Community Corner
San Bruno CA: Receive Report on the Community Choice Aggregation Program in San Mateo County
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San Bruno CA City Council Agenda Item:
DATE: October 13, 2015
TO: Honorable Mayor and Members of the City Council
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FROM: Jimmy Tan, Deputy Public Services Director/City Engineer
SUBJECT: Receive Report on the Community Choice Aggregation Program in San Mateo County
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BACKGROUND:
In 2002, California passed AB 117 which enables public agencies and joint power authorities to aggregate electricity demands of their constituents to more easily acquire electricity from preferred sources. Since this legislation was passed, a number of cities and counties have joined a Community Choice Energy or Community Clean Energy (“CCE”) initiative, also referred to as Community Choice Aggregation (“CCA”). A CCA enables a city, county or group of cities and counties to pool electricity demand and purchase/generate power on behalf of residents, businesses and municipal facilities within their jurisdictions offering residents a choice to purchase power with higher renewable content.
Currently, there are three CCAs operating in California: Marin Clean Energy, Sonoma Clean Power and Lancaster Choice Energy. The County of San Mateo is in the exploration stages of creating a countywide CCA program. On February 24, 2015, the San Mateo County Board of Supervisors voted unanimously to allocate $300,000 for the completion of the first phase of the CCA project and directed their staff to undertake the necessary steps which includes public outreach and completion of the technical study to evaluate the feasibility of the CCA program for the unincorporated county and its cities. The County’s Office of Sustainability contracted with Pacific Energy Advisors, Inc. (PEA) to perform the technical study which analyzes local electricity load data, historic and current pricing, and other factors to determine whether the CCA program can meet economic, environmental and consumer benefit goals. The draft document was completed on September 18, 2015 and distributed for review to all agencies within the County.
The County also established a CCA Advisory Committee for local governments, community stakeholders and public to learn about and provide feedback on matters related to the CCA program. City Council member Salazar represents San Bruno on the committee. The first meeting was on May 28, 2015 and meetings have continued monthly. The committee members are requested to perform three primary functions throughout the formation process:
1. Represent the views of their constituency in their comments and decision-making;
2. Serve as an information channel back to their colleagues and community, providing liaison report and/or opportunities for County representatives to provide status reports and briefings; and
3. Help identify issues of concern and opportunities to educate about the CCA in San Mateo County.
This report provides an update on this San Mateo County process to consider the feasibility of establishing a CCA program in our region. No action is being proposed by the City at this time. For further information and minutes of the CCA Advisory Committee meetings, please go to the County’s website at http://green.smcgov.org/cca.
DISCUSSION:
The cities within the County presently receive their electric services through Pacific Gas & Electric (PG&E). Through the CCA program, the CCA and PG&E will partner to deliver electricity to its service area. CCAs are essentially responsible for the electric generation (procure or develop the power) on behalf of the residents, businesses and municipal facilities. The electricity is continued to be distributed and delivered over the existing electricity lines through PG&E who continues to own the grid, distribute power, maintain the power lines, and issue consumers monthly bills.
One of the main goals of the CCA program is to give customers a choice between purchasing electricity from PG&E or the CCA with a possibility of providing a lower cost that is between 3%-10% lower than PG&E rates. The other goal is to purchase and develop electricity sources that are more heavily weighted toward renewable energy and carbon free power resources to reduce greenhouse gas emissions which are a leading cause of pollution, climate change and unhealthy air quality. Once the City decides to join the CCA program, all customers within that jurisdiction are automatically enrolled into the program. However, individual customers can choose to not participate or opt-out and return to PG&E as their direct electricity provider. State law requires that customers be informed about the opt-out option and shall receive several notifications before and after the CCA program launches. When the customer decides to opt-out, they will be reverted back to PG&E and need to stay with PG&E for one year before transferring back into CCA program. Administration fees may be required for opting-out after the program launches.
Although participating in the CCA program has benefits for the customers within the jurisdiction and environment, it is not without risk. Some of the risks fall into the following four categories:
1. Rate risk — the risk that CCA’s rates are higher than those offered by PG&E.
2. Opt-out risk — the risk that customer opt-outs are too high and the program is thus economically infeasible.
3. Operational risk — the risks associated with commodity, credit, vendor default, poor management and oversight.
4. Legislative/regulatory risk — the risks associated with unfavorable state legislation or regulation that could threaten or harm the program.
To minimize the risk, the CCA proposes to post a bond in the amount of $100,000 so that in the event of the program failure, CCA customers are returned to PG&E services without interruption or financial penalty for the customer or the member jurisdictions of the CCA/JPA.
The CCA program will require a formation of a Joint Powers Authority (JPA) which is a legal agreement between public agencies that share a common power to jointly implement programs, build facilities or deliver services. The County will oversee the start-up and formation of the the CCA program and the JPA. Local agencies that want to participate in the CCA program will be required to pass an ordinance to enable the customers to enroll into the program. The JPA agreement would need to be signed by the local agency as well. The City may withdraw from the CCA program at any time; however, the customers within the jurisdiction will remain with the program unless they withdraw on their own.
In regards to the implementation schedule for the formation of CCA program, the county established the following three phases:
1. Pre-planning and due diligence – consists of workshop and education about CCA; performing technical study; establishing internal planning team and formation of CCA advisory committee
2. Community outreach; CCA planning and development – consists of JPA formation; developing CCA program; public outreach; implementation of local ordinances and preparation of RFP for energy services.
3. Preparing for launch – consists of completing utility service agreement; drafting energy supply contracts; performing regulatory registrations and formation of call center and customers
The County has completed Phase 1 and is currently in Phase 2 which is scheduled to be completed in April 2016. Phase 3 is tentatively scheduled for completion in September 2016.
FISCAL IMPACT:
This report is presented for City Council and community information. Staff is preparing to come back to Council at a future date for a study session, reading of an ordinance and consideration of a JPA agreement.
ALTERNATIVES:
1. None—this report is presented for information only.
RECOMMENDATION:
Receive Report on the Community Choice Aggregation Program in San Mateo County.
Source Credit: City of San Bruno CA
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