As Community Choice agencies spring up around the state, they are experimenting with various new business models. As they do, they are functioning as innovation incubators.
Valley Clean Energy Alliance (VCEA), a new Community Choice agency comprised of the Cities of Davis and Woodland and unincorporated Yolo County, is using an approach not previously tried in California. Rather that contracting with a private electric service provider, VCEA is contracting with their neighbor SMUD (Sacramento Municipal Utility District) to provide these and other services.
According to VCEA board member and Yolo Supervisor Don Saylor, the relationship with SMUD began ten years ago when Yolo County tried through a ballot measure to be served by SMUD. The measure, fiercely opposed by PG&E to the tune of over $9M, was defeated. Even so, through the campaign SMUD professionals and Yolo County elected officials and staff developed a healthy appreciation for each other.
Saylor said that VCEA did not start out with a plan to partner with SMUD. VCEA put out a request for proposals (RFP) for an array of services including energy procurement, technical service, a call center, and community outreach. At the same time, they started conversations with SMUD and encouraged them to respond to the RFP.
The costs of going with SMUD versus other private contractors that bid on the RFP were comparable. But Saylor said that the comprehensive nature of the services that SMUD provided created efficiencies that were attractive to the board. SMUD’s work in the public interest and their transparency and accountability were also seen as beneficial by VCEA’s board. The vote to move forward with SMUD was unanimous among the 15 voting elected officials. On October 12, VCEA approved the implementation plan and the master service agreement with SMUD. VCEA’s proposed launch date is June 2018.
Saylor foresees that the partnership with SMUD will give VCEA on day one capacities in energy procurement and related services that other Community Choice agencies must develop over time. VCEA plans to hire a general manager and three to five staff, mostly for contract management. The staffing plan is still under development. He emphasized that VCEA would retain governance, rate setting and policy functions, as well as accountability to customers. VCEA has also contracted with Circlepoint to handle community outreach and maintain some independence from SMUD.
When asked how the relationship with SMUD and VCEA’s staff would impact the development of local resources, Saylor responded that the relationship would actually accelerate their deployment. He pointed out that Yolo County already has a strong track record of developing local resources, and argued that if VCEA has a solid administrative and operational foundation with SMUD, it will free up board and staff time to develop local projects.
Saylor noted that VCEA has participated as an affiliate member of CalCCA, the Community Choice trade association, and that he anticipates they will be a full member after launch. Having SMUD as a contract partner should enhance Community Choice agencies’ standing in Sacramento with the legislature because of the respect SMUD enjoys with state policymakers. This could prove important going forward. Proposed state legislation this year would have severely harmed Community Choice. This legislation didn’t pass, but will likely return in 2018.
Mitch Sears, interim General Manager for VCEA, agrees that SMUD’s experience, capabilities, and orientation toward advanced energy solutions will “give them a jump start” in local resource deployment. Sears felt that “this kind of partnership with a public utility seems like a natural fit, because of the alignment around public service. It might be a useful approach for others to consider.” He also sees potential not only in partnering with SMUD, but also with the UC Davis Energy Efficiency Center and other municipal partners.
Gerry Braun, a member of the VCEA Advisory Committee and founder of the nonprofit Integrated Renewable Energy Systems Network that supports the development of local clean energy resources, was more measured in his assessment of the potential for SMUD to accelerate the development of local energy resources. He said that although SMUD has done quite a bit of research and development regarding local energy resources, they have actually implemented less per capita than Davis and Woodland have.
Braun explained that strong local energy management capacity is the key ingredient for developing local energy resources. He is skeptical that a vertically integrated utility like SMUD has both experience and motivation to perform well on local resource development. He said the partnership was “an opportunity to do really well and stay focused on the core CCA business, but maybe not develop the full transformative potential of the enterprise.”
Although SMUD has tremendous capacity as an electric service provider, they may not be as experienced as other contractors in dealing with PG&E and particularly that utility’s complicated rate setting and billing system.
The future will show whether VCEA’s partnership with SMUD enhances their capacity to develop local programs and resources, and is a model to emulate.
Yolo County Partners with SMUD – A New Model of Community Choice Development?, by Barry Vesser, Center for Climate Protection, October 18, 2017.