Wednesday, October 11, 2023

Rural responses to corporate utility disasters (Part III): Building local power through community choice aggregation and microgrids

In this series on rural responses to corporate utilities, I have used the August 10 Butte Creek PG&E canal failure as a spring board for examining both investor-owned utility harms and community response. My first post talks about the failure’s devastating ecosystem impacts and the immediate community response. In my second post, I examined how the Klamath Dam removal project could provide a blueprint for Butte Creek Canyon and Chico community members to succeed in removing the Centerville dam and associated hydroelectric project. In this third and final installment, I turn to the topic of local electricity options.

Residents of Butte Creek Canyon and others in the Chico area frequently express justified frustration with PG&E, the large investor-owned utility that serves Butte County and much of the rest of California. After looking at local alternatives to PG&E, I see a path forward via community choice aggregation (CCA) and microgrids.

Butte County residents’ feelings, largely spurred by PG&E-caused fires, ecosystem threats, and blackouts, are not unique. In 2019, when PG&E was more frequently in the news, public dissatisfaction throughout the utility’s service areas rose from 49% to 61% in just 9 months. Around the same time, some state leaders, including Gov. Gavin Newsom considered replacing PG&E with a large public utility (you can read more about the debate to do so here). However, the state ultimately approved PG&E’s reorganization plan, more or less ending the immediate chance of a state government takeover.

This has largely left PG&E alternatives in the hands of regional and local governments.

Public utility districts are one option for local governments.They are municipalities or municipal corporations that provide and distribute energy for their residents.

While public utilities operating their own distribution infrastructure can offer community members a high level of oversight and energy resiliency, as well as lower energy rates, creating them can be time and resource intensive. The history of the Sacramento Municipal Utility District (SMUD) is illustrative of this. Voters elected to create SMUD as a customer-owned, not-for-profit electric service in 1926, but operation didn’t begin until 20 years later. This Courthouse News Service article explains the sequence of events:
In 1934, Sacramento voters approved a $12 million bond to acquire PG&E's assets. What followed was a 12-year legal battle. The Railroad Commission, predecessor to the California Public Utilities Commission [CPUC], approved Sacramento's bid to take PG&E's wires and equipment by eminent domain for $11.6 million. PG&E challenged that decision in federal and state court, eventually losing when a state appeals court ruled against it in 1946.
PG&E’s resistance to public utilities didn’t end in the ’40s. In 2006, it spent millions of dollars to defeat a Yolo County ballot measure that would have allowed SMUD to take 77,000 customers from PG&E; and it has met San Francisco with significant resistance over its ongoing efforts to purchase PG&E’s power infrastructure within the city.

The barriers to creating a public utility district are high even for larger cities. They are exacerbated in rural places, where voters are less likely to approve local bond measures and communities often have less capital and fewer legal resources. It can also place the burden of improving poorly maintained infrastructure on communities. Enter community choice aggregation.

CCAs are local, not-for-profit programs through which communities can purchase their own electricity in place of investor-owned utilities. The existing investor-owned utility still operates the transmission lines and provides customer service. While this doesn’t give the community full electric autonomy, it can make local power more feasible in rural places. Under this model, communities don’t enter costly legal battles to acquire PG&E’s equipment and don’t take on the liability and costs of managing an aging grid that requires extensive maintenance and repair.

Communities in Humboldt County launched a CCA program through Redwood Coast Energy Authority (RCEA) in 2017. Their model is one that Butte Creek Canyon and Butte County residents might look to. (For another example of rural microgrids, see this blog post.)

In this episode of the Local Energy Rules podcast, RCEA Executive Director Matthew Marshall talks about the authority’s climate resiliency projects, which include using local logging byproducts of biomass to create renewable energy in the region and solar microgrid projects.

The Blue Lake Rancheria, a federally recognized tribe and member of the RCEA created a solar microgrid in 2018. In 2020, its microgrid allowed the tribe to continue providing onsite power during a county-wide public safety shut-off. This increased energy resiliency directly benefited community health as the tribe provided hotel rooms with continued access to power to community members who relied on electric medical equipment.

In 2022, RCEA opened the state’s first 100% renewable, multi-customer microgrid. The microgrid powers the regional airport and U.S. Coast Guard Air Station, both important facilities during emergencies. In the podcast episode, Marshall said this first multi-customer project can lead the way for other microgrid opportunities:
One of the things that’s very exciting about this, and we’ve gotten a lot of support and funding for this project from the California Energy Commission, is the opportunity to do this kind of a multi-customer microgrid setup [that] really opens up the opportunity to look at neighborhoods or areas where maybe there’s multiple hospitals or other kinds of situations where [... we may] be able to operate a whole section of the grid that includes multiple customers. [That] really will hopefully broaden the range of opportunities where you could deploy micro grids to provide resiliency and emergency response capabilities.
As another rural(ish), northern California region that also faces wildfire and other natural disaster threats, Butte Creek Canyon and Butte County as a whole could greatly benefit from implementing CCA and microgrids in a similar way. While obtaining full control of the grid would also be beneficial (and could still be pursued down the road), a CCA and microgrids offer a more immediate opportunity to create energy resiliency during wildfires and make more renewable energy-based choices within the community. 

And, the community might be able to obtain substantial assistance with funding a project like this. As I finished writing this, I discovered that just today, PG&E launched its portion of a CPUC Microgrid Incentive Program, which will provide grants to disadvantaged and vulnerable communities for installation of clean-energy microgrids. 


Sophie R Radford said...

I've really enjoyed following along with this series of posts. I had zero prior knowledge about US corporate utility disasters and the flow on effects, so this has been really interesting to learn about.

Thalia Taylor said...

In the one economics class I took, I learned that utilities are an example of a natural monopoly because the barriers to entry are so high. Utilities are heavily regulated and, in this country, operate at a regional scale. I wonder if the barriers to entry wouldn't be so high if utilities were generally more local? I know nothing about the technical issues involved in running a power grid, so maybe localized utilities are more of a non-starter practically, but it seems like it could be better. If utilities had to compete with each other, maybe they'd invest in improving infrastructure and providing better service (and lower prices). At any rate, PG&E's series of spectacular failures make me think that there has to be something better. I think that municipal utilities would be great, but, like you point out, they take forever to establish. Maybe more competition would help in the meantime?

J. Todd Bernhardt said...

I think this series illustrates some of the dangers that come with corporate monopolies. It's unfortunate that the American preference for privatization, especially prominent during the the 19th and 20th Centuries when the electrical industry was developed, has now become so entrenched that even a company that the public generally dislikes is able to maintain its hold on such a vital service. I appreciated your discussion of CCAs and microgrids, I did not know much about them before. Do you think that personal electrical solutions such as putting solar panels on the family home or a shed in the backyard, would alleviate this problem and reduce people's dependence on the utility company if enough people implemented them?

Isha Sharma said...

This was a very informative read. I did not know that some counties and the state itself has considered replacing PG&E. I read more on PG&E’s reorganization plan, and I wonder what the oversight for PG&E meeting these goals will be. Is this their final chance from the state? Nevertheless, it is refreshing to see communities come together to think of safer and local alternatives that are not dependent upon a large corporation. It is also great to see PG&E make good on their word and launch a microgrid incentive program. I hope such efforts continue on their part.

Chris Datu said...

Thank you for this informative post, Laretta. I was not familiar with microgrids prior to this. Given they have proven to be both sustainable and effective in the instances you mentioned, I hope PG&E’s CPUC Microgrid Incentive Program is successful. You make strong points about the barriers facing rural communities looking to establish a public utility district, placing the CCA’s as a more viable option. I’m interested to know more about how the CCA’s are formed and what kind of approval process is needed from the community to get one up and running.