The Cost of Power in Fresno

Posted on April 23rd, 2012 by
   

Source: City of Fresno

The city of Fresno is located in one of the fastest growing regions in California. The state’s fifth largest city has one of the most productive agriculture communities in the world, with over 400 crops produced there every year. This asset has helped the city develop one of the deepest concentrations of food manufacturers in the world. Unfortunately, not everything about the city’s economic development is so ripe for the pickin’.

Fresno’s unemployment currently hovers around 17%. More than any other large city, Fresno has the highest concentration of poverty in the United States. Additionally, Fresno is located in an extremely hot climate (Climate Zone 13). The city pays some of the highest electricity rates in the state ($.21/kwh). As a result, the Fresno community spent a collective $866 million in electricity and gas bills in 2009, up from $750 million in 2007. Fresno’s approximately 33,000 businesses were responsible for footing about sixty percent of these energy costs. The high cost of energy is a financial drain for Fresno’s business community and could potentially stunt future economic growth.

According to Mayor Ashley Swearengin, the city’s rising energy costs are forcing businesses to rethink whether it makes financial sense to stay in Fresno. She comments in a recent phone interview, that this issue is, “a big red flag that something has to be done to take the edge off of that kind of an impact to a business. Otherwise, we would never stand a chance of locating a company in our area or causing them to expand here.”

Fortunately, a green team had already been created by former Mayor Alan Autry when Swearengin took office in 2009. Since then, Swearengin has ramped up the team’s efforts and increased her own interaction with the residential and business community to ensure that the city’s energy issues remain a top priority. A little more than three years later, the city’s efforts have become more and more fruitful.

Joseph Oldham, Sustainability Manager for Fresno and his team have conducted over 1200 free residential energy audits over the last 18 months. They have also recently approved a small free commercial energy audit pilot program with six businesses. Last January, a commercial Property Assessed Clean Energy Financing (PACE) program was put into place and the first three bonds, totaling $375,000, were issued to commercial projects before the end of December  2011. Oldham’s work has also focused on becoming closer partners with PG&E, the utility provider that services Fresno’s territory.

Over the years the city’s relationship with PG&E has been cordial. But only recently has PG&E appeared to have realized the scope of Fresno’s energy challenges. Jonathan Marshall, a spokesperson for PG&E says that, “one of our goals for all of our customers is to make our services as affordable as we can within the limits of the resources we have available.” But according to Oldham, “today, PG&E is recognizing that Fresno has some major opportunities. In the past, they have underestimated or overlooked the opportunities here.”

Now that PG&E and Fresno are serious about collaborating, the utility is doing more to accommodate the city. For example, PG&E has created a team dedicated to working with Fresno on energy challenges. PG&E has also increased the promotion of energy efficiency rebates and incentives to the Fresno community. Additionally, PG&E, acting as an energy service company (ESCO), is working with Fresno to identify ways to complete twelve, low-hanging fruit, energy saving projects.

With a goal of incentivizing economic expansion for their entire service territory, in March 2012 PG&E submitted a request to the California Public Utility Commission (CPUC) for an enhanced economic development rate. This rate is limited to counties that have an unemployment level of 25% higher than the state average. Of the twenty two counties that are applicable, businesses that use 200KW or more and would then be eligible for certain discounts. The discount could be thirty five percent over a five year term, if a business adds a minimum of an additional 200KW of energy use to their portfolio. Because PG&E wants to allow counties to use the rate as a retention tool, new companies would be able to take advantage of the discount if they are willing to move their operations into one of these 22 counties. Lastly, PG&E may also use this incentive to dissuade a business from leaving one of the 22 counties.

If passed, Swearengin thinks that the special rate would offer the right incentives to recruit and retain businesses. “Based on these preliminary discussions that we had with Fresno businesses that would be eligible, this is going to be very meaningful,” said Swearengin.

One Fresno-based business owner can’t wait to take advantage of the savings. Mike Grazier, CEO of Busseto Foods, said that his company currently spends over $1 million each year in energy costs and that the potential discount could save his business over $350,000 annually.

“A 35% incentive is a lot of money, a lot of money that can be freed up to other things that help us become more efficient,” said Grazier. “At the end of the day, that is what we want to do!”

When asked if the special economic development rate would be enough to make Grazier 100% confident to grow the business in Fresno, he replied, “It makes our chances of remaining here very, very high. I wouldn’t say 100% because we don’t know what tomorrow brings. But it certainly will be a major factor.”

Because, the CPUC’s review process is expected to take about year, a ruling isn’t expected until next spring. Even if the California Public Utility Commission passes the special rate, Swearengin and her team won’t stop working until Fresno gets its energy costs under control. Swearengin defiantly explains, “This has been a major barrier for economic expansion here and we’re going to knock it down.” Here’s to hoping that their efforts grow into something sustainable!

Ben Lack is the CEO & Chief Conversationalist for The Daily Energy Report, an online publication that provides daily clean energy news and analysis.

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