While we appreciate interest in MCE, we find Mr. Phelps’ recent criticism of MCE’s upcoming rate change to be remarkably inaccurate, misleading to readers, and not reflective of information that has been provided to him. Therefore, we would like to provide the following response to his misleading claims:
1. Rate Changes and Impacts
MCE has proposed a rate increase of about 7%, bringing our rates closer to PG&E’s current generation rates. This increase – which is smaller in both percentage and actual dollar amount than PG&E’s increase in January 2013 – is needed to reflect the rising cost of our contracted energy commitments, such as the solar we now purchase from the San Rafael Airport. It is not related to our expansion into Richmond. As proposed, we expect that the typical residential customer after April will pay about 90 cents more per month for MCE’s 50% renewable energy than they would for PG&E 20% renewable energy, while commercial customers should continue to see a small savings. The MCE Board will be voting on whether to accept or adjust these proposed rates in April.
2. Rate Setting Process
MCE sets its rates annually based on the fiscal year budget adopted by our Board. In 2012, due to a number of changes in revenue and customer costs, MCE was faced with what would have been a revenue surplus for the year. Because MCE is a not-for-profit agency, we were able to pass these savings directly to our customers by lowering rates for residential, large commercial, industrial and street lighting customers.
In 2013, rates will increase for all customers due primarily to higher power supply costs associated with serving all MCE customers. We look forward to any additional customer input on rate design as we move towards implementation of these proposed rates.
3. Market Costs of Electricity
MCE’s rate increase is not due to deficits or hidden costs. The contract prices for MCE’s non-renewable energy costs generally increase on an annual basis, and this cost increase is the primary cause of the FY 2014 rate increase. The terms “fixed” and “fully hedged” mean that MCE’s power supply costs are not subject to market price volatility during the term of the contract. For example, if market prices spike due to a heat wave or some other event, MCE’s power supply costs would not be materially impacted because of the price hedges that MCE has put into place to control power costs.
5. Misreprestation of the University of California
Mr. Phelps makes a number of misrepresentations regarding renewable energy certificates (RECs), including misattributing an op-ed from a UCSC professor as somehow representing the position of the University of California as a whole. This is remarkably misleading given that the subject of the paper is that UCSC utilizes and purchases RECs to support renewable energy generation equivalent to its own electric usage. Claiming the editorial represents the University of California is patently false and intentionally misleading.
5. Conflicting Viewpoints Regarding RECs
Mr. Phelps’ comments regarding RECs are particularly disingenuous and intended to mislead readers as he himself has been a strong proponent of RECs, and has strongly urged the local cities and towns in Marin County to purchase RECs to green their energy supply. For example, in the minutes of the Town of Ross City Council meeting on September 15, 2011, Mr. Phelps is quoted as stating, “…Ross can purchase a Renewable Energy Certificate (REC). It is a green attribute paid for from a wind farm.” Mr. Phelps then went on to say, “RECs allow everyone to be green.”
6. Understanding RECs
RECs are part of MCE’s energy portfolio, in addition to local and in-state renewable energy generation and third-party suppliers. RECs are the energy industry’s means of accounting for renewable energy: noting credit when renewable electricity is generated, and then ensuring that nobody can take credit for renewable energy more than once. All grid-tied renewable energy projects generate RECs. The solar project at the San Rafael Airport – which most would agree is ideal as far as local renewable energy generation is concerned – produces RECs. This is how energy suppliers keep track of renewable energy.
7. Identifying MCE on Bills
RECs are an important tool to help support the development of new renewable energy facilities and reduce greenhouse gas emissions in the western U.S., while keeping rates competitive for customers. Each REC that MCE purchases is tied directly to a certified renewable energy facility supplying electricity to the western region electric grid. MCE REC purchases are independently certified and verified by Green-e Energy.
We understand that electricity bills are complex and can be difficult to understand. MCE’s charges are clearly marked on PG&E electric bills on the front page and on the Third Party Electric Detail page. Visit www.mceCleanEnergy.com/bill-explanation to view a sample bill.
For more information on MCE’s current and proposed rates, or any other questions, please contact us at info@mceCleanEnergy.com.
Communications Director, MCE