining about it. 

"Abundance will reduce the price?" Huh? Apparently this statement was derived by a person who has never run a business.  Remember P=R-E? This is the equation that drives business. Profit equals Revenue minus Expenses. Your abundance model says that having more companies selling electricity to consumers will result in lower prices. In other words, Revenue will drop. If Revenue drops, Profit drops. So to keep or get any Profit what must happen? Cut Expenses. Yet your company increased Expenses by hiring a CEO at $330,000 per year. Your company is about to hire 30 more people. Your company has taken on $13 million in debt which drives even higher Expenses. Your company is going to buy miniscule power contracts that will cost more than PG&E pays. There will be NO Profit. Consumers will face higher monthly bills (more Revenue) to achieve any sort of profitability. P=R-E says this company will fail to deliver cheaper electricity. What equation says it will succeed, Mr Freeman? I am not complaining, Mr Freeman. I am stating that in my opinion this company is selling snake oil.  This is not the future to be embraced.

By the way, Marty, research the impact of abundance on the auto industry in the 1950s. How did having all those many automakers help the economy? Read about the recession.

--William McCarey

"Nearly 70 percent of the electricity Pacific Gas and Electric Company (PG&E) delivered to its customers in 2016 came from greenhouse gas-free resources, the company announced this week."  PG&E announcement, March, 2017.

 

Hi Bill, don't know if that was directed at me.  If you read my statement I clearly said that would only happen if they produced more energy, not merely bid for the available energy.

It's not a panacea, nothing is, but increased availability usually means a lower price.  As I'm sure you know we still import a lot of oil and that is an economic risk (balance of payments) and security risk (embargo threats).  We need to produce more energy.

The U.S, automakers' problem was lack of competition. They started producing really crummy products and had a take it or leave it attitude - I know, I lived though it.  I don't see how that reasonably relates to energy production and if it does at all it actually strengthens the argument for more production from more sources.

I have no idea whether MBCP will be any good - they haven't done anything yet, hopefully we'll see other options too.  Meanwhile, let's educate the public to be good shoppers.

I'll stick with my statement.

Marty Richman

Marty, the US has been independent from the need for foreign oil for years. Our national strategic reserves are filled to capacity. We are the third largest EXPORTER of crude oil in the world, after Saudi Arabia and Russia. We import oil for two reasons: it stabilizes the economies of countries that depend on petroleum sales and secondly, it gives US oil companies who process this imported oil much higher profit margins than processing the heavier US crude. In fact, the US is the second largest EXPORTER of refined oil products after Russia. MBPC has nothing to do with energy independence.

MBPC will only be useful, as you said, when they finally get around to generating their own electricity. Right now all they can do is sell consumers the same electricity PG&E uses. The power grid is a combination of all power sources from coal, oil, solar, wind, nuclear, etc. MBPC has no influence on this. The fact that they have no business model on their website tells me all I need to know about this company.

I am not going to take a chance on a critical resource such as my family's need for electricity with such a player. I am opting out as soon as the first mailing arrives.

--William McCarey

Personally my family went with Zoom Energy for our gas and after four years I finally had to give it up due to exorbitant gas delivery charges. PGE is not going to deliver this electricity for free. At least you can withdraw if it’s not for you. 

Hi Carol. I know the cost of PG&E electricity. In this argument, it is a constant. MBPC is saying they can do the same thing as PG&E, but cheaper and cleaner. My long-winded comments above basically said that they cannot do so and that they have not published any business model that explains how they will. I am opting out from Day One. PG&E is changing, slowly, like a big elephant rolling over. They are becoming more responsive. 70% of their electricity is now from non-greenhouse gas sources. So I am going to stick with them, rather than add the complications of getting critical service from a small, unknown entity.

--William McCarey

Submitted by (Seth Capron) on

Willian - If you look into Monterey Bay Community Power a little deeper, you’ll find that they do have a detailed business plan that was developed over the last three years by the local government agencies that were exploring the establishment of MBCP. It’s a model that has been proven by the successful operation of many community choice power agencies, including Sonoma Clean Power which is going strong after ten years. Once up and running, MBCP will generate hundreds of millions of dollars annually in surplus. Sonoma Clean Energy, and others, have used these funds to increase local renewable energy production, implement other greenhouse gas reduction measures, and lower electric rates. Local clean energy production equals local jobs. Most of us here on the Central Coast know that climate change science is real, and we need to move away from the carbon energy economy you promote in your responses. The cost of renewable energy is now competitive with fossil energy, and it continues to drop.

The grid is just the transmission system that moves the electrons. It does matter where our wholesale electricity is sourced from. That’s what determines whether it is produced from non carbon polluting sources.
Seth Capron

Seth, thanks for agreeing with me. I see you also could not find the business plan for MBPC. I've spent a career reviewing (and writing) such plans for many Initial Business Proposals for projects up to hundreds of millions of dollars. I've never seen a successful project launched without one. I am surprised that MBPC has buried theirs so deeply. Makes you think, doesn't it?

MBPC's impact on jobs cannot be a good thing. Hiring more people means the consumer has to pay more. Please see my comments on P=R-E above. Few community choice programs succeed. The increase in monthly fees are what turn residents off.  If we only had that business plan our elected representatives  reviewed in great detail before joining this misadventure then I think we would all be much happier.

With enough people admiring the Emperor's new clothes, others may be convinced they look nice too. Best of luck to you. I'm out.

--William McCarey

 

 

Submitted by Tod DuBois (John Galt) on

How do you eat an elephant? One bite at a time...LOL 

Submitted by (Larry Lycett) on

I agree with the comment above. Electricity is one of those things we take for granted, and for good reason. No need to change what is already working. I’ll opt out.

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