A City, If You Can Keep It: A distinction without a difference

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New year, new changes. As of Jan. 1, 2021, we are all automatically transferred as customers of Valley Clean Energy (VCE). Huzzah! Representatives from VCE presented at the last city council meeting of the year, explaining that they are a green alternative to PG&E, costs exactly the same, and is managed by the elected officials of the member communities. Councilmember Loren also put a piece in the Express a few weeks back that read like a press release eschewing the “benefits” of VCE. I question the wisdom of putting management in the hands of politicians with zero experience running a public utility. PG&E is poorly run in many respects and a big part of that is they have to get permission to make certain business decisions from the California State Public Utilities Commission. Let us, for a moment, remember back to high school macroeconomics. The electricity market in California is essentially a PG&E monopoly. The product is inelastic: no matter the price, you are still going to demand it and buy it in much the same quantity because you need it. VCE represents a new entry into the market providing competition and a product that is a perfect substitute for PG&E’s product. Basic macroeconomics tells us this increase in competition should result in a decrease in price. But VCE is charging the same rates. Rather than compete, their business strategy is price collusion and choosing to differentiate their product through marketing. This is essentially a power oligopoly and VCE is a small fish. If you are unfamiliar with what an oligopoly is and how it works, look no further than prices at gas stations on the same intersection. VCE’s market positioning is they are greener and cleaner, provide “local control” and reinvest profits in the community. At the council meeting, they said they would be purchasing E-Vehicle charging stations for Winters. Undoubtedly to service the fleet of electric vehicles we have in town. They also made donations to the food bank and to help victims of the fire this year. How donations are proposed and selected is unclear, however. Powering our homes and businesses has three main components: generation, transmission and distribution. VCE is a substitute for PG&E on the generation side. Transmission and distribution are still handled by PG&E as they own the lines and the substations. Even with VCE, we are still subject to rolling blackouts and Public Safety Power Shutoff (PSPS) incidents because that is on the transmission and distribution side of power delivery. Where does the local control come into play if we can’t control when our power is shut off? I am left wondering what the tangible benefit is. It seems to be rooted in “I’m helping” as evidenced by City Manager Kathleen Trepa’s statement in her update on Dec. 18, “we could do with a little less climate change these days….” An aspirational sentiment for sure but PG&E already has clean power. Renewable energy is a regulated term, similar to Certified Organic. The peaches you grow in your backyard are organic but you could not sell them as such. Just because certain power generation isn’t certified renewable by California doesn’t mean it isn’t environmentally friendly. US electricity and heat generation accounts for 4.65 percent of global greenhouse gas emissions. Yolo county is a tiny fraction of that, and VCE is not significantly cleaner than PG&E, it’s just a less diverse different mix. VCE’s standard product offering is 17 percent more renewable than the state mix and 75 percent carbon free. Their website shows 23 percent of their power is from unknown sources while PG&E has zero percent unspecified. PG&E’s power is also 100 percent greenhouse gas free. I suppose one benefit of VCE is the feather in the cap of the elected officials in the county who manage it, some of whom have aspirations for higher office. In the Army, we would have called that an OER bullet point — something unneeded that sounds good to make your review look better for promotion, often suggested by the good idea fairy. It is hard to ignore that angle when the benefits to constituents are intangible, marginal or murky. One question that I can’t seem to find an answer to yet is what risk does the City hold if there is a lawsuit or VCE defaults on a contract? Are we insulated since VCE is its own entity, or does membership come with potential financial risk? VCE seems to be a service that comes with zero increase in reliability to the end user, identical or marginally different environmental impact, and no cost savings. The primary benefit seems to be making customers feel as though they are making a difference, even though PG&E has a more diverse portfolio of non-polluting power. I can’t see a significant benefit to VCE over PG&E unless VCE adds transmission and distribution to its list of services, so I am opting out.

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