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Marin Clean Energy’s Manipulated Customers?

Marin Clean Energy is now delivering what it rejects from corporate power companies -- broken promises and sleight of hand. And now you'll subsidize Richmond for its “Marin” clean energy.

Marin Clean Energy recently announced a price increase.  MCE says it’s “because the market cost of power is going up” and because of “growing pains” associated with expanding into the City of Richmond.  MCE  says it provides “a better product” than PG&E (note 1).  

But there are problems with MCE’s claims:

Problem 1 – increased cost of power?

Last April, when MCE (MEA) was on the brink of its massive countywide enrollment of all Marin residential consumers, known as Phase 2b, MCE Executive Officer Dawn Weisz hosted a televised Community Meeting in Novato.  When asked about MCE’s future prices Ms. Weisz said they were “fixed” and “locked-in” until after 2015, plus about 1-1/2% annual escalation (note 2). 

MCE’s fixed prices representation is confirmed by MEA staff consultant John Dalessi who reported to MEA’s Board six months before Weisz’s Novato presentation that MCE is “fully hedged” against price changes until after 2015 (note 3). 

How does “locked-in” and “fixed” and “fully hedged” and “after 2015” produce a 7% price increase now?

Problem 2 – unexpected “growing pain” costs due to City of Richmond?

The following Richmond Expansion milestone table illustrates when MCE (MEA) was aware of costs associated with its expansion into Richmond:

Jul '11 Richmond approves sole-source consulting contract w/ MEA (Dalessi) Jul '11 MEA approves pilot contract to determine impact of adding Richmond Oct '11 MEA Board mid-year retreat -- unveils Richmond Expansion Timeline Oct '11 MEA  Special Meeting minutes: "prices are fully hedged" through 2015 Oct '11 MEA  Special Meeting minutes: Richmond load & cost analysis complete Apr '12 Weisz's televised Novato  presentation: "locked-in prices until after 2015." Jun '12 MEA approves membership Resolution 2012-13 adding Richmond Jun '12 MEA completes Implementation Plan revision (July filing w/ CPUC) to reflect Richmond.  This 90 page document shows costs for staffing, billing, procurement, electric load, finance, etc. Feb '13 MCE claims "growing pain" costs for Richmond contribute to (previously unknown) need for 7% price increase.

Costs associated with bringing Richmond into MCE were not known by MCE in April when broadcasting to consumers that MCE prices were “fixed” until after 2015?

Problem 3 – Marin subsidizes Richmond?

MCE’s “growing pains” into Richmond trigger higher prices for Marin consumers.  Thus, Marin’s price hike subsidizes the costs Richmond would have incurred if forming its own Community Choice Aggregation energy company. 

Why do Marin consumers pay Richmond’s costs when Marin paid for its own "growing pains" when MCE launched in 2010?  Those costs were in the form of  $540,00 County of Marin loans, $950,000 County of Marin co-sign loan, and several private loans from Marin citizens totaling $750,000.     

Problem 4 – “a better product” that’s loaded with RECs?  

RECs (renewable energy certificates) are a poor man’s version of green energy, giving the illusion without the reality.  The air is as dirty as ever -- see attached diagram.  RECs constitute about half of MCE’s Light Green and about seventy-five percent of its Deep Green renewable energy.

The University of California says this about RECs:

  • feel-good scam
  • fleeces consumers
  • spin & gimmickry
  • Federal Agencies are in on the act... handing out awards for REC-based “green” (note 4). 

MCE cites State and Federal Agencies when pressed about its reliance on RECs. 

Problem 5 – last year’s price cut.  Gaming? 

A year ago MCE cut it prices, resulting in a $9 million loss of revenue.  It allocated $8 million of this cut to reducing Residential prices (note 5,6).  MCE allocated zero cut to nearly all commercial and municipal customers.  MCE did this when there was heightened Residential awareness of MCE prices -- when 82,000 Marin households were receiving multiple “Welcome to Marin Clean Energy” notices that included Opt Out text.

Today, almost of year after 82,000 mandatory Opt Out mailers have ceased alerting households throughout Marin that they are part of MCE, and as “Marin Clean Energy” is buried in PG&E utility bills, MCE will increase its generation prices 7%... which covers much of last year’s “loss of revenue.”     

MCE proponents may legitimately cite current PG&E prices.  But this disregards MCE’s representations made to consumers.  Shouldn’t “Marin” households receive the lowest (locked-in) energy prices through 2015 from our local energy company, particularly when MCE claims to behave differently than PG&E? 

Additionally, why must Marin ratepayers subsidize costs associated with Richmond’s joining MCE?  Why isn’t Richmond paying its own “growing pains,” just as Marin did in 2010 when MCE initially launched? 

If you are troubled by MCE’s behavior you can Opt Out at (888) 632-3674 for a nominal fee.  Take telephone notes and be prepared for a sales pitch.

Notes:

(1) “Authority to Raise Rates in April”   Marin Independent Journal, dated February 9, 2013.  http://www.marinij.com/novato/ci_22552345/marin-energy-authority-moves-raise-rates-april-remains   

(2) See highlights in attached transcript of MCE Community Meeting in Novato  on April 12, 2012.  Only applicable pages are included here.  The Question & Answer session at the end of the meeting is not included in the video version of the meeting that MCE posts on its website.

(3) October 3, 2011 MEA mid-year Retreat, Special Meeting minutes, Item #7, page 14.

Mr. Dalessi (staff consultant) says MEA is fully hedged due to fixed prices until 2015.  After 2015, this model will change.”  http://www.marinenergyauthority.com/PDF/10.3.11_Board_Retreat_Minutes.pdf

(4) http://www.mercurynews.com/opinion/ci_12049267

(5)  Page 27 of 188 (page 3 of Agenda Item #8).

http://www.marinenergyauthority.com/PDF/4.5.12_Board_Packet.pdf

(6) MEA Board mid-year Retreat minutes, October 3, 2011, page 13.

MEA Director Collins (Richard Collins, Tiburon Councilmember) was concerned that, because of the new people joining MEA, if this huge (price) differential is seen between PG&E and MEA’s rates, it could potentially have a big impact on MEA’s opt out rate.” 

http://www.marinenergyauthority.com/PDF/10.3.11_Board_Retreat_Minutes.pdf

As of February 12, 2013, Richard Collins is no longer listed on MEA’s letterhead as a Board member.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

John Ferguson February 21, 2013 at 05:55 AM
We probably should subsidize Richmond's adoption of clean energy. After all, they've polluted their land, air and water in order to bring us gasoline..
Ryan Stinsen February 21, 2013 at 07:44 AM
When will Marin Clean Energy begin receiving some of the tax revenue from Richmond's gasoline refinery? Chevron generates millions of dollars in tax revenue. Until that happens it's a one-way event.
Kevin Moore February 21, 2013 at 04:08 PM
MCE got a sweet deal from Shell energy to get their foot in the door. This presents a thorn in the side to PG&E, which was fine with me. I knew the challenge would be when it is time to renew the contract. I see the use of RECs as fraud. It's not cleaner, it's paying to pollute with a cleaner conscious and obscure the truth. I'm sure Madoff contributed to charities, such a good guy, right? Large hydro and nuclear power can't be counted as low carbon, but RECs can. Neither PGE or MCE make it easy to compare rates and energy sources. Treat the public like mushrooms, in the dark and fed bull s***. I just received my first MCE bill. Highest electric bill ever. I'm going to compare with PGE prices. Saving that magic opt out bullet for when this program becomes much more expensive than PGE.
MillValleyMom February 21, 2013 at 04:52 PM
MCE = Misleading Consumers Everywhere. Yes, I could use help keeping my bills as low as possible. These people make promises and then think they won't be found out? I remember a few years ago when the MCE folks came to Mill Valley before they went into business, and they were talking about how friendly they were and how, unlike PG&E, MEA would be run by local people looking out for Marin's interests. It sounds like they're looking out for their own interests!
Malcolm Shelley February 21, 2013 at 05:59 PM
The only reason that MCE has to use RECs is because there isn't enough local renewable energy sources to provide all of Marin's needs. MCE has to purchase RECs from other utilities. In doing so, the other generators have to produce more renewable energy to meet their goals. REC's are basically an investment in renewables; increasing demand and stimulating further growth in their renewable portfolios. The same is happening locally. Since virtually all the local renewable energy is in high demand, there is a higher incentive to develop projects locally like the San Rafael Airport solar project. I'd love it if the people of Marin would let massive wind projects be developed locally. It would solve the RECs problem immediately, but I can't imagine this ever becoming a reality when local residents have threatened to sue North Gate Mall for wanting to install solar panels because it didn't look appealing. Seems like a classic NIMBY example to me. Until we are willing to shoulder our own energy burden, we might want to rethink demeaning RECs. They're not perfect by any stretch of the imagination, but they are the most feasible option without significantly raising our rates. Also, PG&E has also increased their rates early this year which means that currently, MCE has a better product at a lower rate.
J D Harris February 21, 2013 at 06:04 PM
I was highly annoyed that we all got forced into the MEA/MCE scheme then had to jump through hoops to opt-out and return to PGE. The kids at MEA simply don't seem know what they are doing. The costly Richmond plan should be abandoned, it would seem. Let CoCo County start their own energy authority. I recommend that everyone attend MEA Board meetings or watch them on your local public access channel. The MEA Board needs to start asking tougher questions of the MEA management and staff, imo.
Jim Phelps February 21, 2013 at 07:27 PM
The argument that RECs drive renewables development is debunked by MCE's own claim... ... MCE cites its RECs purchases from Middle Fork Irrigation District in Oregon as "promoting" (planning and adding) renewables development. When Middle Fork was contacted a day after MCE made this claim, Middle Fork responded that "no, there are no plans to add to, or expand its renewables." They do appreciate the small cash flow from RECs purchases by MCE, however. MCE’s San Rafael Airport project displaces 1/5 of 1% of MCE’s Marin load. If you were to build 30 similar size Marin-based solar projects, that’s pushing $100 million... but only displaces 5% of MCE’s Marin load.
Malcolm Shelley February 21, 2013 at 10:45 PM
You're looking at RECs in a narrow way. Yes Middle Fork may not be increasing its portfolio at that location, but since they sold their RECs, the actual energy that they produce is no longer considered a renewable source. That title of renewable energy was sold to MCE which can attach it to the energy that they are selling. Therefore, it does create an incentive to create more renewable energy as long as companies like MCE are willing to buy them. On a complex electrical grid like ours, there's no way to track each electron from windmill to electric socket. The point is we are paying for renewable energy sources (whether directly from a local source or indirectly through RECs) to be created which will phase out more carbon intensive installations. RECs allow larges-scale renewable energy projects to be built in places that don't demand their power be "Green." While producing projects locally is without a doubt the best thing, it may not may sense economically. MCE is trying their best to serve Marin with a product that is based on Green energy at a comparable price with PG&E. To keep those prices down they have to resort to RECs. I completely agree with you about the scale of the airport project. But try and get some wind turbines up over West Marin and see what happens. The airport is a very small step, but its a step in the right direction.
Ex-LADWPworker February 22, 2013 at 12:28 AM
MCE's use of RECs brings back memories. I used to procure RECs for DWP. We knew they did little, if anything, to stimulate renewables development. But the regulators bought into them, so we used them to green up our coal plant, Intermountain. Here’s a link to Businessweek that lays out the RECs game pretty good. http://www.businessweek.com/stories/2007-10-28/little-green-lies < developers that stand to profit from RECs concede that producers making $91 a megawatt hour aren't going to expand production for another $2 > < made a mistake last year when he pushed the resort to make audacious green claims based on the purchase of "renewable energy credits." RECs > < But even as he helped launch this campaign, Schendler had a queasy feeling. At some level, he suspected the credits (RECs) weren't causing any new windmills to be built > < Rather than enjoying his role as an REC pioneer, Schendler felt increasingly anxious. In private, he pushed REC brokers for hard evidence that new wind capacity was being built. Their evasiveness gnawed at him. He asked veterans in the renewable energy field whether his marketing message was legitimate. "They laughed at me," he says > < In an April letter to the Center for Resource Solutions, a nonprofit group in San Francisco that certifies credits, he said that RECs have as much effect on the development of new renewable-energy projects as would trading "rocks, IOUs, or pinecones." >
Jim Phelps February 22, 2013 at 01:16 AM
Federal regulators are asking Marin Clean Energy’s power supplier Shell Energy North America to repay California the money it took when gaming our energy market during the summer of 2000. $1.6 billion for all participants. http://www.sfgate.com/business/article/Energy-companies-might-repay-California-4292020.php Marin Clean Energy recently extended its contract with Shell for another 1-1/2 years.
Bob Ratto February 22, 2013 at 01:53 AM
From the article Jim Phelps listed above...the last line is pretty funny..."Shell already runs...", and they have done it in the best PT Barnum style. REC's do nothing, repeat, nothing to reduce GHG's..without a material change in power generation, nothing changes. Try for a moment to remember thermodynamics. If you want to save energy, use less...there is no magic bullet with MCE. Shell Energy, a subsidiary of European oil giant Royal Dutch Shell, did not respond to requests for comment on this story. San Francisco supervisors in September approved a five-year, $19.5 million contract with Shell Energy to establish and run CleanPowerSF, which will buy electricity on behalf of city residents. Shell already runs a similar program in Marin County. Read more: http://www.sfgate.com/business/article/Energy-companies-might-repay-California-4292020.php#ixzz2LaXqe9wj
valeri hood February 22, 2013 at 07:43 AM
What kind of wind energy are you talking about- and buying it from whom?
Jim Phelps February 22, 2013 at 08:19 PM
Marin Clean Energy blames Marin NIMBY for MCE’s loading up on RECs? This is tantamount to acknowledging the shortcoming of RECs, while also blaming Marin citizens for MCE’s anemic execution of constructing “local” power projects. NIMBY is a known reality in Marin. “Malcolm” should know what happened to wind farms in W. Marin. McGlashan tried to marginalize neighbors while supporting Florida Power & Light’s development efforts. Marin Audubon and Marin Conservation League pushed back. MCE’s inability to implement its vision underscores leadership problems and ignorance about Marin’s culture. MCE’s “local” energy promises are now supplanted with paper Renewable Energy Certificates (RECs). What happened to Marin’s locked-in prices through 2015? How does Dawn Weisz tell Novato that MCE’s prices are fixed, then raise them 7% this year? What about next year, and the year after that? 21% over 3 years?
Matt McCarron February 22, 2013 at 10:53 PM
Richmond is Marin affordable housing solution, so more than one wayevent already.
Harold H. February 23, 2013 at 12:33 AM
In describing MCE’s use of RECs, Malcolm Shelley (whatever) gives a mechanical definition of renewable energy certificates that has the curious whiff of MCE staff to it (rebrand, rebrand. repeat, repeat). : “While producing projects locally is without a doubt the best thing, it may not may (make) sense economically.” [“It may not make sense economically.” Malcolm, is MCE paying you to say this stuff? How do you know MCE's economics?] “I can't imagine this ever becoming a reality when local residents have threatened to sue North Gate Mall for wanting to install solar panels because it didn't look appealing.” [They threatened? Was this in the news? How do you know this?] “MCE is trying their best to serve Marin with a product that is based on Green energy at a comparable price with PG&E.” [“based” on Green energy? So, we’re into semantics. Sounds like Lance Armstrong who, for years, responded to “Do you take performance enhancing drugs?” by saying “I’ve never failed a drug test.”]
John Parulis February 23, 2013 at 02:43 AM
Good article and part of the diet of fraud projects like SMART that are rammed down tax payer throats by cloaked enterprises. Shell Oil is the parent company of MCE. Shell, famous for killing Nigeria and the Arctic...
Kerry Price February 23, 2013 at 03:08 AM
Thank you Phelps for keeping us enlightened. Why is Dawn Weize trying to hurt our environment by being a supplier of Shell Oil? Why would anyone want MEA's dirty energy?
Kevin Moore February 23, 2013 at 04:01 PM
Pretty much sums up RECs. unless the sellers of the RECs show actual investments going into renewable energy projects, it should be considered FRAUD. I'm sure there are high administration cost stories and promises to one day invest... I should start Kevin's energy company. I could buy coal generated power and RECs from Oregon, then sell it as 100% clean power. Naw, I dislike fraud.
Steve Perry February 23, 2013 at 08:42 PM
I am curious why someone would go to all of the effort and expense of putting together this organization http://meatruth.org, which Jim Phelps is a member to attack MCE. Is it just true civic altruism, is this effort really there to alert us that there may be a flim flam involved with one of PG&E's competitors (PG&E who has never flim flammed anyone!). I know that the 'About Us' page on the site says they are are not funded by PG&E, but when you are PG&E, you don't have to look far for someone who will donate for you. No matter who we get our energy from, it is a dirty, environmentally and transactional business. But it irks me that either side takes some kind of high road.
Jim Phelps February 25, 2013 at 04:48 PM
Welcome to the Marin Clean Energy discussion, Steve. I have no affiliation with PG&E or any organizations representing it, but have spent a lifetime in the power business so know the operations and issues more intimately than most. Regarding flim flams, I’m more concerned with MEA’s behavior about this... ... first, because it’s MEA that has featured green energy as its high road and has done so based upon specious “clean” energy with which the Sierra Club and U.C. take exception. MCE’s done this via force-in Opt Out rather than electing to build its business with opt-in and most sensitively, they’ve done this while insulating their municipal members with a financial “firewall” that does nothing to protect residents’ financial exposure. How about guaranteeing a $5 exit fee for the next seven years – in writing? Am I for greener energy? You bet. I’m also for doing what MEA originally promised to Marin – but has failed. That’s what I’m calling out. BTW, if not me, then who? The State PUC has no oversight authority on MEA. If MEA did what they said to get their public backing in the form of 1) Green energy, developed via local full-time jobs and resources, 2) competitive prices based upon clean energy that doesn’t emit greenhouse gases and includes no RECs, then I would have nothing to say. As soon as MCE starts doing this, I’ll be a happy, green Marin resident.
Steve Perry February 26, 2013 at 09:12 PM
I hope that you or meatruth.org ar not affiliated with the PG&E and the "carbon industry", I am still surprised at the level of effort and expense meatruth.org spends. Also please explain the following from the Sierra Club website: "If you can’t afford to generate your own solar or wind power, consider purchasing it from someone else. To do that, first check with your local electric company. They may offer a green power options... ...When you buy green power you’re paying a small premium to support the utility’s renewable energy generation, but you’re not actually getting “green electrons” delivered to your home. Electrons are indistinguishable; those generated by renewable energy sources go into the grid and mix with electrons from all the utility’s other sources. If your utility company doesn’t offer green power, don’t despair. You can purchase “green tags” (they’re also called renewable energy certificates, RECs, or green energy certificates). It’s similar to buying green power from your local utility, except that when you buy a green tag, you may be supporting green power generation in other parts of the country, not necessarily in your region. When you buy a green tag, you’re rewarding power suppliers that offer green power, but you’re not necessarily funding the development of new renewable energy sources." http://www.sierraclubgreenhome.com/co2-carbon-dioxide-center/renewable-energy-for-your-home/
Jamie Tuckey February 26, 2013 at 09:46 PM
Hi John - Our rate increase is not related to our expansion to Richmond. While we appreciate interest in MCE, we find Mr. Phelps’ recent criticism of MCE’s upcoming rate change to be remarkably inaccurate, misleading to readers, and not reflective of information that has been provided to him. Therefore, we would like to provide the following response to his misleading claims: http://novato.patch.com/blog_posts/a-response-to-misleading-information-about-marin-clean-energy Jamie Tuckey, MCE Communications Director
Jim Phelps February 27, 2013 at 06:13 PM
MCE needs to get its story straight about Richmond’s affect on driving up MCE’s prices. The Marin IJ reports one thing, while Jamie Tuckey says the opposite: Marin IJ (Feb. 9): “The market cost of power is going up. There are also increased costs due to growing pains. The [Marin Energy] Authority (MCE) will begin marketing to residents of the city of Richmond in early April.” http://www.marinij.com/novato/ci_22552345/marin-energy-authority-moves-raise-rates-april-remains Tuckey (Feb 27): “Our rate increase is not related to our expansion to Richmond.”

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