State energy problems expected this summer
Santa Monica has purchased a year’s supply of electricity for $2.5 million from a renewable energy source.
By buying all of its electricity at once, the city saves about $157,500 because it is not purchasing the same amount of energy from Southern California Edison, officials said. The city will use the electricity in all of its public buildings and facilities.
City officials say the cost savings was not their primary motivation. Over the past four years, the city has been buying its annual allotment of energy from Irvine-based electricAmerica, which sells energy generated from CalPine, a geothermal plant located in Northern California.
The company then releases the electricity onto the grids operated by SoCal Edison, which serves Santa Monica. The city pulls the equivalent amount off the power lines.
“The amount we are paying for comes off the grid but we don’t get those specific electrons,” said Craig Perkins, director of the city’s environmental and public works department. Perkins was chiefly responsible for making the city’s purchase.
Roy Reeves, an electricAmerica executive, said his company purchased a long-term contract of its own from the CalPine plant at a fixed low rate before the energy crisis. That’s how the company can sell “green” renewable energy, which typically costs more, at a competitive rate.
However, newly enacted state legislation which blocks citizens from switching to new electricity sources almost ruined Santa Monica’s deal.
The law is intended to make sure the state is paid back for all the expensive long-term energy contracts it negotiated during last summer’s crisis.
“The state legislature is very fearful utility customers were going to flee for private retailers like us who are providing 100 percent green energy at a discount,” Reeves said.
“The state legislature is very fearful utility customers were going to flee for private retailers like us who are providing 100 percent green energy at a discount.” — — ROY REEVES electricAmerica executive
By going with a company that didn’t buy into the state’s long-term contracts, the city may have been fined or forced to go back to SoCal Edison. However, since city officials had a long relationship buying energy from electricAmerica, the sale was able to go through.
“If you want to be a direct access customer you have to pay a fee to the state, so few people are going to do that,” Perkins said. “That’s how the state makes sure they have enough people to pay off all these bad long-term contracts.”
Currently state legislators are debating whether the penalty fee, which is based on a percentage of the transaction, should be waived for people and municipalities that want to buy their electricity from renewable sources.
Even though the city purchases its energy supply from a different source, Santa Monica is still subject to any roaming blackouts from SoCal Edison’s grid.
“If Edison’s grid blacks out, we black out with it,” Perkins said.
While last year’s energy crisis caused several roaming blackouts throughout Santa Monica, the city has worked out an agreement with SoCal Edison that power for the police and fire departments, as well as traffic signals and water pumps, is never disrupted.
With meteorologists predicting another long, hot summer many people are worried last year’s energy problems will be repeated this summer.
City officials said only through conservation will those same problems be avoided this year.
“Last summer California customers reduced their electricity use by 20 percent,” Perkins said. “I don’t see why we can’t do the same this year.”
Originally published in the Santa Monica Daily Press print edition on June 27, 2002. Read the original PDF.