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Green Scheme 

The city's master plan for cleaner energy is fraught with risk. And, like it or not, you're already signed up.

Wednesday, Jan 14 2009
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On the afternoon of Friday, Dec. 12, consultant Paul Fenn stood in a hearing chamber before San Francisco's Local Agency Formation Commission (LAFCo) — an obscure but influential panel that oversees the city's energy policy — trying to explain why his proposals for promoting renewable energy are worth dying for. The five-member commission listened as Fenn argued that the benefits of installing a tidal-power turbine in a dangerous area of the San Francisco Bay just beyond the Golden Gate Bridge would merit the deaths of a few construction workers along the way.

"I'm sorry," Commissioner Hope Schmeltzer said. "You're still saying that you're confident that it's worth pursuing, but you've also established it's going to cost several lives?"

"Yes," Fenn said.

An uncomfortable silence followed.

"That is a pretty bold statement," said Supervisor Ross Mirkarimi, the commission's chairman.

"I'm not a politician," Fenn replied. An acid note crept into his voice. "Consider how many people your current energy supply is killing right now. It's easy to be sentimental about lives."

Among major American metropolises, San Francisco is perhaps unique in combining a fierce political drive for novel energy policies with a lack of success in implementing them. Over the years, this fog-hung peninsula, which for the past century has rested in the grip of a Pacific Gas & Electric Co. monopoly, has been home to bold proposals for solar power and wind energy facilities as well as a steady stream of ballot initiatives designed to authorize a government takeover of PG&E's electricity grid. The municipalization schemes have all been rejected by voters, most recently in November, when Proposition H, the latest iteration of "public power" in San Francisco, went down to a crushing 22-point defeat.

By contrast, Fenn's plan is no pipe dream — at least not in the eyes of most city officials. Called CleanPowerSF, the program calls for the city to become the electricity provider for virtually every power consumer in San Francisco as early as next year, generating more than half of all energy from renewable sources such as wind farms, solar panels, and geothermal plants.

In our overheated, oil-dependent world, most can agree that these are laudable goals. Reaching them, it turns out, is a painful proposition.

Start with the hit to ratepayers' pocketbooks. According to estimates from the city's own economists, CleanPowerSF's fast-track greening of the local power supply would raise average residential electricity bills by 24 percent, and could have a crippling impact on some of the city's poorest residents. The program also calls for San Francisco to plough $1.2 billion of borrowed money into its own renewable-energy plants — infrastructure such as rooftop solar panels and wind farms, much of it within the city — an investment that could be backed by the promise of future tax hikes if the facilities can't support themselves.

Risks abound in CleanPowerSF, and not just for the hapless workers who may one day venture beneath the Golden Gate Bridge in furtherance of Fenn's vision. In fact, one of the more remarkable aspects of this largely unpublicized public-power venture is that almost every resident and business in San Francisco has already been signed up to participate, whether they want to or not. If you're reading this, there's a good chance the city is counting you among its paying customers.


Fenn's consultancy, Local Power Inc., keeps an office on Grove Street, about a block from City Hall. With its bare walls, wide windows, and spare furniture, the space seems geared to highly conceptual work. One afternoon last fall, Fenn — a balding and handsomely weathered 43-year-old — sat at a table in the second-floor suite, explaining that he first formulated his ideas about the energy markets during his graduate studies in intellectual history at the University of Chicago. "What we're after here is a demonstration of scale and speed," he said. "How do you change a city's power supply, quickly, without causing harm?"

Rather than beating the drum for the old leftist cause of municipalization, Fenn conceived of a way to put city governments in control of their energy supply while skirting the politically volatile suggestion of taking over private utility equipment. Instead, a city could purchase energy in bulk for all its customers — thus "aggregating" them — and sell it to those customers across privately owned utility lines. In San Francisco's case, the city would hire a contractor to procure power while simultaneously building its own green-energy facilities. CleanPowerSF would owe PG&E a surcharge to cover the utility's infrastructure investments.

Fenn called this arrangement Community Choice Aggregation, or CCA. In addition to stabilizing or even lowering the cost of electricity, CCA would empower green-minded municipalities to ditch fossil fuels and pursue renewable sources of energy.

Or so the thinking went.

CCA found fertile ground in California following the 2000 collapse of the state's energy market. The unprecedented deregulation of the buying and selling of electricity in 1996 had proved a nightmarish exercise in the excesses of free-market capitalism, as wholesale energy suppliers — among them the disgraced corporate giant Enron — undertook complex trading schemes to sell their power at artificially high prices. Federal regulators eventually instituted price caps for electricity, causing the chaos to subside, but there was plenty of pain along the way. Blackouts swept the Bay Area during a heat wave in the summer of 2000, and in the spring of 2001, PG&E filed for bankruptcy.

The deregulation experiment was not one consumers — or policymakers — would soon forget. The state's energy woes had a particularly galvanizing effect in San Francisco, which for decades had been home to vocal and politically potent advocates of government control of the city's power supply. The gospel of public power has long been common fare in the pages of the San Francisco Bay Guardian, an organ of the left, and to this day is espoused by almost every ambitious politician of the self-described "progressive" ilk.

For these true believers, the state's failed experiment in deregulation was the final vindication of their arguments that city bureaucrats, rather than private corporations, should control the flow of energy. In 2002, the state passed Assembly Bill 117, called by its proponents the Community Choice Law. Sponsored by then-Assemblywoman Carole Migden, it was also a direct product of the Bay Area's activist community. Fenn was its author.

About The Author

Peter Jamison

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