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Financial Risk Too Great?
Council’s “Green Energy” JPA Plan Causes Concerns
What exactly did the Dixon city council do to the financial stability of our town by voting to set up a Joint Powers Agreement (JPA) with Marin Clean Energy at their May 28th meeting? While the council may “think” they have given our citizens a “green energy provider choice”, have they set up Dixon for “green” mail at best and bankruptcy at worst? Here is the reality of the situation.
In an article that appeared in Technocracy News and Trends on April 6th 2017 written by Michael Hoskinson titled “Beware Of Latest Energy Scam: Community Choice Aggregators”, a Marin County energy expert Jim Phelps has claimed that MCE has actually cost consumers more while providing energy that is less clean than PG&E (the local IOU, Investor Owned Utility) was providing. According to his analysis, “the primary beneficiaries of MCE, which has 22 employees, appear to be the directors and consultants of the organization that are bilking taxpayers out of millions of dollars a year.”
“Energy is a long-term business. Procurement contracts are non-cancelable and can span 30-40 years into the future. Cities that join CCAs are on the hook for large, long-term financial obligations. When things turn south (as they surely will), member agencies are stuck because they cannot afford to exit the program.”
“For example, as of March 31, 2015 Marin Clean Energy had outstanding non-cancelable power purchase commitments of approximately $886.5 million for energy and related services through October 31, 2041. This equates to more than $52 million for each of MCE’s 17 members, which include the Contra Costa cities of El Cerrito, Richmond, and San Pablo. As of June 30, 2015, Sonoma Clean Power had non-cancelable power purchase related commitments of approximately $505.3 million for energy that has not yet been provided under power purchase agreements that continue to December 31, 2026. This equates to more than $56 million for each of SCP’s 9 member agencies.”
The entire article may be found at: https://www.technocracy.news/energy-alert-community-choice-aggregator-latest-energy-scam/
It was reported last week that the city council in a 4-1 vote (Mayor Bogue voting No) approved proceeding with a Joint Powers Agreement with Marin Clean Energy (MCE), a green energy provider. MCE was brought in by councilman Jim Ernest at the “suggestion of some of his constituents.” Ernest did not make it clear who they were and how many citizens were behind this.
Another mayor, Carolyn Petty of Hermosa Beach is seen in a youtube video saying “it is not the govern-ment’s job to get involved in ‘renewal green energy’ and to impose on their citizens to buy renewal green energy.” Bogue’s position was concern over the loss of local control through the design of the JPA. Bogue cites the problems which occurred with Solano Irrigation District and their JPA with the city.
According to Phelps, MCE consists of the county of Marin, all 11 of Marin’s municipalities and the city of Richmond, and serves as the retail electricity provider for 124,000 customers. MCE’s proposed rate as of July 1, 2019 is “38 cent savings/month for typical household compared to PG&E.”
What makes this JPA with MCE scary is the liability that an individual city has with the JPA if /when the city tries to leave the JPA, or it is involuntarily terminated by the JPA. According to Phelps “Direct Access is here, and other technologies will emerge, but the JPA is constructed with fish hooks that make it all but im-possible for municipalities to depart, or to pay off the JPA if terminated. This is not to disregard the inevita-ble politics of a huge, multi-jurisdictional JPA such as MCE. What happens if the JPA invokes eminent do-main for a wind farm or solar farm in a member city and that member city says “Not in my town, you don’t!” So, the JPA threatens to terminate the City, which cannot pay its JPA termination costs… bring on eminent domain” Phelps explains.
June 7, 2019
“Towns and cities will have a nearly impossible time getting out of a JPA unless they have $$$$$$$$ sitting
around. It is difficult to fathom how municipalities sign up for this stuff because they are signing away their
sovereignty to outsiders who may control a JPA” he added.
Phelps provided us with the copy of the JPA Agreement document. In Section 7.3 the JPA states: Continuing
Liability; Refund. Upon a withdrawal or involuntary termination of a Party, the Party shall remain responsible
for any claims, demands, damages, or liabilities arising from the Party’s membership in the Authority
through the date of its withdrawal or involuntary termination, it being agreed that the Party shall not be
responsible for any claims, demands, damages, or liabilities arising after the date of the Party’s withdrawal or
involuntary termination. In addition, such Party also shall be responsible for any costs or obligations associated
with the Party’s participation in any program in accordance with the provisions of any agreements
relating to such program provided such costs or obligations were incurred prior to the withdrawal of the
Party. The Authority may withhold funds otherwise owing to the Party or may require the Party to deposit sufficient
funds with the Authority, as reasonably determined by the Authority, to cover the Party’s liability for the
costs described above. Any amount of the Party’s funds held on deposit with the Authority above that which is
required to pay any liabilities or obligations shall be returned to the Party.
“The pro-rata costs for a town to depart a JPA, or be terminated by the JPA, are beyond staggering. Depending
upon financial health of the town, the overall JPA liability could trigger bankruptcy of the City of Dixon,”
Phelps said. “Hopefully is early enough for your council to change their mind and withdraw from the JPA,” he
added.
For those of you who don’t care about costs but want to focus on “green” energy, you will be disappointed to
learn that Marin Clean Energy purchases REC’s (Renewable Energy Certificates) rather than producing or
obtaining electricity from actual alternative energy sources. “What happens is they buy a REC, and it is pasted
on the front of this brown power (natural gas or coal generated electricity),” Phelps said. “Then they report to
you, the consumers, that this is clean energy; but it’s not.” This is known as “green washing”.
Phelps analyzed the MCE’s power mix substituting system power, which has an emission rate of 944 pounds
of carbon dioxide per megawatt hour, for all of the authority’s RECs. From that he concluded that MCE is
producing more greenhouse gas emissions than PG&E.
Phelps also criticized the authority for waiting more than a year to purchase 10,500 RECs that reduced its
greenhouse gas emission rates in 2011.
Phelps said, “What had happened was MCE’s emission rate was higher than PG&E’s so they went in the
market afterwards and they bought those 10,500 instruments so they could undercut PG&E” in a contrived
green washing scheme.
As the representatives from Marin Clean Energy stated, they weren’t in the business of saving money for
consumers but were there to provide a green source to reduce carbon emissions. Going with 60% renewables
had a less than 1% reduction in your potential electric bill while 100% would have you paying 5% more than
PG&E charges.
If Phelps’ contentions are true, MCE does not even have the ability to provide 60% renewables let alone a pure
“green” solution. Does any of this matter to the majority of the council who voted this in? No response was
received from any of them when the Technocracy article was sent to them.
There will be a future council meeting where the actual JPA will be presented to the public. Having the option
to “opt out” of a bad deal individually is a poor substitute for the council acting responsibly in nixing it before
it ever goes into effect. From 6/7/2019 Dixon Independent Voice Newspaper