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CalCCA Statement on the Continuing Advancement of Community Choice Aggregation in San Diego

Concord, Calif. – The California Community Choice Association (CalCCA) has issued the following statement by Executive Director Beth Vaughan in response to the San Diego City Council voting on February 25 to give Mayor Kevin Faulconer a green light to negotiate the creation of a new joint powers authority (JPA) to implement a regional community choice aggregation (CCA) program. San Diego – California’s second-largest city – is an affiliate member of CalCCA.

“The California Community Choice Association congratulates San Diego as it moves ahead with the formation of a joint-powers authority to implement a community choice aggregation program as the preferred pathway to reach the city’s 100 percent renewable energy goal. We appreciate San Diego’s careful consideration of CCA with a focus on fiscal responsibility, competitive rates, economic development, local job creation, investment in communities of concern, and prioritization of local renewable energy development.”

Key points/links:

Under San Diego’s CCA timeline, the city plans to initiate CCA service in 2021. The city council would consider the approval of a JPA agreement in the third quarter of 2019 and submit a CCA implementation plan to the California Public Utilities Commission (CPUC) in the fourth quarter of 2019.
Environmental, community, labor, business, and climate and environmental justice organizations supported the resolution approved by the city council.
Several cities in the region are currently exploring the feasibility of CCA and have expressed interest in joining the JPA, according to city staff. These include Chula Vista, La Mesa, Del Mar, Encinitas, Carlsbad, and Oceanside. Public agencies that may consider joining the JPA or signing on as large customers include the Port, Airport, and County Water Authority. Cities in Orange County that are within SDG&E’s service territory may also have an interest in participating.
About CalCCA
Launched in 2016, the California Community Choice Association represents California’s community choice electricity providers before the state Legislature and at regulatory agencies, advocating for a level playing field and opposing policies that unfairly discriminate against CCAs and their customers. There are currently 19 operational CCA programs in California serving approximately 10 million customers.

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

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Moody’s says bankruptcy court PG&E order credit positive for CCAs

A recent bankruptcy court order that maintains existing arrangements between community choice aggregators (CCAs) and investor-owned Pacific Gas & Electric is credit positive for CCAs in California, Moody’s Investors Service said.

The U.S. Bankruptcy Court for the Northern District of California on Jan. 31 provided interim approvals, known as “first-day” orders, related to PG&E’s Jan. 29 bankruptcy filing.

The approved motions include an order to maintain existing arrangements between CCAs and PG&E, which is credit positive for Marin Clean Energy (MCE) and other CCAs in California.

“The order provides more stability to CCAs’ cash flow collections, which enables their power suppliers and other vendors to have greater certainty that CCA revenues and cash flow will remain unaffected by the utility’s bankruptcy filing,” Moody’s said in a Feb. 7 report.

Issuance of the order will facilitate the continued receipt of revenues and cash flows and should also be supportive of continued development of CCAs in PG&E’s service area, the rating agency said.

CCAs were established to provide electricity customers choice of generation supplier in the service areas of California’s investor-owned utilities.

Under the CCA business model, PG&E includes the charges for generation services provided by MCE on the monthly electricity bill that PG&E sends to customers. The customer pays the bill, and on a daily basis, PG&E transfers collected CCA generation revenues to MCE, Moody’s noted in the report.

The California Public Utilities Commission’s “Rule 23” established this process and governs the relationship between PG&E and all of the CCAs in California implementing the requirements of Assembly Bill 117, the state’s electricity aggregation choice statute.

“For the past eight years, MCE has benefited from the PG&E billing and collection process, leading to a very strong receivable collection record. In return, MCE and the other CCAs have paid PG&E a fee to handle the collection process, which they will continue to do during the bankruptcy process,” Moody’s said.

The bankruptcy court’s first-day order also included an acknowledgment that the revenues are not a part of PG&E’s estate, that PG&E must return to regular banking and billing operations, including remitting bill collections to CCAs and that CCA revenues cannot have a lien placed against them by the debtor-in-possession lender.

MCE is one of the 12 CCAs operating in PG&E’s service territory where PG&E provides transmission and distribution services. Together, the CCAs provide generation services to approximately 40% of the electric demand in PG&E’s service territory, “a level that we expect will grow,” the rating agency said.

Once a CCA is formed, it becomes the default provider for generation services in the defined area. CCA customers have the option to opt-out and return to PG&E for their generation service but most customers elect to stay with the CCA.

The CCA is unregulated on its cost recovery like public power utilities and has a local governance role in power supply planning, local greenhouse gas reduction policies and customer choice, Moody’s noted.

Moody’s Investors Service in 2018 issued the first ever credit rating for a CCA, a Baa2 rating and stable outlook for MCE, saying that MCE has an established operating record as a California Joint Powers Authority.

Facing billions of dollars in wildfire-related liabilities, PG&E Corporation and its primary operating subsidiary, Pacific Gas and Electric Company, on Jan. 29 filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of California.

Public power utilities working with CCAs

In California, several public power utilities and entities are moving to provide services to CCAs.

In September 2017, SMUD said that it had been selected to negotiate a services agreement to provide Valley Clean Energy Alliance, a new community choice aggregation joint powers agency, with technical and energy services, data management/call center services, wholesale energy services, credit support services and up to five years of business operations support.

Meanwhile, California-based East Bay Community Energy, selected the Northern California Power Agency to provide wholesale energy services.

In November, NCPA in late 2017 said that it will be providing a variety of wholesale energy services to California’s Pioneer Community Energy.

Association offers new CCA program membership category

The American Public Power Association has initiated a new category of membership for community choice aggregation programs.

 

Moody’s says bankruptcy court PG&E order credit positive for CCAs, by Paul Ciampoli, American Public Power Association, February 11, 2019.

What you need to know about Clean Power Alliance, SoCal’s newest electric company

Southern California Edison has been the region’s dominant electric utility for more than a century. But for nearly 1 million homes across the Southland, the days of Edison’s monopoly are ending.

Clean Power Alliance is becoming the default energy provider this month for residents of 29 cities, as well as unincorporated parts of Los Angeles and Ventura counties. The government-run power agency launched for a small group of customers last year and will continue its rollout in May, when it expands service to 100,000 businesses.

If Clean Power Alliance is your new power company, you should have received notices in the mail by now. But you probably still have plenty of questions.

Here’s everything you need to know about the switch, including what it means for your electricity rates and why Edison isn’t going away entirely.

How do I know if Clean Power Alliance will be my new energy provider?

If you live in one of these cities, you’ll be switched to Clean Power Alliance service by the end of February: Agoura Hills, Alhambra, Arcadia, Beverly Hills, Calabasas, Camarillo, Carson, Claremont, Culver City, Downey, Hawaiian Gardens, Hawthorne, Malibu, Manhattan Beach, Moorpark, Ojai, Oxnard, Paramount, Redondo Beach, Rolling Hills Estates, Santa Monica, Sierra Madre, Simi Valley, South Pasadena, Temple City, Thousand Oaks, Ventura, West Hollywood and Whittier.

The February switch also applies to residents of unincorporated Los Angeles and Ventura counties. Westlake Village residents are on track to start receiving service from Clean Power Alliance in 2020.

Residents of cities with their own municipal power departments, such as Los Angeles, Burbank and Glendale, will stick with their city-run energy provider.

Can I sign up for Clean Power Alliance if I’m an Edison customer living somewhere else?

No.

Why is this happening? Do I need to do anything?

You don’t need to do anything. Your electricity service will continue uninterrupted after you’re switched from Edison to Clean Power Alliance, which will happen automatically after your regularly scheduled meter reading in February.

This is happening because the 29 cities and two counties got together and created a community choice aggregator, or CCA. Forming a CCA allows local governments to decide what kinds of power to buy for their communities, how much to charge and what incentives to provide for going solar or reducing energy use.

California had 19 CCAs serving more than 8 million customers last year, but Clean Power Alliance will be the biggest one yet. Elsewhere in Southern California, local governments are making plans to form CCAs in Riverside County and San Diego, where Mayor Kevin Faulconer recently endorsed calls for community choice.

Am I going to pay more for electricity?

It depends what you want from Clean Power Alliance. The CCA offers three rate plans to its customers: One with a 36% renewable energy mix that the alliance says is 1% cheaper than Edison’s base rate, one with 50% renewables that’s on par with Edison, and one with 100% renewables that’s 9% more expensive than Edison.

Every city and county in Clean Power Alliance has chosen one of those plans as the default for its residents. Eight cities picked the cheapest option; nine cities, plus Ventura County, opted for the 100% renewables rate.

If you don’t like your local government’s choice, you can switch to another rate plan at any time. You can also opt out of Clean Power Alliance and return to Edison. Of the roughly 960,000 homes and businesses that will be eligible for Clean Power Alliance by the end of February, just 14,000, or less than 1.5%, have opted out.

So who’s setting my electricity rate now? And what will they do with my money?

Rates are set by Clean Power Alliance’s 31-member board of directors, with one representative from each city and county. The board is chaired by Diana Mahmud, a South Pasadena City Council member. Its monthly meetings are open to the public.

Clean Power Alliance has big plans for cleaning up the region’s energy supply, said Ted Bardacke, the alliance’s executive director and a former infrastructure director for L.A. Mayor Eric Garcetti.

Over time, that could mean incentives for customers to install electric water heaters or space heaters, reducing the need to burn natural gas in homes and other buildings. It could mean free or discounted electric vehicle chargers, or special electricity rates that encourage people to charge their EVs at home. It also could mean community battery installations that reduce the need for polluting, gas-fired “peaker” power plants.

“We’re very interested in projects that not only reduce greenhouse gas emissions but also reduce local air pollution, and that leads you to also improve public health,” Bardacke said.

Can I still put solar panels on my roof?

Yes. Clean Power Alliance offers a net metering rate plan for solar-powered homes and businesses just as Edison does, but with slightly more favorable terms.

Does community choice have any drawbacks?

So far, most CCAs seem to be living up to their promises of cleaner energy, lower rate options and local decision-making. But it’s yet to be seen how they’ll fare over the long term. Some renewable energy companies are worried the CCAs won’t be able to buy enough clean power over the next few years to meet the state’s climate change goals. The CCAs dispute that premise, saying they’re buying plenty of solar and wind energy.

Michael Picker, president of the California Public Utilities Commission, has also warned that the shift from monopoly utilities to more decentralized decision-making could have dangerous unintended consequences, such as a repeat of the state’s early-2000s energy crisis. The CCAs say that concern is hugely overblown.They point out that the state’s first community choice provider, Marin Clean Energy, launched in 2010, followed by Sonoma Clean Power in 2014 and Lancaster Choice Energy in 2015, and so far there have been no crises.

But 16 more CCAs have started serving customers in the last three years, and it’s hard to predict how things will shake out — especially as California’s energy sector is also reshaped by other forces, including a mandate of 100% clean power by 2045 and the bankruptcy filing of the state’s biggest utility, Pacific Gas & Electric.

Does community choice mean Edison is going away?

No. Edison will still be responsible for operating the poles and wires of the electric grid, and Clean Power Alliance customers will still pay the investor-owned utility for those services. Edison will still send out everyone’s bills too.

Clean Power Alliance customers will also see a new item on their bills: the “Power Charge Indifference Adjustment,” more commonly known as the exit fee. As the name suggests, it’s an additional monthly charge that CCA customers must pay Edison to cover the costs of long-term contracts signed by the utility years ago to provide electricity to all of its customers. State officials say it’s only fair for CCA customers to keep covering their share of those costs because Edison would otherwise have to increase rates for its remaining customers.

There’s an ongoing debate about how to calculate the exit fees, with CCAs arguing the investor-owned utilities are inflating the numbers. The Public Utilities Commission approved an increase in the exit fees last year, although the commission may continue to tweak that decision.

So that’s everything I’ll still be paying to Edison, right?

Not quite. For the next year, homes served by Clean Power Alliance will also pay an additional $100 million to Edison to help fill a hole in the company’s power budget. Edison said it spent about $815 million more than it expected on electricity in 2018, partly because of a summer heat wave. The utility asked the Public Utilities Commission for permission to charge some of those costs to homes leaving this month for Clean Power Alliance because Edison purchased the electricity on behalf of all its customers, including those now leaving.

The Public Utilities Commission approved that request in a 5-0 vote on Tuesday, over the objections of Clean Power Alliance. The community choice provider had said it would have to cut into its financial reserves to offer customers the rate savings it promised, while accounting for the additional $100 million they will now pay.

Cliff Rechtschaffen, a member of the Public Utilities Commission, said the additional charge will probably raise electricity prices for Edison and Clean Power Alliance customers by about 5% over the next year.

What you need to know about Clean Power Alliance, SoCal’s newest electric company, by Sammy Roth, The Los Angeles Times, February 1, 2019.

Marin energy aggregator could benefit from PG&E bankruptcy

MCE and the other eight community choice aggregators in Northern California will be watching closely if Pacific Gas and Electric Co. files for bankruptcy as expected on Tuesday.

Assembly Bill 117, which made it possible for local governments in California to buy electricity directly from suppliers and sell it to their residents, was passed by the Legislature in 2002 on the heels of the state’s failed experiment with deregulation of the electricity market and PG&E’s related bankruptcy in April 2001.

Community choice aggregators in Northern California focus exclusively on securing electricity for their customers. Transmission and distribution of the electricity as well as meter reading, billing and revenue collection are left up to the investor-owned utility, PG&E.

“CCAs will want to make sure there is no interruption in that revenue collection and billing process, and the transfer of revenue that keep the CCAs operating,” said Shawn Marshall of Mill Valley, executive director of LEAN Energy U.S., a nonprofit organization that supports the formation of CCAs nationwide.

She said CCAs will also want to make sure they and their customers are not asked to pick up the tab from contract restructuring due to the bankruptcy that may result in some PG&E power vendors “being forced to take a haircut.”

Longer term, however, a PG&E bankruptcy could benefit CCAs, Marshall said.

For example, she said some of PG&E’s transmission and distribution could be municipalized, allowing CCAs to get involved in that end of the business.

In a release issued on Dec. 21, the California Public Utilities Commission, which regulates PG&E and the CCAs, said it is considering a range of possibilities in response to PG&E’s tarnished safety record and threatened financial state due to related lawsuits. Those possibilities include reconstituting the company as a publicly owned utility.

The San Francisco Public Utilities Commission, which operates CleanPowerSF, San Francisco’s Community CCA program, has said it is exploring the possibility of acquiring or building electrical infrastructure assets.

Marshall said longer-term CCAs could also benefit if the bankruptcy proceeding results in the restructuring of some of PG&E’s older, more expensive contracts. That might result in customers leaving PG&E to join a CCA having to pay lower exit fees.

When a PG&E customer switches to MCE or another community choice supplier, PG&E is permitted to charge that customer an exit fee to compensate it for the power contracts it previously entered into to supply that customer electricity. The fee was imposed by the California Public Utilities Commission to ensure that customers remaining with the utilities do not end up footing the entire cost of the contracts.

Dawn Weisz, MCE’s chief executive, said the main thing CCA customers need to know is, “There won’t be any impacts to community choice aggregation customers due to this potential bankruptcy filing.”

“PG&E has stated publicly that they will continue in a business as usual fashion,” Weisz said. “The lights will stay on. This was the case when PG&E filed for bankruptcy protection in 2001, and we don’t expect anything different to happen here.”

Severin Borenstein, a business professor at the University of California, Berkeley, and faculty director of the Energy Institute there, said, “The bankruptcy itself is not going to change PG&E’s function as a transmission and distribution provider so it’s not going to hurt CCAs in an actual delivery sense.”

He doubts that many CCAs will want to get into the transmission and distribution business.

“They are not in a physical energy business, and I’m pretty sure they don’t want to be,” he said.

Borenstein, however, sees PG&E’s bankruptcy as an opportunity for CCAs to woo new customers. He said the filing will be a blow to PG&E’s reputation.

“Part of what has made the CCAs so attractive is they are viewed more positively by people in the towns which have joined,” Borenstein said. “So I think the bankruptcy will accelerate interest in CCAs.”

In addition, Borenstein said, “There is a real question regarding the investment of PG&E in renewables if they’re in bankruptcy.”

He said if PG&E has to cut back on investments in renewables that could serve to further differentiate the CCAs’ product.

“They already make a big deal of being much greener that PG&E, and the reality is the difference isn’t that large,” Borenstein said. “It could potentially become larger.”

MCE says 61 percent of its energy comes from renewable sources, while PG&E says 33 percent of its energy comes from renewable sources.

Weisz said MCE signed three new contracts with renewable energy producers at the end of the year. The producers — solar farms in Fresno County and Lancaster and a wind farm in Mohave – will deliver 728,000 megawatt hours of electricity annually.

If the PUC gives PG&E permission to pass along costs to ratepayers both PG&E and CCA customers will feel the pain equally. PG&E and CCAs charge different rates for their electricity, but all customers pay the same amount to maintain the electrical grid.

In December 2003, the PUC approved a bankruptcy plan that required PG&E’s customers to pay the company $7 billion to $8 billion over nine years. PG&E’s shareholders were required to contribute $2 billion in lost dividends.

“The collection of fees is bifurcated so customers are billed directly by PG&E for the transmission and distribution activity separate from the generation activity,” Weisz said.

Marshall said that also means that PG&E can’t blame increased competition from CCAs for its maintenance issues.

“The reason that PG&E is in the spot that it is in has nothing to do with emergence of community choice,” Marshall said. “It has everything to do with their maintenance of infrastructure, or lack thereof.”

 

Marin energy aggregator could benefit from PG&E bankruptcy, by Richard Halstead, Marin Independent Journal, January 27, 2019.

Santee votes to join La Mesa, Chula Vista in study to explore ‘community choice energy’

SANTEE, Calif. — Santee council members voted unanimously Wednesday night to move forward in partnership with Chula Vista and La Mesa to explore other, more affordable energy options for residents.

The idea of community choice aggregation or energy has been discussed for the last several years, but now this study would help determine if the option is realistic and possible for the cities.

“Community choice energy can provide cleaner power at lower rates. It’s hard to be against cleaner power and lower rates,” said Van Collinsworth, a Santee resident.

Nearly 20 similar programs have already been put into action throughout California.

“What they do is kind of take you away from the independent operator which is San Diego Gas and Electric and allow municipalities to have their own autonomy in energy,” said Santee Mayor John Minto.

Minto said the study voted on Wednesday evening is an essential next step.

“We are all looking forward to finding out more information so that we can make that final decision whether or not this is right for our city.”

The city of San Diego is expected to take a look at a similar proposal in the coming days.

 

Santee votes to join La Mesa, Chula Vista in study to explore ‘community choice energy’, by Kasia Gregorczyk, Fox 5 San Diego, January 23, 2019.

San Jose Clean Energy: What you need to know

Next month, San Jose will switch electricity suppliers — from PG&E to San Jose Clean Energy.

The change is part of the city’s broader goal to become more environmentally friendly. Although President Trump announced in June he was pulling out of the 2015 Paris Agreement on climate change among almost 150 countries, San Jose Mayor Sam Liccardo has said he still wants the city to meet the greenhouse gas emission targets outlined in the accord.

Thousands of residents and businesses will be affected by the switch from PG&E. Here’s what you need to know.

What is San Jose Clean Energy? 

San Jose Clean Energy (SJCE) is what’s known as a community choice energy program. There are several such programs of locally controlled electricity providers in the region, including Silicon Valley Clean Energy and Peninsula Clean Energy.

Why is San Jose switching? 

As a nonprofit, SJCE aims to provide cleaner energy options to customers than PG&E does, for roughly the same price. Right now, according to the city, only about a third of PG&E’s energy is from renewable sources and about 78 percent is carbon free.

San Jose is offering two choices: Green Source is about 45 percent renewable energy and at least 80 percent carbon free; Total Green is 100 percent carbon free and 100 percent renewable.

What will it cost?  

The program will cost about 1 percent less than what PG&E charges. The city estimates that the average Green Source cost will be about $109.49 a month, compared to PG&E’s $109.97. Total Green will cost a few dollars more, about $113.94.

Will rates go up? 

Electricity prices vary, but the city says the current SJCE rates are expected to remain steady until at least the spring of 2020. The program’s goal is to always be as competitive with PG&E’s rates as possible, and while that company has shareholders, SJCE is a nonprofit that does not.

What do I have to do to sign up?

Nothing. In February, residents and businesses in San Jose will automatically be enrolled in the Green Source program. People who want to sign up for Total Green can upgrade and those who want to stick with PG&E can opt out.

Really? Everyone is automatically signed up? 

Well, almost, but not quite. Residents who have rooftop solar panels will not automatically be enrolled in Green Source. The city says it expects to enroll those customers in the program in 2020, when “we can be certain you will receive a fair value for the solar you generate.” Residents can still sign up for Total Green, however, and commercial customers with solar can participate in SJCE.

So I won’t hear from PG&E anymore? 

SJCE will generate the electricity but PG&E will still transmit and distribute it in San Jose. PG&E will also still handle customer and billing services, so your bill will still come from PG&E. The company will also still be responsible for maintaining power lines and providing natural gas services.

Will my bill look different? 

Yes. PG&E charges what’s commonly known as an “exit fee” to people who participate in a community choice program. The reason PG&E says that’s necessary is because it has already purchased power for customers who will switch to a community choice program. But even with the fee, the total bill should still be slightly lower.

Wait, didn’t PG&E just announce that it’s filing for bankruptcy?

Yes, the company is planning to file for Chapter 11 protection. It faces potentially billions of dollars in costs tied to wildfires that have ravaged the state in the past several years. But the company has told San Jose there will be no interruption in power service for customers and SJCE is expected to launch in February as planned, said Zach Struyk, a deputy director with SJCE.

The future of PG&E remains unclear, but the city said in a statement that SJCE and other community choice programs are “closely monitoring the situation and evaluating potential impacts” on customers.

Is this really helping the environment? 

Yes. The city expects to see an 18 percent initial reduction in what are known as GHG emissions. That’s like getting 35,000 cars off the road.

Where can I get more information?

The website sanjosecleanenergy.org has more information about the program. People with specific questions can call 833-432-2454 or email customerservice@sanjosecleanenergy.org. The city is also hosting a series of community events through March to discuss the program.

 

San Jose Clean Energy: What you need to know, by Emily Deruy, The Mercury News, January 19, 2019.

 

Alternative energy provider smart way to go

Every household in Agoura Hills has an exciting new opportunity to make a tangible difference in reducing greenhouse gas emissions and improving air and water quality, all while saving money.

Residents have begun to receive mailers announcing the move to a new energy provider called Clean Power Alliance. Starting in February, our city, along with 30 other communities across Los Angeles and Ventura counties, will launch a community choice energy program that will offer cleaner, more renewable power at competitive rates.

How will it work?

Simply put, Clean Power Alliance purchases clean power and delivers it to your home via existing Southern California Edison lines. SCE will continue to send one bill and resolve any service issues, as before. Financial assistance programs will remain intact and you’ll still have access to rebates and incentives.

What will change?

You now have choice. Customers will have a menu of energy options to choose from.

Lean Power: This is the default rate option for Agoura Hills residents, providing 36 percent renewable content at the lowest possible cost, a 1 to 2 percent savings over SCE’s standard rates.

Clean Power: Purchase 50 percent renewable content at either no cost difference or up to a 1 percent savings compared to SCE’s standard rates.

100 percent Green Power: This will cost about 7 to 9 percent more than SCE’s base rates, but will deliver nearly three times the amount of renewables. And, it’s about 5 percent less expensive than SCE’s 100 percent Green rate.

What do you have to do?

Nothing, unless you want to change your default option. Agoura Hills residential customers will be automatically enrolled in Lean Power, but you can easily make your own energy choice or opt out entirely and return to SCE as your energy supplier. Just go to cleanpoweralliance.org or call (888) 585-3788. Business customers will be enrolled in May.

Why did Agoura Hills choose 36 percent Lean Power as the default?

We anticipate that this service level will allow Agoura Hills residents to realize a cost savings even if SCE raises transmission rates to recoup losses from the California wildfires. That said, we encourage as many residents as possible to opt up to 100 percent Green Power if you can afford the slight increase. It’s an investment in our future.

Unsure which rate is best for you?

Grab your latest bill and head to the online bill calculator to compare and decide. Whether you enjoy the costs savings, go for 100 percent Green, or find your balance in the middle, it’s your choice.

Watch for more mailers coming soon. In the meantime, feel free to reach out or go to cleanpoweralliance.org for more details.

Klein Lopez is an Agoura Hills City Councilmember and the city’s board member on the Clean Power Alliance. She can be reached at dlopez@ ci.agoura-hills.ca.us.

 

Alternative energy provider smart way to go, by Klein Lopez, The Acorn, January 17, 2019.

Fresh Energy to Start an Exciting New Year

A new year offers a clean slate — a chance to celebrate achievements, assess the challenges of the past and start the new year with fresh energy.

Our biggest achievement in 2018 was the launch of Valley Clean Energy (VCE), our local public electricity program. With years of planning and lots of community support, we officially started serving the cities of Woodland and Davis and unincorporated Yolo County last June. Over the past six months, VCE has been providing greener energy, customer choice, local control and reinvestment in the community.

VCE’s standard portfolio of electricity includes 42 percent renewable energy, compared to 33 percent provided by PG&E. This allows VCE customers to help our region and our state take a big step toward changing our fossil fuel-based economy.

Another notable achievement in 2018 was the VCE partnership with Davis, Woodland and Yolo County to apply for a $2.9 million grant from the Sacramento Area Council of Governments (SACOG), which we ultimately received. The grant will provide dozens of new, publicly available electric vehicle chargers and will lay the foundation for electric vehicle charging and lower-carbon transportation options in the region.

 

Although 2018 was a banner year for the effort to bring local energy control to Yolo County, we also faced significant headwinds from state regulators. Due to decisions by the California Public Utilities Commission that favored investor-owned utilities like PG&E, as well as requirements from the California Energy Commission, VCE took a $4.7 million hit to our young program’s budget, leaving us with many difficult choices — one of which was the decision to delay the enrollment of existing solar customers.

Since both of us are solar customers, we were disappointed that we could not sign up right away for the local energy program we help run. But as board members we understand that this delay is simply a bump in the road on a long journey toward completely renewable, more affordable electricity. We also understand why some folks may be unhappy about the delay of enrolling solar customers, but the VCE board’s difficult decision was made with the long-term good of the program in mind.

Despite these challenges, we are reminded that our communities launched Valley Clean Energy last summer to bring cleaner energy at competitive rates to local residents and businesses while reinvesting earnings into our economy by creating local green energy programs and projects.

We have been successful in taking the important first steps toward these goals because VCE is accountable to the communities it serves, not to shareholders. VCE offers choice, local governance and transparency — everything local energy customers have sought for years.

One of the tangible, immediate impacts of our local energy program is the fact that VCE customers are reducing greenhouse-gas emissions by automatically receiving a higher percentage of renewable electricity than that provided by PG&E, and they can up the ante, at a small premium, by choosing that 100 percent of their power come from renewables.

We are proud that VCE customers are each doing their small part to help California avoid the growing consequences of climate change like the tragic wildfires of 2017 and 2018 that devastated our sister communities in Northern California.

VCE’s customers are joined in these efforts by the 18 other CCE programs that are already serving 8 million-plus customers in more than 160 communities across California. Dozens more communities are recognizing the benefits of taking local control of their energy futures and are lining up to form or join CCE programs. We encourage and welcome them to this energy renaissance that is challenging the old ideas that clearly no longer serve the best interests of our communities.

With Valley Clean Energy, we’ve taken a big step toward a more sustainable future. As solar customers ourselves, we’re willing to wait another year to join the program, knowing we’re already doing our part for renewable energy.

Because VCE is in the business of delivering value to the customers and communities we serve instead of shareholders and Wall Street, we have the advantage of being able to take the long view. As we reflect on 2018, we are reminded that the success of our community choice energy program is our higher priority because it is poised to deliver decades of value to our communities.

—Tom Stallard is a Woodland City Council member and board chair of Valley Clean Energy. Don Saylor is a Yolo County supervisor and a member of the VCE board. To learn more about Valley Clean Energy, visit www.valleycleanenergy.org or email customerservice@valleycleanenergy.org.

 

Guest Commentary: Fresh Energy to Start an Exciting New Year, by Tom Stallard and Don Saylor, The Davis Vanguard, January 16, 2019.

Why SDG&E wants to get out of the business of buying electricity

With California’s grid going through dramatic changes, San Diego Gas & Electric has approached the Legislature in Sacramento with a proposal that, at least at first blush, sounds pretty radical — it wants to get out of the business of buying and selling electricity.

Instead, the company is calling on the state to create a separate entity that would handle all those transactions.

SDG&E officials are quick to say it has no plans to go away — it and other investor-owned utilities in the state would still shoulder other responsibilities such as delivering power to customers through transmission and distribution facilities, maintaining poles and wires and taking care of billing and metering.

But it wants to be relieved of the job of purchasing the sources of electricity (natural gas, solar, wind, etc.) to meet customers’ energy needs.

“Choice is happening and we need to evolve with it,” said Kendall Helm, SDGE’s vice president of energy supply said. “And this old model … doesn’t make sense.”

The proposal comes as San Diego’s city council is expected this month to clear the way to form a community choice aggregation, or CCA, that would provide an alternative to SDG&E when it comes to procuring different sources of power.

CCAs and other changes to the power system

CCAs have sprung up across California in recent years, boasting they offer customers cleaner sources of power at roughly equal or sometimes even lower prices than traditional utilities.

Under the CCA model, local governments purchase the power.

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. Those third parties are paid by the CCAs through the rates the CCA charges to its customers.

A potential CCA in the San Diego area would likely include a joint powers authority that would fold in other municipalities such as Solana Beach, Del Mar, Encinitas, Carlsbad and Oceanside. That would make it one of the largest in California.

By state rule, once a CCA is established, customers in that given area are automatically signed up.

If customers feel more comfortable staying with the local utility, they can opt out of the CCA but it often requires customers to fill out a request form first.

SDG&E anticipates the creation of a CCA would result in about half of its current customers migrating to community choice.

Throw in the increasing numbers of customers getting their power from rooftop solar panels and private electric re-sellers called Direct Access providers — not to mention large industrial customers buying power directly from renewable generators — and SDG&E and other investor-owned utilities anticipate steep erosion of their customer base.

SDG&E officials have said more than 85 percent of retail electrical load could be supplied by sources other than California utilities by the mid-2020s. But its job delivering power to all customers — regardless whether they are in a CCA or other entity — will remain intact.

“We will always, for all customers, serve the delivery of energy through our transmission and distribution,” Helm said. “But if they have chosen another provider or another option and say, ‘I want this provider purchasing my energy,’ we don’t want to be purchasing their energy for them. They’ve chosen that provider. Let that provider do the purchasing.”

So what would take the place of the utilities when it comes to power purchases? And how would a change be structured?

SDG&E proposes creating a task force to look into the issue.

It would be led by the California Energy Commission (the state’s primary energy policy and planning agency), the California Public Utilities Commission (which regulates SDG&E and the state’s two other investor-owned utilities, Southern California Edison and Pacific Gas & Electric) and the California Independent System Operator (which oversees the operation of about 80 percent of the state’s electric power system, transmission lines and electricity market).

SDG&E in November asked lawmakers in Sacramento to introduce legislation creating the “Energy Procurement Task Force” by March of this year. Obtained by the Voice of San Diego, the draft bill looks to have the state establish a body that would handle power purchases and act as the default provider — in other words, assume the responsibilities investor-owned utilities now perform in that space.

The so-called “state-level electricity procurement entity” would be formed by Jan. 1, 2023 and get up and running no later than July 1, 2025. By then, the expected San Diego area CCA would be well under way.

“If 85 percent of customers are procuring their energy through a CCA or a (Direct Access) provider, it just makes sense there’s this third party entity that captures the (remaining) 15 percent,” said SDG&E spokesman Joe Britton. “Maybe it doesn’t make sense for the utilities to continue to do that.”

But one of the major reasons the state established a framework for CCAs to proliferate was to create competition and alternatives to the utility model. Wouldn’t shifting the responsibility of procuring power to a state-created “central entity” undermine that?

“There will always be a default provider,” Helm said. “We’re just saying it doesn’t need to be SDG&E. And there are many places in the U.S. and around the world where it’s not the investor-owned utility who is the default provider, so it’s not an untested model.”

Outstanding contracts

SDG&E, like the other investor-owned utilities in the state, have agreements with other power companies that typically range from five years to as long as 25 years. But with utilities serving fewer customers as CCAs and asother programs grow more popular, what happens to those contracts?

That’s a key part of SDG&E’s push for a state-level “central entity.”

Part of the entity’s responsibilities, as SDG&E sees it, is to shrink those portfolios. The state — or a third-party group — could buy some of the contracts that have shorter terms left on them. Other contracts could be re-assigned to the central entity. And, Helm said, excess resources can be taken off the table through auctions and markets.

Crucially, the draft bill calls for utilities receiving “full cost recovery” from those contracts.

“We have commitments to developers who absolutely do want to be made whole,” Helm said. “We can’t just walk away from contracts.”

Bill Powers, an engineer, consumer advocate and frequent critic of SDG&E, says the company is “pretty bulked up on utility-owned assets” and therefore sees the proposal to the Legislature as an opportunity.

“This is SDG&E and Sempra (SDG&E’s parent company) doing what they do, which is looking for the most favorable financial pathway for themselves,” Powers said. “And I’m sure if they could get a sympathetic legislator to float legislation that gives them a financially advantageous exit from the generation business, why not take it?”

What kind of effect would the proposal have on monthly bills for ratepayers?

“I really can’t predict that,” Helm said. “It will depend on the choice they make … If they are receiving service from a CCA in the future, it will depend on the choices their CCA makes and it will depend on power markets and all those other factors.”

CCA customers pay a monthly exit fee (called a Power Charge Indifference Adjustment) each month on their bill.

Over the years, utility customers — through their rates — have paid power companies to build things like power plants and sign long-term power contracts with independent power producers. The exit fee is designed to make sure those costs are not unfairly shouldered by customers who decide to remain with their traditional utility instead of joining a CCA.

Last October, the utilities commission adjusted the exit fee, which varies depending on the service territory of each of the state’s three investor-owned utilities.

SDG&E has estimated the new exit fee will come in at 3.3 cents per kilowatt-hour. That would equate to approximately $16.50 per month for a prospective residential customer who uses 500 kWh per month.

But backers of CCAs want the utilities commission to rehear the decision, complaining the fees have been adjusted too high, which they argue will reduce the financial incentive for prospective customers to jump on the CCA bandwagon.

If SDG&E’s proposal for a “central entity” is eventually adopted, Powers suspects ratepayers may be left on the hook.

“If the state were to legislate that it’s now state responsibility to keep all of these owners of capacity and owners of utility-owned generation whole, then inevitably it’s the citizens of the state who are going to pay for it,” Powers said.

Helm said SDG&E is focusing on investing in assets that help integrate renewable energy into the grid. About 45 percent of the electricity the company delivers comes from renewables, a higher percentage than SDG&E’s instate rivals at PG&E and Southern California Edison.

“If we were out of (the) procurement (business), we would probably not continue to try to build new plants,” Helm said.

Nicole Capretz, executive director of the Climate Action Campaign and a major advocate for CCAs in San Diego, said it’s too early to tell if the SDG&E proposal is a net positive or negative but “it’s good to know they (SDG&E) are rethinking their business model and adapting to a new world view. Eventually, it might make sense for them to just be in the wires business.”

SDG&E sent a letter in November to state Sen. Ben Hueso, D-San Diego, that outlined the proposal. Hueso is chairman of Senate’s energy committee. Hueso’s office said the senator is still reviewing the proposal and is not ready to comment on it.

“It’s something we’re obviously going to be vetting thoroughly,” said Erin Hickey, Hueso’s communications director.

 

Why SDG&E wants to get out of the business of buying electricity, by Rob Nikolewski, The San Diego Union-Tribune, January 13, 2019.

Solana Beach to enter three-year energy purchase deal

Seeking to reduce the risk from fluctuations in the energy market, the city of Solana Beach will enter into a three-year purchase agreement for hydroelectric power, under the city’s program that allows residents to purchase electricity as an alternative to San Diego Gas & Electric.

The city launched its program, called the Solana Energy Alliance, last summer. Among the goals of the city’s program are to offer cleaner energy to the city’s residents, provide more local control regarding energy sources, and work toward the city’s target of having 100 percent renewable energy by 2035, said Dan King, assistant city manager. The city also agreed to set electricity rates at 3 percent below those charged by SDG&E.

Under the program established by the council, the city has contracts with two entities, said King. One organization, called the Energy Authority, is a consortium of eight or nine public energy alliances similar to the one formed in Solana Beach. The authority purchases power on the open market for its member agencies.

The city also contracts with a second consultant that handles such tasks as operating a call center, customer billing and data management.

At its meeting on Wednesday, Jan. 9, the Solana Beach City Council voted unanimously to authorize the Energy Authority to enter into a three-year contract to purchase hydroelectric power, to meet the needs of Solana Beach residents who are participating in the city’s alternative energy program. This would be the first long-term energy contract for the city program, but the city will explore other long-term options in the future, King said.

A city staff report said that in a worst-case scenario, the city’s energy costs could go up by $5,699 over the three-year life of the deal, while under the best case, the city could save $25,609 over the three years. The difference, said King, depends on the amount of rainfall during the contract period, which affects the cost of hydroelectric power, and if additional agencies join in the purchase agreement through the Energy Authority.

“If things work out well, it’s a much better deal,” said King.

Under questioning by council member Jewel Edson, King said residents’ electric rates would not go up even if the city’s energy costs rise marginally during the three-year energy purchase agreement.

According to King, Solana Beach residents are automatically enrolled in the city’s energy program unless they opt out. Currently, he said, there are about 7,000 households in the program. About 8 percent of the city’s households have opted out of the city’s program and have continued to purchase their electricity from SDG&E, leaving the city with a 92 percent participation rate in its fledgling energy program,.

The Solana Energy Alliance offers two packages of electricity rates: SEA Choice, which promises electricity from 50 percent renewable sources, and 75 percent from sources free of greenhouse gas emissions; and SEA Green, which offers electricity generated from 100 percent renewable sources.

Currently, residents who use an average of 445 kilowatt hours per month are billed $119.35 for SEA Choice, and $120.69 for SEA Green. SDG&E’s charge for standard electrical service is $122.69, and it also offers a 100 percent renewable option for $121.65. A side-by-side comparison of SEA and SDG&E rates can be found on the city’s website at https://solanaenergyalliance.org/wp-content/uploads/2018/10/JRC-Online-July-1-2018.pdf.

Those in the program continue to pay SDG&E for use of its power grid and transmission lines.

Solana Beach was the first city in San Diego County to launch a community choice energy program. According to the CalCCA, an advocacy group, there are 19 community choice programs serving some 8 million California residents.

King said funding for Solana Beach’s community choice program is kept separate from the city’s general fund. The city did contribute $107,000 in startup costs for the Solana Energy Alliance, which will be paid back over time. The program also covers approximately $122,000 annually in city staff costs for work done on behalf of the energy program.

If the community choice program accumulates funds above those needed to operate the program, the city could designate the money toward projects that further the goals in its Climate Action Plan, King said. Other California communities with energy choice programs have used money generated from energy sales to pay for such things as electric vehicle rebates and electric buses.

 

Copyright © 2019, Del Mar Times

Solana Beach to enter three-year energy purchase deal, by Joe Tash, Del Mar Times, January 13, 2019.