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.

Read more here:

California’s biggest utilities are losing their monopolies. Is that a good thing?

San Diego’s decision to go into the power business was the last straw.

Ever since the city’s announcement last year, San Diego Gas & Electric has been telling state lawmakers it wants out of the business of buying and selling electricity. That may sound like a radical plan for a monopoly utility with nearly 1.5 million customers and annual profits that regularly exceed $500 million.

But given the state’s rapidly shifting energy landscape, it might actually make sense.

California’s three big investor-owned utilities — Southern California Edison and Pacific Gas & Electric are the other two — are losing a growing number of customers to government-run power providers called community choice aggregators, or CCAs. There’s a good chance the monopoly utilities will lose the vast majority of their energy sales to CCAs and other energy providers over the next few years.

And the utilities don’t profit from energy sales, anyway — they’re allowed to charge customers only what they paid for electricity on the market.

But the investor-owned utilities do earn a regulated profit when they invest in infrastructure projects, such as building and operating the poles and wires of the power grid, or installing electric vehicle charging stations. So why not stop signing contracts for electricity supply and become infrastructure companies exclusively?

“We don’t think we should be signing big, long-term contracts for customers that have made a conscious choice to be served by a different” power provider, said Kendall Helm, SDG&E’s vice president of energy supply. “We think our primary role and our primary value is in the safe and reliable delivery of that power.”

Edison and PG&E, whose poles and wires span most of the state, haven’t suggested they’re ready to stop buying and selling power. But they face the same conundrum as SDG&E: Dozens of cities and counties across their service territories are choosing to become their own energy providers.

California had 19 community choice providers serving 2.6 million homes and businesses last year. Nearly 1 million homes in Los Angeles and Ventura counties are being enrolled this month in Clean Power Alliance, the state’s biggest CCA.

Advocates say CCAs empower local officials to set electricity rates for their communities and to increase the use of climate-friendly energy sources such as solar and wind power more quickly than the big utilities.

Read more here:

California’s next climate step: pushing for equitable choices

When it comes to climate action, it will be hard for California to top 2018. Last year legislators passed a law committing our state to 100% emission-free electricity by 2045, and our governor issued an executive order setting the goal of a carbon-neutral economy by the same year.

Now the architects of those initiatives have moved on, and a new crop of leaders faces the enormous task of meeting these goals. What can they do to hit these ambitious targets while also making life better for the people who put them in office?

It’s a moment that calls for big-picture thinking. As experts in environmental economics and urban planning, we see a promising path forward in bundling climate change solutions with initiatives to ease the housing crisis, transportation problems, and income inequality. At the center of this approach is a simple but powerful concept:  choice.

We’re not talking about expanding the kind of choice that the well-off among us are accustomed to enjoying while the people most in need of real options lose out.  Rather, we believe all Californians — including members of low-income and vulnerable communities — deserve choice in terms of where they live, where they work, how they move around, and how they power their lives.

As a first step, we should dramatically increase choice when it comes to housing and transportation. California could launch its own version of a Green New Deal to build millions of units of affordable housing near mass transit and work centers. We could also radically expand options for Californians to conveniently ride transit, walk, bike, share rides, and otherwise avoid the high cost of driving fossil-fuel-powered cars. Improved housing and transportation choice would save countless hours and dollars for Californians who currently have no other option but dependency on gasoline guzzlers.

Tested tools include incentives for local governments and residents to make housing and transportation choices that reduce gasoline dependence, such as retiring polluting vehicles and replacing them with clean cars or transit passes. At UCLA’s Luskin Center for Innovation, our research has found that existing clean transportation incentives could be expanded to cost-effectively reduce pollution while increasing the wellbeing of Californians.

Expanding transportation and housing choices requires government resources. Funding can come from the many revenue-generating policies California already has in place, such as the cap-and-trade program for carbon pollution and the gasoline tax (Senate Bill 1).

In the electricity sector, innovative programs to increase choice are already making a big difference in California’s energy mix. Over the past 8 years, 19 community choice energy programs have emerged across the state. Community choice aggregators respond to local energy priorities, instead of answering to far-flung shareholders like a traditional investor-owned utility would. And as Luskin Center research documents, California communities that are given the choice choose renewable energy: community choice aggregators offered an average of 52 percent renewable energy in 2017.

Read more here: California’s next climate step: pushing for equitable choices

Here’s how local governments are replacing California’s biggest utilities

Seventy miles north of downtown Los Angeles, where the Mojave Desert gives way to the San Joaquin Valley, three newly built wind turbines stand atop a ridge overlooking State Route 58. Strong gusts emerge from the mountain pass below, making this an especially windy spot in one of the windiest parts of California.

A few new turbines aren’t normally a big deal in the Golden State, which has been building wind farms for decades.

But these particular machines are at the heart of a revolution in California’s energy industry, which for millions of people, homes and businesses could mean an end to buying power from monopoly utilities such as Southern California Edison.

The three wind turbines at the top of the ridge — and three others nearby — recently started generating electricity for Clean Power Alliance, a government-run energy provider that is replacing Edison as the power source for more than 1 million homes and businesses across the Southland. Twenty-nine cities have joined Clean Power Alliance, as have unincorporated areas in Los Angeles and Ventura counties.

Residents of those areas will start receiving electricity from Clean Power Alliance in February. Edison will still distribute power over the poles and wires of the electric grid, and the Rosemead utility will send out the bills. But the alliance will buy and sell power, set rates and decide what incentives to provide customers for reducing their consumption or going solar.

Clean Power Alliance launched for a small group of customers last year, rolling out electric service to city governments and 30,000 businesses in parts of Los Angeles County. But next month will serve as the alliance’s grand opening. By the end of February, it will be California’s fifth-largest power provider, after Edison, Pacific Gas & Electric, San Diego Gas & Electric and the Los Angeles Department of Water and Power.

That fact is especially striking given Clean Power Alliance’s start-up-like working conditions. The alliance has 13 employees and is based in a WeWork shared-office space in downtown Los Angeles, with living-room-style lounges and Instagram-worthy neon lights.

“We’re not a bunch of people who were running some other public-sector something or other. We’re bringing a business savvy to this that is really important for our size and our ambition,” said Ted Bardacke, Clean Power Alliance’s executive director and a former infrastructure director for Los Angeles Mayor Eric Garcetti.

Read more here: Here’s how local governments are replacing California’s biggest utilities

PUC again tries to help utilities fight their big bear

Until damages and liabilities from wildfires rose from mere hundreds of millions into the multi-billion-dollar range over the last 18 months, California’s big private utilities had no greater fear than the steady expansion of a phenomenon best known by the initials CCA.

That’s short for Community Choice Aggregation, a means allowing electricity consumers in some places to opt out of being served by the likes of Pacific Gas & Electric Co., Southern California Edison and San Diego Gas & Electric Co. Municipally-owned and-operated CCAs generally charge a little less per kilowatt hour than the private companies and provide more energy from renewable sources like wind and solar. They use existing transmission lines to fetch power for their customers.

It’s a nightmare for the utilities, which have already lost cities big and small to CCAs, cutting into their profits a bit. San Francisco Clean Power is a CCA. Marin, Sonoma and Mendocino counties also offer CCA service. Starting next month, customers in 31 Southern California cities plus the unincorporated areas of Los Angeles and Ventura counties will join the biggest-ever CCA unless they opt out in favor of sticking with Edison.

That one will include cities like Ventura and Thousand Oaks, Santa Monica, Manhattan Beach and Calabasas, to name just a few. About one-third of those locales have chosen to give customers 100 percent renewable power unless they deliberately choose dirtier options priced a bit lower. Los Angeles itself won’t join the CCA because it already has the state’s largest municipally-owned utility, the Department of Water and Power.

The latest significant city wanting a CCA is San Diego, where Republican Mayor Kevin Faulconer the other day announced support for an alternative to SDG&E as the best means to fulfill the city’s pledge of running on 100 percent renewable energy by 2025.

Not surprisingly, California’s Public Utilities Commission, which regulates the big utilities and has long favored them over their customers, keeps throwing obstacles in the path of CCA expansion. In January 2018, it passed new rules that essentially delayed establishment of new CCAs for a year. As that time expired, the commission adopted new, higher levies on CCA customers as a way to compensate the existing utilities for expenses of previous power plant construction and long-term power purchase contracts they signed during the energy crunch almost 20 years ago. Never mind that consumers actually paid for all that via their monthly bills.

“We are updating the formula because everyone agrees it is broken,” newly termed-out Commissioner Carla Peterman, a Jerry Brown appointee, said at the time of the vote.

But not everyone agrees. Some activists, especially in the San Diego area, believe the new, higher charges – significantly more there than what’s paid by consumers leaving PG&E and Edison – are excessive.

“This is dangerous because it defeats the aim of better prices by CCAs than established utilities,” said Bill Powers, a San Diego energy engineer who helped California fight off utility plans to import high-priced foreign-sourced liquefied natural gas through Ventura County in the early 2000s. “In San Diego, it could set up an almost impossible burden for any new agency.”

Read more here: PUC again tries to help utilities fight their big bear

State Threatens Viability of East Bay Green Energy Program

Just as Alameda County was launching a new, publicly owned electricity service offering greener electricity at lower prices than PG&E, state regulators put a big new obstacle in its path. A little-noticed decision in October by the California Public Utilities Commission will raise the monthly “exit fee” that customers of East Bay Community Energy and other “community choice” programs have to pay to utility companies like PG&E.

The fee is intended to compensate the companies for “unavoidable expenses” they incurred to procure electricity for customers who now buy their electricity from community choice agencies. But environmentalists say the higher exit fees threaten the viability of community choice agencies like East Bay Community Energy, which offers renewable energy sources to residents and businesses in Oakland, Berkeley, and nearby cities.

CPUC commissioner Carla Peterman, who proposed the plan, said the changes “insure a more level playing field between customers,” so those who stay with traditional utilities “don’t get stuck paying back the costs for power that was bought for customers who now are served by community choice.”

But advocates of community choice call the new formula unfair and dangerous. According to a letter from 120 public officials — including the mayors of Oakland, Berkeley, Richmond, Albany, San Francisco, and San Jose, along with many members of Bay Area city councils and county boards of supervisors — it “would significantly and unfairly increase exit fees charged by big corporate utilities and threaten current and future community choice energy programs — the very programs that are helping the state exceed its emissions-reduction targets.”

Four Bay Area community choice agencies — MCE, Sonoma Clean Power, Peninsula Clean Energy, and CleanPower SF — have joined several statewide advocacy organizations in petitioning the CPUC to reconsider its decision. A spokesperson for the CPUC said it will “consider the applications and make a determination.”

The CPUC argues that raising the fee — technically called the “power charge indifference adjustment,” or PCIA — would mean only a small increase in customers’ bills. But according to the public officials’ statement, that small increase could “significantly jeopardize [community choice programs’] ability to invest in long-term renewable resources and customer programs.”

Nick Chaset, CEO of East Bay Community Energy, told the Express that EBCE is “very disappointed” with the CPUC’s decision. “We feel like they did not provide enough analysis to justify their plan and very little analysis of the impacts of the wholesale changes they made.” He also said that the commission has not yet set the PCIA rate for 2019, so “we don’t know what we’re on the hook for.”

The new PCIA will lower electricity bills for customers of utility companies and raise fees charged to community choice customers. This threatens the whole business model of EBCE, which pegs its rates at 1.5 percent lower than PG&E. “We remain committed to delivering lower-cost green energy,” Chaset said, although “we may have to narrow our discount.”

The higher exit fees will leave EBCE will leave with less money for operating expenses and community programs. “Nothing has been decided yet” about how to meet this challenge, Chaset said, but “we will be looking at cost-cutting measures.”

Critics charge that the new formula lets utility companies make any investment or spending decisions they want with no accountability on the basis of information that’s not available to the public. They say the utilities have paid inflated prices and made investments that were unwise because they already knew customers would be leaving for community choice programs.

The formula adopted by the CPUC “reward[s] big corporate utilities for mismanaging their energy portfolios,” says the letter from public officials. Weinrub speculates that the utility companies might even deliberately sell their extra electricity at low rates, so they could raise the PCIA.

Allowing the PCIA to keep rising, critics say, also creates uncertainty that makes it impossible for community choice agencies to figure out how to set their own rates.

Regardless of the technical details of the formula, Weinrub concluded, “The whole issue is political, representing different interests, and has to be decided on that basis. How to determine PCIA fees is all arbitrary, and the question is whether you’re going to be arbitrary on the side of our communities or arbitrary on the side of the monopoly utilities.”

Read more here: State Threatens Viability of East Bay Green Energy Program

Monterey Bay Community Power expands, adds two San Luis Obispo cities

Less than a year after its launch, Monterey Bay Community Power is expanding outside the area.

On Wednesday, the community power agency board unanimously approved the addition of the cities of San Luis Obispo and Morro Bay to its service area. The move, which still needs to be approved by the state Public Utilities Commission, would add about 29,000 new customers to the “community choice aggregator” power agency and push the local community power agency’s customer base to more than 300,000.

The tentative date for the two new members to be operating under a revised agreement is January 2020. The CPUC now requires CCAs to wait a year to start service for new members and the CPUC must also review and approve an implementation plan next year.

Monterey Bay CEO Tom Habashi noted the cities are part of the continued growth at a “remarkable rate” in CCAs across the state.

“Here on the Central Coast, this new partnership with the cities of San Luis Obispo and Morro Bay affirms our region’s longstanding commitments to environmental stewardship and economic stimulation,” Habashi said. “Our team is really excited to bring these cities into the fold and we hope more communities in our region and across California follow in their footsteps.”

Read more here: Monterey Bay Community Power expands, adds two San Luis Obispo cities

California community choice aggregators seek rehearing

Community choice entities and advocates in California have filed a petition asking the state’s Public Utilities Commission to revise its decision on the exit fee customers have to pay when departing from investor-owned utility service.

The California Community Choice Association, along with CleanPowerSF and Solana Energy Alliance, are asking the PUC to rehear its October 11 decision on the Power Charge Indifference Adjustment, or PCIA, that investor-owned utilities charge community choice aggregation and other departing load customers to compensate for electricity generation built or contracted in the past at prices that are now above market.

Several other parties have also petitioned the PUC for rehearing on the PCIA decision, including California Large Energy Consumers Association and the Direct Access Customer Coalition, Shell North America, and a joint application by Peninsula Clean Energy, Sonoma Clean Power Authority and Marin Clean Energy.

In the California Community Choice Association filing, the community choice entities say the PUC’s decision will result in a “sharp increase in PCIA rates” for community choice customers and may make it uneconomic to launch new community choice entities.

“The PCIA decision fails to ensure equitable treatment of all market participants in California,” Beth Vaughan, executive director of the California Community Choice Association, said in a statement. “It favors incumbent utilities by shifting costs, including recovery of shareholder returns, from IOU bundled customers to CCA customers.”

Read more here: California community choice aggregators seek rehearing

How Peninsula Clean Energy is bringing renewable energy to San Mateo County

An assortment of elected officials from across San Mateo County crammed into two vans on a recent morning and headed inland. Their destination: Los Banos.

Their route was a winding roadway through the Pacheco Pass, with dry, brown hills in every direction – a desolate California, far from the foggy sea, lush Santa Cruz Mountains or oaky chaparral that characterize their home jurisdictions.

Local council members Jeff Aalfs of Portola Valley and Rick DeGolia of Atherton (above) have been active players in the county’s efforts to create Peninsula Clean Energy. (Photo from Rick DeGolia.)

Only one hiccup occurred when one of the vans got stuck on a pile of rocks on the dirt road leading up the hill. After the officials had been safely transferred to another van, they were deposited at their dusty destination, the literal end of the road that had a large shade structure, tables, a dais with a microphone, a team of supporters and collaborators, and a collection of golden shovels.

They had made the journey for the Oct. 11 groundbreaking of what’s called the “Wright Solar Project,” the installation of a solar farm that is going to be a 1,200-acre, 200-megawatt collection of solar panels that will provide between 500,000 and 600,000 megawatt hours a year of electrical power to meet the energy needs for about 15 percent of San Mateo County.

The Wright Solar Project is so far the largest solar power plant ever commissioned by what’s called a “community choice energy” provider in California, according to Peninsula Clean Energy (PCE), a community choice energy program that San Mateo County formed in February 2016.

Solar power now comes at a lower cost than many other alternatives, the cost is known up front, and in this case, it will create an estimated 400 local, union jobs during the construction and upkeep phases of the project, he said. According to George Hershman, president of Swinerton Renewable Energy, the firm building the project, renewable energy employs more people than the coal, oil and gas industries combined.

Read more here: How Peninsula Clean Energy is bringing renewable energy to San Mateo County

Monterey Bay Community Power signs on to new solar agreements

Monterey Bay Community Power’s recent signing of two long-term solar renewable energy project development agreements, in partnership with Silicon Valley Clean Power, has helped the state’s community choice aggregators surpass a significant milestone, even as they deal with the fallout from a California Public Utilities Commission decision on so-called “exit fees.”

The local agency’s power purchase agreements with two solar projects to be built in Kern and Kings counties pushed the state’s community choice aggregators over 2,000 megawatts in long-term contracts with renewable energy facilities, more than double last year’s total.

The contracts, signed Oct. 25, total 278 megawatts of solar power combined with 340-megawatt hours of battery storage for two separate projects, including a 15-year deal with Slate 1 by Recurrent Energy in Kings County and a 20-year deal with BigBeau Solar by EDF Renewables North America in Kern County. The former is the largest utility-scale, solar-plus-storage project to be built in the state.

Combined, the two projects are expected to power 32,000 local customer homes annually and provide 840 temporary jobs during construction with commercial operation set for 2021, according to Monterey Bay Community Power.

“We are excited to bring online the largest California solar-plus-storage by (community choice aggregators) to date,” Monterey Bay Community Power CEO Tom Habashi said. “Solar development has been a hallmark of California’s renewable energy boom and with the storage component we can realize the full potential of solar generation.”

California Community Choice Association executive director Beth Vaughan noted the milestone reflects the strong commitment by the state’s 19 community choice aggregators serving 8 million customers statewide to drive clean energy and economic development in California and help the state achieve “ambitious decarbonization and climate change goals.”

“This is a significant achievement for the (community choice aggregator) movement in California,”: Vaughan said. “It shows (community choice aggregators) are ready, willing and able to sign long-term contracts with renewable energy projects, fueling new sources of clean energy, job creation and revenue for host communities.”

Meanwhile, two of the state’s community choice aggregators, CleanPowerSF and Solana Energy Alliance, filed an application with the CPUC on Monday for a rehearing of the commission’s early October approval of a revised Power Charge Indifference Adjustment or “exit fee,” which charges customers who join community choice aggregators such as Monterey Bay Community Power for costs incurred by their previous investor-owned utility such as PG&E before they left.

Read more here: Monterey Bay Community Power signs on to new solar agreements