Tom Arnold: Hi, everyone. I am Tom Arnold, CEO of Gridium. I wanted to welcome everyone to a conversation with Dan Lieberman, senior manager of account services at East Bay Community Energy. Today we’re just going to take 15 minutes and discuss EBCE’s new demand response pilot. This is a pretty exciting program, and it’s only for E19 and E20 PG&E customers that participate in PDP, but also want to take service on EBCE.
What we’re going to discuss today is the program structure, the incentives, how everything works. This is a limited enrollment program, so if you want to take attention to this, you want to probably move pretty fast on this, as I suspect it will fill up quickly.
Dan, it’s a pleasure to talk to you. We’ve been in the same industry here for close to 20 years working on renewables and carbon. I’m very excited to talk to you and tell everyone about the new program.
Dan Lieberman: Yeah, happy to be here. Thanks for inviting me.
Tom Arnold: So Dan, a lot of our Gridium customers, they’re familiar with the CCA model, they’re still digesting what it means. Some of them have buildings, obviously, in the new territory of the EBCE. Can you tell us a little bit about EBCE’s goals, where the service is available and how do you want customers in the East Bay thinking about the organization and what it can do for them?
Dan Lieberman: We’re the CCA that serves Alameda County and almost the entire county is in: it’s 11 cities in the unincorporated areas. It’s essentially every city except the city of Alameda, which runs its own municipal utility, and the cities of Newark and Pleasanton, which took a sort of “wait and see” approach and we’re hoping they may join later.
We’re primarily a procurement function, at least in these early years. You know, our focus is on bringing cleaner, cheaper power to customers and so for those who don’t have much familiarity with CCAs, we’re a public agency and we replace the energy buying function of PG&E.
They still deliver the power to you, you still pay a bill to them, they maintain the poles and wires and if you have an outage or anything you still call them and you still have access to all of their energy programs, but in addition you get our generation service which is a little cleaner, more affordable and if we have excess revenues—which we do forecast—then since we’re a public agency, we don’t have shareholders, we just spend that money on programs.
And so, down the road we’ll look for a suite of programs to commercial accounts that might include feed-in tarrifs, electric vehicle incentives, battery storage incentives, those sorts of things.
Tom Arnold: That’s very exciting. EBCE is totally new, I think you’ve just launched commercial service this month. I think that includes municipal accounts as well and it looks like residential is coming out in November.
Can you give us a little update on how things are going, what’s the feedback from customers and the things that you’re noticing from customers as people enroll?
Dan Lieberman: We did start this month with service. We’re enrolling all of the non-residential accounts this month—June 2018. That’s about 55 thousand meters and it includes commercial and municipal accounts and then in November we’ll do all of the residential accounts—that’s over 500 thousand, so it’ll be the largest CCA enrollment month ever, I think.
Tom Arnold: Exciting.
Dan Lieberman: Yeah, really exciting.
The feedback we’re getting right now… so, right now we have two service options for customers: one provides some savings compared to PG&E rates. It’s about a percent and a half of savings on the generation part of the bill, called Bright Choice. We have another option called Brilliant 100, and that’s priced at parity with PG&E’s rates, but the customers get 100% carbon-free energy.
And what I’m finding engaging with customers is that there’s actually a really large portion of customers opting into that carbon-free option; because it’s priced to parity, it gives commercial accounts a cost-free way of completely eliminating the carbon footprint from their power consumption and that’s really attractive.
We usually see pretty low opt-up rates for greener products, especially among price-sensitive commercial accounts. But this option, since it’s priced…your bill remains exactly the same as it would under PG&E service. I think we’re going to have the highest opt-up rate of any CCA for a green program, at least that’s the way the numbers are looking right now. So, that’s very exciting.
Tom Arnold: That’s great.
Dan Lieberman: Yeah.
Tom Arnold: You used the term “renewable” and “carbon-free” to describe both of those options. Can you just outline the differences and for our customers that have to have certain sustainability reporting guidelines, what kind of assurances do they get that they can actually take credit for the reductions that you’ve put into the power mix?
Dan Lieberman: Yeah. Thanks for asking that question, actually, it’s a good thing to touch on.
So, in California, as you certainly know but a lot of customers do not, large hydropower facilities are not considered renewable by California’s renewable portfolio standard definition, so we’re buying a lot of renewable energy which is primarily going to be from wind & solar, and then we’re also buying a lot of large hydro because it can run 24/7 and it’s relatively low cost and zero emitting.
If you look on our website and our materials, we talk about having renewable energy and we talk about having carbon-free. When we mention carbon-free for us that’s all coming from large hydropower facilities. And so, our mix is quite clean, our default product is 85% carbon-free, largely—it’s about 38% renewable, 47% large hydro and about 15% system power which we use to keep the lights on at night right now. And then that’ll evolve over time, we hope to have more renewables in our mix and procure longer term fixed rate contracts to keep rates stable.
And then getting back to the claims issues in terms of customers who want to make renewable energy claims or use a greenhouse gas accounting protocol, I anticipate that we’ll participate in The Climate Registry to give large commercial customers the comfort of knowing that this is all verified. And then we’re going to actually offer a third service option starting in November that’ll be 100% renewable from wind and solar, and that will be a penny per Kilowatt hour premium and it will be Green-e certified also, or I should say we’re pursuing Green-e certification at this time.
Tom Arnold: That’s fantastic and it’s great to have your personal work experience in the mix there. As I know, you spend a lot of time in your career working on assurances that the assets that people are actually marketing can be verified and substantiated, so that’s fantastic.
Dan Lieberman: Exactly.
Tom Arnold: Let’s shift gears a little bit to PDP, this is a fascinating pilot program. Would love to hear what the conversations are on your side of the table on why do you think managing demand is important for the environment and why is it important to EBCE?
Dan Lieberman: Yeah, so as I mentioned, our mission is to offer low-cost power that is greener and cleaner than what customers would otherwise receive from PG&E, and part of that is managing the load and the load shape and operating a CCA requires matching the customer’s load with demand.
We can’t just buy solar all day because solar is cheap; it’s great that solar is cheap, but there are limits on how much we can supply to our customers since they like to have power at night. And so anything that we can do to be able to help shape our load helps us be greener and buy lower-cost power, especially at times when the power is expensive. So, demand-response types of programs are an effective tool, one of many tools that we’ll use to help achieve that.
We launched this program because we saw that there are a lot of customers on PG&E’s pricing program—that’s become a default program for PG&E. So, they’ll place customers on that program and customers can opt-out. When we started first looking at the customers who we’d enroll, we saw a very large majority of the commercial accounts were on that program.
That’s a program that’s not compatible with CCA service, so it means that if we’re going to auto enroll these customers—which is what the law requires, that this is an opt-out program and customers become automatically enrolled in our service—if we were going to do that then those customers would lose their participation in peak-day when they became our customer. And so we just decided very quickly, “Let’s launch a program that’s similar to Peak Day Pricing and that way we can keep customers having that incentive to reduce their demands on a Peak Event Day.”
And then I’m hoping that we can actually expand this program beyond a pilot next year, open it up to more rate schedules and also consider having a similar program for residential accounts, but still some analysis required when we go down that road.
Tom Arnold: Good. Can you talk a little bit about eligibility? What buildings actually are eligible? Who’s ineligible? How do you know that you actually could qualify?
Dan Lieberman: What’s interesting is we decided we’d start with a small program for E19 and E20, and if you look on our website you’ll see we’re reserving the right to limit it to 100 accounts—we haven’t gotten to 100 accounts yet, but we did open it up initially just to E19 and E20.
The rate structure for Peak Day Pricing for E19 and E20 is easy for us to mimic and so it sort of fit both that we wanted to hit the larger accounts and also just administratively; it was a good fit to match E19 and E20 and I’m really hoping we can expand that out.
I know we’re recording this webinar sort of at the end of our enrollment period for the pilot program, but I’m happy to report that we can add some customers along the way; we just wanted to make sure that we didn’t have a flood of customers come in all at the beginning that we couldn’t accommodate.
So, we’re happy to entertain the additional allocations of customers that are interested in participating.
Tom Arnold: That’s great news. And in terms of your pilot versus PG&E, is there anything different in the rates or is it just straight out of the PG&E tariffs for PDP?
Dan Lieberman: Yeah, so we’ve come up with a slightly simpler version which I actually like a little better administratively.
The incentive structure is the same, so the credits that you accrue… the basic way the program works is that throughout the summer season you get reduced demand charges—that’s the benefit—in exchange for having a kilowatt hour fee, PG&E can call up to 15 Peak Days or Event Days throughout the course of the season. And they tend to do that when average temperature in the service area goes above 97 degrees or so, so it’s essentially a weather determined program and customers get a day in advance notice that tomorrow’s going to be an Event Day.
So, we mimicked that. We’re calling the same Event Days as PG&E, we’re notifying customers by text and/or email the day before and then between 2 and 6 pm on Event Days there’s this surcharge per kilwatt hours and customers get an ongoing demand charge benefit for their participation.
The thing that’s different for our program is first, PG&E does this and they balance your account every month. So, if you’ve come out ahead in a month and you have the benefit of those low demand charges and don’t have many charges—Event Days—then you come out ahead and you get a credit from PG&E. And if you haven’t managed well to the program, then your costs will exceed your benefits and you’ll pay more to PG&E, that’s how that program works. And I should say PG&E gives you your first year, they give you rate protection and then they take you off of rate protection.
So, the way our program works is that we’re actually just going to look at your usage on Event Days and we’ll look at the amount of demand charge credits that you’ve earned and we’re just going to keep a ledger going all season long.
Your bill every month will remain the same and then in November when the season is over, we’ll go back and determine how those credits compare to the amount of fees that you accrued. And if you come out ahead as a customer, then we’ll credit you that amount and if you come out behind as a customer, we’re just going to walk away. I mean, it’s a rate protection option, and so we’re not going to charge you anything: no charge for participation, no charge if you didn’t perform well on Event Days, there’s only the upside.
Tom Arnold: So all carrots, no stick.
Dan Lieberman: Yeah. Well, so there’s sort of the stick, but what we’re doing is we’re measuring how many sticks and how many carrots there are over the course of the season, and then if there are more carrots in there, then we’ll give you those extra carrots but if there are more sticks, then we just say, “Good luck next time.”
Tom Arnold: Now, PG&E only provides one year of bill protection. This is a pilot, but have you thought about extending that bill protection? Because a lot of our customers are nervous about, “Oh, god. What happens if we have special events in the facility or a really tough mechanical problem and we can’t respond?”
Dan Lieberman: Absolutely.
I think that offering bill protection is essential. I mean, the way I look at it is we’re going to serve these accounts whether they’re on the demand response program or not. I’d like to reward them for good behavior, but if they’re not participating in the program then there wouldn’t be a penalty.
And so I’m looking at it that way where I wouldn’t punish a non-participating customer for not responding, so I shouldn’t punish a participating customer for participating. But I do want to reward them when they respond and curtail on a day when we really need that. So, at least that’s the thinking right now; in November we’ll go back and analyze how this turned out on a cost-basis for us.
We’re a public agency, we have to be good stewards of the dollars. So, I’m thinking this is going to be a good way for us to manage costs on days when power’s expensive and we should just thank the customers who helped us achieve that.
Tom Arnold: That’s great. One thing that we do a lot of work on is CRL optimization.
You know, if you have a very big building, of course you don’t want to enroll the entire building in a price response program because you’re never going to shift you know, more than 10 or 20% to the load. Have you thought about that in your program and if so, how are you going to establish CRLs? And do customers have the opportunity to actually change those CRLs when they enroll in the program?
Dan Lieberman: Right now we just have an enrollment form that has a space where you can indicate what your CRL is.
We’re not calculating that, so that I guess is another difference from PG&E—they have a formula for that. We just have a space and if customers want to use a CRL or insert it, then they can and we’ll just work off of that as the baseline. We did this quickly and didn’t have a whole lot of time to engineer something. So, yeah it’s just open right now.
In fact, when I get the enrollment forms, I usually check if they left it blank, I’ll ping someone back and make sure that if they’ve participated in the program before and they have a CRL, if they want to include that they can. But yeah, right now I think that’s a great service you can provide because that will help a lot of customers benefit from the program.
Tom Arnold: So, we’ve talked about the program and covered, I think, most of the high points of the program. If you’re interested, how do you actually join the pilot program? You mentioned a form. Where can customers get that and how can they get more details about the actual program?
Dan Lieberman: If you go to our website which is EBCE.org, you’ll find a business rates page and there’s a link there to all of the details about the program, so I would recommend taking a look there and there’s an enrollment form on that site that goes to me when you complete the form. Also, I see here on the screen we have the website up and the email that says info@ebce.org. I get those emails forwarded to me also in a mailbox so that’s a good way to reach me.
Tom Arnold: Great, and if you’re a Gridium customer, we’re happy to connect you and help you analyze this as well as well as the CRL optimization if that is of interest.
OK, Dan. I think we’ve covered a lot of ground here. Anything I’ve missed about the program? Any closing thoughts?
Dan Lieberman: You know, really we just look forward to having your customers as our customers. We think that there’s a great opportunity here.
Your customers can get on either our savings product Bright Choice and save a little money on their bills every month or keep bills as they are and go carbon-free with Brilliant 100, and then have this layered opportunity to save a little bit more money if they are able to curtail on Event Days. We look forward to serving your customers, we hope to roll out some more programs that may be of interest to them over time.
Tom Arnold: Look forward to learning more about those. Certainly a great opportunity, everyone should dig in here and take a look and of course we’re happy to help those people analyze.
Dan, thank you so much for your time today and enjoy the good holiday weekend ahead.
Dan Lieberman: Yes, thanks for having me!
