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MEA: Ever Changing and Extraordinarily Expensive

Author: Connie Rodgers
August, 2009 Issue

North Bay residents have always prided themselves on being green. We cherish our open space, bike to work and drive more hybrid cars than virtually any other area in California.
 
So what’s not to like about the Marin Energy Authority (MEA) and its Community Choice Aggregation (CCA) component, which supporters claim will increase the supply of renewable energy in Marin? How about financial risks to Marin County and its cities, dubious environmental benefits and political and bureaucratic empire building?

Last December, Marin County’s Board of Supervisors established the MEA, which, according to its website, is intended to “address climate change by reducing energy-related greenhouse gas emissions and securing energy supply, price stability, energy efficiencies and local economic and workforce benefits.” The main component of the MEA, the CCA, would procure renewable power, but that power would still be carried through existing PG&E lines, and PG&E would still provide customer service and maintenance. A CCA is, in short, a partial public utility. MEA’s members include Marin County and the cities/towns of Belvedere, Fairfax, Mill Valley, Ross, San Rafael, Sausalito, Tiburon and San Anselmo.

However, the San Anselmo Chamber of Commerce board of directors has taken a position not to support MCE, and we applaud Corte Madera, Larkspur and Novato for their wisdom and political courage in not joining the MEA.

The MEA has adopted an ever changing and extraordinarily expensive business plan. According to that plan, MEA will run a budget shortfall of $3 million in 2009-2010 and incur $22 million in short-term debt for startup and other near-term costs. Over the long term, as the MEA builds its own sources of renewable power, it plans to borrow another $475 million (yes, $0.5 billion). That long-term debt exceeds the total of every approved school district bond measure and parcel tax in Marin County over the last two decades! (By the way, if you’re doing the math, that $0.5 billion obligation, plus interest, translates into $4,000 for every person in Marin County.)

But the immediate financial risk of the MEA will be borne by Marin County and the eight cities and towns that have joined. Simply put, energy suppliers will ask MEA to provide collateral before providing power. That will require Marin County and the MEA member cities to expose their general funds at a time when all government budgets—federal, state and local—are in dire straits. Shouldn’t counties, cities and towns focus on what they do best—delivering police and fire services, providing public works, planning, recreation and park programs and library services?

In short, there are no guarantees that the MEA can shield its members from financial liability. That risk has led not only Corte Madera, Larkspur and Novato to reject the MEA, but also Berkeley, Emeryville and Oakland, which have rejected creating similar local power agencies. In late June, after four years of consideration, the San Joaquin Valley Power Authority, a similar effort, abandoned its efforts, citing a poor economy, financial markets, volatility in energy prices and increased renewable energy provided by California’s utilities.

As indicated in MEA’s founding documents, its main purpose is to reduce greenhouse gas emissions (GHG). But MEA appears very unlikely to achieve even that objective. In fact, recent changes in MEA’s direction suggest its actions could easily lead to an increase in GHGs. How could this “green” effort actually deliver a less than green outcome?

Simply put, as the MEA has discovered the complexities of energy markets, the commitment to renewable power has declined dramatically. Here’s the timeline of that shrinking commitment:

January 2008: MEA’s “business plan” projects a renewable energy supply of 56 percent by 2010 and 81 percent by 2014.

March 2008: MEA’s consultant, Navigant, lowers the 2014 forecast to 50 percent.

May 2009:
MEA issues a request for proposals that requires at least 25 percent renewable energy. Notably, it says renewable energy can include large hydroelectric resources, as well as “spot” purchases of nonrenewable energy, such as coal-fired and nuclear power. (Does MEA now consider nuclear to be “green” power?)

May 2009: MEA Board Chairman and Marin County Supervisor Charles McGlashan states his willingness to accept a renewable mix as low as “17 to 18 percent.”

May 27, 2009:
In a speech to the Marin County Bar Association, Chairman McGlashan lowers the minimum acceptable renewable mix to 15 percent.

MEA has reduced its commitment to renewable energy from 81 percent to only 15 percent since January 2008. What that means for Marin’s GHG emissions requires a look at the baseline case, assuming PG&E would still procure, deliver, maintain and service Marin customers.

Currently, PG&E delivers electricity to Marin County that’s about 50 percent GHG-free, with about 15 percent from renewable supplies, such as solar, geothermal, wind and so forth. It is, in fact, one of the “greenest” electricity suppliers in the nation.

By 2010, PG&E expects to increase its renewable supply contracts to 24 percent. How does that compare with MEA’s reduced commitment? MEA would deliver power that’s only 15 percent GHG-free, compared with PG&E’s nearly 60 percent GHG-free supply. MEA could actually result in an increase of 100,000 tons of GHG—on top of the fiscal risk to governments and residents.

We urge the county and MEA members to follow the lead set by Corte Madera, Larkspur, Novato, Berkeley, Oakland, Emeryville and the San Joaquin Valley Power Authority, which just abandoned its efforts after spending $2.9 million in taxpayer money. Shut down the MEA’s foolish effort to build a new bureaucracy and focus on local government’s core objectives. If you’re serious about reducing GHG and meeting our reduction targets, create a partnership with PG&E to reduce our collective financial risk, reduce greenhouse gases, and make Marin a real leader on energy and the environment.
 
Connie Rodgers is president/CEO of the San Anselmo Chamber of Commerce. You can reach her at (415) 454-2510 or info@sananselmochamber.org.

 

 

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