michael campbell, to provide an update on those activities. secondly, dawn weiss is here from the marin energy authority, as well as david orth from the san joaquin valley energy authority to talk about their status of where they are with their program and also to address -- am i getting feedback? to talk a little bit about -- these are two programs that are independent programs. they are structured differently than ours in that they have taken on the risk themselves as a public entity for the program. this was an issue that came out before our commission, so they will address some of the issues on risk that they have dealt with in their jurisdictions. so with that, we are going to start with mike.

>> good morning, chairman, commissioners, my name is michael campbell. as ms. miller just highlighted, i am going to give a status update on the variety of areas we are pushing aggressively at the puc to make sure the rules that are set up are as favorable toward the cca as possible. right now, the deck is stacked against us. as mentioned, we will have discussion from representative from the brent and san joaquin valley power authority. first of all, i wanted to let the pc commission know that on september 9 there was a senate committee chair a meeting. i was invited to speak at that meeting, as were marin and san

joaquin folks, as well as nancy miller and chairman mirkarimi. i know president vietor was also in attendance. we gave presentations to the senator to discuss the issues we are facing with pg&e and areas where the enabling legislation could be beefed up. i think that was a good conversation, and hopefully, we will see movement in sacramento associated with those points. we are aggressively participating in a number of proceedings alongside our allies. we are really pushing back on the role that make cca success all the more difficult. one place where we are fighting is the adjustment to the exit fee structure. exit fees will be levied on the customer. what we wound up doing, we are pretty much pro forma

applications, utilities, pg&e in our case, what put forward to the puc to get a rubber stamp. those could include approval for using a method of attack the exit fee. that has not been looked at since it was said in 2006. we noted there was a systematic bias, and that makes the exit fee higher than we believe is appropriate. in protesting that pro-forma filing, we got the commission interested and looked at it, and we have been attending workshops. there was one this week on tuesday, another next week. we have also found common cause with direct access providers who were also there because these exit fees affect them as well. but this is really trying to address is the issue where exit

fees have the perverse incentive, that an accident cca customer has to pay this fee which will help to subsidize renewable portfolios of the utility. we are doing what we can to be more green. why should our customers have to pay an additional fee to pg&e? we are getting some traction at the cpuc. on top of that, at the cpuc, we are looking at making the bond and not more fair. looking at the guarantee, performance bond, that is required in ab 117 that a cca must put out, to cover any entry

fees that the local iou my experience, should the cca terminate and return the customers. if pg&e would have to go into the marketplace, purchase incremental energy. it is to protect their bundled customers. at least that is what the regulatory framework says. we have been looking at that, the method that is currently under consideration. it also has a significant bias to make that value be a lot higher. we have estimated, should we go through a full rollout, in some market conditions, a bond amount would vary depending on where prices were. it could be more than $200

million, the amount that san francisco would need to guarantee to pg&e. marin has been looking into this because it matters very much to their program. as they have been mentioning at the cpuc, there is really no market for such performance guarantees. one of the perverse outcomes of this rule and mechanism, we are fighting against it, we could foresee there could be conditions where the existence of this bond requirement could be the reason alone that daa cc could terminate. how we intend to structure our program, we do not have exposure to fluctuations in the marketplace, but the mechanisms to cap to the bond amount is based on current prices are.

if prices escalate rapidly, the bond amount would escalate rapidly, but there is a disconnect on how likely the cca needs to put their customers back to pg&e. that is a fight that we are taking at the cpuc. lastly, there is an unfair settlement between what are called cogeneration operators, firms that combined heat and power to generate electricity. there is a summit between those entities and utilities, negotiations facilitated by the cpuc for more than a year and a half. provisions of that settlement applied to us, cca's, direct access providers, that would procure crossed for heat and power.

the part that we are offended by, we were never parties of the discussions. we think that it is patently unfair that we were not included. we are working against the cpuc on this. they have approved a settlement but we have some good comments from the commission arguing that that is unfair. our target for grenoble's will always be in excess of pg&e -- grenoble's will always be in excess of pg&e -- renewables will always be in excess of pg&e. that has been keeping us pretty busy, as well as the rfp process. now i want to introduce dawn weiss from the marin energy authority and david orth. supervisor mirkarimi: right

before we bring up our guest, would not you say from the tenor of the senate panel hearing that you and i, and others, attended, that there is a sea change in sacramento recognizing the level of interference or obstructionist practices by the private utility so that it is now on the radar. municipal governments should be free to pursue, in a unfettered way, their ability to become a cca. would you say that that have now captured the attention of others? lines have potentially been crossed where now cpuc is being involved. >> absolutely, there is

frustration with utilities for not meeting their targets. sacramento may be thinking that municipalities like ours can help to achieve the state's targets. as well, general frustrations that pg&e and its other transactions -- they have definitely demonstrated that they have very much changed their posture since ab 117 was enacted. pg&e said they were in different to the formation of cca's. they have demonstrated that not to be the case. in many cases, pg&e has been thumbing their nose at the regulators of the cca. supervisor mirkarimi: clearly, by the activity of pg&e's interference, other regions, and

combine with prop. 16, has captured the attention of state leaders. since the expectation is we should be able to feel more support, to at least mitigate those external threats, 2 san francisco's pursuit of a cca, would you agree with that? >> yes, i would agree with that. we are trying to build a relationship with mr. leno. supervisor mirkarimi: in fact, we are fortified from support elsewhere, eliminating those external threats, that would be something rather unique, something that has not been felt, here in san francisco. is that correct? >> yes. the formation of a cca is a

challenge enough, but having to fight an uphill framework -- the way the rules are set -- getting some additional help would be more than welcome. supervisor mirkarimi: colleagues, if there are no more question for mr. campbell, then we can invite our guests up from marin and san joaquin valley. >> good morning. it is such a pleasure to be here. thank you for the invitation. i will give you an update on where marin energy authority is in our process, and i will talk about challenges we face along the way, lessons learned. supervisor mirkarimi: could you say your name? >> don weiss, interim director of the marin energy authority. we began serving customers in may of this year after many years of study and

investigation and preparation. we are now serving approximately 9500 customers. we consider that to be our phase 1 rollout, about 20% of the load in our jurisdiction. we will be rolling out phase two over the next year or so -- we are targeting january 2012. i will be our remaining 70,000 customers. since our launch, we have also been able to get some programs off the ground which were a part of our original vision. first of all, we had developed and adopted a net energy metering carrot which allowed customers to be paid for any access to energy they produced at their own place of business, residents, beyond what they use. we are allowing customers to roll their credit over month by month, year by year, and we are

allowing customers to cash out if they generate more than they used. that option is not available currently through pg&e. we are excited about the way that this is producing local generation. we pay customers $0.10 per kilowatt hour over and above what they are charged. so is the retail rate, plus $0.10. we have also allocated funding to help with the installation of five vehicles charging stations around marin county. those will be installed over the next months. those will be said by our grain power that we are currently providing. we have energy rebates that are being offered to augment the energy california program. we will be supplying that to customers in the next few months. we just approved a feed in

tariff in january which pays customers who wants to produce power. anything with in marin county's borders is eligible for that terrorists. we also recently approved and rfp forever noble pat power supply in northern california, and in addition to that, a 1 megawatt project has to be within our borders. the intent of that is to cover a program that is similar to the smud solar shares cooperative. it allows customers who live under the trees, who know that they will be moving soon, are not able to install solar on the rooftop, to buy a share of solar in other parts of the community. we are looking at options for customers to share into the

program. we are excited about those programs. there are a couple of threshold that we have been able to meet. we offer two energy products to our consumers. there is the light green product which is 25% california- certified renewable energy. that is at a competitive rate with pg&e. then we also have the deep green product which is 100% renewable energy. that is available to any customer who chooses it. we have seen a lot of interest in that product. that comes in at a premium, $0.10 per kilowatt hour more to be part of the program. i have it at my house. i pay $5 extra per month to get 100% clean power. we have been able to achieve compliance with the renewable portfolio standards after being up and running for only six months. we have a 26.5% renewable mix,

which we are proud of, about double what customers were getting before from private utility. we have also been able to achieve a 70% greenhouse gas reduction. in addition to the wholesale power supply contract, which we put in place in february, we have already begun working on some other power supply sources that will be coming in to search nea's load. we received an application for a hydro project that will cover 3 megawatts of load which will come into play a few years from now. we also just last week executed a power purchase agreement with a small waste to energy landfill project. it will be generating 3.2 megawatts for us and will be coming on line next year. that will serve some of our renewable needs as we expand to phase two. so that is an overview.

i will talk about challenges, and i think mike campbell did an excellent job giving an overview of the regulatory hurdles we are facing. certainly, the marin energy authority has been involved in the same battles, so i will not go over them again, but i will say we have been working closely with attorneys from sfpuc and we found them to be excellent, extremely helpful, and a real ally in these battles. i hope that we can support san francisco as well. i think we are aligned on these issues and we bring a lot of influence to bear. we have also been working with other parties that have aligned interests with us. in addition to the three issues, there are two others that we have been following. i know san francisco has been involved in energy efficiency

proceedings, looking at how we can bring public goods charged dollars into the authority said that we can run some of our own efficiency programs. then there is another issue we have been following called the conservation incentive adjustment, a proposal from pg&e to shift the tiering effect of the bill on to the transmission side of the bill. this would have an negative impact on the marin energy authority and the way that we serve customers, and would also take away our ability to incentivize conservation by using that tier effect. we did face challenges as we were getting up and running, and we were able to outline those in detail at the hearing. if folks are interested in hearing more about that, the information is available on our website. that session was taped, so there is a summary version and a full

version. we did face a lot of marketing threats by the private utility when we began to prepare to launch service. this was early last fall. also during that time and even before, we saw lot of political pressure being brought to decision makers in marin county. there were a lot of closed-door meetings with pg&e representatives, really working to prevent them from continuing to purchase a paid in the marin energy authority, promising duties, like energy efficiency programs and that sort of thing, and to convince some of our cities and towns not to participate. that did some damage to us but not enough to slow us down. we also experienced legal threats from the income the utility. they threatened a ceqa lawsuit

on our part purchase agreement, which was surprising because they have a power purchase agreement approved. particularly, when there is nothing new being built, it is impossible to do a ceqa review. so there were extra resources that we had to allocate in areas that were not anticipated. particularly, around the legal threats and marketing addressing the misinformation that was coming out of marketing. there were some things that were said which were completely untrue. even today, a lot of the marketing that was done at that time comes back to us in customer calls that we get. they believe their lights will go out if they do not opt out.

those things are unfortunate but they have not impacted us to a point where we cannot move forward. that is the good news. there have also been a number of challenges on the operations front, as far as pg&e handling the billing for us. it is a conundrum to have a competitive be responsible for handling your billing, a lot of your customer interface. so there have been some challenges on that front. for example, customers on the balanced payment plan, paying an equal amount every month, they were being charged double for generation for the first four months of service because our private utility could not figure out how to deoucouple those rates. there are also continuing issues on the bill. the rate factors shown on the customer's bill are the bundled

rates. our customers are no longer considered bundled customers. they're only paying half of the generation church, so they should have an unbubdndled rate. despite these difficulties, we have not seen the opt out rate get high enough to where it is impacting us. it came in driver we projected, right around 20%. -- right where we projected, right around 20%. it is unfortunate that customers had to go through this sort of thing though. budget-wise, we've been able to get up and running with a loan from a bank and some individuals, but we are in the process of paying that back now. the financing side of mea is

working as projected. we are in a position now where we can have all of our loans paid off by next summer and be operating from that point forward, building a reserve account. the other good news is that, despite the many challenges that we faced in marin -- and i know that you faced challenges in san francisco and san joaquin -- private utility now is really on its heels. they have done a lot of damage to their reputation, and as a result, are having to be more careful about their actions. i was just asked to sit in on a meeting with the cpuc energy division next week where there is a new requirement discussion where they have to comply with, at the legislative level, for them having to show what issues

cca's are having with utility, and then getting a response back on how they are complying with the cca. so we have a litany of issues that are poor are not in the process of being addressed. those will be combined into a report that will be submitted to the legislator at the end of january, and there will need to be quarterly reports at the end of the year on how things are progressing. these reports will actually be dating back quite a ways. we will be looking back as far as 2005 to look at areas where pg&e did not cooperate with the law, follow the mandate set forward in ab 117. anytime you are planning a new path, there will be popbumps ine

road, and we feel we have done a good job clearing the path. the opt out process is now in cca's court. we did a lot of toying with the statutory opt out service and pg&e was making outbound calls to customers outside of the law, convincing customers to opt out at that time, and that is no longer possible. that, and other things, have been fixed. i think they will continue to be fixed through this legislative process. the last point i would like to make, finding the balance between long-term goals and to market realities is really the challenge that is faced by any new cca.

i think we were able to strike that balance by not letting the perfect the enemy of the debt. we are getting better, we are excited about the programs we are launching. over the course of the next five, 10 years, we can make a real difference in the community. happy to answer any questions. supervisor mirkarimi: mr. torres, please. and feel free, colleagues, if you push the red button, i will be able to see you. >> thank you, mr. president, commissioners. i am disturbed by your testimony because, to me, it speaks volumes about a very unseemly nature of a corporate giant conducting itself in this matter. i have three questions i would like to ask directly. the pressure you have given us indicates customers who opt out

may be prohibited by pg&e from re-entering the marine clean energy for three years. under what authority are the authorized to do that? >> this is a provision that pg&e requested be included a, cpuc mandate. it is referred to as switching rules. basically, there is a requirement after the statutory opt out period, if they choose to, they may not return to the program for a three-year period. >> this was a regulation passed by the public utilities commission? it will be overturned, obviously. >> yes. there are a lot of things. our position is that the three- year rule should be eliminated. many of our customers have opted out under false pretenses. a couple of months ago, one of our customers was in the process of opting out, was told by pg&e

that there was no switching rule and that they could switch back and forth at any time. we got on the phone with their call center and even asked for a supervisor and they did not know. so yes, there are customers opting out under false pretenses, and we do not believe the three-year rule is appropriate. >> secondly, according to your testimony, the meetings that took place between pg&e, were those local officials duly appointed? >> you are referring to the meetings with -- >> where you decided in closed meetings with pg&e, local officials. were those officials appointed, elected? >> in most cases, elected. >> so those