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Hitting Back Against Silicon Valley Clean Energy Rumors

Silicon Valley Clean Energy (SVCE) recently started providing carbon-free electricity to Milpitas residents and businesses. For those who have not followed the progression of this change over the past 2 years, concerns about it may arise. Rumors from people who don’t know the facts make things worse.

Here are some myths I have heard…

An opt-in plan for customers would have been better than an opt-out plan.

There are 3 reason this is false. First, current California law requires all customers to be switched over to a newly formed Community Choice Aggregation (CCA) with an opportunity to opt out. Second, opt-out is easier for the 98% of customers who are either satisfied with the change or actually prefer it. Lastly, as the latest IPCC Report clearly states, Global Warming is the biggest issue facing civilization; we should take every chance we get to reduce our carbon footprint.

The cost of SVCE’s clean energy could go up.

The trend lines for renewable energy costs are heading down, as they have been doing for decades. While there is a small chance of those trends reversing, there is a high probability that electricity from carbon-energy sources will rise with the arrival of a carbon-fee and dividend (CF&D) program, or an outright tax on carbon. Fortunately, as a locally-governed agency, SVCE is nimble and able to quickly adjust prices to remain competitive. Meanwhile, PG&E rates continue their upward trend, with an average increase of 9% in 2018.

The City should have chosen Green Start for its own use.

GreenStart is SVCE’s competitively-priced, standard electricity offering. All customers are automatically enrolled in GreenStart, with electricity generated from renewable sources such as wind, solar, and carbon-free sources like large hydropower. GreenPrime, SVCE’s 100% renewable generation service, was chosen for City use to demonstrate our commitment to a clean energy future. Buying GreenPrime further expands generation from new and competitive renewable energy sources. For a typical residential customer like me who upgrades to GreenPrime, the extra few dollars a month is an investment in future generations.

Milpitas is on the bleeding edge of CCAs.

Back in 2007, the CPUC authorized its first CCA application. And most cities in the County chose to switch to SVCE about 2 years before Milpitas. Although invited to join the others in 2016, at that time Milpitas’ leaders failed to respond. Now that we have joined SVCE, we can start sharing in the roughly 20% net profit, estimated at $20 million in 2018.

For both financial and environmental reasons, our new City leadership made the right choice in joining SVCE. By purchasing our electricity at wholesale prices from 21st-century renewable sources, our CCA will be able to provide residents and businesses with opportunities for future energy savings. Soon, SVCE will start deciding what to do with that extra money. If you have ideas, please contact our SVCE representative, Marsha Grilli, at mgrilli@ci.milpitas.ca.gov

 

Rob Means
Activist
http://meansfordemocracy.org

 

Opinion: Hitting Back Against Silicon Valley Clean Energy Rumors, by Rob Means, The Milpitas Beat, October 16, 2018.  

Local government energy-buying idea bruised by ruling

The effort of Butte County and Chico to form an agency to buy electrical power for their citizens suffered a blow Thursday, but it’s unclear just how severe a blow it was.

The state Public Utilities Commission approved a set of costs for customers who leave PG&E or the state’s other investor-owned utilities (IOUs) to receive power from providers like the community choice aggregator that is being pursued locally.

“The ruling was favorable for the IOUs, so it’s not favorable for CCAs,” said Butte County Assistant Chief Administrative Officer Brian Ring.

Under a community choice aggregation program, a government entity buys power on the open market, which locally is estimated to result in savings of at least 2 percent. PG&E would still deliver the power and retain ownership of the power lines and other electrical infrastructure, but it would be delivering power provided by the county and city.

The other municipalities in Butte County could join in, but a study found in the minimum Chico and the county would both have to participate to provide the necessary customer base.

What the PUC approved on a 5-0 vote largely involves long-term power purchasing contracts PG&E and the other utilities have. The contracts were signed to provide power for a customer base that is shrinking as more and more CCAs and other alternatives form.

The utilities argue the people who leave owe a share of the costs of the contracts that were purchased partially for them. There hasn’t been much disagreement on that, but how much that cost would be has been contentious for more than a year.

The vote Thursday put the charge at an average of 1.68 percent for residential customers in PG&E’s service area. The costs for customers who leave Southern California Edison or San Diego Gas & Electric are even higher: 2.50 percent and 5.24 percent respectively.

Locally, that could still mean savings if the CCA is formed. The 2 percent figure was a conservative estimate, and savings could easily be more than that.

But Ring said it would mean less money coming to the CCA, and lengthen the time it will take to pay off the debt it will have to incur to form. Paying off the debt would give the CCA flexibility to reduce rates or pursue other initiatives.

He said the county’s consultant would be rerunning the data through the model used for the study to see if the CCA was still feasible here. “We’re crunching the numbers,” Ring said.

“It’s going to have an adverse impact on our study,” he said, “to what degree we haven’t determined.”

 

Local government energy-buying idea bruised by ruling, by Steve Schoonover, Chico Enterprise-Record, October 14, 2018.

SLO wants to be carbon-neutral 10 years faster than the rest of California

The City Council wants San Luis Obispo to be carbon-neutral by 2035, an ambitious target that’s 10 years earlier than Gov. Jerry Brown’s statewide goal of 2045.

The council last week directed staff to move forward with a climate action plan that could mean new building codes and ramping up citywide electrical vehicle charging stations, among several other initiatives.

Carbon neutrality, or net-zero energy, is the concept of reducing as much carbon dioxide and other greenhouse gases from the atmosphere as possible, with the overall goal to achieve a zero carbon footprint. It is achieved largely by replacing fossil fuel energy sources that emit greenhouse gases with renewables like solar and wind.

Greenhouse gases are emitted from cars, homes and businesses, as well as from livestock, among other sources.

“This is aggressive,” said Councilwoman Andy Pease. “It’s a really big goal. I think we can do it. But I think it should be a goal within our Climate Action Plan development.”

The specifics of the city’s Net Zero 2035 commitment haven’t been formulated yet, pending the Climate Action Plan update next year.

But efforts undertaken by the city already have reduced greenhouse gas emissions in the city by 10 percent since 2005, with a goal of reaching a 15 percent reduction by 2020.

Ideas to further reduce greenhouse gas emissions, based on California Energy Commission recommendations, include:

▪ Reducing solid waste (including making sure people recycle and reuse items they consume, and compost food scraps), eliminating the need for landfills;

▪ Using carbon-free electricity, while transitioning from fossil-fuel based appliances and technologies (such as phasing out internal combustion-based vehicles in place of electric ones, and ratcheting down natural gas-fired furnaces or water heaters in favor of high-efficiency heat pump models that run on clean electricity, for example);

▪ Creating new laws around building codes to ensure efficient, clean energy uses rather than natural gas ones (pending legal and practical study of that possibility to be reconsidered by the council in 2019);

▪ Finding ways to attain carbon sequestration, meaning strategies to manage city forests that convert carbon dioxide into nutritional benefits for tree growth, and other means;

 Encouraging efficient use of water and cars (walking and biking whenever possible, versus driving, for example).

Despite its commitment, the council will wait until its Climate Action Plan Update next year to formally decide on the 2035 goal, but it’s united in trying to implement policy to set that timeline in motion, which council members acknowledge is ambitious.

The council was divided on whether to adopt a formal resolution to set the 2035 Net Zero target — immediately creating a formal policy directive to work from, rather than waiting to formalize that goal after more research on how it would affect city residents, builders, existing policy, land use and other considerations.

Mayor Heidi Harmon argued in favor of adopting a resolution, saying that a formal, “bold” statement targeting a 2035 Net Zero goal could make it harder for a potentially new council, after this November’s election, to roll back that policy.

“I think this is so important, and I know how tough culture shift is,” Harmon said. “But this is one of the main reasons I got elected was to be a champion on climate and have real, actionable things that we’re doing.”

 

SLO wants to be carbon-neutral 10 years faster than the rest of California, by Nick Wilson, San Luis Obispo Times, September 25, 2018.

Explaining what MCE is all about

The recent public interest and controversy about a proposed solar field has reminded us that we as a community must come together to make choices that are good for the environment, good for our quality of life and good for our economy.

First though, we want to make sure we are all using the same facts about the role of MCE (formerly known as Marin Clean Energy) in supplying clean electricity to Napa County’s electricity customers. Some basics:

The name: Marin Clean Energy is, at this point, sort of a misnomer. Think “My Clean Energy” instead.

MCE is a not-for-profit public agency, a “community choice aggregator,” composed of member municipalities from around the North Bay. Members include all communities in Marin County (where it started), all communities in Napa County, the city of Benicia in Solano, and 14 communities in Contra Costa County.

MCE is one of several community choice energy suppliers across the state, including Sonoma Clean Power, serving Sonoma and Mendocino counties; Clean Valley Energy, serving Davis and Yolo County; and CleanPowerSF, serving San Francisco.

MCE is governed by a board of directors of elected officials, each of whom represent the communities they serve.

The job: MCE buys electricity generation supply for customers. PG&E still delivers your electricity. Typically, the reasons utility customers stay with MCE is because they’ve historically been slightly cheaper than PG&E while also getting more of their energy from renewable sources (economics and environment, hand in hand). MCE also offers a 100 percent Deep Green option for electricity that is currently less expensive that PG&E’s 100 percent renewable option.

The way it works: MCE buys renewable energy in the marketplace – as PG&E does—and uses its revenue to incentivize local solar installations, to increase the amount of locally-generated renewable energy available to its customers. Each of these projects must fulfill and conform to local regulations and the normal permitting process to be eligible for MCE’s contract.

MCE is not involved in finding and developing sites for projects, but is always interested in supporting local renewables if the project is approved by the community and it meets their requirements.

MCE’s energy portfolio is at least 50 percent renewable. Much higher that the 30 percent of PG&E’s portfolio that is from renewable sources. Given that the vast majority of Napa County’s customers are served by MCE, that 50 percent means that we have made significant progress toward our greenhouse gas reduction goals.

Especially now, with the county redrafting its Climate Action Plan this could be an excellent time to explore strategies for well-considered development of local renewable energy generation. For example, creation of renewable energy zones to identify the best and most appropriate locations for solar in advance of any particular project.

In short, the challenge is not that Napa customers get their electricity from MCE, nor that MCE is developing local sources of renewable energy generation. The challenge is finding the best locations to carry out this good idea. Astute use of renewable energy will be a significant resource in meeting our climate action goals and powering our communities with clean energy.

Dave Whitmer

Chair, Board of Directors

Sustainable Napa County

Brad Wagenknecht

Napa County Supervisor, District 1

MCE Board of Directors

 

Explaining what MCE is all about, by Dave Whitmer and Brad Wagenknecht, Napa Valley Register, September 19, 2018.

CCA 101: How does Community Choice Aggregation work? What you need to know

The name may sound clunky, but Community Choice Aggregation, or CCA, is one of the hottest energy topics in California and may upend the long-time relationship between utilities and customers.

But while the growth of CCAs has led to heated debates across the state within the energy and political spheres, many local utility customers are either unclear or unaware of the subject — even as the City of San Diego slowly deliberates whether to hop on the CCA bandwagon to help it meet its Climate Action Plan that calls for 100 percent of the city’s electricity coming from renewable sources by 2035.

It’s a complicated story but an important one because adopting a CCA affects what consumers pay, what kinds of energy sources a community purchases and who makes those acquisitions.

It also tests the relative levels of trust and mistrust ratepayers have in their local power companies and local governments while raising questions about making decisions affecting an energy sector with a history of volatility, in a state where dramatic transformations are already underway.

Here’s an overview.

What are they?

Community Choice Aggregation allows any city, county or combination thereof to form an entity to take over the responsibility for purchasing power for their community.

How are they different?

About 75 percent of electricity supply in California comes from three investor-owned utilities — Pacific Gas & Electric in Northern California, Southern California Edison in the Los Angeles metropolitan area and San Diego Gas & Electric, which covers San Diego County and a small portion of Orange County.

As the name suggests, investor-owned utilities are owned by shareholders, and these private electricity and natural gas providers are overseen by the California Public Utilities Commission, or CPUC.

They are different from publicly-owned utilities, which are not regulated by the CPUC, such as Los Angeles Department of Water and Powerthe largest municipal utility in the country.

Under the traditional model, investor-owned utilities:

1) Purchase sources of electricity (natural gas, solar, wind, etc.) to meet the energy needs of their customers and make sure the electric grid runs smoothly.

2) Maintain the transmission and distribution lines (poles, wires, etc.) needed to deliver the electricity.

3) Handle billing and customer service issues.

How do CCAs work?

Should a CCA be established, one big thing changes and two big things remain the same.

The utility still maintains the transmission and customer service responsibilities, but the purchasing of power is done by municipal governments.

Since elected officials often don’t have expertise in energy markets, many CCAs hire third-parties with experience in energy markets to perform all sorts of complex scheduling and marketing transactions. They are paid by the CCAs, using rates charged to their customers.

CCAs typically offer customers three different energy programs — a default program, a program for solar and a more expensive program advertising use of 100 percent renewable sources.

Who joins?

Once elected officials vote to form a CCA, all the electric customers in their jurisdiction are automatically signed up. Customers can remain with the investor-owned utility if they want to, but it’s up to them to contact the CCA and go through the opt-out process.

Opting out is free, provided it is done within the first few billing cycles (usually within 60 days). After that, a small fee may be charged, although some CCAs don’t impose opt-out fees.

Who does the billing?

The utility still does. A consolidated monthly statement will include a line-item for the CCA so customers would not receive two separate bills. The customer pays the entire bill and the utility then pays the CCA its share.

Are the number of CCAs growing?

Yes. There were fewer than 10 CCAs in the state last year but there are now 18, with a 19thexpected to come online by September.

The state’s first CCA was formed in Marin County in May 2010 with 8,000 customers, many of whom wanted community choice in order to tap more green sources of power. Called MCE (short for Marin Clean Energy), it has grown dramatically and now serves 470,000 customers in four counties.

Solana Beach became the first community in San Diego County to establish a CCA, which went online June 1.

What kind of effect have CCAs had so far?

CCAs across the state have offered electricity from renewable sources ranging from 37 percent to 100 percent, with a statewide average of 52 percent, according to the Luskin Center for Innovation at UCLA.

By comparison, SDG&E delivered about 45 percent renewable resources to customers last year, exceeding state mandates.

Rapid CCA growth is expected to continue. In 2010, investor-owned utilities had 78 percent of the statewide market share but it dropped to 70 percent last year and the Luskin Center report predicts it falling to 57 percent within two years.

PG&E mentioned erosion of its customer base due to CCAs as one of the reasons for shutting down the Diablo Canyon nuclear power plant.

What about San Diego?

The City of San Diego is considering whether to create a CCA to reach the goal of the city’s Climate Action Plan that mandates 100 percent of the city’s electric needs coming from renewable energy sources by 2035.

SDG&E is putting together a counter proposal that promises to get the city to 100 percent renewables by 2035.

The city council is expected to make a decision by the end of this year.

Why do some communities adopt CCAs?

Some want more clean sources in their energy portfolios. Others want more local control, working on the premise that community choice can deliver lower rates for customers than utilities. Boosters of CCAs say community choice delivers on both fronts.

MCE, for example, said its default program costs 2 to 5 percent less than Pacific Gas & Electric, the investor-owned utility in its area.

But slightly lower bills represent only part of their attraction for fans of CCAs.

Under the traditional utility model, energy decisions “aren’t made in our backyard,” said Nicole Capretz, executive director of the San Diego-based Climate Action Campaign and one of the architects of the city’s Climate Action Plan. “They’re made in San Francisco (home of the CPUC) and Sacramento (home of the Legislature).”

CCAs tend to be “much smaller and more nimble” than investor-owned utilities “and they’re not paying for these exorbitant salaries and they don’t have bonuses and shares of stocks” to concern themselves with, Capretz said.

Who makes the calls?

Leaving the final say on energy procurement to elected officials is a concern, said Tony Manolatos, spokesman for the Clear the Air Coalition.

“A lot of people don’t believe the city should be in the energy business — it’s very volatile,” Manolatos said. “The city would be better off focusing on core services like police, fire, parks, fixing our roads, helping solve the homeless problem … Not on launching a billion-dollar energy program.”

The Clear The Air Coalition includes representatives of the San Diego Regional Chamber of Commerce, the San Diego County Taxpayers Association, two faith groups, the Downtown San Diego Partnership and lobbyists for Sempra Energy — the parent company of San Diego Gas & Electric.

Under state law, a utility cannot use ratepayer dollars to lobby about CCAs but utilities can set up marketing divisions for that purpose, provided that shareholders, not ratepayers, fund them. SDG&E’s parent company, Sempra, did just that in 2016.

City officials making energy decisions is “like any other public agency accountability,” Capretz said. “You want to make sure they hire the right people who are experts in the field … Yes, ultimately the elected officials make the final decisions, but all the leg work and ground work is done by the professional staff.”

In Marin County, MCE has a staff of 60 but officials say that represents less than 3 percent of its budget.

How big is too big?

Another concern centers on the size of a proposed CCA in the City of San Diego — about 1.3 million customers. That’s well over twice the size of the largest CCA operating in the state (East Bay Community Energy, based in Alameda County, with 550,000 customer accounts).

If a City of San Diego CCA went belly up, critics worry ratepayers would be on the hook for financial liability.

But Capretz said a recently formed CCA in Los Angeles County, the Clean Power Alliance, “is going to be way bigger than us.”

The Clean Power Alliance expects to grow its current customer base of 36,000 to just under 1.04 million by the end of May 2019. By then, its CEO said from an energy load perspective, the L.A. County CCA would be the fifth-largest load serving entity in the state, trailing only Southern California Edison, PG&E, Los Angeles Department of Water and Power and SDG&E.

“L.A. County is just starting implementation and like them, we would do the same thing,” Capretz said. “You do it in phases, you get your sea legs, set up best practices and move on.”

What about cities outside San Diego but still in the county?

Since a City of San Diego CCA — at least in its initial iteration — would not include other cities and communities in the county, Haney Hong, CEO of the San Diego County Taxpayers Association, worries that cities like Imperial Beach or Chula Vista could be exposed to higher costs.

SDG&E in recent years signed power purchase agreements with energy providers under long-term contracts for renewables. But the price of renewable energy is lower today. That means a CCA can procure green energy sources at a lower price. That’s good news for customers in a proposed City of San Diego CCA but Hong sees a potential problem for communities in the county not in the CCA.

“If things are not properly accounted, then you have one taxpayer benefiting over another,” Hong said. “I remind folks we’re the San Diego County Taxpayers Association. We’re not just looking at San Diego city taxpayers; we’re also looking at National City taxpayers and Imperial Beach taxpayers.”

Capretz said such cost-shifting concerns can be addressed by properly accounting for the exit fees CCAs pay utilities each month.

What exit fees?

Among the acronyms thrown around, there’s another inelegant set of initials to keep in mind — PCIA, which stands for Power Charge Indifference Adjustment.

Once a CCA is created, the state’s Public Utilities Commission requires the community choice customers pay an exit fee, the PCIA.

Why? Because of those long-term power contracts utilities signed to secure energy for their customers. The utilities commission mandates that customers going to a CCA do not burden the remaining utility customers with costs paid to procure those energy purchases and investments.

Power companies have also built infrastructure, such as natural gas and solar power plants, all with CPUC approval. The utilities procured many of the clean energy sources in order to meet the state’s aggressive climate goals via the Renewable Portfolio Standard.

The exit fee is applied to each kilowatt-hour of electricity consumed by the customer and it shows up as a separate charge on every monthly bill.

The size of the fee is critical. Utilities want to make sure it compensates them for the generation they have procured while CCAs want to ensure the exit fee doesn’t raise their customers’ bills too high.

The utilities commission determines the fee, which involves a complicated formula. The exit fee is different in each of the service territories of the state’s three investor-owned utilities because each power company has a different mix of resources. In very general terms, the exit fee runs about 2.5 cents per kilowatt-hour for SDG&E residential rates.

Last month, an administrative law judge for the CPUC proposed a new exit fee the utilities did not like.

CPUC commissioner Carla Peterman responded with an alternate proposal that is more favorable to the remaining customers of power companies. As one would expect, the CCAs don’t like Peterman’s proposal. The Clear The Air Coalition liked the alternate decision better but didn’t like the fact that both proposals include caps from one year to the next, saying they would create “uncertainty, risk and debt.”

The full five-members of the commission are scheduled to make a decision on a new exit fee on Sept. 13 but CPUC watchers say they would not be surprised if a vote is delayed, given the details and debate.

“If I were a community considering a CCA, I would want to know the resolution of the PCIA debate before committing to provide service to local residents,” said Matthew Freedman, staff attorney at The Utility Reform Network .

Are CCAs really cleaner?

One of the raps on CCAs centers on what is called “resource shuffling” — that the power being purchased from existing resources really doesn’t result in more sources of clean energy but simply moves them around to appear to reduce greenhouse gas emissions.

Earlier this year, Voice of San Diego reported that Marin County’s MCE and another CCA in Sonoma purchased power from a utility in Washington state that operates two hydropower facilities, a clean source of power.

But the Washington utility increased its own amount of coal and natural gas, indicating it may have replaced the hydropower it sold off to MCE and Sonoma with dirtier energy sources.

Dawn Weisz, MCE’s chief executive officer, said her company has no control over decisions a seller makes regarding its own power supply.

“Any load-serving entity, including SDG&E or PG&E, that buys green power to their load doesn’t have control over what the seller chooses to do for their own procurement purposes.”

Another criticism? That CCAs are just purchasing power from existing sources and not creating new generation, or putting “steel in the ground.”

CCAs push back on that and say as the community choice movement grows, so will the number of their energy projects.

Earlier this year, MCE unveiled a 60-acre, 10.5-megawatt solar farm in Richmond.

“We have under contract more than 900-megawatts of new California based renewables,” Weisz said. “We ventured into long-term power supply agreements for wind, solar, geothermal, biomass in California, and that’s not resource shuffling. That’s building new power supply.”

Relatively few CCAs have entered into long-term supply commitments for substantial volumes of new clean energy infrastructure but community choice advocates say that will change as CCAs mature.

What do regulators think?

CCAs are part of a much larger change in the way customers in California receive their energy — whether from community choice, rooftop solar panels or private groups called Direct Access providers who re-sell electricity.

The changes are coming so fast it makes regulators nervous.

CPUC president Michael Picker sees similarities to the bad old days of the California Energy Crisis in 2000 and 2001 when failed deregulatory measures resulted in rolling blackouts across the state.

“If we don’t have a better plan than we currently have, then I worry we could end up in the same pickle,” said Picker, who also voiced his concerns in an extensive CPUC report released last month on the evolving electricity market. “If you’re a smaller provider, you don’t always get what you need.”

CPUC rules have been established making sure entities have purchased sufficient capacity, or resource adequacy.

“I find that not all CCAs are created equal,” Picker said, with some better run than others. “I’m not trying to judge them; I just know that there’s potential for failure there and we have to think that through and take steps.”

Some critics worry if there are big shifts in the market, CCAs in their development stages won’t have amassed the capital needed to withstand a financial shock.

CCAs have bristled at any comparisons to the energy crisis. The trade group representing community choice, CalCCA, challenged the CPUC report, saying in comments filed in Junethat safeguards are in effect to prevent a replay of what happened 18 years ago.

“The deregulated market was a free-for-all and this is completely different,” Capretz said. “Community choice programs are part of the long-term resource planning processes. They have to have resource adequacy. They have to prove that they have enough power for everybody … It’s not like the lights are going out.”

Going forward

All eyes are on the upcoming decision by the CPUC on the exit fee/PCIA.

San Diego’s city council is not expected to make a decision until that’s resolved.

A feasibility study released last year predicted a CCA has the potential to deliver cheaper rates over time than SDG&E’s current service, while providing as much as 50 percent renewable energy by 2023 and 80 percent by 2027.

SDG&E’s counter proposal to get to 100 percent renewables by 2035 has so far produced a rough outline for a “tariff” program that would charge ratepayers the cost of delivering more clean sources of energy over time.

Some council members have expressed frustration more specifics have not been sketched out.

 

CCA 101: How does Community Choice Aggregation work? What you need to know, by Rob Nikolewski, The San Diego Union-Tribune, September 9, 2018.

CALIFORNIA: This Tiny town has found a new way to cut GHGs

SOLANA BEACH, Calif. — This enclave in north San Diego County is known for its small-town feel, the summer concerts held on a bluff above crashing ocean waves and the non-chain stores in its arts district.It’s also seen as a progressive stronghold. Incorporated 30 years ago after local residents grew concerned about overdevelopment, Solana Beach jumped ahead of others regionally on environmental causes. It was first in California to ban smoking on beaches. It banned single-use plastic bags before other cities in the county. Last year, it was the first to restrict Styrofoam containers.

Now it’s considering a landmark move to cut carbon pollution.

Solana Beach is considering taking on the role of quasi-utility. It would form a collective to buy power on behalf of residents and businesses, a practice known as community choice aggregation, or CCA. Under state law, residents are automatic members of the CCA but can later opt out and go back to incumbent utility San Diego Gas & Electric Co. (SDG&E).

The intent is to acquire more power made from renewable sources in order to shrink greenhouse gas pollution. The city is looking at potentially passing a climate plan that would commit to a greenhouse gas reduction. And it would create a CCA in a way that so far hasn’t been done.

“The city has always had residents or a population that is really concerned about improving their community and improving the planet,” said Peter Zahn, Solana Beach deputy mayor and a member of the Climate Action Commission. “Residents have banded together and really used their collective muscle and intelligence and wit to do really whatever they could to make it a better place to live.

“That carries over to the environmental initiatives,” he added. “It was something that was really sort of a natural for the city to be at the forefront of these battles and really lead the way.”

CCAs already exist in San Francisco, in the Bay Area cities of Marin and Sonoma, and Lancaster in north Los Angeles County. Because Solana Beach, population 13,000, is small, it could be difficult and costly to go it alone. Several other cities in San Diego County are also considering CCA and could form a joint partnership.

But Solana Beach might not have to wait.

As cities in the Golden State are entering the new world of competing with large utilities, entrepreneurs are offering options. A new one would have a private company put up money to help launch the program. The city in return would pay the investor group part of the revenues from CCA.

Solana Beach, if it went this route, would be the first in the county, and potentially the first in the state, to do so. Humboldt County in Northern California is also looking at it.

“It hasn’t been done in California, this public private partnership,” said Dan King, assistant city manager at Solana Beach. “It’s kind of intended for smaller cities who want to get this up and running.”

It takes place as the larger region is aiming for major action on climate change. San Diego last year adopted a climate action plan that calls for switching to 100 percent renewable power by 2035. Starting a CCA — or what San Diego is calling “community choice energy” (CCE) — is expected to be part of that.

Starting sooner could cut more GHGs

But it could be 2018 before San Diego puts a CCE into place, said Nicole Capretz, executive director of the Climate Action Campaign, a nonprofit watchdog group. She was director of environmental policy for San Diego interim Mayor Todd Gloria (D) in 2013 when he drafted what eventually became that city’s climate plan. Mayor Kevin Faulconer (R) after his election made some changes and endorsed the plan (ClimateWire, April 7).

Del Mar, the city just south of Solana Beach, has also adopted a plan to switch to 100 percent renewable power (ClimateWire, Aug. 8). In the case of that town, it’s a road map and not legally binding. The city will need to consider and adopt individual actions to achieve the goal. It’s also talking about a CCA, and has said the CCA will likely be needed to reach the green power plan.

Nearby, the cities of Encinitas, Carlsbad, Oceanside and others have met to talk about forming a joint powers agreement that would operate a CCA. Solana Beach could be part of that larger JPA if it gets approved.

Solana Beach is moving faster than its neighbors. It’s released a request for proposals (RFP), asking companies to show how they’d help the city run a CCA. It was modeled after the RFP that Humboldt did, King said.

The responses to that RFP are due tomorrow. Depending on whether there are questions that need to be resolved, the City Council could review those as early as Sept. 28 and look at approving a service agreement Oct. 26.

Starting a CCA in Solana Beach and later combining with one in nearby cities is another possibility. A larger JPA would have more purchasing power, Zahn said. But Solana Beach potentially could act more nimbly if it went first.

“Forming our own energy district and keeping it small probably would enable us to move faster,” he said.

Pete Hasapopoulos, organizer of the Sierra Club’s My Generation campaign, is advocating for community energy in the region. While not speaking specifically about Solana Beach, he cautioned that the model of working with a for-profit business is untested.

“It just has to be proven that this for-profit model can help a city meet its objectives,” he said, including reducing greenhouse gases and offering the same if not better rates than the incumbent utility.

It’s true there are risks with going first with a for-profit partner, Zahn said. He said the city would be sure to vet its partner if is goes that route. But right now there is no larger JPA to join, he said, and the greenhouse gas clock is ticking.

The city is looking at a climate plan that potentially would commit to cutting emissions 50 percent by 2050, which he said is a steep hill.

“The sooner we start, the better chance we have of making them,” Zahn said. “Even starting a year or two later can make it tremendously difficult to achieve those objectives.”

100% renewable is costly

Solana Beach is an affluent community. The median home price here is $1.2 million, according to online real estate company Zillow.

That sometimes makes it easier to take progressive positions, Zahn said, because if there are concerns it might raise costs, “the residents are not taking as big of a risk.” He added that often, the worries about higher expenses created by environmental actions have been proved untrue.

If Solana Beach goes for a CCA, there will likely be a battle with Sempra Energy, parent company of SDG&E.

The state now bars utilities from talking about CCA unless it’s done through a separate affiliate, funded by shareholder dollars. SDG&E last November told the California Public Utilities Commission (CPUC) that it was creating just such an affiliate. SDG&E is the first utility in the state to make the move. CPUC said it’s reviewing the filing.

“SDG&E supports a customer’s right to choose its electricity service provider, including a CCA,” the utility said in a statement.

Solana Beach and Del Mar recently sent a team that told the CPUC the cities have concerns about that SDG&E effort.

“We’re concerned that there could be undue influence from SDG&E into this separate marketing arm,” Zahn said. “It’s really hard to build a wall between the two.” Because Sempra is big with financial resources, “that really could be a disadvantage.”

Solana Beach, meanwhile, still is in the process of setting its climate goals, Zahn said. The City Council must decide whether to implement a climate action plan.

Action on a CCA could come before approval of a climate action plan. The city started looking at the CCA option in 2012, King said, after Marin and Sonoma started their programs. A Solana Beach CCA could start as soon as early next year.

Starting a CCA takes upfront money, however. The city recently received results of a feasibility study that estimated a cost of $1.8 million to $2 million per year to develop a CCA. That wouldn’t include the expense securing the funds or credit line needed to start buying energy, “which could potentially be close to $1 million, depending on how the program is launched.”

The feasibility study looked at four options for the amount of renewables, starting with one that would mirror SDG&E’s obligation to have 35 percent green power by 2021. If Solana Beach did that, it could save its residents about 3 percent on rates compared with SDG&E, the study said. The city in the first five years would retain nearly $6.8 million in revenues that could be used to fund local renewable power generation and energy efficiency.

If it opted for 100 percent renewable power, the bill savings versus SDG&E would be just 1 percent, and there would not be much money left over, the study said.

“The premiums spent on purchasing renewable grid power would be lost for investment in local renewables and energy efficiency — effectively paying more to rent green power year to year rather than owning it for the long haul,” the report said.

The study also looked at the results of providing 50 or 75 percent green power.

Other CCAs offer partial green power

With Marin’s CCA, customers can choose 100 percent renewable power but have to pay more for it, said Nilmini Silva-Send, assistant director of the Energy Policy Initiatives Center (EPIC) with the University of San Diego.

“They are providing mostly 50 percent renewable electricity,” she said.

Sonoma’s CCA has a baseline of 35 percent renewable power, with the option of picking 100 percent green for a premium price, according to the feasibility study. The city of Lancaster’s program also has 35 percent green electricity as its baseline product.

On a recent weeknight, Solana Beach’s Climate Action Commission worked with Silva-Send of EPIC on an experiment to see what would be needed to cut greenhouse gas emissions 50 percent by 2035, a state aim approved last year.

With a CCA that bought 100 percent green power, Solana Beach would get close to the aspirational 50 percent greenhouse gas emissions cut, but would also need to add other measures, Silva-Send said.

With a CCA with fewer renewables, the city would need to do even more. Most of the other options the Climate Action Commission members examined, including cutting waste that goes to landfill, adding trees and converting gas water heaters to solar thermal, shrunk carbon pollution by only small amounts.

The EPIC tool, “it makes us realize how difficult it’s going to be. We’re going to have to make sacrifices,” said Judy Hegenauer, member of the Climate Action Commission. “That is a conversation we’re going to have to have with citizens.”

Business opportunities

The group that did Solana Beach’s feasibility study, California Clean Power, came together in 2015 to expedite CCA programs through public-private deals. The market for companies serving CCAs is developing so quickly that it’s since been bought by Pilot Power Group Inc. of San Diego.

Pilot Power Group is one of those looking at Solana Beach’s RFP. In essence, a private company would procure energy on behalf of Solana Beach and could administer all of the data and handle customer billing, said Denis Vermette, chief financial officer at Pilot Power Group.

The company would procure fixed price contracts with suppliers, securing the level of renewable power that Solana Beach says it wants. The grid wouldn’t deliver that green power specifically to residents’ homes, he said, but 1 megawatt of clean electricity purchased would displace a dirty one in the state.

Pilot Power Group has been around since 2001, Vermette said, and has been securing power for commercial and industrial customers. It bought California Clean Power because it already has relationships with cities it’s been talking to about forming CCEs, he said.

“The CCE market has kind of ramped up, we obviously feel we have an expertise,” Vermette said. “It’s just sort of a natural segment we can move into.”

For a CCA to succeed, it needs at least 80 percent of the city’s consumers to stay as members, Vermette said.

“An attractive price, an attractive product” with renewable energy “has to be key,” because residents must be given four notices that they can opt out.

Twitter: @AnneCMulkern Email: amulkern@eenews.net

Del Mar Climate Action Plan Passage Could Influence Other Cities

The City of Del Mar considers adopting a Climate Action Plan to outline their efforts to cut their carbon emissions in half, and reach a goal of using 100 percent clean energy.

“Del Mar specifies in its plan that one option to fulfill its goals would be to join a Community Choice Energy plan (also called Community Choice Aggregation) to purchase clean energy at a lower cost.”

Del Mar Climate Action Plan Passage Could Influence Other Cities, by Alison St John, KPBS, June 6, 2016.