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California CCAs Seek Rehearing of CPUC’s Inequitable ‘Exit Fee’ Decision

Concord, Calif. – The California Community Choice Association (CalCCA) and two of the state’s community choice aggregators, CleanPowerSF and Solana Energy Alliance, filed an application for rehearing today with the California Public Utilities Commission in response to the CPUC’s October 11 decision to revise the Power Charge Indifference Adjustment (PCIA).

The PCIA is an “exit fee” charged by the state’s investor-owned utilities (IOUs) to community choice aggregation (CCA) and other departing load customers to compensate for electricity generation built or contracted in the past at prices that are now above-market. The CPUC’s decision is expected to result in a sharp increase in PCIA rates for CCA customers and may make it uneconomic for new CCAs to launch.

“The PCIA decision fails to ensure equitable treatment of all market participants in California,” said Beth Vaughan, executive director of CalCCA. “It favors incumbent utilities by shifting costs, including recovery of shareholder returns, from IOU bundled customers to CCA customers.”

In the application, the CCA parties request that the Commission correct a number of legal errors in the PCIA decision that run afoul of the California Public Utilities Code, California Code of Civil Procedure, as well as other statutes. The errors include:

  • Failing to exclude the costs of utility-owned generation (UOG) in the PCIA imposed on CCA departing load customers
  • Failing to reduce the net PCIA portfolio costs of the IOUs by the value of any benefits that remain with bundled service customers
  • Failing to exclude from the PCIA portfolio costs that are not “unavoidable” or “attributable to” departing load customers

The parties are seeking expedited review of the application on the basis that the decision will in some cases result in PCIA rates that prevent CCAs from serving their customers at the same total generation rates that an IOU can charge its customers. The PCIA rates may also cause CCAs to suspend or cancel the launch of service to new customers.

There are 19 CCA programs serving approximately 8 million customers in California. The higher PCIA rates will have local as well as statewide impacts, particularly when it comes to energy decarbonization. CCAs have signed long-term contracts with new renewable energy facilities totaling more than 2,000 megawatts, and they serve their customers with electricity that is cost-competitive, and in many cases greener, with the supplies of investor-owned utilities.

As UCLA’s Luskin Center for Innovation notes in a 2018 study, “the rise of CCAs has had both direct and indirect positive effects on overall renewable energy consumed in California, leading the state to meet its 2030 RPS targets approximately ten years in advance.”

The precise effects of the new PCIA on 2019 rates will ultimately depend on the outcome of Energy Resource Recovery Account proceedings that are now underway at the CPUC. ERRA proceedings are where the PCIA methodology is combined with an IOU’s actual cost and contract data to calculate the PCIA that will go into effect at the beginning of each year (January 1).

CalCCA is preparing for Phase 2 of the PCIA proceeding and remains undeterred in its efforts to support a new PCIA that lowers costs for all consumers and fosters a competitive environment that offers communities more energy options.

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About CalCCA: The California Community Choice Association supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. CalCCA is the authoritative, unified voice of local CCAs, offering expertise on local energy issues while promoting fair competition, consumer choice, and cost allocation and recognizing the social and economic benefits of localized energy authorities

For more information visit www.cal-cca.org.

Community choice energy backers file for CPUC rehearing, say proposed exit fees are too high

Backers of community choice energy programs want the California Public Utilities Commission to take another look at a recent decision that supporters say is tilted too much in favor of traditional power companies and will discourage potential customers from switching to CCAs.

Last month, the commission voted 5-0 to increase the exit fees that Community Choice Aggregation, or CCA, customers must pay to utility companies in their respective service territories, effective next year.

Late Monday afternoon, the state’s CCA trade association and a pair of San Diego-based groups filed paperwork calling on the commission to hear the case again.

“This is an added fee that will increase the cost for customers to move over” to CCAs, said April Maurath Sommer, executive director and lead counsel for the Protect Our Communities Foundation, an environmental group based in San Diego County. The Utility Consumers’ Action Network joined Protect Our Communities in its filing.

The CalCCA trade group submitted its own application, saying the state’s decision “artificially inflates” the exit fees.

The utilities commission did not respond to a request for comment on the filings.

Largely formed as a way to offer customers power from cleaner energy sources, CCAs have grown rapidly across the state. The first CCA was established in 2010 in Marin County and since then 18 others have sprung up.

San Diego mayor Kevin Faulconer last month announced his support for creating a CCA that, under a joint powers authority, could also include multiple cities around the county.

Under the CCA model, utilities like San Diego Gas & Electric still maintain transmission and distribution lines (such as poles and wires) and handle customer billing. But decisions regarding what kind of power is purchased in a given community are made by government officials.

Once a CCA is formed, its customers must pay an exit fee — called a Power Charge Indifference Adjustment — to the legacy utility serving that particular region. The fee is included in customers’ monthly bills.

The fee is required to offset the costs of investments utilities have made over the years for things like natural gas power plants, renewable energy facilities and other infrastructure.

Utilities argue if the exit fee is set too low, it does not fairly compensate them for their investments; if it’s too high, CCAs complain it reduces the financial incentive for their potential customers.

In October, state commissioners unanimously voted for an adjusted exit fee backed by commissioner Carla Peterman. While expressing support for CCAs, Peterman said the commission had a “legal obligation” to make sure increased costs are not shouldered by “customers who do not, or cannot, join a CCA” and said the adjustment “ensures a more level playing field between customers.”

The fees vary, depending on the service territories of the three investor-owned utilities across the state (SDG&E, Southern California Edison and Pacific Gas & Electric). According to estimates from the commission, the new exit fee in San Diego will be raised from 2.5 cents per kilowatt-hour to about 4.25 cents.

For a prospective CCA residential customer who uses 500 kilowatt-hours per month, that works out to about $21.25 per month.

The groups filing for a re-hearing said the state ruling contained legal errors. Among them:

  • allowing utilities to pass along the costs of generation the power companies themselves own onto the exit fees
  • not properly taking into account the value of cleaner energy sources, and
  • saying there is “substantial evidence” that utilities executed contracts for renewable energy at inflated prices.

Protect Our Communities also called on the commission to issue an immediate stay on its decision because it will go into effect in little more than six weeks — Jan. 1, 2019. The group projected the new exit fees would be 50 percent higher than the existing fee.

“If this decision is allowed to stand there’s going to be huge numbers of San Diegans who will be getting their electricity from a (CCA) at rates that are unfairly high,” Maurath Sommer said. “This is a gift to the utilities … and does not encourage good management because they can turn those costs over to the new (CCA) customers.”

A spokeswoman for SDG&E said the utility had no comment because it had not yet had a chance to review the filings.

The commission has scheduled a second phase of discussions to fine-tune the exit fees.

Maurath Sommer said the commission is under no specific deadline to announce whether it will rehear its decision. In addition, plaintiffs cannot lodge an appeal in court until the commission issues a decision on a rehearing.

“In an ideal world the commission would expediently respond to all applications for rehearing and unfortunately the commission has a long history and a continuing history of electing to ignore applications for rehearing, in some cases up to two or three years,” she said.

The only existing CCA in San Diego County, the Solana Energy Alliance out of Solana Beach, joined Cal CCA in its request. Voicemail messages left to the mayor and deputy mayor at the Solana Beach City Council by the Union-Tribune went unreturned.

 

Community choice energy backers file for CPUC rehearing, say proposed exit fees are too high, by Rob Nikolewski, The San Diego Union-Tribune, November 19, 2018.

California CCAs Achieve 2,000-Megawatt Milestone for New Renewables

Concord, Calif. – The California Community Choice Association (CalCCA) is pleased to announce that community choice aggregators (CCAs) in the state have signed long-term contracts with new renewable energy facilities totaling more than 2,000 megawatts (MW), reflecting a strong commitment by CCAs to drive clean energy and economic development in California and help the state achieve ambitious decarbonization and climate change goals.

CCAs achieved the 2,000 MW milestone in October when Monterey Bay Community Power (MBCP) and Silicon Valley Clean Energy (SVCE) approved power purchase agreements (PPAs) totaling 278 MW of solar coupled with 340 megawatt hours (MWh) of battery storage for two separate projects, to be built in Kern and Kings Counties. In 2017, CCAs in California had secured approximately 1,000 MW of new renewables under long-term contracts, so the figure has doubled in one year.

“This is a significant achievement for the CCA movement in California. It shows CCAs are ready, willing and able to sign long-term contracts with new renewable energy projects, fueling new sources of clean energy, job creation and revenues for host communities,” said Beth Vaughan, executive director of CalCCA.

California’s aggregators have signed a total of 59 PPAs with new solar, wind, biogas, and energy storage facilities, supporting billions of dollars in construction and thousands of jobs. All but three of the contracts are for terms of ten years or longer.

The renewable energy projects are located in 16 California counties – from Mendocino County in the north to Riverside County in the south, with one located in New Mexico. Several projects are already operating, while others will become operational between 2019 and 2021. A map of project locations and a list of contracts can be found here: https://cal-cca.org/calcca-renewable-energy-map-11-15-18-final/. The table below includes a sampling of projects:

Marin Clean Energy (MCE) initiated service in 2010 becoming the first operational CCA in California. There are now 19 CCAs serving approximately 8 million customers in the state and momentum is building. Ten CCAs launched in 2018 alone and many more are under development.

Despite their newness, CCAs are viewed as reliable and stable counterparties and are proving adept at securing cost-effective, long-term power resources. As a result, CCAs are able to serve their customers with electricity that is cost-competitive, and in many cases greener, with the supplies of investor-owned utilities.

“A key aspect of the value proposition offered by MCE and other California CCAs is the requirement that renewable and clean energy be a major component of the customers’ power supply mix,” Moody’s Investor Services said upon assigning MCE an investment grade credit rating in May. “This value is one of the most significant factors that provides strength to the long-term business model.”

As more CCAs begin procuring long-term resources, investments in new clean energy facilities will intensify. Clean Power Alliance and East Bay Community Energy, launched in 2018, are among the CCAs that are currently evaluating developers’ offers for new renewables projects in California. This fact sheet provides additional information on CCA power purchasing.

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About CalCCA: The California Community Choice Association supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. CalCCA is the authoritative,

unified voice of local CCAs, offering expertise on local energy issues while promoting fair competition, consumer choice, and cost allocation and recognizing the social and economic benefits of localized energy authorities

For more information visit www.cal-cca.org.

CalCCA Statement on CPUC Approval of Controversial ‘Exit Fee’ Reforms

Concord, Calif. – The California Community Choice Association (CalCCA) today released the following statement from Beth Vaughan, executive director of CalCCA, after the California Public Utilities Commission (CPUC) voted to approve controversial revisions to the Power Charge Indifference Adjustment (PCIA).

“CalCCA is very disappointed that the Commission approved changes to the PCIA that favor the investor-owned utilities and will stifle competition from locally-run CCAs,” Vaughan said. “However, we remain undeterred in our efforts to support a new PCIA that lowers costs for all consumers and fosters a competitive environment that offers communities more energy options. We will consider all avenues going forward.”

The PCIA is an “exit fee” charged by the state’s investor-owned utilities (IOUs) to CCA and other departing load customers to compensate for electricity generation built or contracted in the past at prices that are now above-market.

Today’s action by the CPUC will result in a sharp increase in PCIA rates for CCA customers. This devastating blow to the flourishing CCA movement in California could deter further market entry by CCAs.  At a minimum, the action will impair CCAs’ abilities to accelerate the state’s decarbonization and economic justice policy goals and to better tailor electric service to meet the needs of local communities.

CalCCA thanks Administrative Law Judge Stephen Roscow for putting forth common sense, legally-supportable reforms to the PCIA based on the hearing record, that would have provided a more balanced result. The rejection of Roscow’s proposal by the Commission is at the expense of both CCA and IOU ratepayers in California.

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About CalCCA: The California Community Choice Association supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. CalCCA is the authoritative, unified voice of local CCAs, offering expertise on local energy issues while promoting fair competition, consumer choice and cost allocation and recognizing the social and economic benefits of localized energy authorities. There are currently 19 operational CCA programs in California serving an estimated 8 million customers in 2018.

For more information about CalCCA, visit www.cal-cca.org.

Press release is here.

FOR IMMEDIATE RELEASE: October 11, 2018

Press Contact: Leora Broydo Vestel

(415) 999-4757 | leora@cal-cca.org

CalCCA Issues Report on CCA Efforts to Advance Equity and Diversity in Local Communities

Concord, Calif. – The California Community Choice Association (CalCCA) has issued a new report that details efforts by the state’s Community Choice Aggregators (CCAs) to advance equity and diversity through their procurement, policy and program activities. The report’s release coincided with the California Public Utilities Commission’s Supplier Diversity En Banc, held on October 4 in Richmond.

The report, titled “Beyond Supplier Diversity,” highlights CCA initiatives that align with the intent and spirit of General Order (GO) 156, the CPUC’s Utility Supplier Diversity Program. The program monitors supplier diversity in procurements by participating utilities and oversees a clearinghouse of women; minority; lesbian, gay, bisexual and transgender (LGBT); and disabled veteran-owned business enterprises.

CalCCA Executive Director Beth Vaughan and MCE Chief Executive Officer Dawn Weisz participated in a panel at the En Banc which focused on emerging energy markets. They highlighted the steps CCAs are taking to ensure their operations are inclusive of diverse groups, such as those targeted in the GO 156 program.

CalCCA’s Environmental Justice and Equity Working Group compiled the report after surveying CCAs to find out what they are doing to promote economic development in diverse communities.

“We asked, what are the CCAs doing to ensure access, inclusion, and representation of underrepresented sectors in the core business of CCAs, that of clean energy,” Vaughan said at the En Banc.

CCA programs and activities featured in the report vary widely, from the creation of community advisory committees and local development business plans to the funding of grants to enable community engagement and local workforce development initiatives.

“In their role as public, not-for-profit agencies, CCAs share a commitment to inclusion and representation of our diverse communities through democratic governance and intensive community engagement,” the report notes.

The working group is evaluating CCA diversity activities to establish best practices that can be shared within CalCCA’s membership and with external stakeholders. CalCCA also plans to host a CCA supplier diversity symposium next year in Southern California. The first symposium, co-hosted by CalCCA and the Greenlining Institute, was held in January 2018 in Richmond.

The full report is available here.
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About CalCCA: The California Community Choice Association supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. CalCCA is the authoritative, unified voice of local CCAs, offering expertise on local energy issues while promoting fair competition, consumer choice and cost allocation and recognizing the social and economic benefits of localized energy authorities. There are currently 19 operational CCA programs in California serving an estimated 8 million customers in 2018.

For more information about CalCCA, visit www.cal-cca.org.

CalCCA Calls on Commission to Reject Alternate PCIA Proposal

The California Community Choice Association (CalCCA) is urging the California Public Utilities Commission to reject a proposal to alter the Power Charge Indifference Adjustment (PCIA), warning in comments filed Sept. 6 that it would lead to sharp increases in PCIA rates for existing community choice aggregation (CCA) programs and make it uneconomic for new CCA programs to launch

The PCIA is an “exit fee” charged by the state’s investor-owned utilities (IOUs) to CCA and other departing load customers to compensate for electricity bought in the past at prices that are now above-market. The Commission is considering two proposed decisions on the PCIA.

The first Proposed Decision (PD), crafted by an Administrative Law Judge after a year-long process, strikes a reasonable balance with respect to stranded cost recovery and provides an opening for long-term cost reduction for both CCA and IOU bundled customers. A commissioner’s Alternate Proposed Decision (APD), however, would result in significant PCIA rate increases for CCA customers, while protecting the returns of utility shareholders.

“The APD would deal a devastating blow to the flourishing CCA movement in California, impairing CCAs’ abilities to accelerate the state’s decarbonization and economic justice policy goals and to better tailor electric service to meet the needs of local communities,” said Beth Vaughan, executive director of CalCCA.

The APD contains a number of elements that would materially shift costs to CCA customers. Of primary concern is the APD’s inclusion of pre-2002 “Legacy” utility-owned generation (UOG) in the scope of PCIA-eligible costs. Doing so would place responsibility for new capital investment costs in these aging UOG facilities on CCA customers long after their departure, contrary to the Commission’s indifference standards and clear statutory directives.

“It is the Commission’s province to apply, not rewrite, the law, and the final decision must exclude Legacy UOG from CCA customer cost responsibility,” CalCCA notes in its comments.

The APD also removes the 10-year limitation on recovery of post-2002 UOG costs through the PCIA, ignoring prior Commission decisions, reducing utility incentives to prudently plan and manage their portfolios and subsidizing the ongoing operation of fossil fuel-fired power plants.

Further, the APD “scrapes the bottom of the barrel” in proposing a flawed, short-term resource adequacy capacity benchmark to value the IOUs’ energy portfolio capacity, leaving CCAs no alternative but to procure in the short-term market to compete with the IOUs.

“The APD’s benchmark would drive a change in the CCA’s business model that undermines the state’s policy goals,” CalCCA said. “Rather than engaging in new RPS project development with a long-term power purchase agreement, a CCA would be driven to procure low-cost attributes to reduce risk.”

Most critically, it would be impossible for the CCA to fund the types of services they were intended to promote, such as innovative electric vehicle programs, procurement of local premium resources or programs for low-income residents and disadvantaged communities, while staying competitive with IOU rates.

CalCCA requests that the Commission reject the APD and adopt the Administrative Law Judge’s Proposed Decision, subject to the modifications proposed in CalCCA’s August 21 comments on the PD. The association will be advocating today for a fair PCIA resolution during an all-party meeting at the CPUC. The Commission is expected to consider PCIA reform proposals onSeptember 27.

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The California Community Choice Association supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. CalCCA is the authoritative, unified voice of local CCAs, offering expertise on local energy issues while promoting fair competition, consumer choice and cost allocation and recognizing the social and economic benefits of localized energy authorities. There are currently 19 operational CCA programs in California serving an estimated 2.5 million customer accounts in 2018.

For more information about CalCCA, visit www.cal-cca.org.

Press Contact: Leora Broydo Vestel
(415) 999-4757 | leora@cal-cca.org