Huntington Beach Puts RFP out for CCA Feasibility Study

The City of Huntington Beach has put an RFP out for a CCA Feasibility Study. This bid closes 10/12/17. Click the link below for more information on this RFP. 

http://www.californiabids.com/bid-opportunities/2017/09/19/8059929-Community-Choice-Aggregation.html

Critical to assessing whether a CCA Program will make economic sense and meet local objectives is the need for a Feasibility Study that identifies pertinent specifications and requirements associated with the prospective CCA Program (i.e. determination of how many customer accounts are likely to be served by the Program and identification of related tariff designations/options under which such customers will take electric service; quantification of expected electric energy requirements for customers participating in the prospective CCA Program; and determination of periodic peak demands associated with such customers as well as various other parameters), including the projected impacts of various clean energy and GHG reduction scenarios. The Study is helpful in determining whether or not the CCA can provide electricity rates that are generally lower and/or competitive with those offered by the Investor Owned Utility (IOU) Southern California Edison (SCE). The City is seeking proposals for a firm to conduct a CCA Feasibility Study.

The proposal is for a 12 month professional services contract.

 

California Choice Energy Authority to Provide Community Choice Aggregation Services for the City of Palmdale

On Tuesday, July 11, 2017 the City of Palmdale City Council approved a consultant services agreement with California Choice Energy Authority (CCEA) to conduct a feasibility study and develop an implementation plan for the City’s participation in a Community Choice Aggregation (CCA) program.

“The City of Palmdale demonstrates the ambition needed to launch a CCA program and is eager to provide more renewable energy and cost savings to residents. CCEA will provide the services needed to determine the City’s feasibility of launching a CCA program.” says City of Lancaster Mayor and CCEA Board Member R. Rex Parris.

CCA programs allow local governments to purchase and generate electricity for ratepayers within a specific region and offer an alternative to electricity purchased and distributed by investor-owned utility companies.

To confirm the City’s feasibility of launching a CCA program, CCEA will request data from the City’s local investor-owned utility company Southern California Edison. CCEA partners with industry experts who can analyze the data and provide an overview of the City’s potential electrical load, number of customers, startup costs and rates needed to be competitive in the market.

“CCEA staff and partners are experts in CCA and are equipped with the necessary knowledge to assist the City of Palmdale with their CCA implementation efforts,” says Mayor R. Rex Parris. “The City of Lancaster formed CCEA after the successfully launching Lancaster Choice Energy and it’s our goal to share our CCA knowledge with cities that are looking to form a CCA program as well.”

Following completion of the feasibility study, CCEA will develop an implementation plan for the City based on the information acquired from the study. The implementation plan will outline the organizational structure and operational functions of the City’s CCA program. The California Public Utilities Commission must approve the City’s implementation plan before the CCA program can be formed.

The City of Palmdale’s consultant services contract with CCEA does not bind the City to partnership with CCEA nor does it commit the City to formal adoption of a CCA program. Following the feasibility study and implementation plan development, the City of Palmdale may still decide whether to form a CCA program. If the City decides to form a CCA, the City may choose to join CCEA as a partner city.

CCEA is a pioneering Community Choice Aggregation solution for cities in California. Formed through the experience of the City of Lancaster as it went through the launch of its CCA in 2014, the joint powers authority provides an innovative model that retains local control of utility services for cities who partner with CCEA while alleviating operational risk and administrative overhead associated with the implementation of CCA. CCEA’s joint power authority model is quickly becoming the gold standard for implementation of CCA by California cities.

California Choice Energy Authority to Provide Community Choice Aggregation Services for the City of Palmdale, by Staff, PublicCEO, September 11, 2017

Some of California’s Major Utilities Are Trying to Block the Growth of Government-Owned Electricity Programs

Some of California’s big shareholder-owned utilities are working to thwart the expansion of government-owned electricity programs, including Los Angeles County’s proposed end run on traditional power providers.

San Diego Gas & Electric Co. and Pacific Gas & Electric Co. are seeking amendments to state legislation or even a separate bill before the session ends Sept. 15 that will impose a moratorium on the so-called community choice aggregation programs operated by local governments as alternatives to existing power companies. Southern California Edison so far has taken a wait-and-see stance.

The legislative effort has been dubbed the Freeze Bill for proposing to put the choice program expansion on hold, at least until the state develops what the utilities believe are appropriate fees to be paid by customers who leave for government-run providers. Some discussions have included language applying the moratorium to any community choice program not delivering electricity as of Sept. 1.

The community choice aggregation movement, which now includes Los Angeles County, is the latest potential blow to the shareholder-owned utilities, which have endured a dramatic shift in their industry with the proliferation of rooftop solar, improved energy efficiency, use of smart technology and the advent of battery storage that enables consumers to store electricity in their garages.

The technological advances have led to declining or flat usage in recent years of electricity produced by the utility companies. An industry report referred to these advances as “disruptive” technologies.

Although the shareholder-owned utilities say they support consumer choice, they insist that the current regulatory framework creates inequities for those who want to stay with their existing power provider.

“A diverse range of organizations, including seniors, small business, labor and consumer groups believes the current [system], which is supposed to ensure equity, is broken,” said Helen Gao, an SDG&E spokeswoman. “SDG&E agrees with these organizations, and believes we are headed for a major problem if regulators don’t fix the … issue soon.”

Southern California Edison said there is concern about how costs are managed and has communicated with lawmakers about the issue.

“SCE is not actively supporting a specific bill at this time on CCA-related matters, but continues to monitor bills and proposed legislation with a focus on protecting its customers,” Edison said in a statement.

At issue are obligations the utilities already have that need payment — in particular, contracts for energy that the power providers secured years ago at prices that are higher than what the government-run programs are able to secure today.

If customers fleeing the shareholder utilities for the government-run providers don’t help cover the costs, those who remain with Edison, SDG&E or PG&E could face higher bills, the utilities argue.

Proponents of the government-run choice programs say they believe some reasonable compensation for the utilities to cover their costs is fine. But the utilities already receive adequate compensation, said Shalini Swaroop, deputy general counsel for the state’s oldest choice program in Marin County, called MCE.

“Traditionally, MCE has argued that the fee is too high and it affects our customers disproportionately,” Swaroop said. “MCE does not believe a freeze is needed. The Public Utilities Commission is currently examining the power charge indifference adjustment fee.”

MCE customers currently pay about $160 a year to PG&E in compensation after having left the utility.

Swaroop said MCE has been raising the issue of the exit fees for the last five years with no resolution, so the move for a moratorium now doesn’t make much sense.

A moratorium would affect MCE, as it is planning to add as many as nine cities, which have some 1 million people.

Perhaps the biggest concern for the utilities is the decision by Los Angeles County to create a community choice aggregation program. It has the potential to be the state’s largest.

Right now, four areas have signed up for the county program — West Hollywood, Calabasas, South Pasadena and Rolling Hills Estates, representing 1.2 million residents, or more than 250,000 residential and commercial accounts. The county intends to phase in the program in 2018.

The change in provider isn’t overwhelmingly apparent to consumers, other than the size of the bill.

In the case of Los Angeles County customers, electricity will still be delivered by Edison over its existing power lines. Edison will also continue to read the meters and send the bills.

But the county utility will buy the electricity from the market or under contract. The county can choose as much green energy as it wants and even build solar projects in the future.

Los Angeles County Supervisor Sheila Kuehl, who helped lead the effort to establish a choice program in the county, said the shareholder-owned utilities are simply “freaked out” at the idea of competition.

“When you’re used to having a monopoly, competition is a very scary thing,” Kuehl said. She said the effort to seek the moratorium in the waning days of the legislative session was troubling.

“They decided to take what I think is a fairly sneaky tack,” Kuehl said.

Some of California’s Major Utilities Are Trying to Block the Growth of Government-Owned Electricity Programs, by Ivan Penn, The Los Angeles Times, September 8, 2017.

LADWP Sees Highest Demand Ever as Angelenos Roast in Record-Breaking Heat Wave

Los Angeles Department of Water and Power customers used more electricity on Thursday battling the heat wave than has ever been used in the agency’s history, DWP officials announced.

Customers hit a peak demand of 6,502 megawatts at 4:15 p.m., shattering the previous record of 6,396 megawatts used on Sept. 16, 2014. The agency expects a record to be set on Friday as the heat wave continues.

“Simple actions like setting your thermostat at 78 degrees or higher, using major appliances before or after peak hours, and turning off unnecessary lights can go a long way toward reducing the strain on our electrical equipment and overall power system demand,” LADWP General Manager David H. Wright said in a statement. “High nighttime temperatures and around-the-clock demand for electricity by customers doesn’t allow our high-voltage equipment time to cool. By reducing your electricity use, you can help prevent power outages during this record-breaking heat storm.”

In Boyle Heights, an estimated 11,000 Department of Water and Power customers were without power between Wednesday night and Thursday morning as high demand overloaded equipment to the point of failure, the agency said. Power was restored by 6 a.m., officials said.

In all, about 14,000 DWP customers lost electricity overnight as crews worked to reroute power to less-used equipment, the agency said.

The toll on the region’s power grid has been a concern for days as temperatures have hovered in the triple digits during the day and 70s or 80s at night. Temperatures remained even warmer in the deserts, where cities like Palm Springs had a low of 90 degrees overnight Wednesday, the National Weather Service said.

The heat wave and the inevitable spike in power usage triggered the California Independent System Operator to issue two flex alerts this week. Officials this week called on utility customers to voluntarily conserve power through the hottest hours of the day. Despite the call for conservation, blackouts were reported across the region.

The latest outage occurred Thursday morning in Colton, in San Bernardino County. Unlike other recent outages, though, Colton’s was caused by lightning.

According to the city of Colton Public Utilities’ Facebook page, a lightning strike hit the city’s main substation, which receives power from Southern California Edison. Schools were closed districtwide for the day because of the outage.

The city’s water pumps and phone lines were down, and the only way the agency could send messages Thursday morning was through Facebook, it wrote.

“PLEASE USE EXTREME WATER CONSERVATION DURING THIS OUTAGE OUR PUMPS DO NOT HAVE POWER,” the agency wrote about 8:30 a.m.

Power was restored before 4 p.m.

In the afternoon, a lightning storm sparked a brush fire near the 5 Freeway in Castaic, the Los Angeles County Fire Department said. The fire started about 4 p.m. amid some 3,400 lightning strikes that occurred in the afternoon.

Several heat records were also broken in Southern California.

Burbank hit 108 degrees, breaking the old record of 106 set in 2007, the weather service said. Sandberg reached 98, two degrees higher than the 1995 record of 96. Riverside reached 112 degrees, breaking its old record of 110 set in 1998.

An excessive heat warning for the Apple and Lucerne valleys and the mountains, valleys and foothills in San Luis Obispo, Santa Barbara, Ventura and Los Angeles counties remains in effect through Saturday.

LADWP Sees Highest Demand Ever as Angelenos Roast in Record-Breaking Heat Wave, by Joseph Serna, The Los Angeles Times, August 31, 2017.

Huntington Beach to Explore Local Control of Utilities

HUNTINGTON BEACH The City Council has taken a step toward claiming added control of its electric utilities, agreeing to examine data from Southern California Edison on the costs and usage of the utility’s power supply. That data will be used for a $25,000 report on the benefits and risks the city would face if it chose to buy its power on the open market.

The council voted 5-2 Monday night in favor of exploring a process known as community choice aggregation, or CCA, in which cities create their own utility and buy power on the open market. It is an increasingly popular method to potentially lower energy costs and increase the use of renewable energy sources such as solar and wind power, advocates say.

Cities and counties across the state have adopted aggregation. And more are considering it, including Laguna Beach, Newport Beach, Orange, Garden Grove, Tustin and Lake Forest, according to a city report. Nationally, as of 2014, 1,300 municipalities had aggregation agreements, according to renewableenergyworld.com.

The idea for studying aggregation was presented in a strategic planning workshop in January and brought to the council for a vote to launch a study.

At the time, Councilwoman Jill Hardy said she felt the proposal had been a bit rushed.

If the city adopted the process, Edison would continue to operate the power grid and maintain the infrastructure, but would no longer purchase the energy for those who chose the new utility, according to the city. Residents could choose if they want to remain with Edison.

To start the process, the city must acquire data from Edison to understand its current usage trends and sign a non-disclosure agreement to obtain the data, according to city officials.

Council members Lyn Semeta and Erik Peterson opposed going forward. Semeta said she wanted to wait until there was more information from other cities about their experiences, particularly with regard to customer savings.

“That’s what we were sold,” she said. “Now what I’m hearing is it may cost the same or more.”

Peterson said he had numerous concerns about being unable to hold to the non-disclosure agreement if public information requests force releasing Edison’s data.

He also said there hasn’t even been discussion about which consultants would write the report.

Howard Choy, of the Los Angeles County Office of Energy and Sustainability, spoke in favor of community choice aggregation, saying it gives communities flexibility in deciding how they want their energy to look going forward.

Choy said many supporters focus on potential savings, which he estimated at 5 percent for Los Angeles, which approved the measure in April. But he added there is a “bigger picture” than savings on monthly utility bills.

Communities can make decisions on what percentage of their energy they want to come from renewable sources, he said

Aggregating, he said, could allow the city to decide, “Are you going to be repairing a plant on the beach or are you going somewhere else for your energy? I’ll leave it at that.”

Jim Phelps, an energy industry consultant, told the council while there is nothing wrong with aggregates, most of the contracts do not benefit the communities or deliver on their promises.

He challenged Choy’s claim of 5 percent overall savings in Los Angeles, saying it was really one-half to one-third of that number.

Phelps said the process has been hi-jacked by what he called “claw” — consultants, lawyers and wholesalers. It is rife with fraud, doesn’t deliver on its promises of savings or cleaning the energy grid and can open cities to massive liabilities, he said.

“I want clean energy. But the way it’s been rolled out — no way,” he said.

On the larger scale, Phelps said he just didn’t believe the city should be in the energy business.

“I think there are a lot of questions,” he said. “People come to me and say, ‘protect us and fix our streets.’ They don’t say, ‘go out and buy us clean energy.’”

Most of the council members said it was important to learn more about aggregation so they could understand whether it was a wise decision and would deliver on its promises.

However, Semeta said “Once we ask for the report, I think we’re going down that road rather than asking if it makes sense.”

Councilman Billy O’Connell said he was open to commissioning a study, but added that unless it guaranteed substantial savings to customers he would pull the plug.

Several residents and audience members spoke in favor of aggregating.

“I think it would be a great option for our city,” Dan Kalmick, a resident and planning commissioner, said when the idea came to the council floor in June. “There are a lot of interesting things that can happen with a CCA both in the short term and the long term.”

 

Huntington Beach to Explore Local Control of Utilities, by Greg Mellen, The Orange County Register, August 8, 2017.

LADWP Fast-Tracks Major Solar Battery Project

The Los Angeles Department of Water and Power (LADWP) Board of Water and Power Commissioners on Tuesday advanced a utility-scale battery storage project at the Beacon Solar Plant in the Mojave Desert that will allow greater utilization of nearly 600 MW of solar power, while helping maintain grid reliability and reducing the use of LADWP’s natural-gas-fired generating units.

“Los Angeles is committed to showing the world that a clean energy future that is safe, reliable, and affordable is well within reach,” said Los Angeles Mayor Eric Garcetti. “With half of our energy portfolio expected to come from renewable sources by 2025 and continuing to grow from there, the Beacon battery storage system approved today will help maximize the amount of solar we capture and deliver to Angelenos. I commend the LADWP board and staff for the forward thinking we need to realize our vision of a carbon-free electric grid.”

According to LADWP, the board action Tuesday approved an agreement with Doosan GridTech CA LLC to build the Beacon Energy Storage System (BESS), a 20 MW lithium-ion battery energy storage system that will interconnect with the Beacon Solar Plant and Barren Ridge Switching Stations along Highway 14 north of Mojave, Calif. The new storage project will add to LADWP’s energy storage portfolio, which already includes 1,296 MW of energy storage capacity.

LADWP General Manager David H. Wright said, “The BESS is a unique type of battery energy storage system that will be an integral part of LADWP’s ability to meet its long-term clean energy goals and mandates and help diversify LADWP’s portfolio of energy storage technologies while maintaining reliability and keeping electricity rates low for our customers.”

The BESS will help LADWP meet its target of 178 MW of new energy storage by 2021, as set forth in A.B.2514, which allows local governing bodies, such as the Los Angeles City Council and its Board of Water and Power Commissioners, to establish energy storage targets for their public power utility. LADWP had accelerated the timeline for the BESS from the original 2020 completion date to March 2018 to address grid reliability issues created by the interruption in natural gas supply from SoCal Gas’ Aliso Canyon storage facility.

The project is strategically located to capture and mitigate the variability of 600 MW of solar power and 135 MW of wind power generated by several utility-scale renewable projects in LADWP’s largest renewable energy corridor in neighboring Kern County. This renewable energy hub connects to the city’s power grid through the recently constructed 1,200 MW Barren Ridge Renewable Transmission Project and allows LADWP to increase the amount of renewable energy serving the City of Los Angeles. In 2016, LADWP provided 29% of its customers’ energy needs from renewable sources, which is equivalent to meeting 100% of all energy needs of the cities of Anaheim, Burbank, Pasadena and Riverside for a full year.

“The Beacon battery storage project will join the 1,296 MW Castaic Pumped Hydro Energy Storage plant and other smaller storage projects already in our storage portfolio. Instead of curtailing solar, the BESS will use plentiful, low-cost renewable energy to charge up its batteries, and discharge that energy later during periods of higher prices, while lowering emissions by replacing fossil fuel generation,” said Reiko Kerr, LADWP senior assistant general manager of power system engineering, planning and technical services.

LADWP Fast-Tracks Major Solar Battery Project, by Joseph Bebon, Solar Industry, August 17, 2017.

Severing Ties with Utilities Isn’t as Easy as Cutting the Cable Cord

If disaster ever struck, Joe Fleischmann could keep the lights, refrigerator and big-screen TV running in his Orange County home, even if the power company went dark.

Fleischmann is an early adopter of home energy storage: In his garage is a battery strong enough to help keep the essentials in operation.

The home of the former Los Angeles County sheriff’s deputy sports a full suite of eco-friendly power equipment — solar panels on his roof as well as battery storage and an electric vehicle charging station in his garage. But even with all his powerful tools, Fleischmann still can’t cut the power cord with Southern California Edison.

Severing ties with the centralized power system — going off the grid — might be a dream of survivalists and some consumers, but the reality is difficult to achieve. The cost of batteries large enough to power air conditioners, a washer, dryer and other big energy guzzlers would imperil most homeowners’ budgets.

“As far as being completely off grid, it’s kind of a foreign thought to me because you’ve always had to rely on the utilities,” Fleischmann said. “We could do that, but at what cost?”

Even the leader in the residential electricity storage industry — and supplier of Fleischmann’s $26,000 battery system — doesn’t see consumers defecting from their utilities.

“True off-grid is ridiculous,” said Blake Richetta, senior vice president of Sonnen Inc., who oversees the German battery maker’s U.S. arm that is based in North Hollywood. Sonnen has about 18,000 residential systems, primarily in Germany and Italy.

Not only is it costly to turn your home into a virtual power plant, Richetta said, but it makes the consumer’s home an island that would be unable to tap the central power system if the off-grid operation fails.

And going it alone negates a more global benefit: Residential and commercial power systems can provide support for the electric grid and utility companies.

“Energy storage adds value, significant value, to the grid operator,” said Richetta, a former North American sales manager for Tesla Inc., which has a battery line of its own.

For instance, as consumers add solar panels and battery storage, combined with increasing energy efficiency, demand decreases for electricity from traditional utility companies. That helps utilities avoid construction of new fossil fuel plants such as natural gas facilities.

“We are essentially helping the grid do things it could never do before in a cheaper and cleaner way,” Richetta said.

And although Fleischmann’s system comes with a high price tag, the cost has been dropping substantially, making it potentially more affordable for average consumers in the next few years.

Ravi Manghani, director of energy storage for GTM Research, said the installed price of residential systems has dropped 25% to 30% over the last two to three years. The cost of the batteries themselves has declined by about 60% during that time to about $425 per kilowatt-hour, he said.

And consumers can benefit from state and federal incentives that can reduce the overall cost, Manghani said.

In some places, living off-grid makes more sense than in others.

In the United States, that place is Hawaii, which has the nation’s highest electricity rates at roughly twice as much as what Californians pay per kilowatt-hour. Because Hawaii must import fuel for its power plants, costs run high.

Hawaii’s higher utility tab makes it a simpler decision for consumers to spring for solar panels and battery storage. And that potential sales opportunity has drawn the attention of energy companies including Sonnen, Tesla, Sunrun and Blue Planet, which are offering solar and battery packages similar to Fleischmann’s system but at various sizes.

But for other places, even relatively high-cost California, it can be difficult to get a deal that includes storage for less than what consumers are paying their utility company for electricity.

“You’re probably not going to save enough money to make that work,” said Ron Nichols, president of Southern California Edison, which serves about 15 million people through 5 million residential and business accounts. “Right now it doesn’t pencil out.”

Nichols acknowledges that the equation might improve eventually for residential consumers.

“Battery technology is going to get better over time,” he said. “And its costs are going to come down.”

Nichols said he sees some of the greatest, immediate opportunities in commercial storage systems such as at schools, large office buildings and other commercial entities.

Commercial customers pay a premium for using electricity at times of peak demand. A battery can reduce commercial customers’ use of electricity from the utility company during those periods and ultimately save money. In addition, they can contract with the power company to allow the utility to draw electricity from the battery when the electric grid might need it.

“It’s not some silver bullet for everything,” Nichols said. “But we’re finding new opportunities. They’re going to be very helpful for the grid in the future.”

Bernadette Del Chiaro, executive director of the California Solar Energy Industries Assn., agrees that battery prices are still a bit high on the residential side. But she argues that just as commercial customers can assist the electric grid with their batteries, so can residential consumers by staying connected to their utilities and the wider electric grid.

“The solar and storage industry are really, actually committed to a green grid,” Del Chiaro said. “It really is seen as making the grid stronger and more resilient, as opposed to everybody an island unto themselves.”

Del Chiaro said utility companies benefit from the argument that solar plus storage is too expensive for residential customers because they retain control of electricity and keep prices high for consumers. But working toward empowering consumers will ultimately reduce their costs, she said.

“What we’re trying to push for is something that truly transforms the market,” Del Chiaro said. “Everybody just thinks solar and storage are toys for the rich. The utilities run around Sacramento and call solar plus storage the ‘Cadillac class.’”

But if utilities are allowed to set the agenda for how the electric system develops, she said, “we’ll keep prices really high that way.”

Fleischmann, who retired from the Sheriff’s Department after a back injury, installed a 6.5-kilowatt solar array on his Brea home three years ago. He added the Sonnen battery system last year.

Fleischmann thought the Sonnen system, which looks like a storage cabinet in his garage, provided a good match for his home. The system is expandable, unlike some batteries, and can be operated from a computer and smartphone.

“I think it actually looks pretty cool,” Fleischmann, 46, said.

His goal was to save money on the electricity consumed by his family of five as well as to provide backup power in an emergency. He wasn’t thinking off-grid.

But he purchased a large battery — 12 kilowatts, while the typical home system, Nichols said, is about 4 kilowatts and enough to last about four hours. Fleishmann chose a large system with the benefit of a state rebate that picked up about a third of the cost of the battery.

Fleischmann keeps about 20% to 25% of his battery in reserve as backup while tapping the remainder to support his home or send to the electric grid.

“If the grid goes down, we would still have a source of electricity,” Fleischmann said. “I think with the popularity of the system and as the costs come down, more people will be able to invest in them.”

Severing Ties with Utilities Isn’t as Easy as Cutting the Cable Cord, by Ivan Penn, Los Angeles Times, August 13, 2017.

Huntington Beach Votes to Explore Community Choice Program

The council voted 5-2, with members Lyn Semeta and Peterson dissenting, to enter an agreement with Southern California Edison to look into community choice aggregation, which can provide cities control over electricity rates and efficiency programs.

A CCA is a program for cities to buy or generate electricity for residents.

Peterson said he doesn’t like the idea of government being involved in the power industry.

“I don’t think it’s our role,” he said, adding that residents go to the council about things such as cleaning downtown or fixing streets rather than anything related to their power bill.

The council would need to enter a non-disclosure agreement with Edison to obtain customer energy use data to see whether a CCA would be economically viable for the city, according to a city staff report.

City Attorney Michael Gates said the non-disclosure agreement comes with some risk because it relies on broad language.

Several members of the public spoke about community choice aggregation.

Cari Swan said a CCA comes with huge risks and is an unnecessary expansion of government.

Michael Rotcher said he favors CCA and moving forward with the study to find out if the program is feasible in Huntington Beach.

Huntington Beach Votes to Explore Community Choice Program, by Ben Brazil, Los Angeles Times, August 8, 2017.

South Bay Clean Power’s DER & Regional Approach

Distributed Energy & Energy Risk Management

The South Bay Clean Power CCA initiative’s primary purpose is to create a stable, long-term energy agency that becomes a ‘market maker’ for Distributed Energy — and increasingly relies on these resources over the long-term. Throughout this process, we have not considered the challenge of creating a Distributed Energy-enabled CCA in isolation from the other challenges facing ‘typical’ CCA initiatives.

This is technically challenging, owing to the fact that Distributed Energy is complex. It requires the CCA to possess various technical functions and services that are not included in the ‘typical’ CCA design.

Additionally, and this may surprise some stakeholders, tackling Distributed Energy first requires CCAs to have technical capabilities that more resemble those employed by the utilities — not just for Distributed Energy in particular, but in regards to how energy risk is managed from a practical, day-to-day perspective.

Utilities (and increasingly CCAs in California) employ an integrated set of energy risk management functions to coordinate a diverse portfolio of power contracts and suppliers. The utilities’ power portfolios include Distributed Energy. The graphic below shows these functions, which should be deployed in an integrated fashion:

energy services

Without this ability to pick and choose sources of energy, and manage the contracts and power market operations, a CCA has limited ability to plan for and integrate Distributed Energy into its operations in a systemic fashion.

This is one of the main reasons why SBCP is proposing the “Portfolio Manager” operational model, to provide the SBCP CCA with ‘utility-grade’ capabilities in energy risk management, from early on in the CCA implementation process.

The “Portfolio Manager” operational model is a critical risk management recommendation as well— it provides a much higher level of transparency and expertise to manage the primary operational risk for any CCA: energy power costs.

Because of this, over the course of 2017 the “Portfolio Manager model” has been adopted by numerous CCAs and CCA initiatives: Redwood Coast Energy Authority, Silicon Valley Clean Power, MCE Clean Energy, Inland Choice Energy, East Bay Clean Energy and Monterey Clean Power.

We have interviewed five leading Portfolio Managers — both private companies and nonprofits owned by public power — that are offering these services to California CCAs, and published this exchange in our “Q&A with Portfolio Managers” report:

logos of PMs

With this as a foundation, the SBCP Business Plan also identifies additional, specific Distributed Energy capabilities that the CCA will deploy — spanning data analytics, power planning, program design, customized power procurement & contract management, active power market operations & settlements, data & billing management, rate design and customer engagement functions.

This design guidance draws heavily from the way the utilities are evolving in California — because supporting Distributed Energy requires specific functionality across a range of operational activities.

Regional JPA of CCAs

To ensure that SBCP remains stable over the long-term, we have also anticipated and analyzed broader sources of risk that threaten to undermine the CCA industry as a whole.

CCAs are entering a period of unprecedented regulatory risk. Certain threats are political, while others are more fundamental — and while the details are complex (and explained in our reports), the end result is that CCAs may find it increasingly hard to price power competitively with the utilities, likely starting around 2020.

As a solution to help manage this risk, SBCP has recommended a widely-used model taken from the broader public power industry, deployed in this precise sort of situation: a regional joint-action agency to share services between CCAs.

The model, as one 40-year public public veteran that reviewed the SBCP Business Plan commented, is “near universal” and “overdue” for the CCA industry. There are 27 of these agencies across the USA, including two in California: NCPA and SCPPA (the Northern California Power Agency and the Southern California Public Power Authority). As a selection:

Regional-JPAs-in-USA
Creating a Regional Joint Powers Agency of multiple, autonomous CCAs standardizes services and coordinates power planning at an advantageous economy-of-scale.

It is a vehicle to build a deeper bench of expert public-sector staff, and to provide higher quality services at a lower cost, than any individual CCA would be able to afford on its own. It would also accelerate the integration of Distributed Energy territory-wide, and significantly enhance regulatory engagement powers — for the benefit of all member CCAs.

In other words, it gives CCAs many of the same advantages that the large utilities enjoy — and mimicking those advantages is a prudent risk management strategy.

To be functional and stable, the member CCAs & Regional JPA must have specific features and responsibilities:

  1. The member CCAs must collectively control the regional agency, and costs must be allocated fairly;
  2. The Regional JPA provides services to member CCAs, and each may elect to pool power requirements for joint buy or build contracts, or for enhanced credit support (including the issuance of revenue bonds) — but this is at their individual discretion and never compulsory.
  3. Each member CCA must retain full local control of their energy choices, branding, rates, financial reserves and local programs — and have the ability to leave if they choose.
  4. Oversight mechanisms such as process controls, independent audits and empowered Community Committees must be included in both the CCA JPAs and the Regional JPA of CCAs.
  5. Private contractors must be relied on less-and-less over time, as expert staff are hired and assume increasing responsibility — particularly over power planning, energy risk management and Distributed Energy.

There are a number of additional design considerations that are discussed in the SBCP Business Plan — such as how costs are to be allocated between member CCAs.

The early-stage organization chart for the Regional JPA of CCAs from the SBCP Business Plan is below — it would evolve over time, as both the Regional JPA and member CCAs build staff capacity (as appropriate):

Picture1

We have received substantial interest from other CCA initiatives and stakeholders in this proposal — from various statewide environmental and social justice groups, and CCA initiatives from San Luis Obispo down to Orange County.

There are also substantial industry resources and support for an initiative of this kind within public power associations — which are observing the development of CCA in California and increasingly encouraged by the maturation of the industry.

While we strongly encourage SBCP cities to engage in this initiative, our financial planning and implementation process prioritize the launch of SBCP as a Distributed Energy-enabled CCA. As a precaution, we also recommend that service contracts executed by SBCP be designed to transfer to the Regional JPA of CCAs if and when it is created in cooperation with other CCA initiatives.

South Bay Clean Power’s DER & Regional Approach, by Staff, South Bay Clean Power, August 3, 2017.

Putting the Choice in Community Choice Aggregation

Community Choice Aggregation (CCA) is all the rage in LA County cities these days. Likely inspired by the County’s launch of a CCA Joint Powers Authority (Los Angeles Community Choice Energy) program and a string of presentations, LA County cities have been actively evaluating CCA. This interest is great news for the cities and consumers, but cities also owe it to their financial futures and future city councils to vet the options that exist for CCA implementation.

CCA has become a competitive space with choices abounding. As of today, there are four options for cities to consider in LA County if they commit to implementing CCA:

1 – Go with LA County – A regional CCA program initiated by Los Angeles County, Los Angeles Community Choice Energy is governed as a Joint Powers Authority in which every member government receives an equal seat on the board, but key measures can be vetoed by a proportionally representative vote (bigger cities get more power to veto actions). The model can reduce some risk for members, but also reduces local control for the city and custom branding options. This JPA is still in the formation stages.
https://www.lacounty.gov/about-lacce/

2 – Join the California Choice Energy Authority – A Joint Powers Authority founded by the Cities of Lancaster and San Jacinto. CCEA provides a hybrid CCA model that offers more autonomy for city members while dealing with regulatory and administrative overhead and maintaining local control. The JPA has been formed for over a year – Lancaster, Pico Rivera and San Jacinto already are members. (Disclosure note: CCEA is a client of Tripepi Smith)
https://californiachoiceenergyauthority.com/

3 – Join the South Bay Energy Coalition – Residents of South Bay cities initiated South Bay Clean Power to encourage city councils and staff to implement a CCA program in the South Bay area. South Bay Clean Power currently has a draft Joint Powers Authority agreement and business plan that cities may review.
https://southbaycleanpower.wordpress.com/

4 – Go independent. Cities do not have to join any group. A city could simply form its own CCA, execute its own feasibility study and implementation plan and handle all the operational and regulatory work going forward. This provides the greatest independence and local control but does come with ongoing increased costs and risk.

As city staff work to analyze options and provide recommendations on this complicated subject to the city manager and council, they should ensure they have done their due diligence on all these options. Moving to CCA is a long term decision for a community. The pathway forward on CCA should not be taken lightly and should not be a choice of near term convenience. If a city has not fully evaluated all these options, it has limited its choices at the very moment it is trying to create choice for its residents.

To make it easier to digest, here are three questions cities should answer before deciding on a route to CCA.

  1. What are the trade offs with the governance models between the various CCA options and how much control do I want?
  2. What do the pro forma financials look like under each model and how much city revenue is given up with the various options?
  3. How deep is the experience of the team working on the CCA (whether internal staff or staff at the JPA partner)? Can this team get me to a compliant and successful implementation?

About the Author:
Ryder Todd Smith is president and co-founder of Tripepi Smith a marketing – communications – public affairs firm operating throughout California. He is a frequent speaker at local government conferences and a respected voice on local government policy matters and public agency communications. Tripepi Smith counts among its 70+ clients the California Choice Energy Authority.

Putting the Choice in Community Choice Aggregation, by Ryder Smith, Public., August 2, 2017.