If consumers think that Community Choice Aggregation (CCA) companies, such as Marin Clean Energy (MCE) represent transparency, clean energy, and local control, they need to take a critical look at what is really happening.
As I described in detail in my February 2019 article, MCE's stunning volumes of brown power and a class action, a review of MCE's brown power volumes from 2011 through 2016 (latest year available) reveals a stunning and troubling picture that calls into question everything about the clean energy agency.
Under the leadership of Kate Sears, MCE has failed to disclose nearly 1.9 billion pounds of greenhouse gas (GHG) emissions by virtue of capitalizing on consumer naiveté and skirting California's technical renewable energy law, the Renewable Portfolio Standard (RPS). The facts show that MCE’s customers are getting energy that is loaded with dirty power that is advertised as clean energy.
To put Marin Clean Energy's misdeeds into perspective, that 1.9 billion pounds of GHG came from enough dirty energy to power every residence in Marin County for 3 years, uninterrupted. [Footnote 1]
Under California’s Renewable Portfolio Standard (RPS) law, there are three classes of renewable energy -- Portfolio Content Categories -- that CCAs like MCE use to comply with the RPS’s statutory reporting requirements. However, it may come as a surprise to learn that "compliance" does not equate to delivering "clean energy" to customers, even when MCE advertises that they meet or exceed RPS requirements. It’s good marketing but is just not true.
Here's a description of the RPS’s three categories of renewable energy (the last two are where MCE and other CCAs abuse the system and mislead consumers):
1. Portfolio Content Category 1 (PCC 1):
PCC 1 energy is generally referred to as "genuine renewable energy" in that the energy is delivered directly to the clean energy company's customers. An energy provider (MCE or another CCA) purchases both the renewable electric power and the accompanying certificate (called a Renewable Energy Certification (REC), which is simply an electronic receipt that authenticates renewable energy production) to prove the renewable energy was actually produced. There is no deception with PCC 1 transactions.
MCE or other CCA deliver the renewable power to its customers, and they deliver the certificate to California regulators for RPS compliance purposes. The problem with PCC 1 is that it is comparatively expensive, hence the reliance by CCAs on low-cost PCC 2 and PCC 3 energy.
2. Portfolio Content Category 2 (PCC 2):
PCC 2 applies only to renewable energy resources located outside of California. In this transaction a middleman-wholesaler (Shell, Constellation, Morgan Stanley, etc.) purchases both the renewable electric power and the certificate, but sells the clean energy to a party outside of California because it cannot be delivered into California due to reasons associated with time of year and transmission availability.
Then the wholesaler sells the associated Renewable Energy Certificate (REC) to a California clean energy company such as MCE, along with substitute power from some other source that is scheduled for delivery into California. This substitute power is typically system power (fossil-fired power). But the CCA uses the REC to magically claim that it is “clean” energy, because the purchase of the certificate makes it so.
If this seems deceitful to you, you’re not alone.
Using PCC 2 energy is akin to MCE buying the clean energy label without actually buying and delivering the clean energy. MCE (or other CCAs) delivers the certificate to California regulators for RPS compliance purposes, then advertises that its ratepayers are receiving zero-GHG emission renewable energy at their homes and businesses. The net of it is that MCE uses this scheme as the rationale for charging more to deliver dirty system power.
The theory behind trading and purchasing RECs separately from the associated renewable energy was that because the green power existed and got used somewhere, the certificate purchaser's cash for the RECs helped to get new clean energy resources constructed.
Regulators now concede that the money is syphoned by REC brokers and middlemen and that the scheme is not helping California, which is projecting a sizable shortage of needed renewable energy resources. This is due to CCAs' generally weak balance sheets and their widespread inability to finance needed construction. (MCE is an exception here, having over-charged its customers for dirty power while banking around $35 million since 2010 in the process).
Again, this PCC 2 scheme, like PCC 3, helps energy companies comply with the RPS law -- the RPS does not grant permission to claim or advertise that the delivered energy is clean, zero-GHG energy.
In other words, PCC 2 (and PCC 3) is the very definition of green-washing.
3. Portfolio Content Category 3 (PCC 3):
PCC 3 energy is similar to PCC2 energy but without the middleman-wholesaler, and the out-of-state location limitation. Under this arrangement, the renewable energy producer strips the certificate away from its renewable power, then the energy is sold to a party such as a Google sever farm or a crypto currency farm that does not need to satisfy any RPS statutory mandates, so the certificate is not needed.
The renewable energy power plant, or a broker, then sells the certificate (REC) to a clean energy company such as MCE or some other CCA. Then MCE turns around and buys non-renewable system power (fossil-fired power) in an amount equal to the megawatt-hour volume shown on the certificate and delivers that brown power to customers. In this situation the clean energy company (e.g., MCE) falsely advertises that is delivering clean (or “green”) energy to its customers.
Like PCC 2 described above, PCC 3 GHG emission accounting is also green-washing.
Because the RPS is a complex statute that includes workarounds such as PCC 2 and PCC 3, agencies such as MCE can “comply” with the Renewable Portfolio Standard law without delivering actual clean power.
CCAs such as MCE act as if possession of a certificate (REC) gives them the right to tell consumers that they deliver that clean energy to them when, in fact, a REC is only a receipt that proves the renewable energy was produced. As described above, the renewable energy was sold and delivered to someone else -- not MCE or its ratepayers.
CCA green-washing gives rise to AB 1110
Community Choice Aggregators (CCA), including MCE, claim they are now cleaning up their act -- their GHG emission disclosure abuses -- at least to the extent that they are willing to loosen their grip on PCC 3 GHG emission disclosure abuses (aka using Renewable Energy Certificates).
This change of heart was not altruistic but rather was driven by AB 1110, California's new truth-in-advertising GHG emission accounting bill that was created to address these CCA GHG disclosure abuses. In fact, CCAs are primarily responsible for the need of AB 1110-type legislation in the first place.
AB 1110 is currently in the workshop phase in Sacramento where stakeholders, including CCAs, are lobbying for accounting procedures and disclosure requirements that are favorable to their continued abuses. AB 1110 should be fully implemented by the California Energy Commission (CEC) later this year.
There are, of course, significant concerns about the CCAs' evolving lobbying about the implementation of AB 1110.
While publicly touting a new found “truth in advertising” ethos, MCE (and all CCAs) are privately lobbying against the core of AB 1110, arguing that continued GHG emission accounting of PCC 2 and PCC 3 dirty energy as clean energy through purchases of RECs, should be allowed. Otherwise, they say, CCAs will be “forced” to buy higher priced genuine renewable energy (PCC 1).
Huh? Isn't that the whole purpose of CCAs, to deliver clean power. Don't CCAs represent themselves to be the frontline warriors in the battle against carbon emissions and climate change?
CCA (stealth) lobbying against AB 1110 begs the question, what purpose do CCAs serve if they're merely pushing for the continued relabeling of dirty system power as zero-carbon "clean energy"? And if they’re not really selling us clean power, are CCAs, such as MCE, simply a marketing ploy to help people feel good, to convince them that their choice to remain a CCA customer is saving the planet, while CCAs line their own coffers in the process?
Curiously, while CCAs' appetite for green-washing and associated purchases of dirty system power (aka "Generic Purchases") is supposedly declining, CCAs imports of hydroelectric power from the Pacific Northwest (PNW) are increasing.
Getting rid of brown power in exchange for hydroelectric power would appear to be a step in the right direction. But, not so fast.
PNW large hydro contracts do not necessarily mean MCE, or any CCA, is actually delivering large hydroelectric energy to you. In those cases energy deliveries are frequently substitute system power.
Thus, there is no assurance that the energy MCE delivers, as arranged by its wholesaler, is actually imported large hydroelectric power since "other qualified projects" sources may be substituted, such as (low cost) system power that has a GHG emission rate of 943.58 pounds of CO2 per megawatt-hour, or energy from a specific gas-fired power plant (aka "other qualified project") that has an emission rate of 862 pounds of CO2 per megawatt-hour.
MCE's large hydro contract with Shell illustrates this.
California regulators do not carefully track large hydro production because it is not classified as "renewable" (to qualify as "renewable" a hydroelectric turbine cannot be larger than 30 megawatts. All large hydro turbines are larger than 30 megawatts).
Further, AB 1110 does not address potential GHG emission reporting abuses involving large hydro imports. Large hydro falls into a gap that is ripe for abuse, particularly when contracts include substitution language such as "other qualified projects."
This occurs while the CCA reports zero-emission “hydro” with its annual power source disclosure form.
PNW large hydro imports constitute as much as 60% of some CCAs' annual energy portfolios. MCE’s last year was 21%. Given this history of accounting abuses involving “clean” fossil-fired power, large hydro imports remain a giant hole in the integrity of GHG emission accounting.
At this point the only parties who actually know if "hydro" energy deliveries are real, are the CCAs and the energy traders serving them. And that information is not generally available to the public.
Municipal leadership and individual consumers need to pay attention to what is happening with CCAs throughout California. This is particularly true for municipalities that have not yet joined a CCA Joint Powers Authority, like MCE, and become enslaved to the on-going financial liability of their power purchase agreements (PPAs) that result in little, if any, savings for the privilege of having consultants get them into the technical and volatile electricity commodities market.
CCA lobbying to defang AB 1110, as well as CCAs' green-washing record reveal that the CCAs' concern about climate change is more of a marketing ploy than a true commitment to the environment, and that the primary interest in "green" has more to do justifying their existence, their staff salaries, and fees for consultants, lawyers, and energy wholesalers.
At this point the two options available to consumers are to hold their noses and remain in CCA, or opt out of CCAs' version of the New Green Deal.
Footnote  -- MCE's undisclosed system power (undisclosed to consumers) that is associated with the unbundled RECs (PCC 3) and firm-and-shape RECs (PCC 2) that MCE reported to the California Energy Commission (CEC) and The California Public Utilities Commission (CPUC) for 2010 through 2016 = 1,979,807 megawatt-hours (MWh) of dirty power. The associated GHG emissions = 1,868,106,289 pounds of greenhouse gas. MCE and PG&E report on their annual "Understanding your energy choice" mailers that the average residence uses approximately 473 kilowatt-hours per month (5.7 MWh per year). The Marin County census shows 113,126 housing units. 113,126 x 5.7 MWh per year = 644,818 MWh per year for all of Marin's residences. 1,979,807 MWh / 644,818 MWh per year = 3 years.
CLICK HERE TO READ Part II - This shows where to find the source data for MCE's (and other CCAs, if available) energy, and will provide a guide for calculating respective GHG emissions so that you may independently determine the cleanliness of a CCA's energy mix.
Jim Phelps is a consumer advocate, specializing in energy issues and CCAs. Before retiring he was a power contractor and utility rate analyst.