Santa Cruz County/MBCP Study Session

Margaret Bruce Square

Margaret Bruce

contributed by Margaret Bruce

On June 9th, the Santa Cruz County Board of Supervisors chambers were filled to nearly standing-room-only capacity to hear presentations on Community Choice technical study recommendations, and next steps for the tri-county Monterey Bay Community Power (MBCP) initiative (Monterey Bay, San Benito, and Santa Cruz Counties).

Supervisor Bruce McPherson set an enthusiastic tone for the session, opening with, “This is the most significant initiative to take place in this area in my career.” He underscored his commitment to action: “We’re going to make this happen!”

Presentations were given by Shawn Marshall, Executive Director of LEAN and Mark Landman, Board of Director for Sonoma Clean Power. Shawn elaborated on an informational video to dive into the details of how Community Choice Energy (CCE) works, how to set up a program, success stories, risks, and risk mitigation strategies.

Mark provided highlights from Sonoma’s program, touching on the economics of CCE, where there is room to grow, how to keep the money local, and how CCE can speed the transition to renewable energy.

Mr. Richard Steadman, Executive Officer at the Monterey Bay Area Air Pollution Control District and Project Development Advisory Council (PDAC) member noted that the three counties, all 18 cities, and various special districts have been involved in the CCE exploratory process. To date, the project has not used any public funds, but rather, funds from grants and private donations.

The PDAC made several recommendations:

  • A successful CCE agency within the Monterey Bay region is highly feasible with a wide range of options.
  • There is an October deadline for cities/counties to make a decision to join the CCE at its formation (the option will remain for them to join at a future date)
  • Board representation may be structured like the Monterey Bay Air District, which represents the same tri-county area, with 11 to 13 board members comprised of elected officials and their alternates.
  • A stand-alone, regional JPA is the envisioned governance structure.

Key guiding principles:

  • Competitive rates
  • No unbundled RECs (renewable energy certificates)
  • Support rapid investment in local renewable energy generation while ensuring that goals for fiscal stability, rate parity, and carbon reduction are met
  • Control and safeguard customer revenues, long-term power procurement, and local power ownership to hedge future market risk and ensure long-term financial vitality
  • Implement risk management and ensure transparency
  • Offer complementary programs that service community interests: Feed-In Tariff, Net Energy Metering, energy efficiency, demand response, community solar, electric vehicles, etc.
  • Establish criteria for the use of surplus revenues to ensure geographic equity and adhere to economic justice principles
  • Develop long-term strategic goals of regional energy self-sufficiency by building out local renewable generation projects using prevailing wages, etc.

Once the JPA is formed, the Board will formalize their electricity supply scenarios. The most favorable of three workable scenarios would set rates at about 1% below current utility rates, with approximately 70% renewable, GHG free energy. Projecting ten years out, rates would be on par with the utility, with 90% renewable, GHG-free energy.

Pro Forma financial projections were presented to demonstrate the hypothetical financial performance of the MBCP CCE. The current scenario envisions annual contributions to reserves of 2-4 % of revenues.

MBCP economic benefits:

  • The renewable energy sector will create lots of jobs for initial development and construction. It is estimated that 9,000 – 11,000 jobs would be created/supported in association with energy generation development. Local jobs would be contingent upon how many local energy generation projects are undertaken.

The technical study included a Sensitivity Analysis which raised the following issues as possible risks:

  • PG&E rates
  • length of current favorable market conditions
  • availability of large hydropower
  • opt-out rate
  • overall program size
  • credit structure for power supply
  • future CCE-specific legislation
  • regulatory changes round renewables
  • capacity mandates

The importance of dedicating staff and resources to engage with the legislature and regulatory agencies was emphasized.

David Silverman, General Counsel for Peninsula Clean Energy, spoke about the San Mateo experience in establishing their CCE program and organization. The basic formation of a CCE is easy and made clear and straightforward in the enabling legislation. Once the CCE forms, the conditions around power purchases and similar contracts merit getting outside counsel. There is a very simple ‘forming ordinance’ — San Mateo’s is available online as an example.

Board/JPA governance is the biggest political issue.  Governance can be crafted to address various sizes of JPA members – one-entity-one-vote with a weighted voting structure as needed.  (Sonoma was cited as an example.)

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