Colton looks to green energy to cut electric costs

Oct 22 - McClatchy-Tribune Regional News - Josh Dulaney San Bernardino County Sun, Calif.

 

Utility rates remain a sore subject from living rooms to City Hall as election season heats up and candidates promise to reduce energy costs.

Monthly bills totalling in the hundreds are commonplace, despite a 10 percent rate reduction passed by the City Council last year, one that affects roughly 70 percent of Colton residents.

Add in the Global Warming Solutions Act of 2006, or AB 32, which aims to reduce the state's greenhouse gas emissions to 1990 levels, and residents might be waiting a long time for rate relief, as the city may pass along costs to customers in an effort comply with mandates from Sacramento.

But one official believes green energy will eventually translate into green savings.

"It is possible to do," says David Kolk, director of the city-owned Electric Department. "It's difficult to do tomorrow."

Colton residents are in the same boat as folks throughout the state.

"For residential rates, we are at or below Edison, so electric rates are too high, but they're not too high just for us," Kolk says. "They're high for everybody in California...that said, our commercial rates are about 10 percent higher than Edison."

He says during the boom years of the last decade, the city prepared for more business and residential growth by acquiring additional energy-generation resources.

But the downturn in the economy left portions of the city vacant, especially the southwest section, where

buildout was expected.

According to Kolk, the city has the capacity to serve a 125 megawatt load, but remains at about a 95 megawatt peak. One megawatt powers about 700 homes, he says.

"So we have this additional generation that's sitting there, and it has a cost association," Kolk says. "We're over-resourced."

So part of the reason the city's electric rates are relatively high is because it has too much energy.

On top of that, the state is requiring municipalities to increase their renewable energy levels by 20 percent through 2013, and 33 percent by 2020.

"So any renewable resource that we acquire just becomes surplus," Kolk says. "So we go out and we sign solar contracts, wind contracts. All it's going to do is increase our costs, but it's not going to be used to serve load."

Thankfully, Kolk's field of research includes resource and quantitative economics.

"There's a trade-off to it, and you can be clean and green and cheap," he says. "An example of that is Riverside."

Riverside Public Utilities adopted a renewable energy strategy before it was mandated. Today it has 450 systems pumping out of five megawatts of renewable energy, says Reiko Kerr, assistant general manager of resources.

But whether it ultimately pays off for customers remains to be seen, although a rate freeze is in effect.

"The issue with renewables is, frequently they are not located where you can get connected to the grid," Kerr says.

And customers may have to help cover the cost to do so.

"We're hoping that we can go through 2020 with no increases," Kerr says.

In Colton, Kolk frequently hears cost complaints from customers who walk into his 10th Street office.

"It's not that we are out there raising rates on a willy-nilly basis because we need more money," he says. "We are doing it primarily to comply with the increased regulatory and legislative costs we've seen."

Still, the highly controversial AB 32 does have its supporters. Among them is the California Business Alliance For a Green Economy.

Director Susan Frank says the businesses believe it will help their bottom lines by reducing waste and making them less dependent on fossil fuels.

"All of them believe this shift to a clean energy economy is good for them, because it's not just about investment and innovation and jobs, but also some of these environmental issues like climate change are impacting quality of life and the environment in which they operate."

The Electric Department serves about 18,500 customers with a total annual operating budget of roughly $58 million.

It acquires most of its energy through the Southern California Public Power Authority, or SCPPA. The energy is delivered to customers over the California Independent System Operator grid, other utilities and its own system.

The department joins with other utilities in projects such as the San Juan Generating Station at the Grand Canyon.

Because of lawsuits from environmental groups, the Environmental Protection Agency has ordered the owners of the station to install pollution-control equipment on four generating units, including one partially owned by Colton.

Officials estimate the upgrade cost on that unit to be around $250 million, of which Colton would have to pay between $20 million and $23 million.

The department also participates in hourly auctions with its resource partners in which energy is bought and sold. Under AB 32, the city may have to buy roughly $600,000 in emission allowances.

Finally, Kolk says utilities are under constant threat of regulatory penalties for doing something procedurally wrong.

He says in the long run, renewables are cheaper than fossil fuel energy, but the start-up costs are high.

Kolk is looking at ways to reduce costs immediately.

The department is negotiating with companies on energy contracts, and looking at selling surplus energy to businesses at a discounted rate still greater than Colton's cost, for those that want to operate during off-peak hours.

"They're better off because they're getting less expensive energy, and I'm reducing my losses and increasing my revenues with no impact on cost," Kolk says.

Customers should take steps to keep energy costs down, says Kolk, who doesn't believe slapping a solar panel on the roof is necessarily the best fix.

"For most residential ratepayers, it does not pay for itself," he says. "They are better off taking the $20,000 they would spend and do weatherizing, replacing their appliances, upgrading their insulation and windows."

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