The transition toward renewable, alternative energy in San Mateo County is slated to accelerate in the coming months. Peninsula Clean Energy, the county’s new electricity provider, is finalizing contracts with energy suppliers and enrolling a second batch of residents, businesses and farms as customers.
Meanwhile, staff and board members are proceeding carefully as they plot PCE’s course for the coming decades.
The energy provider is part of a burgeoning model for purchasing renewable electricity in California. As one of the state’s five functioning community choice aggregations, PCE allows San Mateo County and its cities to combine individual customers’ buying power to purchase or develop alternatives to the investor-owned utility company Pacific Gas & Electric. The nonprofits are legal in seven states, and seven more are planned to begin in California in the coming years.
Launched in February 2016, PCE currently purchases its energy through a short-term supply contract with the energy retailer Direct Energy. It offers two electricity packages: one that provides 50 percent renewable energy, and one that provides 100 percent, compared with the 30 percent offered by PG&E.
But PCE will soon need a larger supply and a more long-term contract to meet the needs of the customers who are scheduled to enroll in April.
In the fall, PCE issued a request for offers from energy suppliers and is currently in the midst of evaluating bids from companies. Staff will narrow down the bids for the board of directors to consider at its meetings in January and February.
But the process of selecting suppliers is far more complex than just going with the lowest bidder. That’s because PCE weighs all would-be suppliers against a host of criteria. They include the location of the electricity project, whether the supplier would hire local workers and pay prevailing wages, how much experience the supplier has in renewable energy, the supply company’s ownership structure, potential environmental impacts of a project, and the price offered.
The vetting is rigorous because PCE balances working with companies that provide energy affordably against those with a strong commitment to providing energy renewably. And avoiding a conflict of interest, or even the appearance of one, is something that PCE’s board and staff take seriously.
“Our board is really concerned with that issue,” said PCE’s Director of Power Resources George Wiltsee. He did not single out particular companies, but pointed to concerns about working with energy suppliers that have cut ethical corners in the past, been found guilty of manipulating markets, or have exploited policies in developing countries.
“It can leave a certain taste in the mouth,” he said. “There’s all these political factors that can affect our board’s willingness to approve.”
At the same time, officials say it’s critical for PCE’s selection process to be objective. “We can’t be arbitrary,” said Dan Lieberman, PCE’s director of marketing and public affairs. “We need to make sure we’re treating all these companies with the same selection criteria.”
“I guess that’s the biggest pitfall — not falling into going with a company that does not produce what you need it to produce in terms of renewable energy,” said outgoing PCE director and Half Moon Bay City Councilwoman Deborah Penrose. “It’s not an easy thing to do. And our board is great, our staff is fabulous, and I think they can do it.”
Few, if any, established energy suppliers are entirely divested of fossil fuels, which can make it complicated for aggregations focused on renewable energy.
“The reality is, in order to be doing business in this space, these companies tend to be very large, multinational, and have a lot of involvement in other, more conventional development, meaning oil, gas, coal and nuclear. So it’s hard to find a developer that doesn’t have those kinds of involvements,” said Wiltsee.
And PCE itself doesn’t yet rely entirely on renewable energy.
“We’re still procuring fossil fuel for some of our needs,” said Lieberman. Refusing to do business with companies that burn fossil fuels “would be hypocritical,” he said.
PCE is taking a judicious approach to maintaining its energy portfolio. Some similar nonprofits purchase what are called unbundled renewable energy credits as part of their energy portfolio. Legally, those credits permit buyers to claim ownership of one megawatt-hour of electricity from a renewable energy resource. Such credits are sold separately from the actual renewable energy, and are less expensive than other categories of renewable energy.
But some critics have denounced unbundled renewable energy credits as ineffective in actually producing clean energy or reducing greenhouse gas emissions.
At its December meeting, PCE’s board of directors formally adopted a policy not to use them for meeting renewable energy goals. Members of the board, executive committee and the citizens advisory committee “have expressed concerns about how unbundled RECs have been used and misused to give the impression that polluters are more ‘green’ and ‘clean’ than they actually are,” the agenda item read. “There is general consensus that (we) should set an example in the industry and among Community Choice Aggregators to adopt a policy to not use unbundled RECs.”
Both San Mateo County and Barclay’s Bank have both invested in the aggregation, according to PCE’s Chief Executive Officer Jan Pepper.
Being the fifth community choice aggregate in California, PCE has the advantage of learning from the examples set by its forerunners, like Marin Clean Energy, Sonoma Clean Power and Lancaster Choice Energy.
“We’ve learned a lot about how to run this CCA by watching how they run theirs,” said Penrose.
“We’ve benefited tremendously from the pioneers that went ahead of us,” said Wiltsee. “And they are motivated for us to succeed. It’s a movement. We’re not competitors. We just want the business model of a CCA to be successful.”