Energy Storage Could Preserve Solar Savings for California Affordable Housing

A paper released by Clean Energy Group finds that California multifamily affordable housing properties with solar PV systems could face more than a 50% reduction in electricity bill savings over the next few years, but adding energy storage to the solar system could completely restore those savings to solar customers. Based on this analysis, the paper recommends that policymakers support incentives for combined solar+storage systems in affordable housing to minimize and hedge against these future solar regulatory risks.

Recently, utilities and regulators in California have proposed policy changes and new electricity rate structures that could drastically erode the value of stand-alone solar in California. Those changes, through modifications to net metering, time-of-use rates and demand charges, could hit solar installations in affordable housing especially hard. “Solar Risk: How Energy Storage Can Preserve Solar Savings in California Affordable Housing” explores potential risks for California’s multifamily affordable housing sector. The analysis makes two important findings: (1) the changes would significantly reduce the value proposition for a stand-alone solar system, and (2) incorporating energy storage could potentially reverse these negative economic impacts.

The analysis is based on an actual 50-unit affordable housing property under a rate tariff that would be widely applicable to medium- to larger-sized commercial properties in the San Diego area. The analysis found that, by effectively managing the property’s electricity demand, storage could deliver additional savings that would completely recoup the losses to solar savings. In fact, storage would boost the property’s total bill savings by a significant amount more than what solar-alone could currently achieve today, even before any proposed changes have been implemented. In a scenario where storage allowed the property to switch utility rate tariffs, the integrated solar-plus-storage system could deliver more than eight times the savings of a solar-only system under the proposed changes.

“The sheer magnitude of negative impacts that we found should serve as a warning sign for California’s affordable housing sector,” said report co-author Wayne Waite, a program and policy consultant for a nonprofit coalition of California environmental justice and housing advocates. “The proposed policy and rate changes could lead to a significant increase in demand charges along with the devaluation of stand-alone solar due to later time-of-use periods—in short, higher electric bills for solar customers.”

The policy and rate changes analyzed will affect all of California’s solar customers, but affordable housing is particularly vulnerable to increasing energy expenses. The findings are significant to policy considerations as California prepares to ramp up support for low-income solar with the upcoming implementation of its Multifamily Affordable Housing Solar Roofs Program, which could allocate up to one billion dollars for the development of solar energy systems over the next decade.

At present, it is not known how many affordable housing properties in California would experience this kind of rate impact. Since there are several thousand affordable housing properties in the state, a conservative estimate is that there are several hundred housing projects that could benefit from energy storage in this way. The paper recommends that the state’s energy policy makers should determine how many properties could benefit from storage savings before they make definite policies either to provide or not provide storage incentives for affordable housing properties.

The implications of these shifts in California’s solar landscape may also extend beyond the state’s borders. “The policy and rate changes that are happening right now in California will have a major impact on the state’s solar customers, and it won’t be long before we see these same trends repeat themselves in other leading solar states,” said report co-author Seth Mullendore, a project director at Clean Energy Group. “This new economic analysis is yet another indicator that the future success of solar will increasingly depend on energy storage.”

The paper, Solar Risk: How Energy Storage Can Preserve Solar Savings in California Affordable Housing, is available at www.cleanegroup.org/ceg-resources/resource/california-solar-risk.

Clean Energy Group will be hosting a webinar discussion on this report on June 15 from 2:00-3:00 p.m. ET. Panelists will include report co-authors Wayne Waite and Seth Mullendore, as well as Stephanie Chen, ‎energy and telecommunications policy director at the Greenlining Institute. For more information about this free webinar and to register, visit www.cleanegroup.org/webinar/california-solar-risk.

Energy Storage Could Preserve Solar Savings for California Affordable Housing, by Kelsey Misbrener, Solar Power World, May 19, 2017.

 

As California Mulls Retail Electricity Choice, Utilities Are Losing Customers in Droves

Back in March, GTM broke the news that California regulators are considering some big changes to the state’s energy landscape, including the possibility of returning to some form of competitive retail choice for electricity — as long as it doesn’t repeat the mistakes that led to the Enron-engineered energy crisis in 2001.

This week, the California Public Utilities Commission and California Energy Commission will be holding their first hearing to talk through this contentious but timely issue. To guide that discussion, the CPUC and CEC released a white paper to “frame a discussion on the trends that are driving change within California’s electricity sector and overall clean-energy economy.”

The joint white paper doesn’t give any answers to the questions it raises — that’s coming later. But it does lay out a compelling case for why California must act soon to deal with the issue.

While California’s big three investor-owned utilities remain the provider of last resort for the state’s energy consumers, an increasing share of their customers are being lost to existing retail energy access programs, to city and county community-choice aggregators (CCAs), and of course, to the rising share of power generated by rooftop solar and other distributed energy resources.

Between rooftop solar, CCAs and large “direct access” customers that work with energy service providers, as much as 25 percent of retail electric load will be effectively unbundled and served by a source other than an investor-owned utility sometime later this year, the paper noted. And these trends are only accelerating. Over 85 percent of retail load could be served by sources other than the investor-owned utilities by the mid-2020s — effectively putting the state on a path toward a competitive market for consumer electric services.

But this change is now occurring “without a coherent plan to deal with all the associated challenges that competition poses, ranging from renewable procurement rules to reliability requirements and consumer protection,” the paper noted. That means California must “now look at long held assumptions in their regulatory frameworks and examine the role of the electric utility at the center of this system.”

CPUC President Michael Picker shared his thoughts on this imperative on GTM’s The Interchange podcast back in March, when he first floated the idea of looking at retail energy access. Compared to the state’s previous “top-down” attempts at deregulation between 1995 and 2001, today “we’re starting to see retail choice come into being simply because of technology and the commodity on renewable electricity allowing it to take place,” he said. “It’s being hollowed out by innovation and technology rather than by policy regulation.”

California’s current struggles are a byproduct of the success of its energy-efficiency policies, which have have sharply reduced growth in demand for electricity, and its policies supporting utility-scale solar and rooftop solar. The state’s net energy metering regime has helped more than 550,000 customers to go solar since 2007, adding about 4,500 megawatts of generation on the edges of the grid.

Programs like the Self-Generation Incentive Program have “furthered market transformation for additional technologies like fuel cells, thermal storage and lithium-ion battery storage, allowing customers to produce their own power and/or to reduce their peak energy consumption,” the paper noted.

Meanwhile, large commercial and industrial customers have been clamoring to be added to the relatively small number of customers who were grandfathered into the state’s post-energy crisis direct access program.

Finally, after a slow start, CCAs — entities formed by cities and counties to buy their electricity outside of the traditional utility framework — are really starting to take off. Marin Clean Energy formed California’s first CCA in 2010 and now serves 255,000 customers in Marin County, Napa County and six cities. Along with others such as Sonoma Clean Power, Lancaster Choice Energy, Clean Power San Francisco and Peninsula Clean Energy, 915,000 customers currently get their retail energy through CCAs. This is deeply worrying to investor-owned utilities.

The state’s IOUs are seeing a decline in their volumetric sales of electricity, which pay for the “vast network of connected infrastructure and services” that keep the lights on in California. This could end up shifting an increasing share of the costs of maintaining the network for fully bundled customers — thus raising rates, and potentially pushing more customers to seek alternative sources of energy, in what industry observers have dubbed the utility death spiral.

Below are the main questions regulators are considering as part of this examination:

  • How does the State of California ensure that the many different players work together to ensure that the state’s electric supply is not only clean but is also reliable, efficient and resilient? For example, in light of the changes underway in the state’s electric system, how should the state provide such products and services as ramping power, voltage support, frequency control and managing over-generation? How should the state’s electric system become more resilient (e.g., capable of fending off attacks from physical and cyber threats, as well as speedy recovery from disasters)? How will California’s consumers pay for the many mandated public goods programs, ranging from energy research to providing energy-efficiency upgrades and rate discounts for low-income customers, which the California legislature has determined are core elements of the state’s electric system?
  • What are the roles of the incumbent electric distribution utilities in the future, and what are the means for them to finance their core functions (e.g., distribution service, transmission service, [provider of last resort] retail service) where some of these services are provided to all electricity customers and some are provided to only some customers (and in some cases may be provided because no other supplier is willing and/or able to provide them)?
  • As an increasing number of customers can obtain electric generation service from a variety of sources (including IOUs, ESPs, CCAs, and on-site technologies), how does California ensure that all customers get the benefit of having multiple institutions play an important role in helping finance the infrastructure needed to meet the State of California’s GHG strategies, including electrification of transportation and fuel switching in the natural gas industry, while also ensuring that all customers have access to at least basic electric service?
  • Who will be the provider of last resort for customers who don’t seek to make key decisions for themselves, but prefer a simple and reliable bundled service? What agencies are best designed to provide customer protection in this new electric industry structure? What policies and/or authorities are necessary for utility regulators (or others) to assure that all customers — regardless of their supplier of generation and/or delivery service — have access to reliable and efficient electricity supply that also supports California’s economic and environmental goals?
  • How will the State of California provide protection for consumers against predatory actions by providers of electric service or energy technologies in these new policy settings?

Listen to Michael Picker talk about the retail choice imperative on The Interchange podcast:


As California Mulls Retail Electricity Choice, Utilities Are Losing Customers in Droves, by Jeff St. John, GreenTech Media, May 17, 2017.

The Business of Local Energy Symposium – A Smashing Success

Last Friday, May 5, about 400 people including elected officials and energy professionals gathered in Long Beach for the Center for Climate Protection’s third annual Business of Local Energy symposium. Deputy Director Barry Vesser was the symposium’s architect. Co-organizers were the Local Government Commission and the Local Government Sustainability and Energy Coalition. Attendees heard 56 speakers and discussed California’s energy future. The theme was “It’s all about impact.”

Among the many highlights were Senator de Leon’s keynote, a very animated interchange, moderated by Center for Climate Protection advisor Jeff Byron, between California Public Utilities Commission President Michael Picker and Sonoma Clean Power CEO Geof Syphers, and the recognition of early Community Choice heroes.

See the full Symposium program here >>

Community Choice Energy programs are having a major impact in California. About 18 million Californians will be served by Community Choice by 2020.

The cumulative greenhouse gas emissions that Community Choice will have saved by the end of 2020 is about 5.5 Million metric tons – over and above the requirements that investor-owned utilities must meet. And by 2020, Community Choice customers will save about $190 million per year.

More photos, slides, papers, and video footage from the Symposium will soon be available. Please stay in touch!

CalCCA is looking for an Operations Director

JOB ANNOUCEMENT OPERATIONS DIRECTOR

To apply, please send a resume and cover letter to Tom Habashi at tomh@svcleanenergy.org.

SUMMARY

The Operations Director works under the direction and guidance of the CalCCA Board of Directors and reports directly to the Board President. In the future, this position will report directly to the Executive Director. The Operations Director has responsibility for a wide range of matters supporting the formation and essential ongoing operations of CalCCA, including but not limited to, internal functions such as information technology, operational policies and procedures, budget oversight and management, compliance and financial reporting obligations, invoice and payment processing, contract management and administration, membership program management, event coordination, human resources, communications and marketing management, external relationship building, vendor and consultant management, and Board/Committee coordination. This position also facilitates the development of key strategic policy priorities of the association. The Operations Director position, in coordination with the necessary Board members, committees, and approval procedures, serves as a decision maker for necessary operational matters.

ESSENTIAL DUTIES AND RESPONSIBILITIES

  •   Organize, plan, and prioritize work to ensure the successful formation and ongoing operations of CalCCA
  •   Develop and implement the membership program to ensure successful recruitment, stewardship, and retention of Operational, Affiliate, and Partner members
  •   Develop and coordinate annual and one-off member events
  •   Develop and implement internal operating policies and procedures
  •   Develop and oversee management of IT infrastructure, electronic file storage

    systems, and web-based services including Bill.com, Quickbooks, phone line, and email platforms

  •   Support and coordinate the activities of the Board of Directors including meetings, orientations, education, reporting, and other functions as needed
  •   Prepare materials for the monthly Board meetings
  •   Support and coordinate the activities of the CalCCA Board Committees,

    Subcommittees, and Discussion Groups

  •   Interface with the California Public Utilities Commission and the State

    Legislature on regulatory and legislative matters as directed

  •   Oversee budget and finances
  •   Process invoices and issue payments
  •   Ensure timely delivery of reporting and compliance requirements
  •   Oversee the development of communications and marketing materials including

    website, collateral, press releases, and newsletters

  •   Oversee and administer human resources functions including payroll, benefits,

    and other legal requirements

  •   Develop and administer contracts with external vendors and consultants
  •  Other duties as identified or assigned by the Board of Directors

MINIMUM QUALIFICATIONS AND DESIRED CHARACTERISTICS

To perform the job successfully, the individual should hold a Bachelor’s degree in business, public administration, political science, or a related field. Fully qualified candidates should also possess at least five years of progressively responsible experience in management, development, administrative, and operational functions. An advanced degree in business administration, public policy, or a related field is desirable. The requirements listed below are representative of the knowledge, skill, and/or ability required.

Knowledge of:

  •   Community Choice Aggregation (CCA) and the California electric utility market
  •   The purpose, organization, and operations of CCAs and trade associations
  •   California legislative and regulatory processes
  •   Practices and principles of data analysis
  •   Information systems management
  •   Budget and financial management
  •   Best practices for program and project management
  •   Data and statistical analysis
  •   Microsoft Office (Excel, Word, PowerPoint, Outlook)
  •   Bill.com/Quickbooks
  •   Basic branding, design, and marketing

Ability to:

  •   Manage multiple priorities and projects and quickly adapt to changing priorities in a fast-paced dynamic environment
  •   Represent CalCCA in an effective, strategic, and beneficial way to internal and external stakeholders
  •   Advocate effectively for organizational priorities and policies
  •   Build consensus, execute strategies, and coordinate efforts
  •   Negotiate contracts with external entities
  •   Take responsibility and work independently, as well as coordinate agency efforts
  •   Be thorough and detail oriented
  •   Work independently, accurately, and efficiently under pressure and with little oversight
  •   Demonstrate patience, tact, courtesy, and sound decision-making
  •   Exercise sound judgement and operate with confidentiality and discretion
  •   Communicate well both verbally and in written form
  •   Represent CalCCA in an effective, strategic, and beneficial way to internal and

    external stakeholders

  •   Establish and maintain effective and professional working relationships with

    persons encountered during the performance of duties

  •  Lead efforts with passion, idealism, integrity, and positive attitude

COMPENSATION, BENEFITS, AND LOCATION

Compensation for this position will be based on the qualifications of the top candidate with the exact number to be determined by the Board of Directors. In addition, a competitive benefits package will be designed to include a monthly allotment for health and dental coverage, contribution into a retirement plan, and life insurance. A paid- time-off leave policy will also be developed to offer holidays, vacation, personal leave, administrative leave, and maternity-paternity leave. In lieu of a benefits package, the position may be designated as an external contractor with additional compensation to be negotiated at the time of hire.

The candidate for this position will have the option to either work remotely, at of one of the Board members’ existing agency offices, or a combination of the two until permanent office space is developed.

This Summer’s Eclipse Will Put California’s Solar-Powered Grid to the Test

On August 21, a total solar eclipse will travel across North America — and put grid operators to the test.

The solar industry’s success means that utilities and grid managers across the U.S. will have to plan for a period of time when the sky goes dark and solar generation plummets. This is especially true in California, where solar makes up 10 percent of the electricity mix and accounts for around half the entire nation’s total solar generating capacity.

For several hours on August 21, the moon’s shadow will trigger a 6,000-megawatt generation shortfall — equivalent to the power demand of Los Angeles — according to the California Independent System Operator (CAISO). That net load effect assumes large-scale solar production will drop by an estimated 4,194 megawatts, distributed solar with drop by a lesser amount and that wind production will remain at a steady clip based on historical performance.

Source: California ISO

While the generation loss is significant, it’s not the only factor CAISO needs to handle. The grid operator also has to manage the ramp rate, which will see the eclipse cause solar generation to drop off at 70 megawatts per minute, then ramp up at 90 megawatts per minute as the shadow passes. CAISO’s typical ramp rate is 29 megawatts per minute.

“It will be the first like this, that’s for sure,” said Steven Greenlee, senior public information officer at CAISO. “Grid operators, not only in California, but others across the U.S., are going to have to deal with this. But we’ll probably have to deal with it more because we have nearly 10,000 megawatts of solar resources connected to the grid, of all sizes.”

At two recent speaking engagements, California Public Utilities Commission President Michael Picker called on members of the cleantech sector to help California residents use less electricity during the eclipse.

“I don’t think it’s a huge issue, but I want people here to help me figure out how to reach customers,” he said at a Los Angeles Business Council event. “We can do our California thing. We can mobilize and respond without powering up our peakers, without dragging baseload power plants out of retirement to supplement the grid. We can ask people not to charge their phones, not to turn on their washing machines. We can ask them not to charge their EVs. There are simple things we can do to power that hour and a half.”

Some critics may think the eclipse is when California “falls apart,” Picker said. But by showing that the state can handle a grid with high levels of solar penetration during such an event, the state can “send a message to Rick Perry telling him not to worry about California,” said Picker, referring to comments the Energy Secretary made about the need to shore up baseload power resources.

Source: California ISO

Speaking last week at a conference on community choice aggregation — an emerging trend where local governments take the procurement of electricity generation into their own hands and away from the incumbent utility — Picker said he wanted community choice leaders to ask their customers not to use electricity during the eclipse hours. He called on local organizers to engage on the issue, as a way to prove the relatively new concept of community choice aggregation can work well with the larger grid system.

“Bring me evidence you can help manage this,” Picker said.

CAISO is looking at managing the eclipse a bit differently. Greenlee said the grid operator isn’t expecting to ask customers to reduce energy use. Instead, it’s planning on securing generation from other sources, specifically hydropower and natural gas, and using them to manage the ramp.

“We’ll be needing to bring on some natural-gas plants to help us with our flexible ramping product to make up for lost solar,” said Greenlee. “So we need to make sure the gas supply is going to be in place and generators have it procured and are ready to generate during that time. Then we also have…plenty of hydro generation this year, so we’re going to be using that as well.”

Source: California ISO

It’s hard to say exactly how much of each resource will be needed to manage that 6,000-megawatt solar shortfall, he added. If it’s not enough, and there is some kind of grid stress, CAISO will issue a flex alert, which is a voluntary call for conservation. Electricity users directly involved in CAISO demand response programs could respond to the alert. Otherwise, investor-owned utilities, which run the bulk of California’s demand response, will trigger their programs. But that would be a last resort, Greenlee said.

While hydropower and natural gas will play a key role in supplementing solar power during the August eclipse, it doesn’t mean baseload power is coming back. The eclipse is actually a perfect example of why the state needs flexible resources and not baseload power, said Greenlee. “Because they can ramp up and down quickly, and that’s what we need it to do,” he said.

This shift isn’t daunting, because it’s part of a transition that’s been taking place in California for roughly 15 years.

“Here at ISO, we have pioneered how to manage the variability of wind and solar resources, and so this is the most that we’re having to manage, but we have a good foundation going into this eclipse,” Greenlee said.

“The old grid was based on baseload power, and most of the baseload was close to the urban centers that were using it,” he added. “Now we have resources that are more remote, farther way and more variable. So it’s a new paradigm, and one we think is very exciting. We’re helping to create the grid of the future.”

This Summer’s Eclipse Will Put California’s Solar-Powered Grid to the Test, by Julia Pyper, GreenTech Media, May 11, 2017.

Community Choice Is Transforming the California Energy Industry

Community choice aggregation allows cities and counties in California to group individual customers’ purchasing power for energy.

After decades of dominance by electricity monopolies, California is experiencing the emergence of community choice aggregators, a new type of utility that provides cities and counties the opportunity to choose what kinds of energy to purchase for their needs.

Community choice aggregation allows cities and counties in California (and other states that have enacted it) to group individual customers’ purchasing power within a defined jurisdiction to buy energy. In California, community choice aggregators are legally defined by state law as electric service providers.

These aggregators, or CCAs, have introduced competition into historically protected, investor-owned utility territories. In doing so, they have given eligible California customers a choice of retail energy providers. Since 2010, California communities have established eight CCAs. More than a dozen additional communities are making strides toward switching to CCAs.

“California is headed toward transformation with this rapid development of community choice aggregation programs,” said J.R. DeShazo, principal investigator for a new report by the UCLA Luskin Center for Innovation, part of the UCLA Luskin School of Public Affairs. “Our report highlights the benefits of CCAs while identifying unresolved policy questions that must be addressed by state regulators.”

According to the report, CCAs in California generally offer a larger share of renewable energy — up to 25 percent more — compared to the investor-owned utility in the same area. “We estimate that these efforts resulted in a total reduction of approximately 600,000 metric tons of carbon dioxide in 2016 — the equivalent of $7.5 million in reductions at the 2016 carbon price of $12.73 per metric ton on the statewide carbon market,” DeShazo said.

CCAs offer greener energy at a competitive price, according to Julien Gattaciecca, Luskin Center researcher and lead author of the study.

“CCAs have recently entered the energy market, allowing them to benefit from a long decline of falling wholesale renewable energy costs,” Gattaciecca said. “Some CCAs also offer larger incentives than their local investor-owned utility to households and businesses that self-generate energy through rooftop solar programs, and some have made the commitment to source energy from local renewable facilities, and directly own local solar facilities.”

DeShazo, who is a professor of public policy at the Luskin School, added: “Community choice aggregation is currently the best policy tool available to cities and counties who want to tailor energy procurement to their community’s preferences. The stakes are high. Regulators are grappling with important policy decisions that could affect the future of the energy market as well as the pocketbooks of Californians.”

With investor-owned utilities facing increasing competition, the study concludes that more choices can only benefit consumers, with the right regulations in place.

“Currently, an important part of the load in California is looking at CCAs,” Gattaciecca said. “The three major investor-owned utilities could see between 50 and 80 percent of their load departing for CCAs or direct access providers by 2025 or 2030.”

The eight operational California CCAs are Marin Clean Energy, Sonoma Clean Power, Lancaster Choice Energy, CleanPower San Francisco, Peninsula Clean Energy in San Mateo County, Apple Valley Choice Energy, Silicon Valley Clean Energy and Redwood Coast Energy Authority. Other CCAs expected to launch this year are East Bay Community Energy in Alameda County, Los Angeles Community Choice Energy and Valley Clean Energy Alliance in Yolo County and Davis.

Community Choice Is Transforming the California Energy Industry, by George Foulsham, UCLA Newsroom, May 5, 2017.

Community Choice Is Transforming the California Energy Industry

J.R. DeShazo

After decades of dominance by electricity monopolies, California is experiencing the emergence of community choice aggregators, a new type of utility that provides cities and counties the opportunity to choose what kinds of energy to purchase for their needs.

Community choice aggregation allows cities and counties in California (and other states that have enacted it) to group individual customers’ purchasing power within a defined jurisdiction to buy energy. In California, community choice aggregators are legally defined by state law as electric service providers.

These aggregators, or CCAs, have introduced competition into historically protected, investor-owned utility territories. In doing so, they have given eligible California customers a choice of retail energy providers. Since 2010, California communities have established eight CCAs. More than a dozen additional communities are making strides toward switching to CCAs.

“California is headed toward transformation with this rapid development of community choice aggregation programs,” said J.R. DeShazo, principal investigator for a new report by the UCLA Luskin Center for Innovation, part of the UCLA Luskin School of Public Affairs. “Our report highlights the benefits of CCAs while identifying unresolved policy questions that must be addressed by state regulators.”

According to the report, CCAs in California generally offer a larger share of renewable energy — up to 25 percent more — compared to the investor-owned utility in the same area. “We estimate that these efforts resulted in a total reduction of approximately 600,000 metric tons of carbon dioxide in 2016 — the equivalent of $7.5 million in reductions at the 2016 carbon price of $12.73 per metric ton on the statewide carbon market,” DeShazo said.

CCAs offer greener energy at a competitive price, according to Julien Gattaciecca, Luskin Center researcher and lead author of the study.

“CCAs have recently entered the energy market, allowing them to benefit from a long decline of falling wholesale renewable energy costs,” Gattaciecca said. “Some CCAs also offer larger incentives than their local investor-owned utility to households and businesses that self-generate energy through rooftop solar programs, and some have made the commitment to source energy from local renewable facilities, and directly own local solar facilities.”

DeShazo, who is a professor of public policy at the Luskin School, added: “Community choice aggregation is currently the best policy tool available to cities and counties who want to tailor energy procurement to their community’s preferences. The stakes are high. Regulators are grappling with important policy decisions that could affect the future of the energy market as well as the pocketbooks of Californians.”

With investor-owned utilities facing increasing competition, the study concludes that more choices can only benefit consumers, with the right regulations in place.

“Currently, an important part of the load in California is looking at CCAs,” Gattaciecca said. “The three major investor-owned utilities could see between 50 and 80 percent of their load departing for CCAs or direct access providers by 2025 or 2030.”

The eight operational California CCAs are Marin Clean Energy, Sonoma Clean Power, Lancaster Choice Energy, CleanPower San Francisco, Peninsula Clean Energy in San Mateo County, Apple Valley Choice Energy, Silicon Valley Clean Energy and Redwood Coast Energy Authority. Other CCAs expected to launch this year are East Bay Community Energy in Alameda County, Los Angeles Community Choice Energy and Valley Clean Energy Alliance in Yolo County and Davis.

Community Choice Is Transforming the California Energy Industry, by George Foulsham, UCLA Luskin, May 5, 2017.

Utility Proposal Would Increase Legacy Costs for California CCAs

Californians who receive their electricity service from one of the state’s growing number of community choice aggregators (CCAs) could face higher costs under a plan being proposed by the state’s three investor-owned utilities.

The proposal — filed jointly by Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric — calls for the California Public Utilities Commission to adopt a new approach to apportioning the utilities’ costs for energy contracts among the departing and remaining customers.

Utility customers departing for CCAs and direct access arrangements “are not paying their full share of costs associated with the long-term contracts [for renewables], forcing other customers to pay more,” PG&E said in a statement. California’s direct access program allows nonresidential retail customers to purchase power from independent electricity suppliers.

The new plan would replace the PUC’s current formula for calculating those costs — the power charge indifference adjustment (PCIA) — with a new system the utilities call the portfolio allocation methodology (PAM).

The PCIA acts as an exit fee, requiring customers departing for CCA to pay for their estimated share of the contracts IOUs signed to meet California’s energy policy mandates, such as the renewable portfolio standard and energy storage requirements. The fees are assessed until the termination of the contracts. Departing customers also pay a competition transition charge (CTC) that represents their share of a utility’s costs for older fossil fuel generation.

‘Financially Indifferent’

The fees are designed to keep the IOUs’ remaining bundled service customers “financially indifferent” to the departure of CCA customers, the PUC has said.

The PCIA’s calculation relies on an estimate of “above-market” costs incurred by the IOUs for procuring or building policy-driven resources.

But the utilities see a problem with that approach. The PUC bases its “above-market” cost assessment on administratively defined benchmarks developed during a time when prices for renewable energy credits and resource adequacy were higher than they are today. That makes the IOUs’ portfolios appear cheaper than they actually are, the utilities contend.

“This directly translates into departing load customers paying PCIA and CTC rates that do not fully pay for their share of the actual above-market costs of the portfolios, which is contrary to law,” the utilities said.

Under the utilities’ PAM proposal, departing customers would be charged based on the “actual” costs for the contracts procured on their behalf. On the flip side, those customers would also be allocated the “actual value” of contract portfolios, including RECs, capacity credits and revenues generated from providing ancillary services.

Under the new methodology, rates for the contracts would be regularly trued-up in the same manner as those charged to the IOUs’ remaining bundled customers, although the utilities note that most of the agreements in question are fixed-cost.

The IOUs are proposing to implement PAM on a “vintaged-portfolio” basis that depends on the customer’s departure date, “ensuring that all customers are only assigned the costs and benefits of resources actually procured or built on their behalf.”

“We can achieve the state’s clean energy goals while also supporting customer choice and treating all customers fairly and equally,” said Steve Malnight, PG&E’s senior vice president of strategy and policy.

Consumer Protections Needed

Woody Hastings, renewable energy implementation manager for the Santa Rosa-based Center for Climate Protection, told RTO Insider his support for the proposal would in part depend on whether it contains adequate consumer protections. “We have long held that the PCIA is broken,” he said.

Hastings said that while his organization agrees with the concept of bundled ratepayer indifference, his assessment of the plan would come down to exactly what expenses the utilities would roll into the new methodology.

“We need some kind of assurance that avoidable costs are being avoided,” Hastings said. “A third-party audit should happen [in order] to show that the numbers being presented are valid.”

In their filing, the utilities said they will seek approval to develop a formal process to provide load-serving entities with access to portfolio and contract data as part of the PAM.

“PAM is transparent, objective and fully consistent with California law … and should be expeditiously adopted by the commission,” the utilities wrote.

Utility Proposal Would Increase Legacy Costs for California CCAs, by Robert Mullin, RTO Insider, April 30, 2017.

UC Santa Barbara students kick off project to create program evaluation tool for Community Choice agencies and stakeholders

Awarded scholarships to attend Business of Local Energy Symposium

Previously announced in the Center for Climate Protection’s e-news, in late March a group project entitled “Developing a Toolkit to Optimize Community Choice Energy Programs,” initiated by a group of UC Santa Barbara students in the Bren School of Environmental Science & Management, was selected for support by the school. On April 14th a kick-off meeting was held among the participants including the Center for Climate Protection.

To be completed in the spring of 2018, project deliverables under consideration include:

  • An Excel-based interactive Community Choice program evaluation tool
  • A list of appropriate or “best fit” practices with descriptions and real-world examples where available
  • A user-friendly public-facing website “dashboard” with above-mentioned deliverables and possibly a wiki section where Community Choice agencies and stakeholders can share information and ideas

The students will also produce a final written report, policy brief, poster and oral presentation.

Some of the questions to be answered by the proposed project include: What are the possible costs and benefits of Community Choice agency programs, policies, and projects meant to reduce greenhouse gas emissions and rates/costs? What can be done to minimize costs and maximize benefits? How can a community or existing agency know what program design and practices will work best for it?

Erica Petrofsky, one of the initiators of the project said that “my teammates and I are elated to be working with the Center for Climate Protection to help the environment and communities in California and beyond. Each of us applied to be on this project team due to our individual interests in greening the energy sector, the economics of energy, and local ways to take action. For me, this is an opportunity to gain expertise and get involved in the promising area of Community Choice Energy. It’s the perfect Bren School group project to prepare me for the career I hope to pursue.”

The Bren School has earned a reputation as one of the top schools of its kind in the nation. It is among a handful of schools in the U.S. — and the only one in the West — that integrate science, management, law, economics, and policy as part of an interdisciplinary approach to environmental problem solving.

More recently, two of the four students in the group project, Erica and Symphony, were awarded scholarships to attend the Business of Local Energy Symposium in Long Beach on May 5. This will be an opportunity for a full day of immersion in all things Community Choice, as well as an opportunity for the students to meet many of the people involved in day-to-day Community Choice operations, and vice versa.

We will post occasional updates as milestones are reached so be sure to check your CPX e-news!

SCE Supports State’s Clean Energy Goals and Protecting Customer Choice

Retail electricity service in California involves two parts: the buying and selling of electricity (or power procurement) for retail customers, and the delivery of that power to customers. The vast majority of electricity customers in California continue to rely on their utility for both the purchase and delivery of their power.

Customers that receive both services from their investor-owned utility are called “bundled service” customers. Under certain circumstances, customers can receive their power procurement from other authorized service providers. One of these options is Community Choice Aggregation (CCA). Customers that participate in these options are called “departing load” customers.

In 2002, the California Legislature enacted Assembly Bill 117 to establish CCAs, which offer cities, counties or other authorized California public agencies the ability to buy and sell electricity on behalf of utility customers within their jurisdictions, as long as no costs are shifted to the remaining bundled service customers who continue to purchase their power from the utility. This prohibition on cost shifting is an important consideration of the customer choice authorized by AB 117.

To implement AB 117, the California Public Utilities Commission adopted a method intended to maintain bundled service customer “indifference” to departing load — that is, the bundled service customer is not supposed to end up paying more due to departing load customers.

Interest in CCAs has been increasing in the last five years and a few are now operating throughout the state. And there are a large number of communities considering CCA formation. SCE supports customers’ right to purchase power from a CCA as long as there are no costs shifted to customers who continue to purchase their power from the utility.

With growing interest in CCAs, and a recognition that remaining bundled service customers are not presently fully protected (i.e., not “indifferent”) from incurring increased costs due to departing load under the current CPUC method, the three investor-owned utilities in California (SCE, PG&E and SDG&E) have filed an alternative proposal with the CPUC to establish a more effective method for maintaining customer indifference.

Caroline Choi, Southern California Edison senior vice president for Regulatory Affairs, discusses CCA developments and the recent joint utility proposal to modernize the way the utilities’ power portfolio costs and benefits are allocated among customers.

Q: The state has seen a great deal of interest in CCAs and now has more than a handful operating in various parts of the state. What is a CCA and how does it work?

A: CCAs enter the buying and selling side of the electricity business for retail customers in their community while existing investor-owned utilities continue to own and operate the transmission and distribution grid infrastructure and transport and deliver the power to customers. Utilities also continue to provide customer services, such as metering and billing, for CCA customers, and offer public purpose programs, such as energy-efficiency and low-income programs, to customers served by CCAs.

Once a city, county or public agency forms a CCA and becomes operational, that CCA will be the default provider of power for the retail electricity customers in that CCA’s jurisdiction. Customers can continue to receive service from the investor-owned utility, but must affirmatively opt out of the CCA program to do so. Failure of any customer to opt out means they will receive their power from the CCA entity.

Customers of a CCA continue to have an SCE meter and receive a bill from SCE, and the power charge from the CCA will be on that same SCE bill. The SCE bill will be separated into energy charges from the CCA for the energy a customer uses, and for the distribution, transmission and customer services they receive from SCE.

Q: If the CCAs are now providing a service that utilities used to provide, are the two of you in competition?

A:  No. SCE supports our customers’ right to purchase power from a CCA as long as there are no costs shifted to customers who continue to purchase their power from the utility. CCAs and investor-owned utilities, such as SCE, are not in competition for customers. When CCAs enter the market, they enter the buying and selling side of the business, creating a system somewhat like Texas, where customers have a choice in who sells them electricity.

The formation or growth of CCAs does not impact the number of customers SCE serves. When a CCA forms or expands, SCE continues to provide transmission and distribution service (poles, wires, transformers) and other services, such as public purpose programs, and reliability procurement for all the customers in its service area, including all CCA customers.

Q: Will the growth of CCAs hurt your business and profits?

A: SCE purchases most of the power we provide to our customers without any mark-up, so CCAs should have no impact on our business or profits. This does not mean, however, that a bundled customer (not in a local government territory that becomes a CCA) is not impacted. It is critical for customers that the provisions outlined in AB 117 intended to prevent cost shifting are followed to ensure that customers who remain with the utility, including those who may be low-income, do not subsidize the costs of those who take service from a CCA or other provider.

By law, SCE doesn’t make money for procuring energy on behalf of its customers. SCE is permitted to earn a regulated profit for the delivery portion of its business.

SCE strives to safely provide reliable and affordable service to all of its customers throughout Southern California, including those participating in a CCA.

Q: The state’s investor-owned utilities have submitted a joint application to the CPUC regarding the costs that are recoverable from customers when they depart the utility’s procurement service for other providers. What is the issue and how does this work?  

A: The laws that authorize CCAs and other customer choice programs require that costs are not shifted to remaining bundled service customers when customers depart the utility’s procurement service for other options. The CPUC adopted a methodology intended to keep bundled service customers “indifferent” to departing load customers, and it involves departing load customers (like CCA customers) paying a Power Charge Indifference Adjustment (PCIA) and/or a Competitive Transition Charge (CTC) in their rates. These charges were intended to ensure that departing load customers continue to pay their equitable share of costs of the utility’s power procurement and utility resources that were procured on their behalf before their departure.

However, we now know that the methodology adopted by the CPUC for allocating these costs among bundled service and departing load customers is failing to keep customers indifferent, and needs to be changed. The current approach forecasts costs based on administratively determined estimates of hypothetical future market prices, with no true-up for actual costs.  There is also no periodic review to ensure the system is keeping remaining bundled service customers indifferent to departing load after the date they no longer take power service from SCE.

Because this complex process is not a “static” one that is simply set once based on actual current market prices, but rather requires periodic adjustment as the cost of power in the market changes, the present process does not achieve indifference as required by state law. On April 25, SCE, PG&E and SDG&E filed a joint application with the CPUC that proposed a new, more accurate, equitable and transparent way to allocate the costs and benefits of the utilities’ power procurement portfolios among customers. It is called the Portfolio Allocation Methodology (PAM).

Q: What are the existing generation costs that are allocated and will making the utilities’ proposed change harm CCAs?

A: Much of the costs of the utilities’ power procurement portfolios consist of the long-term renewable energy contracts that have supported California’s clean energy goals and have met specific percentage targets for renewable energy. Those long-term agreements, signed by the utilities and in many cases directed by the state’s policymakers, helped make clean and renewable energy plentiful and more affordable, as well as helping meet California’s ambitious climate action goals.

The proposed PAM is a superior way of ensuring indifference among customers because it recovers actual costs and allocates actual benefits to all customers on whose behalf the power resources were procured, which ensures customers pay for what they receive and benefit from what they pay for. It meets the requirements of California law to treat all customers equally, and not leave one set of customers holding more of the bill for the utility’s power supply portfolio obtained to serve all customers.

The PAM proposal does not impinge on the right of local governments or agencies to investigate or form CCAs; it simply addresses the broken indifference methodology to ensure equity for all customers and the long-term sustainability of customer choice and California’s clean energy and climate action goals. The PAM proposal would eliminate the shift of power procurement costs from departing load customers to remaining bundled service customers by allocating the benefits and actual net costs of the utility’s power procurement portfolio to all customers consistent with the intent of AB 117 to avoid such a cost shift.

Q: What could be the impact on customers if costs are not shared equitably and accurately?

A: Much of the clean renewable power we have today is because of choices California made over the past 15 years to require the utilities to enter into long-term renewable contracts to serve their bundled service customers. Those long-term renewable contracts have been the backbone of creating a competitive renewable energy supply industry in California and beyond which has driven down costs for renewable energy consistently in recent years.

SCE supports our customers’ right to purchase power from a CCA. But no customer should pay more than their share for the clean energy choices made to meet state policy, while others pay less.

The PAM proposal addresses this problem by asking the CPUC to approve a new methodology to treat all customers equitably and helps ensure our common goals for an affordable, safe, reliable and clean energy future.

SCE Supports State’s Clean Energy Goals and Protecting Customer Choice, by Robert Laffoon Villegas, Inside Edison, April 25, 2017.