Local Power Providers Are Securing a Cleaner, More Prosperous Future for California

By Mike McGuire and Ann Hancock

A little-known revolution is sweeping California’s energy market, helping the state exceed its ambitious goals for renewable energy and investing profits back into the communities they serve. Community Choice Energy or Community Choice Aggregation (CCA), enabled by state law in 2002, allows local communities to establish a power agency governed by local elected officials that supplies electricity to residents and businesses. The private for-profit utilities still maintain the wires and handle the billing, while this public, not-for-profit agency decides the sources of electricity generation, sets customer rates, can develop energy generation facilities, and innovative programs to benefit their customers.

The first CCA started serving customers in Marin County in 2010, and the second in Sonoma County in 2014. Fourteen CCAs now operate across the state. Many more are in the pipeline, including in large populated areas like Alameda and Los Angeles counties and the City of San Jose.

CCAs offer customers a choice of an electric service provider focused on doing community good in what was formerly a regulated monopoly market. Where they have been implemented, they also provide slightly lower rates and cleaner power than the private utilities. In these markets, they are serving 80 to 95% of the customers. The Center for Climate Protection estimates that given current trends, CCAs will serve 65% of the eligible market by 2020, or about 18 million customers in every corner of this great state.

CCAs aren’t just providing cheaper, cleaner power, even though these are fantastic benefits. The more mature agencies are also offering innovative programs that help everyday Californians lower their utility bills and transition to a more sustainable lifestyle. For example, Sonoma Clean Power has subsidized the purchase of electric vehicles for their customers with incentives between $2,500 to $5,000 per vehicle. They have also given away hundreds of smart home charging systems for these vehicles. MCE Clean Energy (formerly Marin Clean Energy) has built a 10 megawatt solar system in Richmond, with over 50 percent of the labor for the project from local residents who were trained through a local career training program. These kinds of projects, tailored to the unique needs of the communities they serve, help to combat climate change and drive local economic development.

CCAs also leverage their relationships with their customers and other local agencies to develop distributed energy resources like solar, energy storage, electric vehicles, energy efficiency, and microgrids in a coordinated fashion, while bringing power generation closer to where it is used – at a person’s home or business. Doing this saves the cost of building new, expensive transmission lines, and is more efficient than transporting power over long distances. The local model is flexible and makes the power grid more resilient in times of outages or natural disasters.

There are some that say CCAs are too good to be true and are trying to limit competition by attempting to ban CCAs, despite millions of satisfied customers. Many California legislators and regulators are working hard to prove to the rest of the country that clean energy and a thriving green economy is no longer a theory, it’s reality here in the Golden State. To do so, legislators and regulators should ensure that the playing field for CCAs is level so these new players can continue to set the pace for the rest of California’s energy providers.

Senator Mike McGuire (D – North Coast) represents the 2nd Senate District, which encompasses the North Coast region, from Marin County to Del Norte County. Ann Hancock is the Executive Director of the Center for Climate Protection. She will speak about CCAs’ capacity to drive innovation at the Business of Local Energy Symposium in Sacramento on June 5. More information: www.climateprotection.org

 

 

Community Choice Energy at this Year’s SEEC Forum – June 20, 21

The Local Government Commission will host its 9th Annual Statewide Energy Efficiency Collaborative Forum on June 20 and 21. This year will mark the first year that a session focusing on the relationship between Community Choice Energy and energy efficiency will be featured.

The session, entitled “How Community Choice Agencies Can Advance Energy Efficiency Goals” will explore the challenges and opportunities for local governments advancing energy efficiency goals via Community Choice agencies (CCAs). CCAs can initiate self-funded demand side programs, and also have the statutory authority to receive public benefit funds in order to fund and administer efficiency programs. The session will highlight CCAs that have acted on this and explore the potential that all such agencies, prospective and operational, have in this regard.

I will be moderating the session and I am honored to have three excellent expert panelists to help explain and explore the topic. Joining me will be Kathy Wells, Energy Projects Coordinator, Lancaster Choice Energy, Alice Stover, Director of Customer Programs at MCE Clean Energy, and Rick Brown, President of TerraVerde Energy, an independent energy advisor representing school districts, public agencies, and commercial enterprises.

For more information about the SEEC Forum and registration information, click HERE.

Center for Climate Protection Launches National Renewable Energy Laboratory Project

For Immediate Release

Media Contact: Woody Hastings

707-525-1665 ext. 117 woody@climateprotection.org

The Solar Energy Innovation Network project will work with Community Choice Energy
agencies to design an advanced rate structure for Distributed Energy Resources

Santa Rosa, CA — May 17, 2018 — The Center for Climate Protection (Center) today announced its team was selected by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) to participate in a collaborative research effort to explore new ways solar energy can improve the affordability, reliability, and resiliency of the nation’s electric grid.

The Advanced Rate Structure project, formally titled “Exploring Advanced Rate Structures to Expedite Solar + Distributed Energy Resources (DER) Deployment,” is part of the Grid Flexibility group of NREL’s Solar Energy Innovation Network program.

Joining the Center on the Advanced Rate Structure team are key partners TerraVerde Energy LLC; Chris Cone Consulting; Grid Policy, Inc.; California Solar and Storage Association; and two California Community Choice agencies (CCAs): Lancaster Choice Energy and Peninsula Clean Energy. TerraVerde Energy will lead technical development, and the CCAs will advise from the perspective of an operational electricity provider and help design a virtual pilot of the rate structure.

California energy policymakers have established Distributed Energy Resources (DER) deployment as a key strategy for reaching the State’s greenhouse gas (GHG) emission reduction targets. To support this goal, electricity providers need tools to identify high avoided-cost grid locations, assess DER project grid‑service value, and incentivize DER deployment. The Advanced Rate Structure project will provide a replicable, scalable, and effective tool that will allow electricity providers to expedite and guide DER deployment.

The Center’s team is one of just nine teams selected to join the nationwide Solar Energy Innovation Network. “We selected teams that are experimenting with promising ideas to use solar power to improve the future of grid security and reliability in their communities,” said Kristen Ardani, who leads the Innovation Network at NREL.

The Advanced Rate Structure Team’s participation in the Solar Energy Innovation Network will include financial, analytical, and facilitation support as the team works to anticipate and address new challenges and opportunities stemming from solar energy and other distributed energy technologies in California. The solutions developed and demonstrated by the Advanced Rate Structure Team will serve as a blueprint for other communities facing similar challenges and opportunities.

Specifically, this project will deliver a tool that can produce rate structures to incentivize deployment of DERs including distributed solar photovoltaics, energy efficiency, energy storage, electric vehicles, and demand response technologies. The project will create a DER rate structure design tool that captures the value of DER projects; can be readily adopted, customized, and updated by electricity providers in response to load management imperatives, policy directives, technological advances, and customer demands; and enables informed and expedited deployment of DER resources.

“There is a reason why we just changed our name to the California Solar and Storage Association after focusing on solar for 40 years. Technologies like storage, electric vehicles, and automated demand response are making it imperative that we figure out how to optimize integrations of these technologies with solar. Designing a rate structure that helps foster these innovative deployments is essential,” said Brad Heavner, Policy Director, California Solar and Storage Association, formerly the California Solar Energy Industries Association (CALSEIA).

The Advanced Rate Structure project will deliver a tool that can produce rate structures to incentivize deployment of DERs in a technologically agnostic way; provide a transparent methodology for valuing benefits of DER installations that can also be adapted to technological advances and customized to conditions in electricity provider territories; and provide a consistent approach that enables electricity providers to focus their resources on grid-resilient DER development.

“Community Choice agencies in California can not only set their own rates but can also establish their own rate structures. We have more and more customers combining solar with storage, electric vehicles, and other energy technologies. We are looking for a win/win for both our load management and customer benefits,” said Jan Pepper, Chief Executive Officer of Peninsula Clean Energy.

The Advanced Rate Structure Team is ready to hit the ground running on the project, which is expected to conclude in mid-2019. “We are very excited about this project and see it as an opportunity to truly push the envelope of advancing distributed energy resources. Our Community Choice partners are ideally suited to playing a key role because of their close relationship to their local community and their ability to be flexible and creative,” said Rick Brown, PhD, President of TerraVerde Energy.

NREL is operating the Solar Energy Innovation Network with funding from the U.S. Department of Energy Solar Energy Technologies Office. NREL pursues fundamental research and development of renewable energy and energy efficiency technologies to transform the way we use energy.

About Selectee Organizations

The project team includes the project lead Center for Climate Protection. The Center, a California 501(c)(3) organization founded in 2001, works with business, government, youth and the broader community to advance practical, science-based solutions for significant greenhouse gas emission reductions.

Chris Cone Consulting, consulting firm specializing in pay-for-performance solutions that drive scalable clean energy investment, deliver demand management and rate protection value, and foster innovation, accountability, and competition.

TerraVerde Energy LLC, an independent energy advisor representing school districts, public agencies, and commercial enterprises. We help clients reduce energy use and costs by planning, designing and implementing energy conservation measures, solar energy systems, and energy storage solutions.

Grid Policy, Inc., Led by Jon Wellinghoff, is dedicated to expanding the use of and investment in clean and sustainable DERs in a dynamic grid through reducing market barriers and opening market opportunities. Grid Policy works to remove regulatory, policy, market and institutional barriers to the implementation of cost-effective grid technologies and systems.

California Solar and Storage Association, formerly the California Solar Energy Industry Association, is a solar rooftop and storage trade association dedicated to building California’s solar and storage industries for over 40 years.

Lancaster Choice Energy is a Community Choice Agency providing electricity to the citizens and businesses in the City of Lancaster, California, since 2015.

Peninsula Clean Energy is a Community Choice Agency providing residents and businesses in San Mateo County with clean, renewable energy from resources like solar and wind, since 2016.

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Distributed Energy Resource Projects in the Works

The Center for Climate Protection, along with a variety of partners, pushing the local clean energy envelope

The Center is a partner in three grant-funded projects that are underway aimed at exploring how Community Choice agencies (CCAs) can play a leading role in advancing the decentralized clean energy economy of the future.

The most recent news is the award in early April of a grant from the Adobe Foundation. In order to help local Community Choice agencies (CCAs) attain maximum environmental and economic benefits in their communities, this new Center project will develop information and support materials intended to help operational CCAs in the Bay Area move into an advanced phase by rapidly deploying distributed energy resources (DERs), and help emerging CCAs to prepare to do the same. DERs are any number of clean energy generation resources, energy storage, energy efficiency, electric vehicles, fuel-switched appliances, and demand response technologies connected to the distribution system. DERs are broadly viewed as a key to unlocking the potential of these technologies, in optimized integrations, to reduce greenhouse gases while providing other community and system-wide grid benefits. The project’s services will include offering a database of resources and best practices, workshops, webinars and coaching to support advancement of DER among Bay Area Community Choice agencies.

Earlier this year the Center was selected by the National Renewable Energy Laboratory (NREL) to participate in a collaborative research effort to explore new ways solar energy can improve the affordability, reliability, and resiliency of the nation’s electric grid. The Advanced Rate Structure project, formally titled “Exploring Advanced Rate Structures to Expedite Solar + Distributed Energy Resources (DER) Deployment,” is part of the Grid Flexibility group of NREL’s Solar Energy Innovation Network program. Joining the Center on the Advanced Rate Structure team are key partners TerraVerde Energy LLC; Chris Cone Consulting; Grid Policy, Inc.; California Solar and Storage Association; and two California CCAs: Lancaster Choice Energy and Peninsula Clean Energy. TerraVerde Energy leads technical development, and the CCAs advise from the perspective of an operational electricity provider and help design a virtual pilot of the rate structure. This project will deliver a tool that can produce rate structures to incentivize deployment of DERs and will create a DER rate structure design tool that captures the value of DER projects; can be readily adopted, customized, and updated by electricity providers in response to load management imperatives, policy directives, technological advances, and customer demands; and enables informed and expedited deployment of DER resources. For more detail see the news release.

Lastly, as of the most recently filed monthly progress report in early May, things are on track in the California Energy Commission-funded MCE Building Efficiency Optimization Project, first reported on in the Center’s e-news in April 2017. The aim of this project is to empower MCE to achieve broad deployment of carbon free DER, energy efficiency, local renewable energy integration, and to identify other low cost solutions supporting the goal of delivering 100% carbon free electricity for its community by 2025. Three facilities, including the Buck Institute pictured in the heading of this blog, have been chosen where multiple integrated energy technologies will be deployed. By promoting best practices and lessons learned from the project through the California Community Choice Association, MCE seeks to rapidly scale building efficiency via DER procurement as a cost-effective means of meeting Community Choice Energy climate action targets across the State.

Stay tuned to CPX for future updates on these groundbreaking projects.

Legislative Action Alert: Please Contact Your State Representatives ASAP

Legislation making its way through the process (SB 1088, Dodd) is intended to address wildfire safety relative to the electric grid system. However, it contains elements that do not improve safety and seriously impede the ability of Community Choice agencies and others to implement Distributed Energy Resources (DERs). Find your state rep HERE and send them a brief letter. And whatever you send to your representative, send it to the bill author, Senator Bill Dodd as well: Senator.dodd@senate.ca.gov

Here is what to say:

Dear [representative]:

SB 1088 is overall a good, well-intentioned bill that will help with respect to our electrical grid and future wildfire episodes. However, the bill contains elements that do not improve safety and seriously impede the ability of Community Choice agencies and others to implement distributed energy resources such as community solar power, community battery storage and microgrids.

Therefore, I urge you to make the following amendments:

  • Remove all of 2899.3  This section effectively prohibits most distributed energy resource (DER) projects occurring today. Such projects include community solar power, community battery storage and microgrids. Liability for DERs is already assigned in the DER contracts that providers have with investor-owned utilities today. There is no unassigned liability. However, to extend potentially unlimited system liability to small-scale local DER projects would serve to end the innovation in that sector and not recognize the investor-owned utility’s existing engineering limitations that serve to protect the system from local DER impacts.
  • Modify Section 2899.2(b)(14) to read “Any other element pertaining to electric and gas safety, reliability, or resiliency deemed appropriate by the commission with the option for community choice aggregators to self-provide resources required for reliability as determined by the Commission, consistent with the community choice aggregator’s obligation to comply with resource adequacy requirements pursuant to Public Utilities Code Section 380.”  This addition is critical because CCAs are investing in reliability resources today, so CCA customers would be paying twice for reliability services without this amendment. The addition will ensure that double-procurement of reliability resources does not occur in territories served by CCAs.

Thank you for your consideration.

Sincerely,

___________

Please refer any questions to woody [at] climateprotection.org

Agriculture and Community Choice Energy – My Spring Internship Results

I had the opportunity to have an internship with Center for Climate Protection working in the Renewable Energy Program. A big part of the Program’s work involves advocating for Community Choice Energy in the Central Valley. The Central Valley uses a huge amount of energy and has great potential to increase its use of renewable resources, which are abundant in the Central Valley. The largest industry in the Central Valley is agriculture, which means that to get any local government to adopt Community Choice means getting agricultural interests in the area on board. By spreading the knowledge of Community Choice, we are hoping to be able to get farmers and other Ag sector businesses on board which in turn will hopefully get the regional elected officials on board.

My work included assessing best practices for water and energy conservation in the Central Valley associated mainly with agricultural operations. I started by working on a database with names and contact information of farmers in the Central Valley, mostly focusing on Fresno County. By doing so, there were many other ag-related companies and organizations which I kept running into. I decided to add them to the database because they are an integral part of the agriculture industry in California. Thus, I created different sheets for growers, marketing programs, organizations, events, and funding opportunities all having to do with the agriculture industry. As the project progressed and my understanding of the agricultural industry grew, I made sheets for best practices and a picture of what the most prevalent energy best-practices are in California agriculture.

The next step was to look into growers in areas where Community Choice Agencies (CCAs) operate to be able to have input on how a Community Choice is different from Investor Owned Utilities (IOUs). I created another database of growers mainly in Sonoma County and Mendocino County, focusing on wine growers, orchards, crops, and livestock due to the fact that they are the most common agriculture operations in Northern California.

Finally, we developed survey questions to ask the growers in Northern California areas to assess the impact Community Choice has had on their operations. Questions included things like whether or not they receive service from their CCA or IOU, how they are liking the energy services they receive, whether or not they have been able to improve operations or complete and energy project more easily, and whether they have benefited by having a choice. I have taken the information we find useful, I created a survey to be emailed out to the list of growers in Northern California. The results will serve as a basis for a brief paper on the topic of the relationship between Community Choice and agriculture.

In the end, I hope the project I have had the opportunity to work on can help spread the knowledge and benefits of CCAs and how they can help advance energy efficiency and renewables in agriculture operations. California has enacted laws that set the state on a course to reduce the amount of non-renewable resources we use. One of the largest sources of greenhouse gas emissions is the agriculture industry, so we need to be able to do a good job of conserving water and energy in that sector.

Central Valley to be Highlighted at June 5th Symposium – Scholarships Available

Sacramento event to draw energy experts from around the State

The Central Valley will be one of the highlighted topics of conversation as leaders from across the state gather on June 5th for the fourth annual Business of Local Energy Symposium. It’s all about how California communities can benefit from energy resource localization by accelerating Community Choice Energy. Last May, more than 375 leaders from around the state convened in Long Beach to accelerate California’s shift to a clean energy economy. Last year’s Symposium provided a robust forum to exchange ideas about Community Choice Energy programs and to hear from elected leaders, regulatory agency leaders and Community Choice implementors about the policy and economic landscape shaping emerging Community Choice risks and opportunities.

In the Central Valley, the City of Hanford is leading the way in evaluating Community Choice Energy. Their technical study is in the works and results should be available soon. More information about Community Choice Energy in the Central Valley, including public opinion surveys on energy issues and economic studies, is available at the Clean Power Exchange’s Central Valley Page.

This year’s agenda at the Symposium will feature a panel focusing on the Central Valley. The panel, entitled “Perspectives on Community Choice in the Central Valley” will feature long-time public policy experts who live and work in the Central Valley who will offer their perspectives on the challenges, and discuss how Community Choice might benefit Central Valley communities. California’s Central Valley has a wealth of diverse energy resources, human resources, and the available land, rooftops, parking lots, and other suitable sites needed to develop these resources. Local control of energy dollars may offer the best solution to boost the local economy, increase employment, and achieve environmental goals, while offering competitive rates.

A limited number of scholarships are open to local and regional government staff, elected officials and non-profit organization representatives working to advance Community Choice Energy in their communities. Priority will be given to jurisdictions that are exploring or have emerging agencies and individuals working in rural, hard-to-reach, and/or disadvantaged communities. Since we have limited funding available, scholarships are limited to one recipient per organization/jurisdiction. Scholarships will be awarded on a first-come, first-served basis, with need and background taken into consideration. Click HERE to apply.

The Symposium is organized by the Center for Climate Protection in coordination with our partners, Local Government Commission and Local Government Sustainable Energy Coalition.

Electric cars make inroads in California — but fast enough?

California continues to lead the nation in electric car sales.

But it must drive a long, hard road before it can achieve its goal of getting 5 million emissions-free cars on the road 12 years from now.

That’s the message of a new report, which found that while sales of battery-electric and plug-in hybrid vehicles last year rose 29 percent over 2016, the state’s total remains under 400,000 — less than 10 percent of the 2030 goal set by Gov. Jerry Brown this year.

The report by the International Council on Clean Transportation, a nonprofit that helped uncover the Volkswagen diesel emissions-cheating scandal, found that especially outside wealthy areas, demand needs to keep growing quickly for California to meet the goal, which is just 12 years away. The group believes it can be done.

“We’re really at just the early stage,” said Nic Lutsey, a program director for the ICCT. “At some point, there’s liftoff in the market. The vehicles will become mainstream and not just hit at a couple niches.”

The top six cities in the state for electric vehicle sales last year, as a proportion of total car sales, were all in Silicon Valley, according to the report. Palo Alto, home to luxury zero-emissions automaker Tesla, led the pack with nearly 30 percent of vehicle purchases skewing electric. Following were Saratoga, Los Altos, Cupertino, Los Gatos and Menlo Park.

The Bay Area had 26 cities among the 30 with electric vehicle shares of new car sales above 10 percent, according to the report.

Santa Rosa registered the highest percentage increase in demand for electric vehicles among California cities with at least 500 electric vehicles sold. There, the number of new electric vehicles sold in 2017 rose 61 percent from the number of new EVs sold a year earlier. Berkeley and Oakland both saw increases of over 50 percent.

The regional energy company, Sonoma Clean Power, has been partnering with local car dealerships to offer rebates of up to $3,500 on new zero-emission vehicles, on top of state and federal incentives.

“It’s a pretty sweet deal,” said Kate Kelly, with the power company.

About 96,000 electric vehicles were sold in California in 2017, according to the report, and California accounted for half of all EV purchases in the U.S.

The ICCT counts electric vehicles as those that run exclusively on batteries like the Nissan Leaf, as well as plug-in hybrid vehicles like the original Chevrolet Volt, which run on battery-powered engines or gasoline. Hybrids that do not plug in are not counted.

California’s push for electric cars is part of the state’s broader effort to reduce smog and fight global warming. The transportation sector is California’s largest source of heat-trapping gases, accounting for 37 percent of emissions.

Lutsey said that the ongoing battle between California and the Trump administration over fuel-economy standards should have little effect on the state’s push for electric vehicles. Last week California sued the Trump administration over its efforts to weaken or abandon the planned tightening of federal standards, which would force automakers to make their fleets more fuel-efficient.

California has its own regulations, separate from the fuel economy standards, that force automakers to ensure that a percentage of the cars they sell produce no greenhouse gases. Brown issued an executive order in January declaring California’s goal to be 5 million zero-emissions vehicles on the road by 2030. Another, earlier executive order requires 1.5 million zero-emissions vehicles on California roads by 2025 — just seven years away. The state’s definition of zero-emissions vehicles includes plug-in hybrids as well as pure battery electrics; fuel-cell vehicles also count.

James Sweeney, director of the Precourt Energy Efficiency Center at Stanford University, said there’s too much uncertainty to know if California will meet its electric vehicle targets.

Big unknowns include how much car batteries will improve, how widespread charging stations become and whether governments will need to — and can afford to — continue offering subsidies as electric vehicle sales grow.

“Yes, it will be challenging for the state,” he said, “but not impossible.”

Electric cars have not been as popular outside the Bay Area and Los Angeles County. In Sacramento, Bakersfield and Riverside, for example, emission-free vehicles sales were about 2.5 percent of total sales, or half the state average, according to the ICCT.

Cost is a factor. With a typical starting price of at least $30,000 and often much more, electric cars are generally more expensive than conventional vehicles. People who drive long distances may balk at the range limitations, though improvements in battery technology continue, and some newer models like the Chevrolet Bolt and various Teslas can go more than 200 miles.

“I think it’s natural that electric vehicles end up in certain pockets early on,” said Lutsey, who noted that awareness of electric cars and the number of offerings at local auto dealerships can also be factors. “But sales will migrate to more rural communities.”

Only a third of electric vehicles were sold in places where median income was below the state average, according to the report.

With the right blend of new technology and government support, Lutsey figures California can increase electric vehicle sales by at least 18 percent a year — enough to reach the 5 million goal.

The state must continue investing in the electric vehicle programs, the ICCT says, with much of the funding expected to come from California’s cap-and-trade policy, which requires industrial companies to pay to pollute. And it will need to continue strict regulation of the auto market.

In Santa Rosa, car demand has risen since the wildfires last fall. Todd Barnes, owner of the Platinum Chevrolet dealership, said that government incentives, improvements to electric cars such as greater range, and the availability of charging stations have helped make the plug-in hybrid Chevrolet Volt his top-selling sedan.

“It’s a major contributor to our overall volume,” he said.

Kurtis Alexander is a San Francisco Chronicle staff writer. Email: kalexander@sfchronicle.com Twitter: @kurtisalexander

Electric cars make inroads in California — but fast enough?, by Kurtis Alexander, The San Francisco Chronicle, May 6, 2018. 

San Francisco Announces Historic Commitment to Net-Zero Emissions by 2050

At the City’s annual Earth Day Breakfast today, Mayor Mark Farrell committed San Francisco to net-zero greenhouse gas emissions by 2050, a move that will eliminate the City’s carbon footprint.

Mayor Farrell also announced that funding will be included in his upcoming budget for the City to commit to planting 2,000 new trees in the next two years. Trees absorb excess carbon dioxide—a major cause of climate change—and store the carbon while releasing oxygen back into the air. Mayor Farrell’s goal of planting 1,000 new trees annually will help the City get closer to reaching its emissions free future.

“With the Trump Administration displaying a stunning lack of guidance on climate change, it is up to cities such as San Francisco to take the leadership mantle of this critical issue,” said Mayor Farrell. “We cannot wait for Washington, D.C. to act—we owe it to our future generations to take bold climate action. We are accelerating our plan for an emissions free future now, before it is too late.”

San Francisco has long been a pioneer of innovative and responsible environmental policies and programs. The City has reduced greenhouse gas emissions by 29 percent below 1990 levels—the equivalent of nearly more than 400,000 cars off the road—while San Francisco’s population increased by 20 percent and its economy grew by 111 percent. San Francisco has enforced new green building standards for all municipal construction projects, invested in renewable energy systems, pursed rigorous energy efficiency standards at City-owned properties and has moved closer to achieving zero waste sent to landfill.

San Francisco joins 25 other cities from around the globe who have made the commitment to accelerate emission reduction plans. The pledge aligns with the Paris Climate Accord and builds on San Francisco’s track record of successfully reducing emissions while simultaneously growing its economy. More details of the plan to achieve net-zero emissions will be released at the Global Action Climate Summit, an international summit being hosted in San Francisco in September.

The Paris Climate Accord seeks to limit global temperature increases to 1.5° Celsius above pre-industrial levels. According to research by C40 Cities, a network of the world’s largest cities committed to addressing climate change, climate action within urban areas can deliver almost 40 percent of the savings needed to achieve the goals of the Paris Climate Accord.

“We’ve made tremendous progress over the past decade in reducing our emissions but cities all around the world need to fundamentally transform how they operate in order to achieve net-zero emissions” said Debbie Raphael, Director of the San Francisco Department of the Environment. “When cities lead, states and nations follow. Synchronizing bold climate action around the globe is how we heal the planet and leave future generations a thriving, healthier global ecosystem.”

The new climate commitment offers San Francisco another opportunity to demonstrate that bold climate goals drive economic growth. To make the switch to an emission-free future, the City will explore new technologies to transform markets and leverage San Francisco’s longstanding history of entrepreneurial innovation. And the City will continue to build new renewable energy facilities, which create jobs, diversifies the energy sector, and trains new workforces.

“San Francisco have once again shown how cities can boldly reduce their emissions while maintaining a growing and thriving economy,” said Anne Hidalgo, Mayor of Paris and Chair of C40 Cities. “The commitment to reaching carbon neutrality, approved by Mayor Farrell today, puts San Francisco at the very forefront of global climate action. With just five months before leaders of cities, states and global businesses reveal new innovative commitments in San Francisco during the Global Climate Action Summit, mayors of more than 40 megacities have now publicly committed to implement the highest goals of the Paris Agreement at the local level. Cities are more than ever paving the way towards a healthier and more sustainable future.”

Other cities committing to the C40 emissions-zero pledge include: Austin, Accra, Barcelona, Boston, Buenos Aires, Cape Town, Caracas, Copenhagen, Durban, London, Los Angeles, Melbourne, Mexico City, Milan, New York City, Oslo, Paris, Philadelphia, Portland, Quito, Rio de Janeiro, Salvador, Santiago, Stockholm, Vancouver, and many more.

 

Mayor Mark Farrell Announces Historic Commitment to Net-Zero Emissions by 2050, by The Office of the Mayor of San Francisco, The Office of the Mayor of San Francisco, April 19, 2018. 

Method used to calculate wholesale electricity cost may result in losses and liabilities

Community Choice Agencies affected by this problem

California Community Choice agencies (CCAs) procured more than $550 million of electricity last year to serve their customers. However, the current method used to settle the wholesale electricity transactions can result in substantial errors and unrecognized financial liabilities.

Inaccurate Settlement Data

At issue is how the settlement data, the basis for settling wholesale electricity cost, is calculated. The California Independent System Operator (CAISO) calculates a given CCA’s electricity cost by applying the wholesale prices to the settlement data, commonly known in the industry as Settlement Quality Meter Data (SQMD). According to CAISO Tariff, as Scheduling Coordinator Metered Entities, CCAs can report SQMD to CAISO through their Scheduling Coordinators. CAISO applies the wholesale market hourly prices to the SQMD to calculate wholesale settlement costs.

Rather than tallying up the total electricity consumed by their customers on an hourly basis, almost all operating CCAs use their respective Investor Owned Utility (IOU) partners’ load profiles to approximate their hourly system load. Uses of load profiles for wholesale settlement have been a common practice for municipal and investor owned utilities prior to smart meter deployments. However, the difference is that, while the municipal and investor owned utilities use their own load profiles, CCAs use the other utility’s (in this case an IOU) load profile. The implicit assumption is that the IOU’s load profile is a good proxy for the CCA’s load profile.

Utility vs. CCA Load Profile

It turns out, however, that a CCA’s load profile can deviate significantly from its host IOU. Based on a recent GridX study of a CCA’s load profile, the load profiles can differ as much as +/- 25% on an hourly basis (see the chart below). Key factors contributing to the deviation are the customer demographics, locations and climates. While the IOUs in California all have vast service territories spanning multiple climate zones and diverse economies and demographics, a CCA has a much more limited and homogeneous service territory.

Comparison of PG&E and one of the operating CCA’s in its service territory load profiles for a period of one month, or 720 Hours, (X-Axis), the blue line indicating PG&E and the orange line the CCA. To facilitate a better comparison, both load profiles are normalized to 100% (Y-Axis). The chart shows substantial deviation between two load profiles on an hourly basis.

Losses and Liabilities

Given that the electricity price can swing dramatically from hour to hour over the course of a month, the hourly settlement errors can potentially exceed +/- 25%. While the settlement errors can go either way, the financial impact on CCA however does not cancel out due to the accounting treatment of these errors. If the error is positive, in favor of electricity suppliers, the CCA is overcharged for the wholesale electricity and incurs losses; if the error is negative, in favor of the CCA, the CCA is undercharged for the wholesale electricity and therefore, according to the GAAP Accounting Rules, accumulates the financial liabilities. The latter, according to the Wikipedia, is defined as the future sacrifices of economic benefits that a company is obliged to make to other companies as a result of past transactions. Such liabilities can potentially be a fiscal ticking time-bomb for CCAs, since their removal may result in the payments in the future.

Procure and Pay for What Your Customers Consume to Ensure Financial Well-Being

To avoid SQMD-related settlement errors CCAs must accurately and precisely aggregate each of their customer’s hourly electricity consumption, using interval meter data, into system level load. In so doing, the CCAs can precisely procure and pay for the electricity their customers consume collectively, no more and no less, to minimize the losses and more importantly liabilities. A new method of settling their wholesale electricity procurement as outlined above is simple and effective and will ensure the CCAs financial well-being. For an industry that is expected to undergo tremendous growth over the next few years, a more precise wholesale settlement method would ensure the industry’s healthy growth.