The City of Hanford is on track to become the first Valley community to take more control of its energy sources and costs when it launches its Community Choice Aggregation (CCA) program next year.
Other Valley communities are at various stages of considering whether to form CCAs, with Fresno, Huron, Clovis, Sanger, Parlier and Kerman among them.
Potentially, the programs could save residential customers a few dollars off their electric bills, and the savings could be considerably more for manufacturers and other businesses with heavy demand, a trio of men advocating for CCAs told attendees at a seminar during the recent Valley Made 5th Annual Manufacturing Summit in Fresno.
Setting an energy destiny
The actual savings would stem from the decisions made by the governing boards of the individual CCAs, which would be run by local government leaders.
Those decisions would include from where the CCAs buy power; how much of that power would come from solar, wind and other renewable sources or if generators burning fossil fuels and some waste products might be in the mix; and how any profits are spent.
Options for using those profits include reducing rates for customers or funding incentive programs for homes and businesses to become more energy efficient, the experts said.
In any of these decisions, business people should be at the table, whether it’s at the beginning stages, as Fresno is doing, or when its farther along, as in Hanford, or if an authority is fully formed, as in Marin and Lancaster, said Barry Vesser, deputy director of the nonprofit Center for Climate Protection in Santa Rosa, one of the invited speakers.
Business input crucial
“A CCA will allow Fresno to have a say in how that looks, not just leaving it to a state or major utility,” he said, adding that businesses need to be part of this if Fresno or any other Valley cities go forward, “because if you want the kind of program that will serve local business interests and will help grow the economy here, you want to be part of helping develop that.”
As for what CCAs are, they stem from a 2002 law passed by the California Legislature allowing communities in the state to combine the electricity loads of their residents and businesses into community-wide electricity aggregation programs.
Not that a CCA could completely break free from Pacific Gas & Electric, Southern Californian Edison or one of the other investor-owned utilities.
What the law does is give the CCAs more local control, specifically the ability to chose from where they buy power. They also have the authority to own and run their own electrical sources — including solar and wind farms — though so far the 19 existing CCAs in California largely buy their power from businesses that generate electricity, as PG&E mostly does, the advocates told the audience.
CCAs being able to choose from whom they buy their power creates a more competitive market, so the CCAs may negotiate more favorable rates for their electricity than the utilities could, explained Mike Dozier, a Clovis-based, independent energy consultant.
So communities can work with energy suppliers closer to their areas, helping keep the money they pay local, or they could pay for power generated from far away, he said.
The distance isn’t important from a technical standpoint, because a supplier doesn’t actually direct power to a particular city. Instead, the power is fed from the source into the electrical grids operated by the big utilities, and communities draw from it like farmers drawing their portions of the water they’re entitled to from a reservoir, Dozier explained.
This also allows individual power customers to decide to opt out of their respective CCAs and continue being customers of the utilities.
As such, even in a Valley community that forms a CCA, customers would still pay the electrical distribution costs — usually about 60 percent of an electric bill — and the utilities still own and maintain their electrical infrastructure and handle the customer billing, he said.
An effort had been underway years ago to create the state’s first CCA in the Valley, but the Great Recession helped ground it in 2008, Dozier said.
CCAs come into their own
The first started in Marin in 2010, and since then more have formed, serving 60 cities and parts of 20 counties.
The question of whether to start a CCA is likely to become more prevalent in Fresno and other communities that don’t have them, as this new system of contracting for electricity is gaining momentum.
A newly formed CCA in Los Angeles County is serving 32 cities, and expectations are that Fresno will more actively explore the possibility of forming one in the future. The speakers at the May 2 summit noted that some of the smaller communities interested may wait for Fresno to go forward and — if that happens — then join its CCA.
“And we project that by 2020, [CCAs] will be serving half of the load of the state of California.”
Savings in Hanford
Dozier said Hanford expects to cut electric bills by 10 percent once its CCA is up and running, adding that the chief driver to create the program was to reduce energy costs for Faraday Future, which has been building its first electric car manufacturing plant in a million-square-foot former tire plant on the city’s south end — though financial troubles have so far stalled the project.
While some savings may be considerably less — including the average 2.5 percent savings for Sonoma Clean Power customers — the CCA advocates said it’s important to note that the savings also are hedges against power utilities raising their rates.
“Can it save you money? Absolutely. If you look at PG&E’s record over the past 30 years, it’s basically a 4% [rate] increase every year,” Vesser said.
With the utility having filed for bankruptcy and facing billions of dollars in liabilities for reportedly causing a series of California wildfires in recent years — including the Camp Fire that destroyed more than 21,000 homes in parts of six counties in the northern part of the state — more rate hikes seem inevitable in the near future, he said.
For businesses, the monthly electric bill savings may be less important than the programs the CCAs my impose that could draw new businesses or incentivize existing ones to stay.
Though the audience for the seminar was small, those in attendance seemed highly interested in what was said, among them Mike Betts, CEO of the Betts Co., a Fresno manufacturer of industrial springs and truck accessories.
“The real bottom-line issue for manufacturing is we’re paying three to five times more than we should be paying today,” when compared to electric rates in Texas, Oklahoma and many other parts of the country, as well as other countries, he said after the seminar.
While a 2.5-percent savings may not seem like much, if it allows communities to avoid yearly rate bumps by the utilities, the savings could cumulatively be significant, Betts said.
But if a CCA is formed in Fresno, “Maybe there should be some manufacturers on that board,” to help ensure the decisions it makes are good for businesses here, he noted.
“I like what Hanford is doing because of Faraday. It was focused on an economic incentive of doing business [there] for industry.”
As for whether manufacturers would favor a Fresno CCA, Betts said not enough discussion has occurred to get a good sense of that. But until that happens, “We’ve got to just get the facts, do the research, talk with the other cities that have CCAs.”
Businesses Urged To Help Valley Set Its Energy Future, by David Castellon, The Business Journal, June 4, 2019.