Tuesday, May 6, 2008

City to look at managing power supply


Santa Barbara city leaders are taking a cautious look at getting into the energy business.
On a 5-1 vote, the City Council agreed to send a letter of interest to the Community Environmental Council regarding a feasibility study of Community Choice Aggregation (CCA), a process that would allow the city and other local governmental agencies to buy and sell power to local residents and businesses.
Such a setup has the potential to increase the use of renewable energy, lower prices and promote the development of local power generation. Drawbacks include possibly creating higher prices, unreliable sources of energy and a draw on city resources.

Councilmembers stressed that their interest at this point is only to examine the possibility of managing the local power supply through a CCA.
“At this point in our history, now is the time to take a look at this,” Councilman Roger Horton said. “If we don’t do it now, we are simply putting off something that we will later regret.”
Included in the letter of interest is a condition that the city will only participate in a feasibility study if the County of Santa Barbara, Ventura, Carpinteria and Goleta also get involved. The cost of the study, estimated at $100,000, would be split between the municipalities.
Councilman Dale Francisco, who voted against the study, said moving forward with a look at CCAs is premature.
“I would like to see city government, in general, keep its portfolio of major projects somewhat limited,” he said. “I think we have enough on our plate.”
James Dewey, the city’s facility and energy manager, said the concept of CCAs grew out of the failed energy market deregulation in 2002, when investor-owned utilities took over the industry.
Those utilities are now struggling to meet state requirements for renewable energy, he said, which mandate a level of 20 percent by 2010 and 33 percent by 2020. The Santa Barbara region’s provider, Southern California Edison, currently has 17 percent of its energy portfolio as renewable.
Created by a State Assembly bill in 2002, the CCA concept has yet to be put into action, although Kings and Fresno counties are nearing implementation, Dewey said.
A feasibility study would answer a number of key questions, he said, including whether a local CCA could provide electricity at a lower cost than Southern California Edison and increase the amount of clean, renewable energy being used.
Potential pitfalls, in addition to higher costs, could include having to compete with investor-owned utilities over a limited number of power sources. Residents are also free to opt out of the CCA service during a specified window of time, leaving it vulnerable to a fluxing customer base.
Councilman Das Williams brought up other issues, such as whether stepping away from Southern California Edison, which he described as having one of the best renewable energy portfolios in the state, is the right move. He said clear gains would have to be shown before he agreed to leave the utility company.
Williams, however, dismissed an argument made by Francisco that a group of feasibility studies conducted by other municipalities throughout the state could be analyzed instead of paying for a new study.
“Each situation and each mix of customers in each community is different,” he said. “…If we don’t analyze the particulars of our community, we cannot say conclusively if this is a good idea or a bad idea.”
Francisco also argued that the largest risk of going with a CCA is creating an unreliable power supply that has the potential to raise costs rather than lowering them.
“This putative CCA … is going to have to build power generation facilities if this program is actually going to be economically viable,” he said. “Some of us in this room know how hard it is to get condominium projects built. … I really don’t think this is the business for the city to be in.”
Mayor Marty Blum said global issues, such as the rocketing price of oil, necessitate making a change.
“There’s such a huge issue out there with gasoline going up,” she said. “There’s so much going on and we’re in a real transition period. I just can’t see how we can stay on the course we’re on now.”
With the letter of interest from the city, the Community Environmental Council will approach other local agencies to bring them on board for the feasibility study. A contract for the study would have to return to the council for approval.
If the study is completed and local leaders decide to move forward with a CCA, Dewey said the likely path forward involves the creation of a Joint Powers Authority, the submission of a CCA plan to the state, and ultimately the development of an energy portfolio, including rate structures and short-term and long-term contracts with power providers.
That process would take an estimated five to 10 years.
“This is a real complicated issue and there are some major, major concerns,” Councilwoman Helene Schneider said. “…That, to me, is the point of doing the study. Before jumping to conclusions, we need to get good, solid information.”

No comments: