NHEH Publications

Monterey Bay Community Power: The Alternative Energy Program Coming Your Way Soon

While most of the public is in the dark, a significant change is occurring regarding the manner in which electrical power will be managed, purchased, and sold to customers in Monterey, San Benito and Santa Cruz counties. 

What is Monterey Bay Community Power?

Propelled by State legislation, the new Monterey Bay Community Power Authority (MBCPA) will soon be governing our electrical energy supply.  This new Joint Powers Authority, known as a Community Choice Aggregation (CCA) agency, is one of several similar agencies formed within California to procure electrical power as an alternative to purchasing electricity through investor owned utilities, such as PG&E.  These agencies empower counties and cities to pool their energy demands and contract directly with energy generators to enhance the use of renewable energy and reduce greenhouse emissions.  All existing PG&E customers will be automatically enrolled in the new MBCP program.

How was the MBCPA Formed?

The effort to form the MBCPA was led by former Santa Cruz State Senator and California Secretary of State Bruce McPherson, along with organizers based in Santa Cruz County.  Local groups promoting social justice and environmental issues, and organizations such as LEAN Energy US, a CCA consulting firm, were also active in convincing the local elected officials to adopt ordinances creating the new Joint Powers Authority.

CCAs in other States have been established by voter initiative, providing widespread opportunity for public scrutiny and debate.  In California, the Legislature has empowered the governing bodies of cities and counties to establish these new agencies on their own. 

With little media attention, the Boards of Supervisors of Monterey, Santa Cruz and San Benito Counties, and most of the City Councils within the three counties, have voted to approve the formation of the new MBCPA.

How Will the MBCPA Operate?

Delving into how these CCA agencies work reveals a complex and controversial program which deserves close public oversight and attention in its implementation.

The new MBCPA will be required to establish an Implementation Plan outlining, among other important details, its energy rate structure, its energy contracts and sources of the energy it purchases, as well as cost recovery arrangements with PG&E.  The California Public Utilities Commission will review the Implementation Plan with regard to the cost recovery for PG&E, but rate setting, energy purchasing practices, allocation of costs among participants, and other operational provisions, will be established by the MBCPA.  

Both Marin County (Marin Clean Energy) and Sonoma County (Sonoma Clean Power) have established similar CCA agencies.  Reviewing the Implementation Plans for these CCA’s reveals they purchase a majority of their energy from existing utility suppliers, such as Shell Energy North America, as well as, Calpine, Constellation, and Recurrent.  Because much of this power is purchased from out of state, these energy purchasing practices would not appear to provide local jobs, nor create local renewable energy projects in the near term.

While CCAs in other areas of California, such as Lancaster, with its large expanses of land, have initiated local renewable energy projects, a question arises as to where such renewable energy facilities could be located in our area without putting pressure on the conversion of agricultural land or impacting sensitive habitat areas.  

The renewable energy, greenhouse gas reduction, and social justice goals associated with these CCA agencies are laudable; however, the viability of their implementation in our tri-county area remains uncertain.

Why is Governance and Implementation of the MBCPA is a Key Concern? 

With three counties and potentially 18 cities representing an array of diverse interests, balanced governance of the JPA will be important.  Marin Clean Energy’s annual budget is over $145M, and Sonoma Clean Power’s annual budget is over $165M.  The appointed Board members governing the new MBCP agency will be making hundred-million-dollar decisions regarding energy purchases, local job creation, and local land use decisions, including the potential conversion of agricultural land for renewable energy projects in Monterey, Santa Cruz, and San Benito counties.     

What is the MBCPA Governance Structure?                      

The MBCPA will consist of a Policy Board of Directors and an Operational Board of Directors.  Both Boards will have eleven Directors, six of which will each be appointed by Monterey County, San Benito County, Santa Cruz County, City of Santa Cruz, City of Watsonville and City of Salinas, with the remaining five seats shared by representatives appointed by the other 15 cities on a rotating basis as follows:

  • Peninsula Cities (Monterey, Carmel, Pacific Grove);
  • Coastal Cities ( Marina, Sand City, Seaside, Del Rey Oaks);
  • Salinas Valley Cities (Gonzales, Greenfield,  King City, Soledad);
  • Santa Cruz Small Cities (Scotts Valley, Capitola);
  • San Benito County Small Cities (San Juan Bautista, Hollister)

As part of joining the MBCPA, the participating counties and cities are expected to provide a credit guarantee for their portion of startup capital necessary for the new agency. 

What Does the MBCPA Mean to Local PG&E Customers?                     

Once the new MBCPA is up and running, all existing PG&E customers will be automatically enrolled in the MBCP program, purchasing their electrical power through the new agency. PG&E will remain responsible for customer billing, energy transmission and distribution through its facilities, as well as customer service functions, although the details regarding implementation have not yet been determined.  The new MBCPA energy charges will appear as a separate charge on a customer’s PG&E bill.

Customers who want to continue to purchase their electrical energy through PG&E may do so, but must affirmatively “opt out” of the MBCP program and pay a monthly “opt out fee”.  Conversely, PG&E may charge an “exit fee” to consumers who want to remain in the MBCP program.  
Customers will need to pay close attention to notices they receive regarding this program and review their PG&E statements closely when the new program begins in the spring of 2018.  

What are the Controversies Surrounding the MBCPA?

Those promoting formation of the MBCPA claim that CCA’s:

  • Facilitate social justice;
  • Place control of electricity purchasing and pricing into local hands;
  • Allow the local community to determine what type of energy mix best serve its needs;
  • Result in a greater use of renewable energy resources;
  • Provide significant greenhouse gas reductions as a result of a cleaner power supply;
  • Provide more local jobs and development of local power resources;
  • Provide electric power to customers at affordable rates that are competitive with PG&E;
  • Promote long-term electric rate stability, energy security, and reliability for residents.

Locally, opponents of the new MBCPA claim the program will:

  • Cause electrical power rates to increase substantially;
  • Create pressure to convert existing agricultural land to renewable energy projects;
  • Be used to prevent land uses that require additional electricity, such as desalination plants, greenhouses, and residential developments;
  • Create more governmental bureaucracy complicating economic development;
  • Increase greenhouse emissions by purchasing energy from outside energy sources;
  • Create uncertainty as to utility regulatory consequences; 
  • Create fewer local jobs if Project Labor Agreements are required for energy projects;
  • Favor Santa Cruz interests and limit Monterey County’s voting power under the current voting structure;
  • Create a less efficient and more expensive multi-jurisdictional governmental entity.

CCAs are relatively new agencies in California.  Only time will tell if the environmental and social justice benefits of the MBCPA will outweigh concerns regarding increased electrical power costs, additional governmental bureaucracy, multi-jurisdictional governance, the potential loss of agricultural land, and the impact on local jobs.  

This article is intended to address topics of general interest and should not be construed as legal advice.

By Christine Kemp, Esq.
© 2017 Noland, Hamerly, Etienne & Hoss