CCA: Get it done by the deadline

Pub date March 30, 2010

EDITORIAL San Francisco has been talking about creating a community-choice aggregation system to sell cleaner electricity for five years now. There have been hearings, studies, debates, discussions, and negotiations. And now it’s coming down to the wire: to avoid the prospect of a Pacific Gas and Electric Company initiative on the June ballot that cuts the city’s effort off at the knees, San Francisco officials need to get CCA up and running before June 8.

But the mayor and the Public Utilities Commission don’t seem to have any sense of urgency. And the slow pace of negotiations with the contractor that would handle the electricity purchases is playing right into PG&E’s hands. If the mayor and his handpicked PUC director, Ed Harrington, and his handpicked commissioners dawdle and delay, they’ll be giving the corrupt private utility exactly what it wants.

It’s particularly frustrating since Marin County — which, unlike San Francisco, has no federal mandate for public power — is far ahead of this city, has a CCA program ready to go, and most likely won’t be affected by the PG&E initiative. What on earth is wrong with San Francisco?
CCA would allow the city to create the equivalent of an electricity buyer’s co-op, so that San Francisco could purchase electricity in bulk from providers that offer a more renewable mix. PG&E gets only a tiny portion of its power from renewables. With the advantage of wholesale purchases and no corporate profit, the city ought to be able to offer lower rates.

The contractor that won the bid to put the co-op together, Power Choice LLC, is run by people with substantial experience in the electricity business. The city’s been in talks with Power Choice about a contract since Feb. 9 — but progress is slow.

Harrington told us that he expects to have "a contract as soon as we can get a contract," but there’s no deadline. That’s crazy — there’s a very real deadline looming, a time bomb planted by PG&E, and the city needs to take it seriously. PG&E has used vast sums of corporate money to place a measure on the June ballot that would make it almost impossible to create new public-power entities; Proposition 16 would mandate a two-thirds local vote for any public agency that wants to sell retail electricity. And the company is spending $35 million on a campaign to get it passed.

That election is barely two months away — and if Prop. 16 passes before San Francisco has a signed contract and a CCA program under way, five years of work, led by Sup. Ross Mirkarimi and the Local Agency Formation Commission, could be for nothing. The best chance the city has to fight global warming, promote renewable energy, take control of its own energy future, and offer more stable, cheaper rates to customers could be gone, forever.

What’s the hang-up? Nobody’s talking, since the negotiations are still ongoing, but from what we hear, Harrington, Newsom, and the PUC members are worried about "risk" — that is, the risk that the San Francisco CCA might have to raise rates above what PG&E is currently charging to make the numbers pencil out. (Part of the risk: PG&E will have 60 days to try to convince customers to "opt out" of the CCA and stay with the private utility. If a critical mass of residents and businesses doesn’t stick with the CCA program, the economics could be dicey.)

But the risk discussions are missing a critical point: PG&E’s rates are going to go up, dramatically, over the next few years. The company already has an application for a stiff rate hike this year, and it’s inconceivable that the utility’s prices will do anything but continue to climb. So meeting the current rates is a moot point. And as Harrington acknowledged, renewable power rates are "much, much more stable than natural gas, oil, those kinds of things."

Besides, the real risk is that San Francisco will continue to violate the Raker Act and allow PG&E’s illegal monopoly to continue unabated. The PUC needs to get moving, now. Harrington should set a deadline, well in advance of the June election, and direct his staff to make every possible effort to get the program going by then. Newsom should publicly announce his support for the project and demand that the PUC finish its work in time to beat PG&E’s anti-public-power measure (unless he wants to run for lieutenant governor as the mayor who went back on his own positions and allowed PG&E to control the city).

Because right now, the only thing that has to happen for PG&E to win is nothing. *