Since the collapse of energy de-regulation in California in 2000, buildings have largely had one choice in energy supply–their local utility. Now, thanks to state legislation and favorable market dynamics, a wave of support is building for remaking the California energy markets and handing decisions about generation supply to local government leaders, and relegating IOUs like PG&E and SCE to simply delivering that energy through its electrical grid.
These programs, called Community Choice Aggregation (CCA), establish a default provider in a city, or group of cities, and enroll local customers through an opt-out process. If you manage commercial property, and haven’t heard about these programs, you might be surprised to soon find you are buying electricity from someone other than your local utility.
Starting May 1, the third major CCA program started, with San Francisco’s CleanPowerSF becoming operational, with the first 8,000 or so customers going live, pulled from mainly residential districts in San Francisco. Just like Marin Clean Energy and Sonoma Clean Power before it, CleanPowerSF aims to deliver slightly greener electricity at or below PG&E rates, while preserving enough margin to support new local green energy projects. Like other CCAs, CleanPowerSF bills through PG&E, who still charges transmission and distribution fees.
As always, we have some practical and tactical advice for our San Francisco buildings that might be affected by this change, as well as other communities soon transitioning, such as Santa Clara and San Mateo counties.
- Read your notices: These programs are opt-out, which means if you don’t get your notice, you can’t make an informed decision. If you use a billbox or accounting gets the bills, make sure they are on the lookout for the notice. The CleanPowerSF enrollment is going to stretch over 5 years. Most CCA programs require notices be returned in 60 days, and if you miss it, you can be stuck on a CCA program for a year.
- Carefully examine the rates: The rates look really low, but remember, these are only for the generation portion of your bill, and don’t include exit fees charged by the utilities. You should have a professional rate analysis done, as well as understand the risks. As an example, an end of year adjustment to exit fees transformed savings at MCE to slight energy increases. As with all rate analyses, when and how you use energy determines your savings (Billcast comes with an annual rate audit).
- Remove green from the equation: Instead, make your decision on rate savings, balanced with the risks. These programs are noble for consumers who don’t have other options to green up, but buildings have a veritable fountain of ROI-generating green projects in their targets. Save the money from deep green tariffs and use that instead for energy projects that drop spend and increase building value. Even those chasing LEED points will find unbundled RECs in the market at a fraction of the premium charged by these programs. And while CCAs have done an admiral job building local projects, a lot of the initial supply of new CCAs is coming from existing projects or the same unbundled RECs you can buy just as efficiently.
- Understand the risks and costs: The biggest risk is price. CCA is popular now precisely because renewables are cheaper than legacy generation contracts at utilities. The trend could reverse, especially if natural gas spikes or the CCA does a poor job of managing risk and procurement. As we saw above, rates can and do change, and businesses that thought they were saving on MCE in 2015 are spending more in 2016. A final item: commercial customers rely on PG&E reps for a steady flow of information about rates and programs: enrollment in CCA both introduces a new service provider into your account, as well as restricts what your IOU rep can contact you about. There is some value in the old adage “one throat to choke”.
