CUC’s Interruptible Energy Contract Complicates Renewable Energy Investment

The Claremont University Consortium’s (CUC) contract with its power provider, Southern California Edison (SCE), has a variety of consequences for the consortium’s efforts to invest in renewable energy sources. The specifics of the contract and contradictory policies within SCE cause investment in on-campus solar electricity generation to raise, rather than lower, the rate CUC pays for energy.

The CUC purchases the vast majority of their electricity from SCE on a Base Interruptible Program (BIP), which allows SCE to turn the consortium’s power off during energy crises.

“In exchange for receiving a pretty substantial rebate on our power, which in essence lowers the rate we pay for electricity, we agree to be one of the first users that shuts down,” said Bowen Close, Pomona College’s Director of the Sustainabiliy Integration Office.

An interruptible contract is advantageous for SCE because they periodically experience energy shortages, during which energy use in Southern California is so great that they cannot supply all of the energy demanded reliably. They compensate the consortium with the substantial rebate that Close described.

However, while the contract provides the college with very affordable electricity, it hampers efforts to invest in renewable energy technologies.

SCE has programs designed to encourage their customers to invest in photovoltaic solar panels. For example, they offer rebates to customers who invest in solar energy systems. However, for customers on the Base Interruptible Program like CUC, installing such systems can actually lead to increases in the cost of energy.

“SCE realized somewhat of a loophole in their interruptible program structure, because they realized that the more solar [the Colleges] have, the less [demand for energy] they can take off the grid when there’s an interruption, and so the less the rebate from [SCE] is, especially if we’ve gotten a rebate from them for the solar in the first place,” Close said.

Because the colleges purchase energy as one customer, any college that installs a solar energy system must compensate the entire Consortium for the cost increases. For example, Pomona College paid a $794.22 solar fee to Central Services for the photovoltaic solar array on the Lincoln-Edmunds building in June. Over that same time span, the solar array produced $1078.83 worth of energy. Although the system produced savings, they were dramatically cut by the corresponding decrease in the BIP rebate. Solar energy systems require large up-front costs, which, combined with the solar fee, make them much less financially feasible for CUC members.

Additionally, if other members of CUC increase their energy consumption, the solar fees colleges pay for their individual solar projects increase with them, because the increased cost of energy is applied to a larger overall amount of energy being purchased. The decrease in the BIP rebate applies even if the whole CUC becomes a larger consumer of energy and a more useful consumer to interrupt.

“We’re starting to ask questions about exactly why it is that we would have to pay this fee,” Close said. “If the colleges overall are using more than they did before, aren’t they still able to take more off the grid?”

It is unclear how close SCE and the CUC are to resolving these issues.

“The governor of California has come out and said, ‘We really want more solar, we want more efficiency,’” Close said. “Yet here [SCE has] these two financial policy structures that are at odds with each other, and we’re caught in the middle.”

Moreover, because the members of the Claremont Colleges pay no taxes as non-profit institutions, they are not benefitted by federal tax rebates for solar technology.

“The incentives are kind of skewed away from the non-profits,” said Mark von Wodke, the president of Earth Harvester, a Claremont company that designs and installs solar energy systems. “But on the other hand, the non-profits are often the organizations that are value-based, that have a longer view. It presents a real big dilemma.”

Many non-profits have attempted to circumvent this issue by using power-purchasing agreements, in which a for-profit firm will install a solar system for free on the property of a non-profit institution. Because they are able to take advantage of the federal tax rebate, they can sell power to the non-profit more cheaply than would otherwise be possible.

However, Close said power-purchasing agreements have not been able to compete with the low rate SCE charges the colleges for energy.

“Because our power rate is so low, because of the interruptible program, the finances don’t work out, and we haven’t been able to find any power purchase agreement firms that will work with us,” Close said. “That’s been unfortunate for us, because we really thought that might be the savior.”

Von Wodke believed the colleges could work around the energy contract and its consequences.

“I think actually the way to go is to not jeopardize the good deal you have, but to build off it in creative ways that actually get us further down the road to the transition to clean renewables,” he said.

Von Wodke suggested transitioning to electric vehicles as a way to take advantage of the consortium’s uniquely low energy rates. He also suggested the colleges encourage staff members to take advantage of solar tax credits available to homeowners.

“If the school was to make a loan fund available to make favorable loans for solar upgrades and encouraged faculty, staff, administration to do that, they might actually get more solar installed that way than trying to do it on the campuses,” he said.

There are other steps to circumvent the issues with solar electricity generation that do not require reworking the Consortium’s energy contract.

“We have been trying to focus instead on opportunities for solar hot water heating and solar pool heating, which is natural gas instead,” Close said. “We don’t have those same sorts of problems [there,] because we don’t have any sort of interruption on our natural gas.”

For example, the proposal to heat Haldeman Pool using solar heating that ASPC is currently considering funding would not require payment of solar fees.

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