{"id":25399,"date":"2010-04-21T13:17:20","date_gmt":"2010-04-21T17:17:20","guid":{"rendered":"http:\/\/home.bates.edu\/?p=25399"},"modified":"2018-06-04T09:23:01","modified_gmt":"2018-06-04T13:23:01","slug":"power-by-the-people","status":"publish","type":"post","link":"https:\/\/www.bates.edu\/news\/2010\/04\/21\/power-by-the-people\/","title":{"rendered":"Power by the People"},"content":{"rendered":"

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Energy entrepreneur Paul Fenn ’88 and his bates brain trust are at the front of Northern California’s green-power revolution<\/h3>\n

By Bryce Hubner \u201900
\n<\/em><\/p>\n

Fifteen years ago, as a young, idealistic, and naive aide to a Massachusetts state senator, Paul Fenn \u201988 had a big idea: Allow local governments to bypass traditional utilities to create their own electricity purchasing collectives.<\/p>\n

He called it Community Choice Aggregation, and he hoped CCA would give municipalities the power to pursue greener electricity options.<\/p>\n

So he wrote up a bill \u2014 which was quickly laughed out of the Massachusetts State House. \u201cIt was an awkward moment,\u201d Fenn says.<\/p>\n

Today, Fenn is still idealistic but far less naive. As founder and president of San Francisco-based Local Power Inc<\/a>., he is smack in the middle of a Northern California electricity revolution that could change the way power is generated and delivered to millions of citizens in the San Francisco area.<\/p>\n

Right now, two influential California communities \u2014 the city of San Francisco and Marin County \u2014 are swiftly moving to adopt the state\u2019s first CCA policies. These green energy agreements, supporters say, will deliver never-before-seen levels of renewable energy: 51 percent in San Francisco and 75 percent in Marin County, respectively.<\/p>\n

Meanwhile, the agreements would meet or beat the electricity rates offered by current electricity provider Pacific Gas & Electric.<\/p>\n

\u201cIf successful, these programs will be world leaders in climate action and green-power development,\u201d Fenn recently told The New York Times<\/em>.<\/a><\/p>\n

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The CCA concept in California owes its existence to Fenn and Local Power, whose Bates-flavored corporate brain trust includes, among others, co-founder and CFO Julia Peters \u201986, who is married to Fenn; co-founder and COO John Cutler \u201986; and adviser Bradley Turner \u201987 of Booze Allen Hamilton, a lawyer and contract expert in public-sector projects.<\/p>\n

A decade ago, in the wake of crippling energy shortages blamed in part on utility company mismanagement, California sought ways to improve the state\u2019s electricity market. Fenn, by then in California, wrote another CCA bill, and this one was embraced and adopted in 2002.<\/p>\n

Basically, a CCA replaces the traditional investor-owned utility with a local organization that can control the types of power it procures, explains Severin Borenstein, co-director of the Energy Institute at Berkeley\u2019s Haas School of Business.<\/p>\n

\u201cA CCA is usually established by a community that feels its big power company isn\u2019t buying the types of green power it wants,\u201d he says. Enter progressive-minded Marin County and San Francisco.\u00a0 CCAs are uniquely positioned \u201cintegrators,\u201d Fenn recently told the Times<\/em>. \u201cThey don\u2019t…have conflicts like [owning] old power plants and transmission lines.\u201d<\/p>\n

In Marin County, Fenn\u2019s Local Power competed with the big boys in bidding to provide new, local, and green electricity. As of mid-winter, Shell Energy North America was the lead bidder for the Marin CCA.
\nIn San Francisco, where Fenn authored the local CCA ordinance, the stakes are perhaps higher for Local Power. In October, the city officially hired Local Power to coordinate the city\u2019s CCA effort, known as CleanPowerSF. Thanks to Fenn, the CCA has some financial oomph: a bond authority mechanism to allow more than $1 billion in green power investment.<\/p>\n

\u201cThe idea is to create some investment strength and leverage,\u201d he says, \u201cso that the CCA doesn\u2019t just negotiate to buy power, but also issues bonds, builds renewable energy infrastructure, and then buys power from it.\u201d<\/p>\n

Why has the CCA movement gotten the incumbent utility, Pacific Gas & Electric, so steamed?<\/p>\n

In response, Pacific Gas & Electric is now sponsoring a statewide ballot initiative that would require two-thirds voter approval before a local government could form a CCA involving public investment. Considering that the time of day might not win a two-thirds majority in any state, the California ballot measure, if passed, would effectively kill the CCA movement. (In fact, the Sierra Club of California has sarcastically suggested that the ballot measure be renamed \u201cThe Utility Monopoly Protection Amendment,\u201d or \u201cThUMPA.\u201d)<\/p>\n

Why has the CCA movement gotten the incumbent utility, Pacific Gas & Electric, so steamed? Just follow the money. The Marin Energy Authority estimates that its CCA will cost PG&E as much as $94 million annually in Marin County alone. PG&E has already spent $3 million to acquire signatures to send the initiative to ballot in June, and some reports suggest PG&E is ready to spend up to another $100 million to bull the initiative through.<\/p>\n

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Fenn, meanwhile, tries to remain equal parts Zen master and Erin Brockovich. \u201cYou know how it is,\u201d Fenn says. \u201cFirst they ignore you, then they laugh at you, then they attack you, and then you win. We\u2019re in the attacking stage now, which is nice.\u201d<\/p>\n

More than a decade ago, Paul Fenn and Local Power arrived on the Bay Area scene in what amounts to a fascinating amalgamation of scholarship, activism, politics, and business.<\/p>\n

A history major at Bates, Fenn was so consumed by his thesis on the \u201cmedicalization of madness\u201d that he shaved half his head and half his beard for six months just so he could \u201csee how people responded to someone who looked mad.\u201d His method went beyond madness, as Fenn\u2019s thesis won highest honors and the Ernest P. Muller Prize as the outstanding history thesis.<\/p>\n

After Bates he traveled to Berlin, where he was a rabble-rousing civil rights activist with the left-wing (and often militant) Autonomen movement. Later, he earned a master\u2019s in intellectual history at the University of Chicago, where he got interested in energy policies.<\/p>\n

Particularly interesting to Fenn was emission credit trading, at the time just beginning at the Chicago Board of Trade. Fenn says he arrived at studying commodity structures as an historical phenomenon by way of a \u201cMarxist-Hochstadtian\u201d perspective (\u201cHochstadtian,\u201d he explains, being a reverent nod to former Bates history professor Steve Hochstadt), further informed by the Marxist philosopher Georg Luk\u00e1cs, \u201cwho basically said that the problem with the world is the commodification of everything.\u201d That is, we want everything to be tradeable.<\/p>\n

Fenn\u2019s first real job came in 1994, when he joined the staff of a Massachusetts state senator, Mark Montigny, who had just been appointed chair of the Committee on Energy. Fenn took the job so he could write a bill on energy policy that treated electricity as a \u201cphysical and local thing rather than simply a commodity.\u201d<\/p>\n

The nation\u2019s first-ever CCA bill, Massachusetts Senate Bill 447, was submitted by Montigny in December 1994. But shortly after the bill was filed, Montigny was stripped of his chairmanship after a losing political battle with then-Senate President Billy Bulger.<\/p>\n

A bitter political lesson followed. Fenn learned what happens when a legislator submits legislation that no one wants. \u201cEverybody was really pissed off,\u201d Fenn says. \u201cI mean, I just cooked up the bill. Nobody was asking for it, no cities wanted to aggregate, no environmental groups wanted city government involved, and the utilities were obviously against it.\u201d<\/p>\n

He was quickly out of a job, but the idea didn\u2019t die. Two years later, with deregulation being encouraged at the federal level, CCA was part of sweeping deregulation of Massachusetts utilities. Several communities on Cape Cod later established the Cape Light Compact, the nation\u2019s first CCA.<\/p>\n

\u201cI felt like the only openly Republican, and Paul was an eccentric socialist,\u201d Cutler says. \u201cBut we appreciated each other\u2019s candor.\u201d<\/p>\n

Fenn soon headed to California, where he began his environmental and energy advocacy and, at times, worked for good friend John Cutler \u201986, who recalls their initial interactions at Bates. \u201cI felt like the only openly Republican, and Paul was an eccentric socialist,\u201d Cutler says. \u201cBut we appreciated each other\u2019s candor.\u201d<\/p>\n

Cutler was involved with a San Francisco startup that eventually became T-Mobile USA. In the late 1990s, he needed help executing a massive wireless effort in the Czech Republic, and turned to his cerebral friend Fenn. \u201cPaul could be injected into almost any situation and get the job done,\u201d Cutler says.
\nThe Czech project required competitive bidding for an operating license plus infrastructure work at more than 700 sites \u2014 just the kind of logistical nightmare Local Power will face if they hope to bring large-scale green energy to the Bay Area.<\/p>\n

CleanPowerSF proposes to bring 360 megawatts of green power into San Francisco, and Fenn knows he\u2019d be laughed into Nevada if he promised to deliver the goods with just one sustainable source.<\/p>\n

\u201cThe complexity of our venture has to do with a decentralized model,\u201d he explains. \u201cThe energy we\u2019re trying to bring to San Francisco would normally equal one big power plant. We\u2019ll have to build a thousand small, green generators to hit that number. This is why our experience with telecommunications and wireless networks has been invaluable: Those companies deal with thousands of sites to deliver a product, and so will we.\u201d<\/p>\n

Fenn initially founded Local Power in the 1990s as a nonprofit to advance green energy at the grassroots and government level. Fenn, joined by Cutler, decided to incorporate in 2007 to provide consulting services and \u201cenergy intelligence tools\u201d to aid the CCA movement. \u201cThe private sector moves a lot faster because money is the bottom line,\u201d Fenn says. \u201cGovernment, by nature, is risk-averse, slow, and conservative. But the planet\u2019s running out of time.\u201d<\/p>\n

Nationally, the CCA concept is applauded for empowering communities to make decisions about what types of energy they procure. (CCAs are in place in Massachusetts and Ohio and, while not technically a CCA movement, Maine\u2019s utility deregulation a decade ago has allowed Bates and other Maine entities to buy their own green power.)<\/p>\n

But Fenn\u2019s vision of large-scale CCAs offering green power at \u201cmeet-or-beat\u201d utility rates is met with skepticism. Conventional wisdom says that delivering green power on a massive scale and as cost-effectively as traditional utilities is impossible. Renewable energy sources, like wind and sun, are too site-specific and only intermittent. Power grids are fragmented, so you can\u2019t transport energy over long distances with any real efficacy.<\/p>\n

\u201cCCAs can be organized as amazing opportunities to purchase green energy,\u201d says Borenstein of Berkeley\u2019s Haas School. But, he adds, when a CCA decides to ramp up on more expensive technology and power, like solar or wind, prices will go up just as they would for a major utility. \u201cMeet-or-beat rates are implausible,\u201d he argues.<\/p>\n

Fenn says critics fail to appreciate how bond financing is not like a typical business loan. \u201cBonds change the economic equation profoundly,\u201d he says. \u201cThe cost of power can be brought down to reasonable levels based on a long-term investment approach.\u201d<\/p>\n

For example, he says, private banks once said it was too expensive to build massive bridges like the Golden Gate Bridge and that the paybacks were too slow. \u201cThat\u2019s why public finance authorities were created to build them. The same argument applies to solving climate change. We need brick and mortar and hardhats \u2014 not just market transaction windfalls and commodity fetishism.\u201d<\/p>\n

Fenn knows what\u2019s at stake for the emerging green CCAs in Marin and San Francisco. Victory in Northern California could presage a national green-power revolution. But if the two CCAs fail \u2014 quite possible if the PG&E\u2013supported statewide ballot measure passes in June \u2014 it could mean death for the entire CCA movement.<\/p>\n

Fenn is now older and wiser but still no politician.<\/p>\n

Speaking before a San Francisco energy commission last year, Fenn raised eyebrows by saying that installing a tidal-power turbine in San Francisco Bay was worth it, even if it meant the potential deaths of construction workers. \u201cConsider how many people your current energy supply is killing right now,\u201d he told the commission.<\/p>\n

\u201cIt\u2019s funny,\u201d Fenn says now, \u201chow a country that prides itself on innovating sometimes maintains an intense cultural resistance to innovation. It\u2019s what killed the auto industry in Detroit and it\u2019s what will sink the power industry.\u201d<\/p>\n

Fenn\u2019s ideals, however, are intact. \u201cOur biggest challenge, by far, is helping people understand that it\u2019s possible.\u201d<\/p>\n

Bryce Hubner \u201900 is a freelance writer and photographer based in Northern California.<\/em><\/p>\n

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