Getting to the grid: how Marin Energy Authority is supplying your energy

Just three months into its existence, the Marin Energy Authority has cracked the list of the Environmental Protection Agency's top 20 green power purchasers in the U.S.

The energy agency that launched May 7 ranked 13th among green power purchasers, based on annual green power usage. With more than 42 million annual kilowatt hours, Marin ranked ahead of cities like Philadelphia and San Francisco, but far behind top-ranked Houston at 438 million kilowatt hours.

Though the Marin Energy Authority (MEA) only started supplying power to Marin customers three months ago, getting that power to the grid started nearly eight years earlier.

In 2002, the State Legislature passed a community choice aggregation (CCA) law, which allows cities and towns to join together to supply energy to residents. For Marin, the goal in providing an alternative to PG&E was to offer lower rates and fewer greenhouse gas emissions.

"Even from the very beginning, back in 2002, MEA looked like a way we could save rate-payers money, create local jobs, and cut greenhouse gas emissions," said Marin County Supervisor and MEA Board Chair Charles McGlashan.

After a feasibility study, business plan, and peer review were conducted, MEA was formed in 2008 as a joint powers agency, overseen by a board made up of its members. The county and each of the towns in Marin - except Larkspur, Corte Madera, and Novato - voted to join the agency at that time, with the option that they could later vote to leave.

In order to make these first initial steps and get off the ground in 2008, MEA depended on a contribution of $540,000 from the Board of Supervisors.

Though part of MEA's plan includes energy efficiency programs and other efforts to reduce greenhouse gases, the crux of MEA centers around the Marin Clean Energy (MCE) program. MCE will supply energy directly to customers as an alternative to PG&E. For the first five years, MCE energy will be provided by Shell North America, per a power purchasing agreement that was signed in early 2010, with specific requirements that at least 25 percent of the energy product be renewable and that the cost of the energy be fixed. In addition, MEA is able to replace the energy generated by Shell with local sources as it sees fit.

The end game for MEA is to replace all the energy generated by Shell with local, renewable energy. Over the five years of the contract, MEA plans to use its cash flow to fund local projects and by 2016 MEA hopes to be at 100 percent renewable energy.

One project, which could begin as early as the fall of 2010, will allow residents who can't add solar panels to their own homes to buy shares of large solar projects.

"We're serious about [local generation]. We want to get started on this right away," said McGlashan.

Before implementing the purchasing agreement with Shell, all the member towns had the chance to vote to leave MEA or to approve the contract.

Debate in the late months of 2009 and early 2010, as towns considered the issue, raged on all sides.

Opponents of the plan cited financial and liability concerns for the member towns, despite assurances that the agency was formed with specific provisions that the towns could not be held liable. Residents also voiced worries that MEA would be incapable of handling the complicated energy markets and that the poor economy did not make an appropriate time for a risky venture.

Though PG&E conceded that the goals of lower costs and lower greenhouse gas emissions were commendable, they argued that MEA "created serious financial risks," said PG&E spokesperson Katie Romans.

PG&E also funded extensive opposition to the plan, backing an organization called the Marin Common Sense Coalition and sending former Assemblymember Joe Nation to town meetings to argue their case.

And in December 2009, the Marin County Grand Jury released a report pointedly called, "Marin Clean Energy: Pull the Plug."

Despite the fierce debate, only the town of Ross voted to leave MEA at this time. All other member towns and the County decided to pursue the contract with Shell for Marin Clean Energy.

Residents in the member towns that stayed in MEA will begin receiving energy from MEA on a rolling basis. Phase 1 customers included all major energy users, municipalities and some residential users. The rest of Phase 2 customers will be added by the end of 2011 or early 2012.

As resident are added to MEA, they can choose to opt out. There is a 60-day period before and a 60-day period after they begin receiving energy from MEA that customers can choose to opt-out and stay with PG&E at no cost. After that period, residents can choose to leave MEA and pay a fee.

Residents also have an option of what type of energy composition they would like to receive from MEA. The "light-green" option provides 25 percent renewable energy at or below PG&E costs. The "dark-green" option provides 100 percent renewable energy slightly above PG&E costs.

The default option if residents do nothing is to receive "light-green" energy from MEA.

For residents, who choose to stay with MCE, not much would change on their bill. PG&E will continue to provide the transmission services and the bill will still come from PG&E. MEA will simply be providing the electricity generation, which is one line item on an energy bill.

Fairfax and Belvedere were the two towns to choose the dark-green option for municipal energy use.

During the opt-out period for Phase 1 customers, PG&E sent flyers to residents urging them to stay with PG&E and called residents' homes offering to opt them out of MEA. But in April 2010, the California Public Utilities Commission told PG&E to stop violating state law and ruled that some opt-outs that had been obtained by PG&E were illegal and invalid.

"We just want to make sure that Marin residents know that participation is not mandatory, but it is automatic," said Romans.

"We knew it would be very difficult and very mean, but the audacity of the misinformation was surprising," said McGlashan.

PG&E also spent $46 million on Proposition 16 in the June 2010 election, which would have required any community choice aggregation to obtain a two-thirds vote of all residents before forming. Because MEA was able to serve all its Phase 1 customers before the election, it would have only been affected in that if any other towns wanted to join MEA a two-thirds approval of all residents in the joining town and in the current member towns would have been required. However, Proposition 16 failed.

On May 7, MEA began providing energy to its Phase 1 customers. In order to meet the $1.6 million start-up costs, four private investors guaranteed $750,000 of the loan necessary from the bank and the County Supervisors guaranteed the rest.

So far, said MEA Executive Director Dawn Weisz, all goals are being met in terms of load demand and cash flow. Though 16.4 percent of customers have opted out, MEA's business plan assumed a 20 percent opt-out rate.

"It's going great. We haven't run into any difficulties," said Weisz.

The agency is also looking to continue to grow. At its Aug. 20 board meeting, the panel will discuss a range of growth opportunities, starting with the possibility of reaching out to those municipalities who decided against going with the energy authority to see if they will reconsider now that Marin Clean Energy is established.

The agency has been receiving a number of inquiries from municipalities elsewhere in the state, said Weisz and must decide whether to provide a blueprint or offer to have them join Marin Clean Energy itself.

"Sonoma County would be a great candidate to join forces rather than reinventing the wheel," said Shawn Marshall, MEA Board Vice Chair. "But the most important thing now is to make sure that we stay in business through this first phase."

In the meantime, two local energy efficiency programs are getting much of the agency's attention to expand renewable power production.

Solar Shares, a program pioneered by the Sacramento Municipal Utility District, allows residents without the ability to install solar panels on their roofs to invest in a solar installation elsewhere in Marin. The agency would select a site for such an installation and investors could then participate in net metering, where a renewable energy system owner receives credit for at least a portion of the power they generate.

"It's great for people who live under trees and that sort of thing," Weisz said.

Solar Shares will likely launch in the fall, while the Bay Area Retrofit Program, funded by a grant from the California Energy Commission that came from federal stimulus money, will assist 600 homeowners in getting energy audits completed.