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MCE's and Kate Sears’ Dirty Secrets - Part 1 of 3 Parts
Kate Sears arrived on the Marin political scene amid promises to conduct her Supervisor business in an open and transparent manner. Part of her commitment was to Marin’s environment by way of her position as Vice-Chair and Chair of the Board of Marin Clean Energy. Sears and MCE were committed to establishing Marin as ground-zero in the fight against global warming.
Soon after Sears arrival, MCE implemented a shift to the use of fossil-fired power that it rebranded as “clean.” Review of MCE public records revealed the following:
- Half of the clean energy in MCE’s base Light Green product was fossil-fired energy;
- Nearly 100% of MCE’s premium priced Deep Green energy was fossil-fired power.
Environmentally conscious Marin consumers wanted clean energy but was it really clean if it was nothing but gas and coal-fired power, collectively known as “system power”?
California Air Resources Board’s Chair was alerted to MCE’s resale of “clean” fossil power.
The last page of the attached PDF shows ARB Chair’s email in which she wonders whether MCE is engaged in consumer fraud.
Background
When MCE launched into business in 2010 its cornerstone promise was the delivery of clean energy to Marin’s homes and businesses. MCE committed to delivering power that was 25% renewable energy, far more than what PG&E delivered.
Although MCE didn’t contract for specific nuclear purchases, it embraced the miscellaneous nuclear electrons that ended in its portfolio by way of its generic “system power” purchases and included the associated zero-carbon numbers in its clean energy calculations that were advertised to consumers. System power is the inexpensive jumbled mix of electricity that constitutes the backbone of MCE’s energy portfolio.
MCE buys system power from its energy supplier, Shell Oil.
Shortly after Sears arrival as Vice-Chair of MCE’s Board, MCE began expanding its customer base at an exponential rate. Accordingly, MCE was forced to buy increasing amounts of renewable energy just to hold the line of its 25% renewable energy commitment.
But economic forces were beginning to simmer because MCE’s renewable energy costs were nearly twice the cost of its system power purchases. Adding to MCE’s predicament was PG&E’s reduction in its own prices.
MCE was concerned that consumers would opt out of its program, and put MCE into a potential death spiral where fixed costs were spread over a shrinking customer base, triggering more defections.
But MCE’s two consultants at Pacific Energy Advisors had a solution. MCE would garner the appearance of delivering super clean energy by instantly doubling MCE’s renewable content to 50% while slashing its cash outlays. The plan was contrary to economic realities and logic.
Kate Sears was all ears.
Something for nothing
MCE’s consultants’ solution was an accounting scheme known as unbundled renewable energy certificates, or “RECs.” The arrangement was akin to MCE buying the right to tell people it was clean without actually buying and delivering the clean energy -- MCE would merely purchase and deliver inexpensive system power (fossil-fired power) and rebrand it as “clean energy.”
On a per ratepayer basis, MCE would become one of the fossil industry’s single biggest customers.
RECs were perfect because while much of MCE’s advertised clean energy was clean (according to filings with state regulators), the balance was coal and gas that saved MCE millions of dollars. Adding to the allure, RECs were so convoluted that most MCE customers wouldn’t understand them.
Even the EPA was confused -- while suing to close gas and coal-fired power plants from which MCE received energy, it showering awards on MCE for being green.
With Sears blessing, as MCE switched to REC-based clean fossil-fired power, it proclaimed itself to be a warrior whose sole purpose was to vanquish carbon emissions.
Sears and her colleagues approved advertising and telephone campaigns and even erected kiosks along the Mill Valley bicycle path, touting MCE’s pledge to combat rising sea levels that spilled over toward Miller Avenue and Almonte Boulevard, and flooded the Manzanita parking lot.
But MCE wasn’t fighting global warming or carbon emissions as it loaded increasing amounts of fossil power into its portfolio and purchased an equal amount of RECs.
The chart on page 2 of the attached PDF shows the difference between MCE’s advertised GHG emissions per megawatt-hour of electricity charted against what it actually emits when adhering to California Air Resources Board’s no-REC rules. Other energy companies, including PG&E and Sonoma Clean Power, MCE’s sister community choice aggregator, abided by ARB’s no-REC rules for carbon accounting. (Sonoma wasn't pure, however, having strayed into the world of large hydro imports from Washington, opening the possibility that system power was being purchased while reporting "large hydro" to regulators and customers).
Keeping a lid on Sears’ secrets
The extent of Sears’ and MCE’s use of RECs was confirmed in 2013, when MCE first reported its 2011 annual carbon emissions and energy volumes to Marin consumers. Strangely, those energy volumes did not match the volumes that MCE advertised on its website only days earlier.
Somehow, additional clean energy appeared on MCE's ledger 15 months after the year in question.
MCE’s total undisclosed carbon emissions through 2014 using RECs:
901 million lbs.
Kate Sears then wrote a newspaper Op/Ed in which she espoused the power of making an “informed” choice by selecting MCE’s clean energy. However, most of MCE’s numbers on the comparison-to-PG&E mailer that she discussed were loaded with RECs.
The subsequent December 2013 review of MCE’s carbon accounting, addressed to Kate Sears and attached here (starting on fourth page), identified how MCE doctored its numbers by purchasing RECs after-the-fact.
The review illuminated how MCE modified its annual GHG emission rate 15 months after the close of 2011; MCE had merely purchased inexpensive RECs and disregarded an equal amount of fossil power that it had already delivered to Marin.
MCE did this in order to appear cleaner than PG&E’s surprisingly low carbon emissions, and to then advertise a lower-than-PG&E emission rate.
Maintaining MCE’s byline that it was pure and ultra-clean was paramount to Sears and the rest of her MCE Board.
Sears was asked about her agency’s behavior -- where was the integrity in MCE’s manipulating its carbon emission numbers? Didn’t her constituents deserve to know what was happening?
At 87¢ each, MCE’s RECs cost less than a package of Twinkies.
Sears’ assistant, Leslie Alden, wrote that Supervisor Sears was open to a meeting (in which Marin residents who were experienced electricity professionals would discuss MCE’s practices and a possible replacement of MCE staff leadership).
Sears quickly ceased all communications.
MCE’s Chief Executive, Dawn Weisz, followed-up with a letter on behalf of Sears, stating that the December 2013 review of MCE’s 2011 numbers was a “disservice to our community” and that MCE’s carbon numbers weren’t doctored, they were simply “trued up.”
The genie was out of the bottle. Sears & company traded MCE’s integrity for the illusion that MCE was saving the planet. MCE’s REC habit was now out of control.
Part II will discus how MCE deflects criticism of its RECs by pointing to its local solar development plans; how the State of California introduced legislation in response to MCE’s REC scheme; and how Kate Sears and MCE responded to legislation by taking their manipulation of consumers to a new level.
Author bio and background:
Jim Phelps has served the power, petrochemical, and geothermal industries for nearly 35 years as a power contractor and utility rate analyst. He is not now, nor has he ever been, employed by PG&E. He sued PG&E (and won) for breach of contract issues at one of their power plants. He has not received any money from PG&E for his work tracking Marin Clean Energy’s activities. He has also completed consulting and thermal performance test work for Shell Oil at one of its Gulf Coast refineries.
Mr. Phelps operates one of Marin's largest residential solar electric systems at his home in Novato. Several years ago he initiated contact with PG&E about its carbon emission practices and about MCE’s emission practices. He also requested clarification from MCE about several business conduct issues, however, MCE declined to provide help. To this time, MCE’s only input about its business is to respond to Public Records Act requests identifying the costs for copies of public documents.