City Council Explores Cutting Ties to PG&E By JUDITH SCHERR

Friday March 10, 2006

A plan that would allow Berkeley residents to pull the plug on PG&E, with its nuclear power plant and investor-driven mindset—and replace it with a community-owned power provider—may be too good to be true, some city officials say. 

“We could be embarking on something that is high-risk,” Mayor Tom Bates warned in a Tuesday evening workshop on Community Choice Aggregation, a concept approved by the state Legislature in 2002 that allows municipalities to join together to generate power for their residents. 

Under discussion at the council workshop were the benefits and risks of creating a Berkeley-Oakland-Emeryville entity to provide power. 

Despite uncertainties, the council voted 8-0 with Councilmember Betty Olds abstaining, to spend $164,000 for the second phase of a study whose purpose would be to analyze legal risks and costs of a CCA. 

Some councilmembers wanted voters to weigh in on the project, though no decision was made on how that would happen. 

Councilmember Betty Olds said the council shouldn’t bear the blame if the project doesn’t work. “Let (voters) help decide,” she said. 

While some spoke of the project as a “pioneering” effort, Councilmember Kriss Worthington pointed out that healthy CCAs already exist in Massachusetts, New York and Ohio. 

“We’re not going to be the first in the world,” he said. 

The benefit, especially in the early years of the project, will be environmental, not savings to ratepayers. 

“We hope to get a higher percentage of green energy,” Worthington said, referring to renewable energy sources such as solar and wind. 

A panel of experts, with differing views, advised the council. The project’s likely cost sparked discussion. Berkeley resident and energy consultant Bill Roberts warned that high capital costs would make the CCA prohibitive, estimating it would need an annual subsidy of $8 million. He further pointed to the uncertainty in revenues. 

“CCA will never know with certainty what its customer base will be,” Roberts argued, pointing out that legislation permitting CCAs gives customers the right to opt out of them for a fee. 

Sean Casey, of the San Francisco Public Utilities Commission—San Francisco is somewhat ahead of Berkeley in exploring the CCA—pointed out that PG&E would soon make large capital investments, including a $700 million upgrade for the Diablo Canyon Nuclear Plant, which could be passed on to the ratepayers. 

Over time, perhaps 30 years, CCA ratepayers will experience savings, Casey argued. 

Worthington further contended that CCA would not have to set rates to satisfy investors or pay exaggerated executive salaries. 

Gerry Adams, of the city’s Energy Commission, sat on the panel and conveyed the commission’s unanimous recommendation for further study.  

At the same time, Adams urged caution. 

“Doing better than PG&E takes doing. They have resources and experience,” he said. “We have good intentions.”