MCE considers rate cut amid questions on energy contracts

MCE, the renewable power company formerly known as Marin Clean Energy, might reduce its portion of monthly bills by $8 to $18 for a typical residential customer.

The idea was discussed at a MCE executive committee meeting on Monday and briefly at a technical committee meeting on Friday. Most executive committee members were receptive to tapping existing funds for a rate reduction but barely drawing upon MCE’s $420 million in reserves.

“I am not interested in drawing our cash reserves down to the point where we jeopardize our credit rating,” said the meeting chair, Cindy Darling, a member of the Walnut Creek City Council. “Even if you do that to try to retain customers for a year, you’re going to have to increase rates the next year.”

The rate discussion comes as MCE prepares its budget for the fiscal year starting April 1 and faces pressures to reduce costs for consumers.

One facet of that pressure is a recent price cut by Pacific Gas and Electric Co., which also raised one of its fees on monthly bills. MCE customers receive their power over PG&E’s infrastructure.

When these factors are combined, a typical MCE residential customer in Marin will pay about $30 per month more than a comparable PG&E customer.

MCE’s typical residential plan was already slightly pricier than PG&E. More than 85% of Marin households have electricity plans with MCE.

MCE procures power directly from renewable energy generators under long-term contracts and indirectly from energy trading markets that slice and dice procurement contracts. MCE estimates it will spend about $632 million on all of its energy contracts in its next fiscal year, compared to $766 million budgeted for this year, which provides some room for a rate reduction.

Even with lower estimated costs, the price gap with PG&E is sizeable, so MCE staff proposed additional ways to lower prices. It would tap three primary sources: a $70 million rainy-day “operating reserve” fund; up to $17 million from scaling back energy contracts; and $24 million to $36 million from reserves.

Before the executive committee meeting Monday, the Marin Conservation League and other public-interest advocates pressed MCE to disclose and discuss the extent to which its energy contracts are providing new clean power.

The issue affects MCE’s overall energy costs, and, in turn, what ratepayers are charged. It also affects how much the public’s carbon footprints are reduced, which is at the center of MCE’s mission to counter emission-driven climate change.

In a letter to the board on Jan. 29, the Marin Conservation League said MCE spent $202 million last fiscal year on “attribute-only” contracts, or buying short-term renewable or greenhouse gas-free energy credits from facilities.

“MCL concludes that additional renewable or GHG-free energy resulting from this large expenditure is either non-existent or minimal,” the letter said.

The contracts allow MCE to file reports with state regulators that boost its percentage of renewable and greenhouse gas-free power supplies to well above state targets. These kinds of contracts are allowed under California’s decarbonization policies, which are being updated to more aggressively regulate emission claims.

MCE spokeswoman Jenna Tenney said the company “did not spend $202 million” on one form of attribute contracts in a response sent to the MCE board before the executive committee meeting. But the same letter said MCE’s policy “is to remove renewable volumes from the market and add them to our portfolio.”

Dan Segedin of the Marin Conservation League said the response misquoted the letter and was “factually incorrect.” The organization wants to know how much clean energy was “added to the grid as a result of these $202 million in purchases,” he said.

“This money is not well spent and could be used in much higher-value ways,” he said.

Nick Pappas, an energy consultant who is a member of the San Anselmo Climate Action Committee, said MCE is engaged in “resource shuffling.”

“It’s discredited decarbonization policy,” he said.

Pappas said buying carbon-free attributes tied to decades-old hydroelectric plants, for example, is not reducing carbon footprints. He called it “greenwashing.”

“You are the only ones who can tell the folks who are supposed to be overseeing this agency staff not to spend money on the low-value products,” he told MCE directors.

Pappas said the state has rejected contracts like these for investor-owned utilities and is evaluating similar policies at not-for-profit agencies like MCE.

MCE chief executive officer Dawn Weisz, in a report after the public comments, did not respond to Segedin or Pappas.

Weisz said a budget workshop held in late January “covered MCE’s strategic plan and potential options for changes to programs.”

“We also covered the integrated procurement planning process and our power supply portfolio,” Weisz said. “And we ended up in a detailed discussion of how MCE rates and other charges show up on customer bills and how customer rates can vary quite a bit.”

The discussion about a pending rate cut and what MCE is purchasing in its energy attribute contracts will continue at more meetings this month.

The MCE service area includes about 1.5 million people in Marin, Napa, Contra Costa and Solano counties.