Stockton City Council votes unanimously to pursue Community Choice Energy

Vote seeks grant and technical study

With one councilmember absent, the seven member Stockton City Council voted 6-0 at their March 19th council meeting to seek a grant offered by Sonoma Clean Power in order to fund a technical study on Community Choice Energy for that city.

Jim Parks of Valley Clean Energy delivered the main presentation and knocked it out of the park. “We’re mission driven and we deliver cost competitive clean electricity, consumer choice, price stability, local control, energy efficiency and greenhouse gas reductions.” He pointed out that since VCE is so new, less than a year old, it will take some time to build capacity to begin offering local programs.

Vice Mayor Dan Wright, instrumental along with Mayor Michael Tubbs in bringing the issue to the Council, stated “I originally became interested in this because of the climate crisis. As I have continued to learn more about it, I realize how much the potential for reinvestment in the local community can address many of the city’s problems.”

Jim Parks, Director of Customer Care & Marketing for Valley Clean Energy, addresses the Stockton City Council.

Key concerns and questions from all the council members revolved around risks to the city, whether the city should go it alone or join with the county or other cities in a joint powers authority, and uncertainty about the PG&E bankruptcy.

About ten community members came in support and five spoke to urge the Council to evaluate Community Choice. Jonathan Pruitt, speaking on behalf of Catholic Charities Environmental Justice Program stated that “we serve and work closely with Stockton’s disadvantaged communities. With a Community Choice program there is potential for innovative green energy projects to help those communities.”

Jonathan Pruitt of Catholic Charities addresses the City Council.

“This is a way for our Stockton citizens to engage and utilize more clean energy,” stated Margo Praus, a leader in several Stockton-based organizations including the Citizens’ Climate Lobby and the Sierra Club.

The video of the entire meeting agenda item is HERE and the Community Choice item begins at the 1:54:50 mark.

Stay tuned to the Clean Power Exchange for more news and updates on the development of Stockton’s Community Choice Energy agency.

California sets a new solar output record – and it isn’t even spring yet (w/ charts)

California continues to break new ground in terms of integrating higher levels of solar, and sometimes the records come when you least expect them. Data from the California Independent System Operator (CAISO) shows that on March 16 solar output peaked at 10,765 megawatts around 2:45 PM local time.

Image sourced from PV Magazine

According to several sources, this was the highest level since California set its previous record of 10,740 MW in June 2018 – despite it being four days before the Spring Equinox.

Image sourced from PV Magazine

Notably, these two figures only include solar connected to the transmission grid, and not behind-the-meter solar. Based on previous estimates, rooftop and other smaller solar installations connected to the distribution grid likely produced around 50% more solar, meaning that the total output was likely somewhere around 16,000 MW.

Nor does this include all of California, as the cities of Los Angeles and Sacramento are among the areas that are not part of the CAISO grid.

 

Deployment & demand

It should be no surprise that California is setting new records, as the state continues to deploy the most solar PV of any U.S. state. According to Wood Mackenzie Power & Renewables and Solar Energy Industries Association (SEIA), California deployed 3.4 GW of solar in 2018 – more than three times as much as any other state.

This enabled California to meet more than 14% of annual electric demand with in-state solar, according to a pv magazine analysis of data from the U.S. Department of Energy.  But the portion of demand met with renewables in the middle of the day, when the sun is shining – and particularly on a cool, weekend day in Spring – is going to be much greater.

According to CAISO data, demand at 2:45 PM on Saturday – minus behind-the-meter solar – was only around 18 GW, meaning that utility-scale solar was meeting 59% of total demand.

Image sourced from PV Magazine

 

Flexibility and exports

High levels of solar and wind output mean that the rest of the system must maximize its flexibility – something that CAISO has struggled to do in the past. When we looked at a previous day of record solar and wind output on May 26, 2018, we found that many sources of power such as the state’s hydro plants were not showing much flexibility.

Furthermore, CAISO was still importing power at mid-day, during maximum solar and wind output – a pattern that was repeated on other days of high renewable energy output. A further analysis pointed to inflexible contracts signed by the state’s investor-owned utilities with out-of-state generators being a main culprit.

However, the analysis of March 18, 2019 is different, and CAISO data shows a net export of power during the periods of highest solar output, an encouraging development.

Image sourced from PV Magazine

 

Minimizing curtailment

When there is too much power on the California grid, it has to go somewhere, and the solution has been to curtail wind and solar. Curtailment levels on March 16 were not as severe as might be feared, with only around 3,000 megawatt-hours of wind and solar curtailed over the course of the day. In fact, curtailment had been higher the previous Wednesday.

However, the trend this year so far is cause for concern. California had what LA Times describes as a “rare wet winter”, and this is expected to lead to high levels of hydroelectric output. As California’s hydro fleet is not as flexible as hydro plants in other regions, this is likely to exacerbate the conditions that lead to the highest levels of curtailment – namely maximum output from renewable energy and limited demand during spring due to cooler weather and less air conditioning use.

Curtailment in February was the highest on record, although March curtailment does not appear to be much higher so far.

Image sourced from PV Magazine

California could still wring a lot more flexibility out of its power fleet, including requiring greater flexibility from its gas-fired power plants and installing more batteries to both soak up mid-day solar output and meet evening demand.

Additionally, if properly managed, the introduction of electric vehicles could bring greater demand flexibility. But like Hawaii and now New Mexico, what California is doing as it moves towards 100% zero-carbon electricity still very much an experiment. We will see how it all plays out as the state continues to push the level of renewable energy deployment in the world’s fifth largest economy.

 

California sets a new solar output record – and it isn’t even spring yet (w/ charts), by Christian Roselund, PV Magazine, March 18, 2019.

Taking a spin on an electric tractor…

With a view of the future?

This past weekend I had the opportunity to visit the ranch of Steve Heckeroth, architect, legendary clean energy pioneer, inventor, former contributing editor for Mother Earth News, and in this instance, creator of the Solectrac electric drive tractor. Steve’s ranch, and e-tractor manufacturing operation, is located along the Mendocino Coast near Albion, California, about two hours northwest of where I live.

My interest in electric tractors is partly personal. After moving to a rural area in Sonoma County in 2009 and finding that perfect place at the end of the lane away from the road noise, we woke up the first few mornings to realize we had not thought about tractor noise. Duh. Being surrounded by small farms, what did we expect? But perhaps with electric tractors now becoming reality, there may be hope for quieter mornings – and assuming they are plugging in to cleaner power, less-polluting farms.

So the first thing I noticed about the e-tractor is how quiet it is. Barely even a buzz or hum. The other thing I noticed immediately was how clean and simple it looked. No black oil, grease, or soot stains as one typically sees on diesel tractors.

One of the interesting things Steve demonstrated was the fact that you can set the tractor to move at a constant, very slow speed, which allows for an excellent seed spreading process. This is something that is difficult for diesels to do. He also explained how electric tractors have an enormous amount of torque, enabling them to tow or push many times their own weight.

There are two main models to choose from, the eUtility and the eFarmer. According to the Solectrac website, the eUtility tractor is designed for vineyards, equestrian centers, livestock operations, hobby farms, etc. It has a 20 kWh onboard battery pack that provides three to eight hours of run time depending on loads. It uses level two (240v) charging and takes about three hours to reach 80% charge, so having two battery packs and switching them out is the way to keep working all day. It accommodates a wide variety of implements on the rear hitch and uses linear electric actuators that replace inefficient hydraulic implements.

Steve Heckeroth on the eFarmer tractor.

The eFarmer is designed for row crop farms and operates at a fraction of the lifetime cost of diesel tractors. Both tractors are zero-emission and quiet with no diesel fuel, hydraulic fluid, engine noise, or exhaust fumes.

Now, yes, clearly these tractors are designed for smaller operations, but the principle is demonstrated successfully and scaling up is a matter of investment. No technological breakthroughs are required.

Another key part of my interest revolves around our work in Community Choice Energy and in the Central Valley. E-tractors will not address the air quality issues of dust kicked up by agricultural activities, but the particulate matter and other toxic air contaminants that result from diesel combustion by farm equipment, an extremely harmful part of the poor air quality in the Central Valley, is indeed something that may be mitigated by this kind of technology. We look forward to helping advance electric farm equipment as we do passenger EVs.

And how might Community Choice agencies (CCAs) play a role? CCAs have successfully demonstrated that they can design a buy-down program for passenger electric vehicles. For CCAs with significant agricultural activity in their service territories, why not do the same for electric farm equipment?

Several other manufacturers including John Deere and Fendt have recently introduced electric tractors, but given that they have a huge market base of long-time diesel customers, it is not clear that they will do much to support their successful adoption.

For more information about the Solectrac electric tractors manufactured right here in California, eager to sell, visit Solactrac.com.

Fresno City Council Holds Its First Workshop on Community Choice Energy

The Fresno City Council held its first public workshop on Community Choice Energy on Thursday, February 14th. Councilmember Luis Chavez sponsored the presentation and welcomed the presentation team, stating that he brought it forward in order to evaluate the how it might benefit the city and see if it would work for Fresno. Information sessions such as this are often the first step on the way to a city or county forming a Community Choice agency.

The presentation included Darrel Pyle, City Manager of Hanford, as well as Woody Hastings, Destiny Rodriguez, and Mike Dozier of the Clean Power Exchange program team. In addition to the presentation team, about 17 local Fresnans came to express their interest and support for Community Choice.

Darrel Pyle, City Manager of Hanford, shares Hanford’s interest and experience in Community Choice Energy with the City Council.

The councilmembers asked many good questions and it was clear that there is interest in continuing the evaluation. A recording of the Community Choice Energy Workshop can be found HERE. If you want to watch the video but have limited time, fast forward to the councilmember Q&A at about the 3:10:30 mark, that is when it gets more interesting!

Being that it was Valentine’s Day, community members showed their love by wearing I “heart” Community Choice Energy stickers.

If you missed the meeting on February 14th, that’s OK, and you can help keep up the momentum by writing your council representative a quick email letting them know you support their continued evaluation of Community Choice Energy for the benefits of consumer choice, local control, local economic benefits, and environmental benefits that such a program can bring to Fresno.

Stay tuned to CPX for news about future Fresno Community Choice Energy action!

CALCCA on PG&E Bankruptcy Filing 2019: FAQs

PG&E Bankruptcy Filing 2019
CalCCA’s Responses to Frequently Asked Questions (FAQs)

With Pacific Gas & Electric (PG&E) facing billions of dollars in potential wildfire liabilities the investor-owned utility on January 29 filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Community Choice Aggregators (CCAs) are committed to providing reliable service, clean energy at competitive rates, and innovative programs that benefit people, the environment and the economy in communities across California. CCAs are closely monitoring the situation and continue to work closely with PG&E in a coordinated manner to address any potential impacts of the bankruptcy filing on CCA programs. Here are answers to common bankruptcy-related questions that we’ve received:

Q. What is Pacific Gas & Electric’s role when it comes to CCAs in California?
A. PG&E is responsible for providing transmission and distribution services to CCA customers (delivering power) as well as serving as billing agent for CCAs. CCAs provide power generation services and are independently responsible for securing sufficient electricity supplies to meet the needs of their customers. CCA customers receive a consolidated bill issued by PG&E that includes charges from both parties. PG&E collects payments on behalf of the CCA, and these payments are then transferred to the CCA. PG&E is legally required to continue to perform as the billing agent for CCAs.

Q. How many CCAs operate in PG&E’s service territory?
A. There are 12 CCAs serving customers in PG&E’s territory. They are: CleanPowerSF, East Bay Community Energy, King City Community Power, MCE, Monterey Bay Community Power, Peninsula Clean Energy, Pioneer Community Energy, Redwood Coast Energy Authority, San Jose Clean Energy, Silicon Valley Clean Energy, Sonoma Clean Power, and Valley Clean Energy.

Q. What percentage of PG&E load is served by CCAs?
A. Approximately 41 percent of PG&E’s load will be served by CCAs in 2019. Approximately 25 percent of the load of all three investor-owned utilities (PG&E, Southern California Edison and San Diego Gas & Electric) will be served by CCAs in 2019.

Q. What will happen to my electricity service?
A. It’s expected PG&E will continue to operate in a business-as-usual fashion and that the lights will stay on. This was the case when PG&E filed for bankruptcy protection in 2001.

Q. Has PG&E’s current situation resulted in any impacts to CCA programs in California?
A. CCAs are continuing to serve their customers with electricity supply as usual.

Q. Will there be additional fees added to rates to pay for the wildfires?
A. Any additional fees to pay for PG&E’s wildfire liabilities would need to be considered by its regulator, the California Public Utilities Commission, and possibly the California Legislature and bankruptcy court. We cannot speculate about future impacts to rates.

Q. Do CCAs support a ‘breakup’ of PG&E?
A. The California Public Utilities Commission is investigating PG&E’s current corporate governance, management, and structure to determine the best path forward for Northern Californians to receive safe energy service. CCAs are committed to working with the State of California to ensure the stability of the retail electricity market and stand ready to engage on next steps while providing community-responsive clean and reliable electrical service.

Q. Some have been calling for a public takeover (municipalization) of PG&E. Are CCAs interested in acquiring PG&E’s infrastructure?
A. Some jurisdictions that operate CCA programs may investigate municipalization, while others may want to remain focused on providing generation services only. There is no one-size-fits-all approach. Some civic leaders have called on their local utilities commission to explore municipalization.

Q. Has the court ruled on PG&E’s first-day motion seeking approval to continue providing CCA services?
A. Yes. On January 29, PG&E filed a first-day motion seeking the Bankruptcy Court’s approval to continue passing through CCA revenues in the ordinary course of business. Under this motion, the CCA revenue that PG&E collects as the legally-required billing agent for CCAs would not be encumbered by the bankruptcy process.

On January 31, Judge Montali granted PG&E’s interim motion authorizing PG&E to continue to pass through CCA revenues in the ordinary course of business. This order allowed PG&E to resume the flow of revenues to CCAs. The court is expected to finalize this order on February 27. We agree with PG&E that “the normal and uninterrupted remittance” of customer payments to CCAs and other public-purpose programs is of the utmost importance.

Q. When will the remittance of customer payments to CCAs resume?
A. The remittance of customer payments to CCAs was briefly halted by the court as part of the normal bankruptcy review process. PG&E has resumed all billing and revenue remittance services to CCAs and we expect these to continue without interruption.

Q. Are CCAs actively participating in the bankruptcy court proceedings?
A. Yes. Sonoma Clean Power filed statements to ensure the ongoing pass-through of CCA revenues. CleanPowerSF, EBCE, San Jose, SVCE, MBCP, Pioneer and VCE signed on in support. MCE and PCE have filed individual statements that support the SCP motion.

Q. What are CCAs’ contract exposure with PG&E?
A. Each CCA in PG&E’s service territory has a legally-required Service Agreement. PG&E filed a first-day motion to continue those services to CCAs. On January 31 Judge Montali granted preliminary approval of the motion. The court is expected to finalize this order on February 27.

Some CCAs have contracts to buy energy products from PG&E. Since those energy contracts provide revenue to PG&E, we expect those to remain in place. Some CCAs also have contracts for state-authorized energy efficiency (public purpose program) funding that PG&E is authorized to collect and pass through to the CCAs. PG&E has also requested that these funds continue to flow in the ordinary course of business. We are optimistic that these funds will continue to flow normally.

PDF of this document:  CalCCA FAQs PG&E Bankruptcy 2.8.19

DER Planning

CCA agency MCE’s 2019 resource plan will be 60% renewable

MCE and community partners are leading the way in meeting California’s ambitious renewable energy and climate goals.

The passage of Senate Bill 100 (SB 100) in 2018 advanced California’s existing Renewable Portfolio Standard (RPS) to 60% by 2030, meaning 60% of all electricity must be powered by renewable energy. SB 100 also requires a zero-carbon electricity grid by 2045.

As demonstrated in MCE’s 2019 Integrated Resource Plan (Plan), MCE’s base energy product (Light Green) is projected to be 60% renewable starting in 2019, and rise to 70% by 2030. This puts MCE 11 years ahead of schedule in meeting SB 100’s 2030 RPS targets. Additionally, MCE’s greenhouse gas (GHG)-free content is projected to be 90% in 2019 and 100% by 2022, 23 years earlier than the state mandate. MCE’s Deep Green product is already 100% renewable and 100% GHG-free.

Other highlights of MCE’s 2019 Plan include a commitment to supporting the economic health and sustainability of communities in its service area. This includes supplier diversity initiatives, ensuring prevailing wages and use of union labor, and business and workforce initiatives located in low-income and disadvantaged communities, as seen with the award-winning MCE Solar One.

“Our achievements are due to the local leadership of our 33 member communities and the many MCE customers we serve,” said Dawn Weisz, CEO of MCE. “Their choice of Light Green, 60% renewable energy, or Deep Green 100% renewable energy, and their participation in local renewable energy projects are why MCE’s efforts are leading the way in meeting California’s ambitious renewable standards.”

MCE is also expanding programs to maximize the use of renewable energy and reduce GHG emissions while achieving community benefits such as increased workforce opportunities and customer bill savings. Programs include electric vehicle initiatives, energy efficiency offerings and energy storage projects.

MCE’s 2018 achievements included purchasing nearly 250 MW of new renewable electricity from local and in-state projects built by our partners. These projects came online in 2018, creating over 790,000 labor hours and employing union and prevailing-wage workforces.

As the sole purchaser of the renewable electricity generated by these projects, MCE was instrumental in ensuring they were built. MCE is purchasing power from the following new California renewable projects:

  • 100 MW: Great Valley Solar 1, located in Fresno County; 15-year contract with owner ConEdison
  • 42 MW: Voyager II wind farm in Mojave; 12-year contract with owner Terra-Gen
  • 105 MW: Antelope Expansion II solar farm in Lancaster; 20-year contract with owner sPower

Within MCE’s service area, two new Feed-In Tariff solar projects came online in 2018 that are now supplying wholesale renewable electricity to MCE:

  • 990 kW: Oakley RV & Boat Storage, 20-year contract with owner Hayworth-Fabian LLC
  • 56 kW: EO Products in San Rafael; 20-year contract with owner EO Products

MCE’s Deep Green 100% renewable energy service charges a penny per kilowatt-hour premium for pollution-free wind and solar power produced in California. Half of this premium is then used to help fund the buildout of local renewable projects like MCE Solar One.

The California Public Utilities Commission acknowledged that Community Choice Aggregators (CCAs) like MCE are leading the way in procuring long-term renewable resources: “Overall, the CCAs plan the most long-term new resource purchases to meet their expected load, while ESPs [Energy Service Providers] and IOUs [Investor Owned Utilities] expect additional short-term market purchases to fill out their portfolios.”

Also noteworthy is that MCE’s Integrated Resource Plan does not include unbundled renewable energy certificates (RECs). For more information on MCE’s power content supply, view the full 2019 Plan or the 2019 Plan highlights at mceCleanEnergy.org/energy-procurement/.

News item from MCE

PG&E Bankruptcy – what does it mean for customers, communities and the climate?

Dear CPX E-News Readers,

In this edition of our e-news, you will see a special section dedicated just to the stories that have come out over the past week about the PG&E expected bankruptcy. We did this due to the fact that there is such an enormous flurry of articles on the topic and it is something we have received many inquiries about. It is still very early in the process and much of what is being discussed at this time is speculative. We plan to stay on this topic, particularly as it relates to Community Choice agencies and their customers, and will report on it in coming editions. For now, the following is a brief article summarizing responses to the three main categories of inquiry we have received.

 – The CPX Team

 

PG&E has not yet filed for bankruptcy at the time of this writing, but they did, on Monday, January 14th, alert their employees and the public that they plan to do so on January 29. What does a likely PG&E bankruptcy mean for energy customers, communities, and California doing its part to address the global climate crisis?

The broad outline of the story, as most Center for Climate Protection and Clean Power Exchange e-news readers are probably aware, is that as a result of utility equipment being pinpointed as a cause of many of the wildfires over the past two years, PG&Es’ liabilities outstrip its assets many times over. They have little choice but to declare bankruptcy.

Customers

PG&E has gone through a bankruptcy in the past. In the wake of the deregulation debacle in 2000/2001, PG&E filed for bankruptcy and emerged in 2004 largely as it had been prior to the bankruptcy. Although there were electricity service disruptions during the crisis, the bankruptcy itself did not cause any disruptions. Contingencies exist to keep the lights on. It is reasonable to expect that once again, no service disruption will occur as a result of the bankruptcy.

In the 2018 legislative session, SB 901 was enacted that allows PG&E to recover some of the liability from the 2017 fires, as well as liabilities going forward beginning in 2019. That bill however, being passed and signed just prior to the Camp Creek Road Fire in Butte County, did not include wildfires that occurred in 2018. But for the fires that the bill does cover, customers can expect their electricity bills to go up either via regulatory approval of rate increases or via what is called “non-bypassable charges” on all bills. How much is unknown at this time, as is much of what may play out in the bankruptcy and in other arenas such as the legislature, where PG&E’s fate will be determined.

Wildfire victims with claims against PG&E may be at risk of smaller payouts, and those of limited economic means, as always, face the greatest degree of uncertainty and suffering.

Communities

For the purposes of this article, I am largely referring to communities in Community Choice Energy service territories. What happens to the customers of these Community Choice agencies (CCAs)? It is hard to say at this time, but at the time of this writing, there is no reason to believe that CCA customers are in any kind of unique or differing situation compared to PG&E bundled customers (customers who have opted out of their CCA or live in PG&E service territory where there is no CCA).

One area where there may be some prospect for a good outcome for CCAs is in regard to the exit fees that they pay to utilities for power purchased in years past for the customers that have now departed in part to the CCA. This fee is also known as the Power Charge Indifference Adjustment, or PCIA. The fee pays for power contracts, mostly renewables, that were struck 5, 10 to 20 years in the past, when renewable energy was much more expensive. So these contracts are all above current market prices. Although it would be a complex and controversial affair to renegotiate these contracts, a bankruptcy is where and when this kind of thing would most likely happen, and doing so would benefit all electricity customers, CCA and bundled alike. We are all paying those above market costs. Some experts are adamant that these contracts cannot and should not be abrogated, others argue that the unprecedented nature of the dynamics we are facing should be taken into account and renegotiating these contracts should be considered. A PV Magazine article features the two points of view,

The Global Climate

Many experts whose thinking is largely stuck in the 20th century paradigm of big centralized generation, big transmission, and helpless ratepayers (not customers with a choice, but captive ratepayers) who just pay the bills and dare not ask too many questions, assert that we need to keep the big utilities as is in order to do big renewables. They are saying we cannot let PG&E fail, with its ability to do large scale renewables and other climate-addressing projects and programs. They’ve got it all wrong. They are ignoring the global transformation that is going on all around them.

The central station model is dying and is being replaced with a dynamic, decentralized, democratized, digitized, and decarbonized system where ratepayers are being transformed not just into customers with more choices, but also into clean generators and manipulators of their own electricity use. With the advent of practical and affordable stationary energy storage, this trend will only grow. This is where the response to the global climate crisis is the most effective, at the most local level – every single household, business, and institution in every community plays a role. We don’t need a U.N. agreement to roll out the response, the response is occurring at the local government level. And at the local government level, the best vehicle for navigating the transition to a localized energy paradigm, is Community Choice Energy. The state should recognize this and should work with all of the stakeholders including CCAs to strengthen their role in advancing the new paradigm.

Some have referred to the looming PG&E bankruptcy as among the first large climate bankruptcies. This may well be true. It may also be true that opportunities may emerge in the process that will enable communities to leap forward into the new clean decentralized energy system that can also by the way, be far more resilient against future calamity of any sort, if it is designed well with self-sufficient and islandable mini-grids, among other things.

The Center staff is keeping its eye on the situation as the story continues to break. We are in the early days. Check back at both the Center for Climate Protection’s e-news and Clean Power Exchange’s e-news as the story unfolds.

How Does the Newly Passed Power Charge Indifference Adjustment Affect California Community Choice Agencies?

Introduction

The California Public Utility Commission (CPUC) voted in October 2018 to adopt a new methodology for calculating the exit fees paid by community choice aggregator (CCA) customers.  The exit fee, or the Power Charge Indifference Adjustment (PCIA), is the calculated rate paid by departing CCA customers for power supply cost stranding resulting from leaving Investor Owned-Utility (IOU) generation service.  The dispute between IOUs and CCAs will continue as some of the later details of the methodology are ironed out in a Phase 2 proceeding, scheduled for early 2019.

Mechanics of New PCIA Methodology

The new PCIA methodology has both positive and negative impacts on CCA financial positions and risk.  The primary negative impact comes from a reversal of the CPUC’s original decision not to include legacy utility-owned generation in the cost stranding.  Also, the decision removed the 10-year cost recovery limit on older generation-related commitments that were previously in place.  Both of these methodology components increase the PCIA rate, making it more difficult for CCAs to remain competitive with incumbent IOUs.

On the positive side, some of the uncertainty related to the PCIA calculation has been removed beginning in 2020 where the $0.005/kWh cap is placed on the year to year PCIA rate changes.  Finally, value for greenhouse gas free resources, renewable resources, and capacity attributes will be included as a credit to the stranded cost.  The inclusion of these values may reduce the PCIA rate as the stranded resources often provide more benefit to the IOUs than what is currently being captured in the market price benchmark.

The PCIA numbers shake out at a resounding “the world’s okay” for Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) CCAs.  Despite the $700 million under-collection in 2018 by SCE (who knew summer was hot?), the 2019 PCIA leaves enough headroom for CCAs to weather the storm in 2019.

Operational CCAs in PG&E service territory may find it challenging to remain competitive in the short term, but the storm should subside within the next few years as PG&E’s stranded costs start to take a steep dive and the PCIA falls back to a more palatable level.

While the CPUC’s decision was seen as unfavorable to CCAs and competition, the effects will not likely be significant enough to change the overall landscape for CCAs.  Emerging CCAs may defer launch or join existing agencies; overall CCAs should continue to operate effectively and offer their customers local control, targeted programs, and rate discounts.

Estimated Economic Metrics Going Forward

The following chart presents the estimated “head room” or amount CCAs can pay for power supply and still be competitive with their incumbent IOU.

Projected Headroom

Projected wholesale headroom in cents/kWh for each of the big three IOUs.

Summary

While the recent CPUC decision is not a favorable decision for CCAs, the impacts can likely be weathered even by newer CCAs.  For established CCAs, the impacts of the decision can likely be absorbed with drawing on reserves, pursuing distributed energy resources, and changes to rate discounts and programs.  For newer CCAs, the time to build reserves may increase and rate discounts may need to be lowered.  It may also take longer to fund energy efficiency and other programs, and fewer greenhouse gas-free resources will be affordable.  However, under current power prices and projections, it is expected that CCAs could be organized such that they are feasible.  Emerging CCAs may wish to consider filing an Implementation Plan by year-end 2019 for possible launch in 2021 contingent on yet to be known wholesale power prices and PCIA calculations to be verified closer to launch.

Community Choice Energy on the Agenda in Stockton

City Council Legislative Committee Receives Presentation

On November 5th staff from the Center for Climate Protection delivered the first formally agendized presentation to the Legislative Committee of the Stockton City Council. The committee asked questions for more than a half-hour after the 25-minute presentation.

The matter is now expected to be heard in the full city council on December 4th where the Legislative Committee will report to the council on Community Choice Energy. Following the hearing in the City Council, an informational study session may be scheduled for some time in early January.

Barry Vesser addresses Stockton City Council Legislative Committee members (L-to-R) Jesus Andrade, Dan Wright, Elbert Holman.

Also coming up in Stockton, the California Partnership for the San Joaquin Valley will be holding its quarterly Governing Board meeting in Stockton on Friday, December 7. The Center will be on that agenda for a full presentation on Community Choice Energy.

Stay tuned to CPX for more information on both of these dates as they approach.