Southern California alternative energy provider goes with a (more expensive) known entity

In this Sept. 23, 2013, file photo, a tugboat pushes a barge down the Sacramento River past wind turbines near Rio Vista.

The board overseeing what could soon become the state’s largest alternative energy provider on Thursday took a big step toward getting its fledgling effort off the ground. 

The Clean Power Alliance, made up of 31 jurisdictions and the counties of Los Angeles and Ventura, awarded Calpine Energy Solutions a four-year contract to provide data management and call center services to an initial 1 million customers. 

Although Calpine will charge roughly $2 million more per year than the lowest bidder for the services, the selection panel used various other criteria in selecting the Texas company.

Ventura County as well as Camarillo, Moorpark, Ojai, Oxnard, Simi Valley, Thousand Oaks and Ventura have joined the community choice aggregator, which offers an alternative to Southern California Edison and other traditional power companies. 

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Currently, Edison “bundles” services to customers, and that includes generating, transmitting and distributing the energy. The Clean Power Alliance will still transmit and deliver energy through Edison’s poles and lines, but the energy it produces will be its own.

That’s got a lot of people excited about the possibility of moving away from fossil fuels and relying much more on wind, solar energy and other renewables. But there are still questions on rates, how community choice aggregators, in general, will be regulated and the relationship with existing power companies. And customers can swap between the two suppliers, making forecasting supply tricky. 

Next year, residential customers will start getting notices about the Clean Power Alliance and have the opportunity to either opt out or select from one of three tiers of renewable energy. The higher the renewable mix — and one option will be 100 percent — the more expensive the rate. 

Calpine was one of four companies that bid on doing data management and handling the call center for the community choice aggregator. Clean Power Alliance Executive Director Ted Bardacke said Calpine offered the largest suite of services at a rate lower than what it’s offering its other community choice aggregator customers. It is also already working in the Edison area. 

“We’re very excited to be working with that experience,” he said. 

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For those reasons, the panel recommended Calpine, which operates roughly 35 power plants in California. Just under 12 percent of its power comes from renewable sources, according to its website. 

It wasn’t the cheapest.

Calpine will charge an average of 96.5 cents per month per active meter, or roughly $11.6 million per year by the time all the customers are phased in.

That compares to low bidder GridX, which offered 80 cents per month per active meter, or roughly $9.6 million per year. The next low bidder was Landmark, which offered 88 cents per active meter, or roughly $10.6 million. 

Calpine Energy Solutions secured a contract worth tens of millions with Clean Power Alliance this week.

But the selection committee also factored in financial viability, background, references, program and operational approach, and additional services. GridX received a 1 for financial viability, which essentially knocked it out of contention. 

Bardacke said the company failed to provide audited financial statements, saying its reasoning was that it is a private company.

Scott Engstrom, vice president of GridX, said the company has multiple, long-term contracts with major utilities. The company is profitable and has no debt and provided information to that effect, he said.

“We certainly hoped for a different result. We believe we were uniquely qualified to serve because of our experience in managing large volumes of data,” he said. “The qualifications spoke for themselves and made us the better provider.”

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The costs will be included as part of the Clean Power Alliance’s administrative overhead. 

“If and when we expand or get more customers, our cost per meter would continue to go down,” Jennifer Ward, its head of local government affairs, wrote in an email to The Star.

Supporters of the Clean Power Alliance celebrate Ventura's vote to join earlier this year.

As part of the deal, Calpine will be opening a local call center and staffing it with 40 representatives, Ward noted. 

Last fall, Calpine received the contract for Phase 1, covering municipal buildings for an amount not to exceed $10,000. The bid was limited to the companies that had cleared Los Angeles County’s June 2016 request for qualifications.

Staff had recommended giving Calpine the contract without going to bid earlier this year, but the board voted to solicit other proposals. Calpine’s offer via the bid was about $400,000 per year cheaper than its initial offer, according to Clean Power Alliance staff reports.

During public comment at Thursday’s meeting, several people with the International Brotherhood of Electrical Workers spoke, urging that jobs created by renewable projects be well-paying union ones.

Although renewable energy may be produced more cheaply out of state, union member Francisco Arago asked that not be at the “expense of the local workforce.”

This year, 20 community choice aggregators are expected to be operating in California, serving 5 million customers, according to advocacy group CalCCA

The state Public Utilities Commission is expected to release a preliminary ruling adjusting the exit fee charged to the aggregators to compensate utilities for energy they already bought. That ruling is expected later this month.