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Page 6 scp edition August 1, 2019
meanwhile, back at the sonoma clean power office ...
Photo Loren Hansen
bOARD — Sonoma Clean Power board of directors at their monthly meeting at agency headquarters July 11, clockwise from left:
Point Arena Councilmember Jonathan Torrez, Cloverdale Mayor Melanie Bagby, Sonoma Mayor Amy Harrington, Windsor Councilmember Bruce Okrepkie, Sebastopol Vice Mayor Patrick Slayter, Cotati Councilmember Mark Landman, Mendocino County Supervisor Dan Gjerde, Petaluma Councilmember Mike Healy, Sonoma Clean Power officials general counsel Jessica Mullan, CEO Geof Syphers, director of internal operations Stephanie Reynolds, chief operating officer Michael Koszalka, PG&E guest, director of customer service Erica Torgerson. Absent were Rohnert Park, Sonoma County and Santa Rosa. The success of Sonoma Clean Power is in the hands of 22 employees, an elected board of directors and a volunteer committee of community advisers. The board of directors and the advisory committee meet regularly in a conference room at Sonoma Clean Power headquarters on the fifth floor of 50 Santa Rosa Avenue in Santa Rosa. They hope to move into permanent headquarters at 431 E. Street, remodeled for roughly $12 million, in 2021. Meetings are open to the public and most of the staff also attend these meetings. The gatherings are intimate, with staff, directors and advisers easily accessible for conversations with the public. The schedule of meetings is posted at sonomacleanpower.org/calendar. Although Sonoma Clean Power is overseen by state and federal regulators who try to ensure a reliable flow of electricity to citizens, these regulators do not control Sonoma Clean Power operations. The staff Heading the staff is Geof Syphers, who has been CEO since the beginning. He began working on the Sonoma Clean Power project in 2012, when the Sonoma County Water Agency hired him at $240,000 a year to help with issues around sustainability, energy contracts and government relations.
Syphers became CEO in January 2014. His five-year contract which began Sept. 1, 2016, provides for a base salary of $275,000 a year, a 2 percent annual cost of living increase and an annual performance-based increase of up to 3 percent. Annual cost of benefits is estimated at $47,250. By comparison, the chief executive of MCE (formerly Marin Clean Energy) is paid $340,000 plus $65,437 in various benefits, and in 2018 the top Sonoma County administrator got $283,285 in total pay and another $66,885 in benefits, county officials confirmed. In May, Sonoma Clean Power hired its first No. 2 person, chief operating officer Mike Koszalka, who has worked in the energy industry for 40 years, including for PG&E and most recently with the global consulting firm ICF International in Portland. Salary and benefits for the 22employee staff are about $3.7 million a year. Employees do not have a pension, instead they have a defined contribution plan. Sonoma Clean Power does not have a chief financial officer. It contracts with outside accounting firms. And it does not have a chief technical officer. Some observers have said at public meetings that these lapses worry them. The board of directors An 11-member board of directors sets policy for Sonoma Clean Power and its staff. The board includes
representatives from Sonoma and Mendocino counties and the 11 member cities: Cloverdale, Cotati, Fort Bragg, Petaluma, Point Arena, Rohnert Park, Santa Rosa, Sebastopol, Sonoma, Willits and Windsor. Usually the governments appoint an elected official to represent them on the Sonoma Clean Power board. The current chairperson is Cotati councilmember Mark Landman. Rarely do Sonoma Clean Power directors have professional experience in the energy markets. All admit to facing a steep learning curve and pledge their commitment to the task. “I’m running a $100 million corporation,” Windsor Councilmember Bruce Okrepkie said at one meeting, seeming to marvel at the unusual opportunity for a councilmember and insurance broker from a town of about 28,000 people. The volunteer Community Advisory Committee The 11 members of this committee advise Syphers and the board. Many have deep experience in the power industry. Some put their emphasis on protecting ratepayers, some stress fiscal strength, some argue for “audacious” green energy goals, some want to see local generation and local projects and all believe Sonoma Clean Power is an important front in the struggle against greenhouse gas emissions. Before Syphers goes to his board
with a request, he usually runs his ideas by these advisers and then shares their input with the board. Directors have repeatedly said that input from the committee volunteers is valuable to them and plays a key role in their decisions. The committee does not typically weigh in on specific electricity contracts because sometimes negotiations can’t wait, though it can request a review. A new kind of power company The governing structure at Sonoma Clean Power, a public agency with revenue of about $180 million mainly from power sales, is different from the $16.8 billion publicly traded PG&E Corp. PG&E has a board of directors who answer to shareholders. It is regulated by the Federal Energy Regulatory Commission in Washington, D.C., and by the California Public Utilities Commission in San Francisco, where five commissioners appointed by the governor carry out state energy laws, set policy for PG&E and must approve key PG&E business decisions including rates. The Office of Ratepayer Advocates and The Utility Reform Network argue for reasonable rates and consumer protections. An important job of the California Public Utilities Commission is to make sure PG&E rates are fair to ratepayers but also high enough for PG&E to be profitable, so PG&E can stay in business and continue to supply electricity to its customers. Sonoma Clean Power doesn’t get the same oversight or protection. Its main oversight comes from its local board of directors. Community choice agencies like Sonoma Clean Power are overseen but not controlled by the public utilities commission. The commission has to approve their start-up operation plans, and Sonoma Clean Power has to show that it has contracted for enough power to serve its customers plus file more than 60 annual compliance reports with various agencies, Syphers said. But operations, energy contracts and rate decisions are handled by Sonoma Clean Power’s board members, who come and go. Since Sonoma Clean Power began in May 2014, 43 people, including some alternates, have served on the 11member board. Only Landman and Okrepkie have been on the board since the beginning. One issue common to both the California Public Utilities Commission and Sonoma Clean Power is some public concern about conflicts of interest. Sonoma Clean Power has a conflict of interest code that covers the board
of directors, Community Advisory Committee members and staff. Still, some board members have expressed concern about the strong energy interests of some advisory committee members, and some board watchers have said a conflict of interest occurs every time Sonoma Clean Power directors approve consulting contracts with the Sonoma County water agency. That’s because by design one of the 11 Sonoma Clean Power directors is a director of the water agency. Today Sonoma Clean Power pays the water agency up to $275,000 a year to conduct education programs for students and teachers, including visits to 49 schools in 2018. Other observers have expressed a need for the agency to set standards for ex parte communications. An ex parte communication occurs when a board or committee member communicates privately with someone who might be affected by a decision. “With the huge funds under the control of Sonoma Clean Power directors, it is imperative that they institute a strict policy of prohibitions against ex parte communications with contractors and lobbyists who stand to potentially rake in millions in Sonoma Clean Power contracts,” said David Keller, a government watchdog and a recently retired board member of Sonoma County Conservation Action, a leading environmental organization. Ex parte communications have become a hot issue in California in recent years with a cascade of revelations that officials at the California Public Utilities Commission and the California Coastal Commission were meeting, emailing and talking privately with utilities, developers and other parties affected by the commissions’ decisions. Keller also believes an independent audit of how Sonoma Clean Power sets rates is needed, something similar to the California Public Utilities Commission’s review of PG&E rate setting, to make sure rates are properly set. For example, when PG&E raises its rates, Sonoma Clean Power usually does, too. Who makes sure that’s needed? Who independently watches for duplicity by suppliers that drives up costs to ratepayers? “Who’s following the ratepayers’ money?” asks Keller. “Somebody absolutely will try to game this. What’s in place to prevent that?” Syphers said board members have told him they expect the staff to run the show well and hire professional help when needed. They expect Syphers to lay out the technical issues for them with detail and clarity, and the board will have a thorough public discussion.
The ACtion’s in the power pit In a wide open room that her team calls the power pit, high above Santa Rosa’s Courthouse Square, Deb Emerson spends much of her day watching at least four computer monitors flashing with mutating hieroglyphics. As data scurries across her screens, she is tracking, assessing, calculating and planning her next move on one of the most demanding commodity markets in the world, the market for electricity. Emerson is Sonoma Clean Power’s director of power services. The electricity needs of the county’s residents and businesses change by the split second, and it’s Emerson’s job to make sure that Sonoma Clean Power’s 224,000-plus customers can get exactly what they need at any given moment. Emerson has been navigating this energy netherworld for more than 20 years.
Most recently she was vice president and senior trader for Constellation Energy, one of the industry giants, where she managed their western United States hydropower and wind portfolio from her desk in Baltimore. Before joining Constellation in 2001, she was an energy trader for Tulsabased Williams Energy Market and Trading for three years, where she traded through the chaos and collapse of the California electricity market in 2000 and 2001. Today Emerson is not an energy trader. In industry jargon, she’s an “originator,” which means that she manages Sonoma Clean Power’s energy portfolio, buying both long and short-term contracts and adjusting as needed. She reports transactions to the California Independent System Operator which manages the region’s electricity grid from its headquarters in Folsom. “I put the pieces of the
puzzle together,” she said. Working with her in the power pit are senior power services manager Rebecca Simonson, a mechanical engineer with advanced degrees from Sonoma State University and the University of New South Wales in Sydney, Australia, and Carlos Gomes, a financial and market analyst with a degree from the Universidade do Estado do Rio de Janeiro and a Professional Certificate in Finance from the University of California at San Diego. By email and telephone, Emerson is in frequent contact with other energy experts, many of whom she has worked with for years. On her screens she watches for emails, breaking news, Nymex natural gas prices, charts, graphs, forecasting, market action, weather trends and more. Sonoma Clean Power buys electricity from energy giants like Constellation, and it is also
Photo Sonoma Clean Power
IN THE PIT — The power pit crew handles power procurement for Sonoma Clean Power, left to right:
senior power services manager Rebecca Simonson, director of power services Deb Emerson, financial and market analyst Carlos Gomes.
diversified into multiple types of contracts from generators in several states. Buying power is challenging. Besides standard contract risks like whether the supplier will perform as
promised, the contracts themselves are fiendishly complex, easily 30 to 100 singlespaced pages of charts, jargon, contingencies, damages, indemnities, covenants, collateral requirements,
defaults, downgrades, disruptions and remedies. No one knows where energy market prices will be a few weeks from today, much less for the years covered by some contracts.
a glimpse at caiso (California Independent System Operator) On the southern edge of Folsom east of Sacramento sits the nerve center of California’s electricity markets, the headquarters of the California Independent System Operator, manager of one of the largest power grids in the world. An independent nonprofit that opened in 1998 when the state restructured its wholesale electricity industry, the Independent System Operator matches buyers and sellers for more than 28,000 market transactions every day and routs electricity across the high-voltage long distance power lines of the electron superhighway to 30 million customers 24/7. Because electricity can not yet be
cost-effectively stored, supply and demand must always be in balance. Pictured at right, the 10 visual displays, on a wall 80 feet wide by 6½ feet high in the Folsom control center, let operators grasp volumes of information at a glance. Source: California ISO. To schedule a tour, go to caiso.com/about/Pages/OurBusiness/ ToursSpeakingEngagements.aspx. To watch the California energy market unfold in real time, go to caiso.com/Pages/ ISOToday.aspx. Photo courtesy California ISO
To meet the 11 people who serve on Sonoma Clean Power’s volunteer Community Advisory Committee, and to find out how you can be on the committee, go to Page 9.