CPUC NEM 3.0 discussion

[BGbreeder]

On my dog walk this morning I was thinking if there are ways an individual homeowner could bank energy for that Summer->Winter offset.
There are no practical ways.
The first unpractical way I thought of would be to dig a deep mine shaft and hang a multi ton weight on a rope, raise it with summer energy, and let it drop in Winter to generate power...

There are actually companies doing this today. Some for short term storage, others with longer time scales. If you are serious about long term storage I suspect that flow batteries will become attractive.

A ton of people have audited PG&E's financials. They know where the money goes. The problem is the CPUC is totally fine with where the money goes. They are totally fine with PG&E needing more money so it goes to the same places with rate growth factors in the double-digits per year. That is why more people should be appalled when the CPUC authorizes PG&E to increase natural gas rates charged to customers by ~12%. Yes, natural gas prices have gone up 12%, but the costs PG&E needs to service natural gas have also inexplicably gone up ~12%.

Of course it's not just NG that is going up, if PG&E is allowed to remain bloated, everything has to go up a ton to guarantee the profits.

Many months ago, I posted about the July 1, 2021 General Rate Increase that PG&E submitted. You can see their own pro-forma income statement by the four profit streams they projected.
1. Electricity Distribution
2. Electricity Generation
3. Gas Distribution
4. Gas Transmission and Storage

https://www.pge.com/pge_global/common/pdfs/about-pge/company-information/regulation/general-rate-case/PGE-GRC-Application-2023.pdf

Go to G-1 to G-4 (pages 102 to 105 of the PDF).

PG&E's stakeholders are guaranteed a 10.25% return on equity (ROE) except for the interpretation around AB 1054 where the particular returns on that segment go to the Wildfire fund.

...

Just to observe that a 10% ROE is venture capital levels of return, which is insane for a utility.

 

[Vines]

Could PG&E be broken up? I assume Palo Alto still gets the actual power from someone through PG&E lines?

Each city will just manage their own grid sorta like most of the US grids, but still be connected to other cities (unlike Texas). It seems almost worth it to buy out and leave PG&E and not have to deal with their constant management.

This is really the result that PGE would hate: Cities get so fed up as to band together and split the monopoly into smaller pieces without the same monopoly power.

The devil is in the details, as this really would be impossible for some smaller jurisdictions, with a ton of rural or vulnerable distribution. Large cities with a good bank account can go through all it takes to become your own utility. This is good leverage to remind PGE that they do not have ultimate power.

You are correct that CPAU, SVP, AMP and PGE all buy the same wholesale power, and have some portion of the power generated with various generations sources within the district.

 

[charlesj]

Could PG&E be broken up? ...

I think this was in the news and possibility when PG&E was facing bankruptcy.

ps. back in 2017 I was able to unbundle the rate plan. This is what I found:
transmission
transmission rate adjustment
reliability services
nuclear decommissioning
competition transition charges
energy cost recovery amount
conservation incentive adjustment
new system generation

 

[Vines]

When my son lived in Santa Clara I looked at his electric bill. I couldn't believe how inexpensive it was. I called his provider; they own the whole system, wires, poles, everything in their territory.

Silicon Valley Power is another great example. Somehow they manage to deliver this power with a lower cost, it must be possible.
Our Story | Silicon Valley Power

I imagine that the rural areas are the ones that really are most expensive to serve. Imagine the difference between the cost of delivery for power in the middle of Sunnyvale, compared with the mountains of Santa Cruz.

If the utilities don't get their acts together, I can see other cities who want to commit to renewable energy following suit.

 

[BGbreeder]

Palo Alto got into the municipal energy business over a hundred years ago, (1896) and has long term energy contracts to provide carbon neutral power.

Power Content Label

California State legislation (SB 1305) requires all energy service providers, such as the City of Palo Alto Utilities (CPAU), to periodically inform their customers of the source of power they are being sold. Such information is provided in the form of a Power Content Label.

www.cityofpaloalto.org

Palo Alto’s Electric Supply Is 100 Percent Carbon-Neutral. Can Other Cities Follow Suit?

Palo Alto, California, is perhaps the most fabulous, smug, high-level-of-being municipality in America. For the combination of the populace’s level of...

slate.com

They also run gas, water, and fiber services. IIRC, they were pulling municipal fiber in downtown Palo Alto in 1991...

 

[Redhill_qik]

I think this was in the news and possibility when PG&E was facing bankruptcy.

Exiting bankruptcy required PG&E to accept a take over by California if certain conditions were not met and there are some calls to start the process.

Editorial: California should begin preparing for PG&E takeover

Enough is enough. Start work now on plan to deliver safe, reliable power to utility’s 16 million customers.

www.mercurynews.com

 

[charlesj]

The exiting bankruptcy required PG&E to accept a take over by California if certain conditions were not met and there are some calls to start the process.

Editorial: California should begin preparing for PG&E takeover

Enough is enough. Start work now on plan to deliver safe, reliable power to utility’s 16 million customers.

www.mercurynews.com

I am in!

 

[Redhill_qik]

Silicon Valley Power is another great example. Somehow they manage to deliver this power with a lower cost, it must be possible.
Our Story | Silicon Valley Power

I imagine that the rural areas are the ones that really are most expensive to serve. Imagine the difference between the cost of delivery for power in the middle of Sunnyvale, compared with the mountains of Santa Cruz.

If the utilities don't get their acts together, I can see other cities who want to commit to renewable energy following suit.

I think that Modesto qualifies as a rural area and the Modesto Irrigation District residential tariff rate is a fixed monthly charge of $20.00 with two tiers based on over/under 500 kWh with the Summer rates at $0.1449 for under and $0.1808 for over.

For solar customers the excess electricity sent to the grid is credited at $0.076/kWh.

 

[Zorg]

I am in!

While in principle, I'm all for taking over that bloated monopoly, I also know how mismanaged CA agencies are. Anyone in the bay area knows how bloated and inefficient BART is. My best guess is that a state agency PG&E would not be any cheaper and would mostly benefit employees pensions. So, I think we're screwed either way.

 

[wwu123]

Palo Alto got into the municipal energy business over a hundred years ago, (1896) and has long term energy contracts to provide carbon neutral power.

Power Content Label

California State legislation (SB 1305) requires all energy service providers, such as the City of Palo Alto Utilities (CPAU), to periodically inform their customers of the source of power they are being sold. Such information is provided in the form of a Power Content Label.

www.cityofpaloalto.org

Palo Alto’s Electric Supply Is 100 Percent Carbon-Neutral. Can Other Cities Follow Suit?

Palo Alto, California, is perhaps the most fabulous, smug, high-level-of-being municipality in America. For the combination of the populace’s level of...

slate.com

They also run gas, water, and fiber services. IIRC, they were pulling municipal fiber in downtown Palo Alto in 1991...

Yes, when I looked into Palo Alto and Santa Clara (city), they at one point generated their own local power, which I think gave them the necessary leverage to negotiate long-term agreements to use the distribution system at favorable rates, and thus be able to switch to importing cleaner power from elsewhere cheaply if they desired. I think Santa Clara still does some generation though.

So I don't think any other cities now can just import power cheaply, they'd just be forced to pay or pass on the steep distribution and other non-generation costs from PG&E and the like. That's basically what the CCA's are, and as we can see, they don't actually lower consumer rates no matter how little they pay for generation. A city would have to go through the threat of building their own local power plant, and generating expensive power, to get negotiating power.

 

[holeydonut]

There are actually companies doing this today. Some for short term storage, others with longer time scales. If you are serious about long term storage I suspect that flow batteries will become attractive.

Just to observe that a 10% ROE is venture capital levels of return, which is insane for a utility.

You know I'm not one to defend the utilities, but 10.25% ROE isn't really that far off other utilities in the USA. The AEE estimates the average annual ROE for the utilities that they track is 10.13%. This is a higher ROE than many financial instruments, but is on the lower end of return for equities.

Insight Engine: State Profiles

Regulatory commission details, utilities, executive branch, state legislature and energy data on Insight Engine's State Profiles - a one-stop shop for high-value information about each state's energy policies and key players.

powersuite.aee.net

But, to get a good ROE, one usually assumes a combination of high margin activity coupled with intelligent expense management. For normal companies to achieve a target 15% ROE, they find ways to leverage efficiencies over time and cut out fluff. All PG&E needs to do to get their 10.25% ROE is to convince the CPUC to spend waste more money. Then they pass the buck to ratepayers to guarantee their 10.25% ROE.

What exasperates this broken approach is when PG&E then convinces someone in Placerville to complain that a rich solar customer in San Jose isn't paying their fair share of enabling PG&E's 10.25%. Instead, one would wish for the people in Placerville to complain about why PG&E isn't intelligently trying to hit their 10.25% ROE by cutting costs. It's a red herring for people to complain about who isn't paying their fair share to enable PG&E's 10.25% ROE. Homeowners are all getting hosed by PG&E. They're the bad guy. Not some boogeyman with solar.

 

[EVDRVN]

This is really the result that PGE would hate: Cities get so fed up as to band together and split the monopoly into smaller pieces without the same monopoly power.

The devil is in the details, as this really would be impossible for some smaller jurisdictions, with a ton of rural or vulnerable distribution. Large cities with a good bank account can go through all it takes to become your own utility. This is good leverage to remind PGE that they do not have ultimate power.

You are correct that CPAU, SVP, AMP and PGE all buy the same wholesale power, and have some portion of the power generated with various generations sources within the district.

SF tried to do this as their power comes from a separate source, they wanted to buy all the transmission lines and PGE said no of course.

 

[sunwarriors]

I don't think a total state or even Nor Cal / PG&E solution makes sense and probably has a lower overall chance of success.

Looking at all those city specific examples, that seems the way to go since it's local, people see the results, and there is less 'blame' of 'why you live in fire danger zone?' Not my problem to pay for transmission lines to your house.

Maybe that's not possible anymore (with that wholesale rate thing), but if a city invested every free space, car ports, buildings on solar/storage and maybe smaller generation/power plants, how impossible would it be?

From that article:
SVP currently provides over 40 percent of Santa Clara’s electricity from carbon free renewable resources. In addition to using green energy from large-scale wind, solar, geothermal and hydroelectric projects outside of the area, SVP employs innovative ways to locally produce electricity by capturing and burning methane gas from a closed city landfill and using power from solar generating systems on city-owned garages and vacant, unusable land.


No one wants to put their $$ for other people's problems understandably.

 

[stopcrazypp]

I don't think a total state or even Nor Cal / PG&E solution makes sense and probably has a lower overall chance of success.

Looking at all those city specific examples, that seems the way to go since it's local, people see the results, and there is less 'blame' of 'why you live in fire danger zone?' Not my problem to pay for transmission lines to your house.

Maybe that's not possible anymore (with that wholesale rate thing), but if a city invested every free space, car ports, buildings on solar/storage and maybe smaller generation/power plants, how impossible would it be?

From that article:
SVP currently provides over 40 percent of Santa Clara’s electricity from carbon free renewable resources. In addition to using green energy from large-scale wind, solar, geothermal and hydroelectric projects outside of the area, SVP employs innovative ways to locally produce electricity by capturing and burning methane gas from a closed city landfill and using power from solar generating systems on city-owned garages and vacant, unusable land.


No one wants to put their $$ for other people's problems understandably.

If you look at the articles arguing for breaking up PG&E, note even they do not advocate a full state takeover. This is because CA state is not known to be efficient in the first place (a ton of examples are available about how inefficient it operates). It can instead be private take overs with some mechanism to introduce competition, it can be the municipal utilities taking over parts of it. But the status quo doesn't appear to be working very well so far.

 

[ucmndd]

This is really the result that PGE would hate: Cities get so fed up as to band together and split the monopoly into smaller pieces without the same monopoly power.

I lived in Yolo county in the mid-aughts when there was a (unsuccessful) measure put to voters to expand SMUD into neighboring PGE territory. The amount of money time and favors PGE cashed in on FUD to defeat that measure was staggering. They were willing to spend literally whatever it took to win (and they did).

 

[Zorg]

Pre Enron, the idea was for the IOUs to divest from power producing and only keep the grid (if I remember correctly). Frankly, having a state owned grid and a bunch of independent power producers may be the solution. On the other hand, the state has a way of imposing a bunch of mandates on the IOUs to make them achieve state social goals (just look at NEM3).

 

[ucmndd]

I've been chewing on this for the last few days and I've gotta say, the very threat of something so aggressively anti-consumer has me completely re-thinking the way I define "energy independence". I've long planned for an eventual upgrade of most of my house systems to electric after investing in solar and storage but at this point I think those plans are done.

I'm in a different situation than most in that I don't have municipal natural gas and heat primarily with an EPA certified wood stove. I have a 400 gallon propane tank that I can fill up once in the summer when LP is cheap to last an entire year for water heating and stovetop cooking. A cord of almond from the orchards nearby keeps us hotter than we need to be for an entire winter. I'd love to stop burning things for energy but self preservation and distrust of PG&E has me completely re-thinking tangling my long term fate up with theirs any more than absolutely necessary.

 

[STS-134]

SF tried to do this as their power comes from a separate source, they wanted to buy all the transmission lines and PGE said no of course.

In eminent domain cases, the "seller" does not have a choice. But it would be amusing to see PG&E arguing that the transmission lines are worth a lot and are well maintained while simultaneously asking the CPUC for rate hikes to supposedly fix them.

 

[Vines]

I lived in Yolo county in the mid-aughts when there was a (unsuccessful) measure put to voters to expand SMUD into neighboring PGE territory. The amount of money time and favors PGE cashed in on FUD to defeat that measure was staggering. They were willing to spend literally whatever it took to win (and they did).

Likely because they just to get a guaranteed 8-12% profit regardless of how much they spend. What incentive do they have to manage things efficiently (including fights with local municipalities like this)?

 

[Zorg]

Likely because they just to get a guaranteed 8-12% profit regardless of how much they spend. What incentive do they have to manage things efficiently (including fights with local municipalities like this)?

None. Zero