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.