Marin Clean Energy.doc by shensengvf


									      Marin Clean Energy
       Blueprint for the Future

    A Citizens’ Guide to the Proposed
      Marin Clean Energy Authority

   DRAFT (v. 1) prepared for review by Marin Clean Energy stakeholders,
                   with support from the County of Marin,
Marin Community Foundation, Waterplanet Alliance, and Joint Venture Marin
        based on the work of the Marin County Sustainability Team,
        Navigant Consulting, and the Marin Clean Energy Task Force

                             April 22, 2008

Letter from the Marin Clean Energy Partnership

Section I. Overview of Marin County’s Energy Challenge and Opportunities

  A. Marin’s Commitment to Environmental and Economic Sustainability
  B. Current Trends in Energy and Climate Change
  C. Local Impact of Current Trends in Sea Level Rise
  D. Impact of Climate Change on Water Supplies                                   5
  E. Marin’s Carbon Footprint — and Opportunities for Accelerated Reduction
  F. The Economic Challenges Posed by Rapidly Rising Fossil Fuel Prices
       Sidebar: A Primer on Natural Gas                                           8
  G. The Role of Marin Clean Energy in Addressing Climate Risks
  H. Next Steps in the Marin Clean Energy Development Process                     10

Section II. Overview of the Marin Clean Energy Business Plan

  A. Marin Clean Energy and California’s “Community Choice” Energy Legislation
  B. Risks of Marin’s Status Quo Electricity System                               12
  C. Plan to Purchase Clean & Renewable Power for a Cost Comparable to PG&E
  D. The Rate and Fee Setting Process                                     15
  E. Plan for Marin Clean Energy to Develop and Own Renewable Energy Facilities
  F. Target for Renewable Energy Production
  G. Availability and Phase-in of Renewable Energy Resources
  H. Energy Efficiency                                                    19
  I.   Demand Response Programs                                                   21
  J. Distributed Solar Generation                                                 21
  K. Marin Clean Energy Customer Outreach and Enrollment
  L. Demand for Renewable Power from Marin Clean Energy Customers
  M. Governance and Management of the Marin Clean Energy Authority
  N. Options for Contracting with an Energy Services Provider

Section III. Marin Clean Energy Next Steps

  A. Creation of the Joint Powers Authority                                                     26
  B. “Off-Ramps” Provide Flexibility to Exit from the Marin Clean Energy Process
  C. Timeline for Implementation
  D. Rate Structure                                                                    27
  E. Customer Enrollment in Marin Clean Energy                                                  29

Section IV. Financial Summary

  A. Operating Revenue Projections                                                              30
  B. Marin Clean Energy Financing                                                               31

  Acknowledgements: The Citizen’s Guide has been prepared by Richard Schorske,
  of Joint Venture Marin, for use by Marin citizens and leaders as they evaluate
  the Marin Clean Energy proposal. The Guide builds on the work of Dawn Weisz,
  Dana Armanino, and Omar Pena, of the County of Marin Sustainability Team,
  Alex Hinds of the Marin Community Development Agency, Tim Rosenfeld of
  HMW Consulting, and the Navigant Consulting team, including John Dalessi,
  Kirby Dusel, and Peter Luchetti. Please note that much of Section II of this Guide
  utilizes language and data adopted directly from the Business Plan prepared by
  Navigant. In addition, Ed Mainland of Sustainable Marin, the public
  ombudsman to the Marin Clean Energy Task Force, provided access to
  information and resources used in the preparation of the Guide. Thank you to

  Support: Development of the Guide was made possible through the financial
  support of Waterplanet Alliance, directed by Michael Dietrick, the Office of
  Supervisor Charles McGlashan, and Marin Community Foundation, with the
  cooperation of the Sonoma Climate Protection Campaign.

                                               Marin Clean Energy | Draft v. 1.0 | 062308 | page 2
         The Marin Clean Energy Partnership

                                                                      June 16, 2008

Dear Fellow Marin Resident:

As you know, global warming, skyrocketing energy costs, and uncertain fossil fuel
supplies are three of the most urgent challenges of our times. To address these
challenges, leaders from Marin’s eleven cities, along with Marin County and the
Marin Municipal Water District, came together in 2003 to assess Marin’s energy
challenges, and chart a way forward. This five-year process has resulted in the
development of the Marin Clean Energy Business Plan, released for public review
in March of 2008, and summarized in this Citizens’ Guide.

Over the coming six months, Marin Clean Energy will be subject to public
comment, input, and review. If adopted by the City Councils of Marin and the
Marin County Board of Supervisors, Marin Clean Energy will be established as a
new public agency for the purpose of purchasing electricity, setting rates, and
developing renewable power on behalf of Marin customers. Many observers view
this decision as the most important policy issue facing the County since the
decision to save West Marin from development in the early 1970’s. To make a
sound decision, it is vital that Marin citizens gain an understanding of how
local control of energy will impact our natural environment, our economic
prosperity, and our long-term sustainability.

Goals of the Marin Clean Energy Initiative: In light of today’s challenges to our
environment and our energy system, Marin County conducted a community-wide
survey on energy priorities in 2007. Eighty-one percent of residents said that it
was important to reduce pollution and greenhouse gases, and 74% said they
would support local government becoming a provider of renewable energy. Based
in part on this feedback, the Marin Clean Energy goal is to create a locally-
controlled electricity option for Marin residents that will be: environmentally
sustainable, responsive to community priorities, reliable, and competitive with
PG&E rates.

Energy & the Local Economy: This year, Marin ratepayers will spend
approximately $130 million for electricity. Over the next ten years, Marin
residents will pay close to two billion dollars for electricity. If fossil fuel prices
continue to increase as they have in recent months, PG&E rates may rise steeply.
According to leading energy experts, now is the time to significantly reduce our
dependence on fossil fuels -- and significantly increase our reliance on
renewable resources.

Benefits of Marin Clean Energy: If Marin Clean Energy (MCE) is established,
customers will have the option to stay with PG&E. However, customers who

                                                   Marin Clean Energy | Draft v. 1.0 | 062308 | page 3
choose MCE will be able to:

        Increase (up to 100%) the proportion of renewable power in their
         electricity mix

        Significantly reduce their share of global greenhouse gas emissions

        Help develop renewable power resources with long-term cost savings
         potential and other local economic benefits.

Local Control & “Community Choice”: The opportunity for local communities to
establish their own locally-controlled energy agency is made possible by
California’s Assembly Bill 117. Passed in 2002, this legislation makes it
possible for local towns, cities, or counties to purchase electricity from
independent power producers, and invest in their own power generation and
efficiency projects – while PG&E continues to operate the transmission lines, and
provide billing and customer service. This approach – known as “Community
Choice Aggregation” – is being developed in many communities around the state
– including the San Joaquin Valley, San Francisco, Oakland, Berkeley,
Emeryville, Chula Vista, Davis, Pleasanton, Beverly Hills, and many others.

The Marin Clean Energy Study Process: When Marin’s local jurisdictions joined
together to study the feasibility of creating Marin Clean Energy, a well-regarded
firm with extensive energy experience – Navigant Consulting -- was
commissioned to undertake a comprehensive study. Local oversight was provided
by a Task Force of elected leaders from Marin’s town and cities and special
districts, along with a Stakeholders’ Group consisting of a broad cross-section of
business and community leaders. In the first phase of the study, independent
experts determined that Marin could meet or beat PG&E rates while also
delivering 50% green and renewable power.

In addition, the Marin Clean Energy study process has concluded that Marin can
effectively hedge against the rising price of fossil fuels by investing in
economically competitive renewable power facilities. Over the next twenty years,
Marin’s 240 megawatts (MW) of electricity demand can be met by a mix of 100%
renewable sources, including approximately: 50 MW of wind, 40 MW of solar,
30 MW of biomass (including methane from landfills and agricultural waste),
and 20 MW from geothermal. Most of these facilities will be located outside the
County, although some of the solar capacity will likely be installed on local

Impact on Our Environment: Many Marin residents are concerned about the fact
that our County has one of the largest per capita “carbon footprints” in the
world. To address this issue, Marin Clean Energy will enable customers to choose
one of two pathways to cleaner power, based on individual priorities:

        The “Light Green” Option: For customers who wish to keep their rates as
         low as possible, a “light green” rate option will provide 25% to 50%
         clean power at rates that meet or beat PG&E. (Currently, PG&E provides
         approximately 12% renewable power.)

                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 4
        The “Deep Green” Option: Customers willing to pay approximately
         $5/month more (based on the average monthly bill) will be able to
         purchase 100% renewable power via the “Deep Green” option. Over the
         next ten years – by investing in Marin’s own clean energy projects -- the
         entire Marin community will progressively be served with nearly 100%
         renewable power at a rate that is competitive with PG&E. Early adopters
         of the deep green option will help accelerate this transition for the
         whole County.

Next Steps: Each of the eleven City and Town Councils of Marin, plus the Marin
County Board of Supervisors, will be voting over the coming months on whether
to launch the Marin Clean Energy Authority. Elected leaders will be listening
carefully to your views. We encourage you to read, learn, and offer your input.

About the Citizens’ Guide and the Process of Public Input: The goal of this
Citizens’ Guide is to provide the background information needed to understand
the Marin Clean Energy plan in the context of larger economic and
environmental trends. The Guide summarizes much of the content of the Marin
Clean Energy Business Plan and related studies. Over the coming several
months, each individual City Council and the Board of Supervisors will also
hold public hearings providing Marin residents with a chance to ask questions
and share their perspectives on Marin Clean Energy. Following the public
hearings, a vote of each Council (and the County Board) will be taken on the
question of forming the Marin Clean Energy Joint Powers Authority. Following
the formation of the JPA, management structures will be established, a Request
for Proposals for energy service providers will be issued, and negotiations with
potential energy service partners will begin.

Once these steps are completed, a final Implementation Plan will be published,
and local City Councils will have the opportunity to make a final determination
regarding their participation in the JPA – providing the first of several “exit
ramps” from the Marin Clean Energy process.

At each stage of the Marin Clean Energy development process – particularly the
initial vote to form the Marin Clean Energy Joint Powers Authority – input from
a well-informed public will be very important in helping local elected leaders to
make their decision. Therefore, members of the public are strongly encouraged to
provide comments and participate fully in the public hearing process. To find
out when and where the hearings will be held, please see and sign up for regular e-mail updates. You may
also forward comments on Marin Clean Energy to Dawn Weisz, Senior Planner
for the County Sustainability Team, at

We thank you in advance for actively participating in this extraordinarily
important conversation – and helping chart a sustainable energy future for


                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 5
The Marin Clean Energy Partnership

                                     Marin Clean Energy | Draft v. 1.0 | 062308 | page 6
Marin’s Commitment to Environmental and Economic Sustainability

The people of Marin, our elected leaders, and our business and civic organizations
all share a common commitment to the principle of sustainability. Sustainability
has been defined as:
          Aligning our built environment and socioeconomic activities with the
           natural systems that support life
          Meeting today’s needs without compromising the ability of future generations
           to meet their needs
          Ensuring the balanced development of the “three E’s” of sustainability:
                 a healthy environment
                 a prosperous economy
                 and social equity.

Recent trends demonstrate the urgent need to act boldly to ensure a sustainable
future. In particular, the inter-related crises of global warming, uncertain fossil
fuel supplies, and skyrocketing energy prices are highlighting the need to develop a
sustainable energy system. At the beginning of the 21st century, sustaining a clean
and reliable supply of energy -- along with water, food, and a stable climate system
– are essential foundations for a high quality of life.

Current Trends in Energy Use and Climate Change

Marin’s current electricity portfolio (provided by PG&E) includes a substantial
proportion of natural gas generated electricity (xx%), with the remainder consisting
of power from nuclear (xx%), hydro (xx%), geothermal (xx%) and other renewables.
Because the Co2 emissions of burning natural gas is a major contributor to global
warming, Marin’s current electricity use contributes a total of xxx tons per year of
CO2, or a total of xx% of Marin’s total.

Use of fossil fuels in burning natural gas (as well as is in the nuclear fuel cycle)
contributes to the greenhouse gases (GHGs) that cause global warming. The
consequences of rising GHG emissions locally and globally include rapid sea level
rise, increasing threats to public health and safety, and decreasing water
availability. If current emissions trends persist, scientific projections indicate the
following likely changes:

   Average temperature increases by as much as 10 degrees F. by 2100
   Sea level rises ranging from 2 - 3 feet (at the low end) to 8.5 - 35.2 feet (at the
    high end) by the end of this century.1

1The   most recent UN Intergovernmental Panel on Climate Change (IPCC) report presents projections at
the lower end of this range, but specifically excludes the current melting of the West Anarctic and

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   Increase in wildfire incidence by 35% - 55%
   Increase in frequency, duration, and intensity of air pollution and harsh heat
   Sharply reduced availability of water from the Sierra due to more precipitation
    falling as rain than snow

In March of 2008, the Director of the San Francisco Bay Conservation & Development
Commission warned Marin officials that preparation must begin immediately for an
expected sea level rise of at least two feet in the San Francisco Bay. This level of sea
level rise is anticipated to threaten approximately $48 billion dollars in real estate and

According to NASA’s Chief Climate Scientist, James Hansen, Director of the
Goddard Institute for Space Studies, the current emissions trends that are
producing global warming must be reversed quickly to prevent the most
catastrophic climate change effects, including the full melting of the Greenland
and Arctic ice sheets:

Humanity today, collectively, must face the uncomfortable fact that industrial
civilization itself has become the principal driver of global climate. If we stay our
present course, using fossil fuels to feed a growing appetite for energy-intensive life
styles, we will soon leave the climate of the Holocene, the world of human history.
The eventual response to doubling pre-industrial atmospheric CO2 likely would be
a nearly ice-free planet [thereby raising sea levels by approximately 70 meters.)

Humanity’s task of moderating human-caused global climate change is urgent. . . .
Paleoclimate evidence and ongoing global changes imply that today’s CO2, about

Greenland ice sheets, because there is not a consensus estimate of how quickly to the full melting will
occur. James Hansen, NASA’s Chief Climate Scientist, believes that a 20 foot + sea level rise is likely by
2100 under our current “business as usual” GHG emissions scenario.

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385 ppm, is already too high to maintain the climate to which humanity, wildlife,
and the rest of the biosphere are adapted. Realization that we must reduce the
current CO2 amount has a bright side: effects that had begun to seem inevitable,
including impacts of ocean acidification, loss of fresh water supplies, and shifting of
climatic zones, may be averted by the necessity of finding an energy course beyond
fossil fuels sooner than would otherwise have occurred.

Continued growth of greenhouse gas emissions, for just another decade, practically
eliminates the possibility of near-term return of atmospheric composition beneath
the tipping level for catastrophic effects. The most difficult task, phase-out over the
next 20-25 years of coal [and other energy] use that does not capture CO2, is
Herculean, yet feasible when compared with the efforts that went into World War II.
The stakes, for all life on the planet, surpass those of any previous crisis.2

2   Target Atmospheric CO2: Where Should Humanity Aim?, Pre-publication paper by James Hansen,
Makiko Sato, Pushker Kharecha, David Beerling,Valerie Masson-Delmotte, Mark Pagani, Maureen
Raymo, Dana Royer, James C. Zachos,

                                                          Marin Clean Energy | Draft v. 1.0 | 062308 | page 9
 Local Impact of Current Trends in Sea Level Rise

The San Francisco Bay Conservation and Development Commission (BCDC) is the
public agency responsible for protecting the resources of the San Francisco Bay.
According to BCDC, the sea level in San Francisco Bay has risen 7 inches over the
past 150 years. The illustration below indicates the impact on Marin of a three foot
sea level rise (within the expected range for this century, based on current emissions
trends). Much of Marin’s urban corridor would be impacted, including all of the
Santa Venetia neighborhood in San Rafael, the shopping centers of Vintage Oaks in
Novato, the Town Center and the Villages in Corte Madera, Strawberry Village in
Mill Valley, nearly all of Sausalito’s business district, and much of central San
Rafael. Equally significant, the current “100 year flood” event, of the scale which
has devastated San Anselmo and the Ross Valley, will occur every ten years under a
“business as usual” scenario.

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Marin’s Carbon Footprint – and Opportunities for Accelerated Reduction

Most Marin residents have a strong commitment to the principle of environmental
stewardship – and wish to leave a healthy environment to our children and
grandchildren. However, studies demonstrate that Marin County’s per capita
carbon footprint is above the U.S. average and among the highest in the world.
Marin’s current CO2 emissions per capita are nearly six times that of China, four
times that of Sweden, and more than double France and Germany. Moreover,
Marin CO2 emissions increased approximately 6% from 1990 to 2005. 3 A modest
downturn since 2000 may be due to reduced traffic following the dotcom bust and
9/11.4 However, Marin is not yet on track to achieve the 80%+ emissions reduction
required by 2050 in order to avert the worst impacts of climate achnge.

    Marin CO2e
    Emissions                   1990            1995             2000               2005
    TOTAL Tons CO2e           3,005,674        2,916,005      3,252,049           3,188,522
    % Change from                      0%              -3%              +8%                +6%
Each civic leader and each citizen must make their own determination about the
appropriate response to global warming. In the view of many policy experts,
however, it is essential that the highest-emission communities move most rapidly
to develop a low-carbon energy and transportation infrastructure – so as to
demonstrate to other communities around the world that GHG reduction can be
advanced rapidly, while preserving and even enhancing economic prosperity and
quality of life. According to a recent report by the Marin Climate & Energy

         Marin is not an “outlier” in the global climate challenge. Marin is at
         the center of one of the most affluent and innovative regions of the
         world. If Marin can demonstrate that local communities can slash
         GHG emissions via renewable energy – while preserving and even
         enhancing our economic prosperity and quality of life -- we will
         demonstrate that other communities can do likewise.

The Economic Challenges Posed by Rapidly Rising Fossil Fuel Prices

Marin electricity customers also face the challenge of rapidly rising fossil fuel
prices. This trend is driven largely by a growing supply-demand gap. Natural gas

3   Marin County Greenhouse Gas Reduction Plan, Marin County Community Development Agency,
August 2006, p. 5

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follows oil prices in the world market. The most recent PG&E rate hike request,
for 6.1% in April of 2008, largely reflects a run-up in natural gas prices of xx% in
the past year, Increasingly steep price rises can be expected as oil moves toward
$150+ per barrel. The graph that follows illustrates the average of 12 oil and gas
supply models produced by an array of energy experts as of September 2007. Most
experts agree that while there are substantial reserves of oil still in the ground,
which could theoretically accommodate some continued demand growth, we are
reaching the likely maximum of productive output or flow that can be sustained.
This is due to a combination of:
  Physical constraints (on drilling rigs, equipment, and personnel)
  Geological constraints (a declining number of highly productive fields that can
    be economically accessed)
  Political constraints (the willingness of energy-exporting countries to boost
  Market constraints (the willingness of key importing and exporting countries to
    raise domestic prices to reduce demand.)
  System constraints (the ability of new renewable technologies and efficiency
    improvements to reduce demand quickly enough to match available supply.)

It is impossible to make accurate predictions of fossil fuel pricing in this new
environment. However, straight-line extrapolation of current trends can be
illustrative of possibilities ahead. For example, if the upward price trends of
2007-08 for natural gas persists through the 2010-2011 period, natural gas
would be at $/ million BTU (or $xx per therm). At this point, electricity rates for
natural gas-fueled electricity could likewise skyrocket.

                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 12
          Fossil fuel models forecast a growing gap between supply and demand.
          The blue dotted line represents oil demand matched by supplies, as
          projected by the International Energy Agency.5 Below the blue line is
          the red “median prediction” of independent energy analysts, which
          show a rapid production downturn after reaching a peak of
          approximately 82 million barrels per day (mbpd). As of early 2008,
          the last peak of production occurred in May, 2005. The International
          Energy Agency’s chief economist, Fatih Birol, has said: "From 2012, oil
          supply will be tight. The message to our governments is to slow down the
          demand increases.”6 Oil is not directly used by PG&E in their current
          energy portfolio, however, as governments begin to constrain carbon
          emissions, natural gas will become even more highly valued as a
          substitute for coal, putting further price pressure utilities – including
          PG&E -- that rely heavily on natural gas.

The Role of Marin Clean Energy in Addressing Climate Risks

In 2006, Marin’s Countywide Plan identified the threat of rapidly rising fossil
fuel prices – combined with global warming-induced sea level rise -- as key
challenges to the County’s future prosperity. After analysis of various options for

5   Historically, International Energy Agency (IEA) estimates have utilized U.S. Energy Information Agency (EIA)
estimates of future oil production as the basis for its own estimates. However, the International Energy Agency will be
updating its production forecasts independently of the U.S. EIA in November of 2008, and a significant downward
revision of future production is expected, in alignment with reduced forecasts from major oil companies and more
realistic data on the economic viability of extraction from unconventional sources such as shale.
6Russel   Hotten, “Curbs needed to avoid energy crunch,” Daily Telegraph (UK), August 11, 2007.

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greenhouse gas reduction, the shift to clean renewable power -- via the
establishment of a local Clean Energy Authority -- emerged as the highest-impact
strategy to reduce GHG emissions in the near-term.

Increasing the proportion of renewable energy in Marin’s electricity mix has the
potential to reduce Marin’s CO2e (carbon dioxide equivalent) emissions by up to
500,000 tons/year, representing 17% of Marin’s CO2e emissions at the high end of
this range. By contrast, the next most powerful tool -- expanded recycling -- is
estimated at 119,000 tons. Other efforts are of significantly less benefit.

   Opportunities for CO2e Reduction in Marin– the Relative Importance of
                              Marin Clean Energy

 Energy                                                             Reduction
                                                                       (tons / CO2e)

 Implement renewable energy via Community Choice                           302,330 –
 Aggregation                                                                 534,369

 Implement solid waste reduction program via reuse
 facilities and programs

 Improve traffic signal synchronization                                        16,000

 Encourage community car-sharing                                               11,880

 Expand local or regional bus service in range and/or

Marin Clean Energy and California’s “Community Choice” Energy Legislation

Beginning in 2004, the County of Marin and the eleven cities of Marin –
including Belvedere, Corte Madera, Fairfax, Larkspur, Mill Valley, Novato, San
Anselmo, San Rafael, Sausalito, Tiburon and Ross – initiated the Marin Clean
Energy study process. During a three-year study process, consultants determined
that a Marin Clean Energy Authority will be able to:
         Reduce Marin’s Greenhouse Gas Emissions by 15% - 17% compared to a
          “business as usual” case
         Reduce Marin’s vulnerability to fossil fuel price shocks and supply
         Provide long-term price stability and price competitiveness compared
          with PG&E, which relies significantly on natural gas for its power

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If a decision is made to go forward on Marin Clean Energy, this new public
energy authority will be established based on the “Community Choice
Aggregation” law established by the state legislature in 2002. Known as Assembly
Bill (AB) 117 -- the Community Choice statute provides cities and counties with
the authority to purchase electricity for resale to customers within their local
government boundaries. Under any Community Choice program -- including
Marin Clean Energy -- PG&E continues to:
        Deliver electricity to customers through its existing transmission system
        Maintain the distribution system
        Read meters and issue monthly bills
        Perform most customer service functions.

What makes the Community Choice power option unique is that the sources of
electricity and the rates paid by customers are determined by the locally
established energy authority.

How Customers Will be Enrolled in Marin Clean Energy: In communities that
join Marin Clean Energy (MCE), customers will be automatically enrolled in the
MCE program after at least four notices are provided via customers’ PG&E bills.
Customers will have the choice of “opting out” of the MCE power program and
remaining with PG&E. Customers can also switch between PG&E and Marin
Clean Energy at a later date. Thus, the startup of Marin Clean Energy does not
eliminate the PG&E service option. It simply adds a new service option for
customers in all the jurisdictions that join MCE. (Please note that customers that
live within a community that chooses not to join MCE will be unable to receive
MCE service.)

Community Choice Programs Outside Marin: Community choice programs exist
in a number of other states, including Massachusetts, and Ohio. In California,
the San Joaquin Valley Power Authority – which includes 11 cities and Tulare
County -- will be the state’s first fully operational Community Choice power
agency when it begins serving customers in 2008 - 09. In addition, the cities of
San Francisco, Oakland, Berkeley, Emeryville, Chula Vista, Davis, Pleasanton,
and Beverly Hills – among others -- are studying CCA options.

Risks of Marin’s Status Quo Electricity System vs. Marin Clean Energy

There are significant risks associated with continued reliance on Marin’s current
energy provider (PG&E) – and there are also risks associated with Marin Clean
Energy. The key strategic challenge is to manage risk most effectively. Economic
risks include:

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     Natural gas price volatility: PG&E customers are significantly exposed to
      natural gas price shocks. Since natural gas generally follows oil prices, the
      recent doubling of world oil prices has caused a similar increase in natural
      gas. Marin Clean Energy proposes a long-term approach to minimize fuel price
      risk through ownership of renewable generation and rapid phase-out of fossil
      fuel dependence.

     Price increases on PG&E’s renewable portfolio: PG&E generates only a portion
      of its own electricity, and it relies on long-term contracts with independent
      suppliers for much of its renewable energy, As PG&E’s long-term contracts
      expire, it will be forced to renegotiate at higher prices, By contrast, Marin
      Clean Energy will develop and own a significant portion of its renewable
      capacity over time.

     Economic exposure to Diablo Canyon: A key component of PG&E’s power
      generating system is the nuclear-powered Diablo Canyon plant. PG&E
      customers are fully exposed to upcoming Diablo Canyon costs, as well as
      unknown risks. After start-up of Marin Clean Energy, these future costs will
      be the responsibility of PG&E ratepayers, and cannot be passed on to local
      MCE customers.

     Hydro power cost increases and exposure to climate risks: Currently, PG&E’s
      hydro power is inexpensive, but costs are projected to rise by 57% in real terms
      from 2004-2009.7 Climate change impacts are also projected to reduce hydro
      power over time, due to reduction in the Sierra snow pack, and reallocation of
      reservoir capacity to address flood risk from increased spring runoff and more
      severe storms.

     Capital cost differential: When PG&E does build new generating capacity, its
      cost of capital is higher than that of public entities, such as Marin Clean
      Energy, which will be largely financed with lower-cost, tax-exempt debt.
      PG&E’s cost of capital is currently between 12% and 13% including equity,
      debt, and income taxes. The MCE cost of capital is conservatively assumed to
      be in the range of 5.5% to 7%.

    Plan to Purchase Clean & Renewable Power for a Cost Comparable to PG&E

PG&E Rates Will Fluctuate with Natural Gas Pricing: In the Marin Clean Energy
Business Plan, the Navigant consulting team conservatively estimated that PG&E
generation rates will increase by 3.5% per year. However, PG&E’s actual rates
will fluctuate with natural gas prices. A requested rate increase this year was
6.1% due to rapidly increasing fossil fuel prices.
Marin Clean Energy Prices for Renewable Power Are Guaranteed by Suppliers –
Because the Price of Renewable “Fuel” is Stable: When Marin Clean Energy

7   PG&E 2007 TY General Rate Case, Exhibit 3, Chapter 4 (Hydro Operations program Costs),Table 3-
1, p. 3-62. and PG&E 2003 TY GRC Exhibit 10, Table 3-1, p. 3-54.

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begins its first phase of service in 2009 - 2010, it will contract with a third
party electricity supplier under a "full requirements" contract. This means that
the supplier assumes full responsibility for delivering power based on the
renewable standards established by Marin Clean Energy. As described above,
MCE customers will be offered two distinct electricity rate options:
   o    The 100% renewable, or "Deep Green" option, at a slight premium over
   o    The "Light Green" option -- which will begin at the 25% renewable level
        in 2010, and increase to 51% in 2014, at a rate equivalent to PG&E.
It is anticipated that MCE rates will be in the range of those in the table below.
However, rates cannot be firmly established until final pricing is received from
potential suppliers through the Request for Proposal (RFP) process that MCE plans
to conduct in 2009.

         Marin Clean Energy -- Estimated Rates in Yr. 2011 (cents per kw/hr)

                                                           Light Green
                                     Deep Green                                     PG&E Rate
Customer Type                                               25 - 51%
                                   100% renewable                                 12%+ renewable*

Residential                               11.3                   9.4                       9.4

Small Commercial                          11.5                   9.6                       9.6

Medium Commercial                         11.1                   9.3                       9.3

Medium Industrial                         10.2                   8.5                       8.5

Large Industrial                           9.7                   8.1                       8.1

Agricultural                               9.5                   7.9                       7.9

Street and Area
                                           9.7                   8.1                       8.1

*PG&E rates are based on Advice Letter No. 3115-E-A (Effective 1/1/08), escalated at 3.5%/year to

Plan for Marin Clean Energy to Develop and Own Renewable Energy Facilities

Over the period 2010 – 2020, Marin Clean Energy proposes to develop a highly
diversified portfolio of renewable electricity supplies. The MCE plan sets a long-
term goal of 100% renewable energy supplies, with an 80% goal set for 2014.
Meeting the MCE commitment to renewable generation will likely involve three
complementary strategies:
   o    Direct investment in new renewable generating resources through
        partnerships with experienced public power developers and operators
   o    Purchase of renewable energy from third party suppliers
   o    Purchase of Renewable Energy Certificates (RECs).

                                                         Marin Clean Energy | Draft v. 1.0 | 062308 | page 17
The Marin Clean Energy Business Plan also proposes to:
   o   Establish ambitious targets for energy efficiency
   o   Deploy approximately 13 MW of new distributed solar capacity in Marin by
   o   Develop 200 MW of new renewable generating capacity to be online by
   o   Achieve substantial reductions in greenhouse gas emissions -- ranging from
       302,330 to 534,369 tons per year – which represents up to 17% (Confirm
       this number) of Marin’s total GHG emissions.

The Issue of Supply Disruptions: There is no increased risk of supply disruptions
with MCE. In compliance with state regulations, Marin Clean Energy will
schedule sufficient electric supplies to meet the hour-by-hour demands of all
customers. MCE will adhere to capacity reserve requirements established by the
California Public Utilities Commission and the California Independent System
Operator (ISO). These rules also ensure that generation capacity is in place to serve
all Marin customers in the unlikely event that the entire Marin Clean Energy
program is terminated, in which case all customers would be automatically
returned to PG&E service, with no service interruptions.

Target for Renewable Energy Production

MCE will target a 56% renewable energy percentage during the 2010 - 2013
period, and then increase the renewable percentage to 80% by 2014. Beyond
2014, the MCE goal is to procure 100% of its energy supplies from renewable
sources as soon as it is economically and operationally feasible to do so. Power
purchases from the cleanest non-renewable resources would supply the remaining
majority of the electricity resource mix. MCE anticipates developing a diverse
renewable portfolio, which includes contributions from the most commercially
viable sources, based on this likely distribution of the renewable portfolio:
      Wind - 30%
      Solar - 25%
      Biomass and/or Geothermal - 55%

MCE also plans to develop both a wind and biomass generation resource within
the PG&E service area -- planned to be online by 2014. The plan calls for
initial development of 200 MW of wind and biomass resources to meet
approximately 62% of the MCE electricity need. Wind and biomass technologies
are technologically mature and generally the lowest cost renewable resources
currently available. However, other technologies -- including solar and

                                                 Marin Clean Energy | Draft v. 1.0 | 062308 | page 18
geothermal -- will be further investigated for likely development as the program
moves forward. Approximately 18% of the total resource mix is anticipated to come
from power purchases from third party renewable energy developers, with the
balance developed directly by MCE and its project partners.

 Availability and Phase-In of Renewable Energy Resources

Energy industry experts agree that there is ample renewable development potential
in California to meet the relatively modest 240MW requirements of Marin
communities. California Energy Commission (CEC) studies demonstrate that over
7,000 MW of renewable resources are economically available statewide by 2010,
and a California Public Utilities Commission (CPUC) study indicates that nearly
50,000 MW of renewable resource potential could be utilized by 2020. 9 Key
resources include:
   o   Wind resources in the Tehachapi area and Riverside County (2,800 MW)
   o   Utility-scale solar in the Southern California deserts (1,000 MW)
   o   Geothermal in the Imperial Valley (1,600 MW)
   o   Wind resources in Solano and Alameda Counties (400 MW)
   o   Additional geothermal near the Geysers in Lake County (45 MW)

A study prepared by Judy London Consulting for Marin County also identified
nearly 850 MW of renewable resource potential within the greater Bay Area
region.12 MCE will be looking at these regional resources carefully, since these
require little or no transmission expansion to ensure deliverability:
   o   Local solar, wind, biogas, and biomass
   o   Wind resources in Solano County
   o   Existing qualifying renewable facilities with expiring PG&E contracts
   o   Expansion of wind resources in Alameda County
   o   Geothermal in Lake and Sonoma Counties

The evidence from recent solicitations by other energy market participants –
notably the “Community Choice” San Joaquin Valley Power Authority – indicates
that there are substantial renewable resources available at a competitive price. In
any case, MCE will go forward with its electricity supply contracts only if and
when there are firm bids in hand to meet MCE’s price and performance

The Impact of Efficiency: Marin Clean Energy will also generate a significant
new supply of “negawatts” (per capita energy demand reductions) via efficiency
programs that help customers reduce costs. MCE will also work with local
partners to maximize incentives for distributed local solar installations. These
incentives are reflected in a planned tripling of Marin’s production of
distributed renewable generation between 2010 and 2019.

                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 19
To ensure that Marin customers are able to minimize both their energy costs and
environmental impact, the MCE Business Plan calls for the creation of an
Energy Efficiency Team to reduce long-term customer energy costs via new
efficiency initiatives, demand response programs, and distributed solar
development, including solar thermal. The MCE Business Plan calls for
efficiency goals equal to 1.1% of projected energy sales, which is consistent with
the National Action Plan for Energy Efficiency: These savings would be in
addition to savings achieved by PG&E administered programs. The combined
impact of MCE and PG&E programs are projected to be in the range of 2% of
annualized electricity sales. Achieving this goal would represent at least a
doubling of energy savings relative to the PG&E status quo.

Demand Response Programs

Demand response programs provide incentives to customers to reduce demand
upon request by the electricity service provider. Demand response programs
provide cost savings to customers who have the flexibility to reduce consumption
for relatively short periods of time when spare generation capacity is low. MCE
will incorporate PG&E customers into its own demand response programs. For
planning purposes, the customer incentive is assumed to be $75 per kW-year,
which is above the incentive levels currently offered by PG&E. 8 Appropriate
limits on customer energy curtailments will be included in the MCE program
design, tailored to customer needs.

 Distributed Solar Generation

Distributed solar generation is another major component of Marin Clean Energy’s
approach to sustainable energy system development. MCE will work closely with
state agencies and PG&E to promote deployment of locally installed photovoltaic
(PV) systems -- with the goal of maximizing incentives funded through current
utility distribution rates and public goods surcharges. While PV systems are
relatively expensive sources of electricity, costs are likely to trend down over time.
Average production costs are currently in the 30 to 40 cents per kWh range as
shown below. For reference, the highest priced "Tier 5" rate charged by PG&E is
currently 37 cents per kWh.

MCE will promote distributed PV without providing direct financial assistance by:
           Providing objective consumer information

8For   example, the annual customer incentive in PG&E’s Capacity Bidding Program is fixed at $43.35
per kW-year in 2007 - 2008.

                                                           Marin Clean Energy | Draft v. 1.0 | 062308 | page 20
       Facilitating customer purchases of PV systems through established networks
        of local, pre-qualified vendors
       Offering a net metering rate to customers who install PV systems so that
        customers are able to sell excess energy to the MCE Authority. (This does
        NOT require approval of new net metering legislation in the state

MCE customers will continue to contribute funds to the California Solar
Initiative (aka the “Million Solar Roofs” program) through the public goods
charge collected by PG&E, and will be eligible for incentives provided for
installation of PV systems. A minimum of 13 MW of solar will likely be
deployed within the boundaries of MCE. MCE will work to ensure that customers
take full advantage of solar incentives, with the goal of meeting or exceeding the
13 MW target.

Marin Clean Energy Rates
Marin Clean Energy is committed to offering competitive rates for both of its
electricity supply options, the premium “100% green” level and the “light green”
rate. To achieve rate competitiveness at the “Light Green” level, MCE will begin by
offering 25% renewable power in 2010, and increase that percentage to 51% by
2014, while maintaining rates equivalent to PG&E. These rates will be confirmed
once firm bids are received from third party suppliers. Beginning in 2014, MCE
will likely begin utilizing electricity produced by new wind and biomass projects,
which will help to limit subsequent rate increases by limiting dependence on
fossil fuels.

The “Deep Green” 100% Renewable Rate Option: In a poll conducted in 2007, a
significant majority of Marin residents expressed their interest in procuring 100%
renewable electricity with a monthly cost increase in the range of $7.50 per month
for a customer using 500 kWh/month. Based on initial polling, the MCE Business
Plan proposes that the 100% renewable option will be the default choice for
individuals switching over from PG&E. Final decisions will be made after the
MCE Board and management is in place, and customer input has been received.

Chart of Projected Rates: The projected rates shown below are based on a “full
requirements” electricity contract priced at approximately 8.8 cents per kWh. MCE
plans to confirm the feasibility of these proposed rates through the RFP process.

                  Marin Clean Energy Estimated 2011 Program Rates

                         Dark Green - 100%        Light Green – 50%          PG&E Rate
Customer Class
                      renewable (cents per kWh)          ren.             (cents Per kWh) *

                                                   Marin Clean Energy | Draft v. 1.0 | 062308 | page 21
                                                                    (cents per kWh)

    Residential                               11.3                         9.4                       9.4

    Small Commercial                          11.5                         9.6                       9.6

    Medium Commercial                         11.1                         9.3                       9.3

    Medium Industrial                         10.2                         8.5                       8.5

    Large Industrial                           9.7                         8.1                       8.1

    Agricultural                               9.5                         7.9                       7.9

    Street and Area                            9.7                         8.1                       8.1
    PG&E rates are based on those contained in Advice Letter No. 3115-E-A (Effective January 1, 2008), escalated by
    3% per year.

     Marin Clean Energy Customer Outreach and Enrollment

Marin Clean Energy customers will be phased into the program in three stages,
beginning with the government accounts of member jurisdictions. Five months
later, commercial and industrial accounts will be phased on, and finally,
residential and other remaining accounts. 9 This approach will enable MCE to
build slowly to its expected base of 111,000 customer accounts (assuming all Marin
jurisdictions join MCE). Phase 1 of the MCE program will be targeted to begin on
January 1, 2010, or as soon as these conditions are met:
       o    CPUC approval of the MCE Implementation Plan
       o    Final approval of the JPA Agreement
       o    Completion of implementing agreements with suppliers and other utilities
       o    Completion of start-up staffing.
The proposed schedule for all customer enrollments is shown below:

                          Marin Clean Energy Customer Phase-In Schedule

             Phase             Date                    Account Type                Total # of Accounts

            Phase 1                              Municipal Accounts                             565

                                                     Commercial and
            Phase 2         May 2010                                                         1,192

            Phase 3            January                  All Others                        109,344

9   It is expected that all direct access customers and 10% of eligible bundled service customers will opt
out of MCE due to previously negotiated contract terms other suppliers.

                                                                    Marin Clean Energy | Draft v. 1.0 | 062308 | page 22

Marketing: Based on initial polling, it is assumed that most residential
customers will participate in MCE based on either their commitment to clean
renewable energy and climate protection OR a pricing option that offers parity
with PG&E. A total of 10% of Marin customers are expected to stay with PG&E.

Governance and Management of the Marin Clean Energy Authority

Once local Marin jurisdictions vote to establish the Marin Clean Energy Joint
Powers Authority, a Board of Directors will be formed that, by law, must include
one representative from each of the participating communities. Marin elected
officials have created a Governance Task Force to fairly represent customer and
community interests, drawing on the expertise of elected officials and energy
industry professionals. Day to day management of Marin Clean Energy will be the
responsibility of an Executive Director, appointed by the Authority's Board.
During the initial phases of MCE development, technical functions associated with
managing electricity will likely be performed by a third-party contractor. Within
the first three years of operation, MCE will develop a team of approximately
twenty employees to fulfill its responsibilities for program and contract
management, legal and regulatory affairs, finance and accounting, energy
efficiency, marketing, and customer service.

MCE’s Plan to Contract with an Energy Services Provider

Throughout the electricity industry, it is common for utilities to generate a
portion of their own power, and contract with independent energy service
providers for the balance. MCE’s energy services company will be responsible for:
        Electricity Procurement - assembling a portfolio of power supplies to meet
         customer needs
        Risk Management – implementing standard industry procedures to reduce
         exposure to sudden changes in wholesale energy prices
        Load Forecasting - developing accurate electricity demand forecasts
        Scheduling Coordination - managing electricity supply transactions with
         the California Independent System Operator (the state agency charged with
         maintaining the reliability of the grid).

During the MCE business planning process, local leaders examined the
qualifications of energy services companies that responded to requests for
proposals from the Community Choice program of the San Joaquin Valley Power
Authority (SJVPA). These responses verified that there is a robust marketplace of
energy service companies with the capabilities and the competitive pricing to

                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 23
meet Marin Clean Energy needs. Once the MCE is established, an RFP will be
issued in early 2009 to solicit bids for the electric supplies needed to serve
Marin customers.

The selected energy service supplier will be required to have extensive operational
experience and to maintain an investment grade credit rating. Through MCE’s
initial competitive solicitation, electricity supply costs (which represent 95% of
total costs for MCE services) will be guaranteed for the first four years of program
operations. Over time, more of MCE’s portfolio operations will be brought in-house
as the Authority’s operational capabilities mature.

All Marin Jurisdictions Will Be Able To Review Power Contracts – and Decide
Whether to Participate -- Before MCE Becomes Fully Operational

All communities in the MCE Joint Powers Authority will have the opportunity to
evaluate whether to proceed with MCE implementation before the program becomes
operational. Specifically, the competitive bidding process will enable all MCE
stakeholders to determine how MCE rates will compare with PG&E. If MCE cannot
provide competitive rates via the initial solicitation, a determination will be made
whether to adjust the implementation timing to secure more favorable pricing --
or to terminate the MCE effort.

“Off-Ramps” Provide Flexibility to Exit from the Marin Clean Energy Process

Each City and Town Council in Marin and the County Board of Supervisors will
need to vote to join the JPA. As of June, 2008, Fairfax has voted to join, and
other cities are beginning to schedule public hearings and votes for later in the
summer and early Fall. Following the passage of the JPA enabling ordinances,
there are a number of subsequent “off-ramps” in the process. These include:
   Off-ramp #1: After the responses to the RFP are received
   Off-ramp #2: After the final Implementation Plan is developed (prior to Plan
    filing with the Public Utilities Commission)
   Off-ramp #3: After the California PUC certifies the MCE Implementation Plan.
    At this point, the county and cities must elect whether or not to continue with
    actual program implementation. This “off-ramp” allows the JPA to deal with
    potential regulatory decisions or market conditions that might block MCE from
    achieving its goals.
Collectively, these off-ramps provide all partners in the initial JPA with the time
– and qualifying information – to determine the economic, management, and
regulatory integrity of the MCE effort before making any final commitments.

Timeline for Implementation

The timeline below illustrates the key steps that must be taken before Marin Clean

                                                 Marin Clean Energy | Draft v. 1.0 | 062308 | page 24
Energy can begin customer service operations.

                      Timeline for the Start-up of Marin Clean Energy
    MCE Public Workshops                                               April – May 2008
    City and County Ordinances                                      May - December 2008
    Commencement of the Authority                                            +30 Days
    Issue Supplier Request for Bids and Select Seller                        +30 Days
    Approve Implementation Plan                                             +120 Days
    File Implementation Plan with CPUC                                      +120 Days
    Final Go/No Go Decision by the Marin Power Authority                    +200 Days
    Execute Supplier/Vendor Contracts                                       +260 Days
    Finalize Initial Rates                                                  +270 Days
    Go live phase 1                                                         +330 Days

Customer Enrollment in Marin Clean Energy

Once MCE is authorized to provide electric service, a total of four notices will be
sent to customers describing the program, including a simple mechanism for
customers to opt-out and remain with PG&E. The first notice will be mailed to
customers approximately sixty days prior to the date of automatic enrollment.
Customers that are automatically enrolled in MCE can also elect to transfer back to
PG&E without penalty within the first two billing cycles of service. After this free
opt-out period, customers will be allowed to terminate their participation in MCE
subject to payment of a small Administrative Fee (unless they were relocating out of
the MCE service area – in which case no fee is charged.) The Administrative Fee
will vary by customer class, with residential and small commercial fees set at
$5.00 -- and the largest commercial and industrial fees set at $25.00.

Next Steps in the Marin Clean Energy Start-up Process

Local Approvals: If Marin elected leaders decide to move forward with Marin
Clean Energy, a new Joint Powers Authority will be established among those
jurisdictions that choose to participate. (All eleven of Marin’s incorporated towns
and cities and Marin County are considering joining the Authority.) Marin Clean
Energy will then solicit bids from reputable energy services company to procure
power on behalf of local customers at competitive rates. Local jurisdictions will
either reaffirm their participation based on the information contained in these
bids, or exit from the JPA. Following the start-up of the JPA, Marin will also
begin developing its own renewable energy projects, largely in collaboration with

                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 25
other reputable and well-established public power providers, such as Sacramento
Municipal Utility District (SMUD), Northern California Power Authority (NCPA)
and others.

Development of Renewable Facilities: To provide high levels of renewable power
at an affordable price, Marin Clean Energy will progressively seek to develop
approximately 200 megawatts (MW) of renewable capacity by 2014 in
partnership with other experienced public agencies with a strong track record in
the industry. Statewide, there are many potential partners, as public power
producers now provide 25% of California’s total electricity needs, at an average
price 41% lower than investor-owned utilities.

Public Input Process and Timeline: In the summer of 2008, Marin’s elected
leaders and citizens will have the opportunity to further consider all aspects of the
Marin Clean Energy Plan, and provide input in the context of local Council
hearings in each of Marin’s 11 cities and towns, and at the County Board of
Supervisors. A calendar of upcoming hearings and events is available at, This site also includes the full MCE Business Plan,
supplementary studies, independent analyses, and related documents.

                                                Marin Clean Energy | Draft v. 1.0 | 062308 | page 26

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