Posts

Revised PG&E ‘exit fee’ impact to vary on MB community power, customers

MONTEREY — Despite statewide and local warnings about the potential impact of a revised Pacific Gas & Electric Co. “exit fee” approved by the California Public Utilities Commission last week, Monterey Bay Community Power officials said the relatively new power agency is sticking to its promise to keep their bills lower than PG&E’s and is well-positioned to absorb the change.

On Thursday, the CPUC approved an alternate proposal backed by Commissioner Carla Peterman that gave PG&E more leeway on charging former customers, including those now signed up for a growing number of community choice aggregation agencies such as Community Power, an annual exit fee (also known as a power charge indifference adjustment fee) for contracts and other investments the corporation made in anticipation of its power needs before millions of customers fled to community choice aggregation agencies. The fee is designed to ensure PG&E’s customers don’t pay more than their fair share of those costs.

Ahead of last week’s vote, Community Power issued a press release that featured local community leaders speaking out against the alternate proposal, arguing it could “derail” the state’s clean power programs and increase energy fees for residents, businesses and families, and inviting people to send letters to the CPUC opposing the alternate proposal and in favor of a proposed decision seen as friendlier to community choice aggregation agencies.

In the wake of the CPUC’s decision, Community Power director of communications and external affairs J.R. Killigrew said the agency’s customers will still see lower bills than they would have under PG&E due to an agency rebate that is actually supposed to increase next year along with the exit fee, which could rise by as much as 25 percent, according to Community Power.

“We are still fully committed to matching and lowering PG&E rates,” Killigrew said.

And Killigrew said the agency’s strategic planning has it poised to absorb the increased exit fee and the uncertainty associated with future related costs while continuing to invest in local clean energy programs.

“We won’t see as much impact as others because we planned,” Killigrew said.

Where the revised exit fee could directly affect Community Power and its customers is in its future revenue, which could be reduced by about $40 million annually, falling from about $260 million to about $220 million and cutting the agency’s surplus — estimated at $30 million for next year but potentially $6-$7 million higher without the revised exit fee — for programs like customer bill rebates, local clean power programs and reserves, which help build the agency’s credit rating and borrowing capacity for clean power projects.

“It makes it harder for Community Power to set aside reserves for local energy generation programs,” Killigrew said. “It’s harder for us to re-invest in the region like we’d like to.”

Longer term, Killigrew said the CPUC decision greatly expanded how long PG&E can continue charging community choice aggregation agency customers the exit fee and for what, as well as leaving unaddressed a potential buyout of the fee-associated costs, all of which leaves Community Power and other similar agencies in a state of uncertainty that hampers long-range planning.

“It’s more difficult to plan when you’re in a reactive state,” he said. “It’s better to have a fixed (exit fee).”

In the final analysis, Killigrew dismissed the idea that the revised exit fee is the beginning of the end of community choice aggregation agencies in the state, which has been suggested by some.

 

Revised PG&E ‘exit fee’ impact to vary on MB community power, customers, by Jim Johnson, Monterey Herald, October 15, 2018.

Marin-based energy aggregator decries state-approved fee hike

An MCE official calls the California Public Utilities Commission’s decision last week to require customers to pay more in exit fees to investor-owned Pacific Gas & Electric Co. a flawed approach that unfairly shifts costs to customers.

But CEO Dawn Weisz said it won’t deter the community-choice aggregator from its core mission of “providing cleaner power at stable rates, reducing greenhouse gas emissions, and investing in local programs.”

Formerly known as Marin Clean Energy, MCE has seen sharper increases in the exit fee in past years, Weisz said. In January 2016, the PUC approved nearly a doubling of the fee.

“We’ve always maintained competitive rates with a lot of stability,” Weisz said, “and we’ll continue to do that.”

Supervisor Damon Connolly, who formerly served as chairman of MCE’s board, wrote in an email, “At a time when we are seeking to incentivize people to sign up for clean energy sources like MCE Clean Energy to meet Marin and California’s ambitious climate goals, this decision goes in the opposite direction by making it harder to do so.”

Richmond Mayor Tom Butt, an MCE board member, said, “All the community-choice aggregators are trying to do the right thing. They are on the front line addressing climate change and to get whacked down by a public agency, particularly in California, is really disappointing.

“The CPUC is basically a surrogate of the investor-owned utilities,” Butt said. “They have huge power over the CPUC commissioners, and I don’t know why. These people all get appointed by the governor, and the governor is supposed to be friendly to people who are trying to do something about climate change.”

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.

Weisz, however, says that PG&E shareholders should bear more of the cost for the utility’s poor decisions in building power plants and purchasing power. For example, Weisz said that in the early 2000s PG&E built a number of natural-gas-fired power plants that now might not be needed.

 

Marin-based energy aggregator decries state-approved fee hike, by Richard Halstead, Marin Independent Journal, October 15, 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.

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

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

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

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

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

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

###

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

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

Press release is here.

FOR IMMEDIATE RELEASE: October 11, 2018

Press Contact: Leora Broydo Vestel

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

Here’s what customers might pay if they leave SDG&E for a community choice alternative

In one of its most closely watched decisions of the year, the California Public Utilties Commission is scheduled to vote Thursday on one of two proposals dealing with the exit fees customers pay if they leave investor-owned utilities like San Diego Gas & Electric and opt for a government-run alternative.

“It’s a bigger issue that we all need to be talking about,” said Beth Vaughan, executive director of California Community Choice Association, a trade group dedicated to promoting what is called Community Choice Aggregation, or CCA, which allows any city, county or combination thereof to form an entity to take over the responsibility of purchasing power for their communities.

Under the CCA model, utilities like SDG&E still maintain transmission and distribution lines (such as poles and wires) and handle customer billing. But the CCA purchases the sources of electricity, with municipal government officials ultimately making the final decisions on power purchases.

Since the first CCA was established in the state in Marin County in 2010, the numbers have grown with many CCAs boasting they have greener portfolios than utilities. Last month, the 19th CCA in California went online and San Diego’s City Council and Mayor Kevin Faulconer are seriously considering adopting a CCA as well.

But once a CCA is established, its customers must pay an exit fee (called a Power Charge Indifference Adjustment) to the utility each month to offset the costs utilities have racked up building things like natural gas power plants over the years — all with CPUC approval. In addition, utilities have been directed to develop renewable energy projects to meet the state’s aggressive climate targets.

The exit fee is at the center of Thursday’s hearing in San Francisco.

Using a complex methodology, the CPUC determines the exit fee’s amount (which is different for each of the state’s three investor-owned utilities). The five members of the commission are adjusting the fee and will consider two different proposals.

The first, submitted by a CPUC administrative law judge, is lower than the other, which has been proposed by Commissioner Carla Peterman.

Roughly speaking, the current exit fee for SDG&E’s service territory is 2.5 cents per kilowatt-hour for residential customers.

Under the administrative law judge’s proposal, the fee for residential customers would go up to 3.46 cents per kilowatt-hour. Under Peterman’s plan, it would go up to 4.25 cents.

If the exit fees are too high, CCAs complain customers have less financial incentive to opt out of the utility model. If the fees are too low, power companies complain they are not being fairly compensated for their infrastructure costs.

CCA supporters have criticized Peterman’s proposal.

If passed, Vaughan said it “could have a sharp increase in costs from the CCA side of the equation. So when we look at what CCAs do and all the programs they bring and everything else, the question is, can CCAs still launch?”

Saying, “I’m optimistic CCAs will still persist,” Peterman pushed back on claims her plan is weighted toward utilities and said the commission is obligated to look out for customers who decide to remain with utilities as well as those who opt for community choice.

“Of course, if there is a cost that goes up that’s going to have some impact in terms of how an organization is going to decide to move forward,” Peterman said. “But based on the cost estimates that we have, we don’t think these costs are so extreme as to be the driving factor.”

Peterman said the two competing proposals were very similar. The difference, she said, lay primarily on her submission taking into account costs of utilities’ “legacy” projects — such as the soon-to-be shuttered Diablo Canyon Nuclear Power Plant and some natural gas facilities in SDG&E’s service territory.

“It is important to fix this now so that communities like San Diego can go forward with accurate information about their cost obligations and then form their CCA in a manner that is sustainable,” Peterman said. “It may not be the outcome some folks love, but I think it’s providing some certainty going forward.”

Vaughan wants Thursday’s vote to be delayed until Oct. 25, citing the fact that Peterman’s proposal was revised last Friday.

“We need some clarification” about the changes, Vaughan said.

The mayors of San Francisco, San Jose and Oakland also called for a delay, issuing a joint statement Tuesday that called the process “rushed, opaque and with little concern for rate-paying customers.”

In an email, Peterman said the revisions “make very limited substantive changes” to her proposal and mentioned the commission already postponed a previously scheduled vote last month.

“This proceeding has been an open and transparent process from the beginning with many parties poring over thousands of documents,” she said. “The evidence in the case has been submitted and the case has been closed for some time now.”

Proposed CCA Exit Fee (PCIA)

For San Diego Gas & Electric’s service territory

Administrative Law Judge proposal:

Residential forecast: 3.46 cents per kilowatt-hour

Medium to large commercial forecast: 2.17 cents per kilowatt-hour

Commissioner Peterman proposal:

Residential forecast: 4.25 cents per kilowatt-hour

Medium to large commercial forecast: 2.67 cents per kilowatt-hour

Source: CPUC

 

Here’s what customers might pay if they leave SDG&E for a community choice alternative, by Rob Nikolewski, The San Diego Union-Tribune, October 10, 2018.

CalCCA Calls on Commission to Reject Alternate PCIA Proposal

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

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

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

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

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

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

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

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

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

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

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

###

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

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

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

Peninsula Clean Energy CEO Comments on Global Climate Action Summit

REDWOOD CITY, Calif. – September 6, 2018 – The Global Climate Action Summit to be held September 12-14 in San Francisco will delve into transformational change taking place in the U.S. energy sector, including the impact of Community Choice Aggregation agencies on electricity customers and renewable resources.

“High on our interest list is how CCAs are answering the critical need to invest in new renewable resources for their own power portfolios,” said Jan Pepper, Peninsula Clean Energy’s CEO.

“PCE is addressing that need,” said Pepper, who was instrumental in creating the green power exchange in California in the 1990s resulting in the first RECs (Renewable Energy Certificates), a process that evolved into today’s currency for trading renewable power.

Peninsula Clean Energy begins construction October 11 on the largest new solar facility in California underwritten by and for a specific CCA.

Pepper, recipient of the Green Power Leader of the Year in 2017 by the US EPA and the Center for Resource Solutions, is available for interviews prior to and during the Global Climate Action Summit.

Contact

Jan Pepper, CEO

jpepper@peninsulacleanenergy.com

M: 650.260.0100

 

About Peninsula Clean Energy

Peninsula Clean Energy (PCE) is San Mateo County’s official electricity provider. PCE (www.PeninsulaCleanEnergy.com) is a public local community choice energy program that provides all electric customers in San Mateo County with cleaner energy. PCE also saves customers more than $17 million a year with its low rates. PCE, formed in March 2016, is a joint powers authority made up of the County of San Mateo and all 20 cities and towns in the County. PCE serves approximately 290,000 accounts.

Media Contact
Kirsten Andrews-Schwind

Peninsula Clean Energy

kandrews-schwind@peninsulacleanenergy.com

M: 650.260.0096

Agency Contact

Tom Mertens

tom@krause-taylor.com

M: 408.234.6881