Pacific Gas & Electric Company (PG&E) is at the center of the energy transition in the United States. Not only does California have one of the nation’s most aggressive mandates to decarbonize, but a combination of the state’s community choice aggregator (CCA) movement and the wildfires that have ravaged Northern California have put the utility in the crosshairs of changes in the utility business model.
This is not to say that PG&E is changing willingly; instead bankruptcy and a safety record including convictions related to the San Bruno gas disaster are forcing change. Adding to a plan to proactively de-energize power lines in areas and times of high fire danger, PG&E also pledged to reform its board as former CEO Geisha Williams stepped down in January.
Yesterday PG&E announced that it has chosen the leader of TVA, William Johnson, as its new CEO and President – along with the appointment of ten new directors as seven directors step down. The utility cites Johnson’s role in turning around TVA, including achieving the best safety record in the industry and the retirement of more than half of TVA’s coal-fired generation.
PG&E further claims that TVA has added roughly 1 GW of utility-scale solar in recent years, along with modernizing the utility’s hydroelectric assets.
Advocates not impressed
To solar advocates, the words TVA are not associated with leadership. After rumors emerged the Johnson would be PG&E’s choice, In March Vote Solar, Environment California and Earthjustice sent a joint letter to the utility’s interim CEO, calling on the utility to choose a leader who has a demonstrated commitment to not only safety, but “advancing California’s public policy priorities around climate and energy issues”.
And following yesterday’s announcement, Vote Solar Executive Director Adam Browning issued a statement denouncing the move:
While we need a renewable energy leader, TVA, under Bill Johnson’s leadership, is a renewable energy laggard. California is demanding 21st century solutions, and Mr Johnson’s resume is very much rooted in the past. After a history of deadly disasters, PG&E customers also deserve board leadership with a laser focus on the safety of our families and communities.
I’m concerned that these board and CEO decisions, which were promoted behind-the-scenes by a few New York hedge funds, keeps PG&E on a dangerous course track of continuing to place shareholder interests above the interests of the public that this utility is intended to serve. Californians deserve better.
Vote Solar estimates that TVA got only 3% of its power from wind and solar in 2018 – about 1/3 the national average. The organization also notes the power company’s moves to stop customer-sited distributed solar, an area in which TVA has been particularly brazen.
CCAs on the move
While PG&E has been under pressure to appoint new leadership, this may not be sufficient to stop the tide of change. And leading much of this change are California’s Community Choice Aggregators (CCAs), entities formed by local governments which have taken over procurement of electricity generation in much of PG&E’s service area with a mandate to decarbonize rapidly.
California’s CCAs have already called on the state to take away PG&E’s retail business and leave the utility to manage its transmission and distribution system. A day before PG&E announced Johnson as its choice, the trade group formed by CCAs launched its new Bright Energy Future coalition, under which it is seeking individual and organizational partners to advance its mission.
This mission includes “empowering local governments to develop and expand their role in providing electricity services, while supporting a range of community clean power choices” – in other words, more CCAs.
Unclear path forward
California regulators have expressed caution regarding the growth of CCAs, with the California Public Utilities Commission (CPUC) warning last May that the state could “drift into another crisis” without a plan to manage the “dozens of different decisions and legislative actions” changing the power sector.
However, other concerns, such as those some have expressed to pv magazine over the ability of CCAs to serve as credit-worthy offtakers for large generators, may be overplayed. Last October Peninsula Clean Energy signed a power contract with a 200 MW solar project, and if anything it is PG&E – which has filed for bankruptcy twice in 20 years – that is looking financially unreliable.
It remains to be seen where things will move from here, with many actors – Governor Newsom, the state legislature and regulators – all expressing interest in weighing in. But as for PG&E, it appears that instead of embracing change, the utility is doubling down on its previous positions.
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