Will the CPUC reject illegal cost shifts onto millions of Californians served by Community Choice Energy programs?

More than 160 cities and counties throughout California have chosen to participate in community choice aggregation (CCA) over the last eight years. There are 19 CCA programs operating successfully across California — from Humboldt County to Los Angeles, Placer County to Monterey Bay. Community choice is proving to be a powerful force in driving greenhouse gas emissions reductions, keeping energy costs down, providing transparency and accountability, and investing in innovative programs and projects to meet the needs of millions of Californians in their local communities.

The future of CCA in California hangs in the balance, however, due to proposed reforms to the so-called Power Charge Indifference Adjustment (PCIA) that would illegally shift costs from bundled, investor-owned utility (IOU) customers to CCA customers.

Instead of adopting these reforms, the California Public Utilities Commission (CPUC) should consider a set a common-sense adjustments to the PCIA that will ensure equity and stability as California’s continues to move forward to decarbonize. The CPUC is scheduled to decide on the PCIA reforms on October 11.

A quick introduction to CCAs and the PCIA

Community Choice Aggregators are local governmental agencies buying electricity for their community members in place of investor-owned utilities like PG&E, SCE and SDG&E. The county of Alameda, along with many cities in the county, created East Bay Community Energy (EBCE) to accelerate deployment of GHG-free energy, and to invest in the community EBCE serves.

CCA customers must pay ongoing charges to the IOUs for the unavoidable, above-market costs of power supply commitments entered into by the IOUs while CCA customers were still served by the IOU. The single largest such charge is the PCIA — state law requires it be set in a manner that avoids shifting costs between either CCA or IOU customers.

The PCIA has been controversial. Both CCAs and IOUs claim the current PCIA methodology unfairly shifts costs onto their respective customers. Right now, the CPUC is considering two proposals that would change how the PCIA is calculated.

Unfortunately, the two proposed decisions currently under consideration by the Commission both have fatal methodological flaws that result in significant — and illegal — cost shifts on to CCA customers. Based on PG&E’s own analysis, the “Alternative Proposed Decision” (APD) would result in a greater than 18% increase in the PCIA rate and more than $300 million in cost shifts — and increased bills — onto millions of CCA customers across California, including the hundreds of thousands of CARE customers currently served by CCAs.

Table 1 – Comparison of current PG&E PCIA and APD PCIA
DL Charges PCIA
2019 APD $1,173.3 3.11
2018 ERRA $872.9 2.62
$300.4 18.7%

The Commission has an opportunity to make some straightforward changes – based on well understood energy market dynamics — to their PCIA proposals that can fix the key methodological flaws and ensure that the PCIA treats both CCA and utility customers fairly.

Read more here: Will the CPUC reject illegal cost shifts onto millions of Californians served by Community Choice Energy programs?

Many Bay Area residents already meeting Jerry Brown’s carbon-free energy goal

California is setting an ambitious goal to source all of its electricity from carbon-free sources by 2045. Governor Brown signed a bill Monday in Sacramento that also calls for the state’s utility companies to generate 60 percent of their energy from renewable sources-wind, solar, hydro-by 2030. That’s a 10 percent increase in the existing mandate. However, there’s no penalty for the carbon-free goal if not met.

“It’s not going to be easy and will not be immediate, but it must be done,” said Brown. “California is committed to doing whatever is necessary to meet the existential threat of climate change.”

Residents in many parts of the Bay Area are already getting their power from renewable sources. They’ve also achieved the Governor’s carbon-free goal.

The main provider of clean energy in the Bay Area is a collection of seven community agencies, including Silicon Valley Clean Energy. In just over a year’s time, it is already meeting the Governor’s goal of carbon free electricity by 2045.

“From the time that we first began our service in April 2017, our default product has been carbon free and 50 percent renewable,” said Pamela Leonard, community outreach manager at Silicon Valley Clean Energy.

Watch it here: Many Bay Area residents already meeting Jerry Brown’s carbon-free energy goal

City-Owned Utilities Are Good Even for Cities That Don’t Choose Them

Public energy programs are launching across California, with 19 programs currently serving customers and many more being developed. Community choice aggregators, or CCAs, are paving the way for California to achieve its ambitious climate targets while providing customers with continued reliable and affordable energy.

Most operational CCAs in California have goals of procuring power from greener, carbon-free energy sources. Six local cities — Chula Vista, Del Mar, Encinitas, La Mesa, San Diego and Solana Beach — have distinguished themselves as state leaders by establishing their goals of 100 percent clean power by 2035, or sooner. The creation of CCAs could be instrumental in achieving these goals.

Until recently, investor-owned utilities like San Diego Gas & Electric enjoyed a virtual monopoly on supplying power to energy customers in California. This meant that, with no other options for consumers, utilities were guaranteed customers.

Then in 2002, in the wake of the energy crisis, the California Legislature passed a law that enabled the creation of CCAs, allowing local communities to take control of the energy they buy and easing constraints on competition that contributed to the crisis.

Over the last few years, CCAs in California have been introducing greater options for communities to access clean renewable energy and delivering local programs that benefit residents and businesses, rather than utility shareholders. Yet, despite their success, we’ve seen some fear-mongering and misinformation surrounding the creation of a CCA in San Diego. These assertions are unsubstantiated. Specifically, the notion that SDG&E customers who are not part of a CCA carry an additional cost burden is simply not true. The law requires that both classes of rate payers — utility customers and CCA customers — be treated equally and that neither group bears the financial burden of the other.

In a technical study completed last year, the city of San Diego found that a CCA could deliver more renewable energy while saving city residents and businesses money over time compared with SDG&E. Meanwhile, a third-party review of a competing proposal by SDG&E found that the utility’s approach was short on details and raised more questions than it answers. SDG&E’s proposal “gives little or no information about the approach, costs, or risks,” the review said.

In June, Solana Beach launched the first CCA in San Diego County in large part to meet its Climate Action Plan goals, offering a cleaner default energy product than SDG&E and a 100 percent renewable option. Solana Energy Alliance has been successfully operating since then and is achieving its goals of providing more renewable energy at reduced rates to its customers.

The cities of Encinitas, Del Mar, Carlsbad and Oceanside are currently studying the feasibility of jointly forming a CCA. The final report is anticipated later this year.

We’ve seen throughout California that CCAs are performing as intended — delivering reliable, affordable and clean energy to millions of customers, while exceeding the state’s ambitious climate goals. Breaking up existing utility monopolies in California has introduced fair competition and choice that is driving innovation and cost savings for energy customers.

Read more here: City-Owned Utilities Are Good Even for Cities That Don’t Choose Them

Why PUC should protect clean energy innovation

Santa Clara and San Mateo counties have made major strides in reducing greenhouse gas emissions through our respective Community Choice Energy agencies. Peninsula Clean Energy launched in 2016, and Silicon Valley Clean Energy followed in 2017. These agencies are responsible for buying our electricity, while PG&E still delivers power, maintains lines and sends bills.

In 2017, our combined 32 cities, towns and numerous unincorporated county communities avoided 1.7 billion pounds of carbon from buying clean power. In 2018, our 560,000 customers will collectively save $37 million through lower electricity rates – additional spending power that stays in our region.

A decision before the California Public Utilities Commission threatens our progress and innovation.

The Power Charge Indifference Adjustment (PCIA), is an “exit fee” charged by investor-owned utilities, like PG&E, to customers that switch to another electricity provider such as Community Choice Energy. The fee compensates utilities for power they bought in the past at prices that are now above-market. The calculation methodology of this fee has been the subject of a long-contested regulatory battle.

On Aug. 1, the PUC issued a proposed decision to reform the PCIA. It provides a balanced approach as it maintains the exit fee at reasonable levels, while transitioning to a longer-term solution. The proposed decision is a step in the right direction and supports the legislative intent of the law that created Community Choice Energy in 2002 (AB 117), which provides customers with competitive, clean energy options and transparency through local governance.

However, a couple of weeks later, an alternate proposed decision was issued that significantly favors the utilities and would greatly harm Community Choice Energy programs. The alternate would disrupt energy markets, creating rate instability for millions of California ratepayers already served by the growing Community Choice Energy movement in over a dozen counties from Humboldt to San Diego. If approved, the alternate proposal will reduce competition and choice for California consumers and rule in the favor of private, corporate interests.

The PUC is scheduled to vote on this matter Thursday. We urge commissioners to adopt the original proposed decision that better balances all customer’s interests, whether they are utility customers, or a community choice customer.

The alternate decision, if adopted, would have an immediate destabilizing impact on energy markets. It could potentially affect the launch of some newer community choice programs, curtail the development of new renewable energy projects, and limit Peninsula Clean Energy’s and Silicon Valley Clean Energy’s ability to invest in local energy programs.

Peninsula Clean Energy and Silicon Valley Clean Energy are accelerating energy innovation through local programs that will continue to lower greenhouse gas emissions and advance our state’s climate goals. Such programs include advancing electric vehicle adoption and piloting new energy storage technologies.

Collectively, the two agencies have secured long-term agreements for new renewable energy developments. Peninsula Clean Energy has contracted for a new, 200-megawatt solar farm in the Central Valley under a 25-year power deal. Silicon Valley Clean Energy signed onto a 15-year deal for a new 200-megawatt wind farm in New Mexico that will directly deliver clean power to California’s electric grid. These projects provide enough power for 150,000 homes annually and stand as proof that Community Choice Energy providers are making long-term investments and creating hundreds of clean energy jobs.

Our agencies, while new, already have a proven track record of advancing our clean energy economy decades ahead of state mandates. We must continue making significant reductions in greenhouse gas emissions and investing in new clean energy development and technologies. True to our Silicon Valley spirit, we want disruptive innovation, not disruptive regulation.

Dave Cortese represents District 3 on the Santa Clara County Board of Supervisors and is a member of the Silicon Valley Clean Energy Board of Directors. Dave Pine is president of the San Mateo County Board of Supervisors and is a member of the Peninsula Clean Energy Board of Directors.

Read more here: Why PUC should protect clean energy innovation

 

Fair ‘exit fee’ critical to renewable energy future

While utility responsibility related to California’s devastating wildfires is dominating headlines and the agendas of policymakers, flying below the radar is a pending decision from the California Public Utilities Commission to change the formula for a fee charged to energy consumers who leave the power supply of investor-owned utilities (IOUs) like PG&E and instead get power from local community choice aggregation programs, also known as CCAs. The new formula could radically alter consumers’ energy choices.

CCAs are increasing in popularity in California and for good reason. Authorized by the Legislature to help prevent another energy crisis, CCAs are created and run by local governments to provide clean, affordable energy that meets specific community needs. Unlike the IOUs, CCAs are transparent entities accountable to local policymakers and community members, and available funds are reinvested in local projects, rather than filling the pockets of shareholders.

The PCIA, or Power Charge Indifference Adjustment, is an “exit fee” charged by IOUs to customers that switch to another provider of electricity like community choice aggregation. The charge compensates the utilities for electricity they bought in the past at prices that are now above-market.

How the CPUC designs the new PCIA fee will greatly impact the CCAs’ ability to compete on a level playing field against these titans of energy. For months, key stakeholders have weighed in with their own proposals. The California Community Choice Association, which represents CCA programs in California, designed a win-win proposal that would lower costs for both IOU and CCA electricity customers by $2 billion through smarter, and more accountable portfolio management.

Consumers benefit when they have alternatives and a fair and balanced PCIA assures those options across California. The state should adapt its regulatory structure to encourage investments in clean energy, support local governance (that is people, not profits, focused) and foster competition to keep costs down. A reasonable PCIA is an essential component to a fair and balanced energy market.

Beth Vaughan is the executive director of the California Community Choice Association.

Read more here: Fair ‘exit fee’ critical to renewable energy future

CCAs Can Play a Role in Cleaner Energy Future

California’s policymakers are acting aggressively to reduce greenhouse-gas emissions in an era of federal regression of such policies.

The state’s rapid transition away from fossil fuels has resulted in it achieving its 2020 GHG goals four years earlier than legislative mandates, while supporting a growing economy. The upcoming Global Climate Action Summit this September in San Francisco will showcase California’s clean-energy innovation on the world stage, including the role of community choice aggregators.

Current forecasts show that CCAs, behind-the-meter solar and direct-access providers will serve 85 percent of California’s retail load by 2025. At the same time, there is a rapid transition away from fossil fuels for power generation.

California is experiencing the growing pains associated with any major market transition, but these issues can be addressed by increasing dialogue and collaboration among policymakers and load-serving entities.

As Californians address these challenges together, we should keep the following in mind so the state can continue to be a global leader in combating climate change, prioritizing social equity, ensuring reliability and fostering innovation.

Read more here: CCAs Can Play a Role in Cleaner Energy Future

 

Flipping the switch: Nevada County hosts discussion on Community Choice energy

Nevada County just took its first baby step toward being in control of its power supply, with lower customer bills and 100 percent clean energy as some of the potential benefits.

On Thursday, local government officials and community members got the chance to explore just what it would take to create a community choice aggregation program, at a roundtable hosted by Nevada Irrigation District. These programs are administered by local governments to purchase electricity as an alternative to investor-owned utility sources such as PG&E.

Community choice aggregation is the wave of the future, organizers said. Statewide, there are 18 such programs in existence, including in Placer, Humboldt and Alameda counties.

“This is an opportunity to define our power future,” said Nevada Irrigation District General Manager Rem Scherzinger.

A community choice aggregation program purchases power for its customers and has authority to design its own rate structure and procurement protocols. PG&E would still provide services such as transmission, distribution, metering, billing, collection and customer service. Customers would receive one combined electric bill.

The roundtable featured short presentations from Woody Hastings from the Center for Climate Protection, Gary Saleba, the CEO of EES Consulting, and Tom Habashi, the executive o

Hastings noted that when a community choice aggregation launches, customers are automatically enrolled and would have to opt out if they want to remain customers of PG&E.

“There’s no need for a multimillion-dollar marketing program to get participation,” he said.

According to Hastings, community choice aggregation programs are generating some impressive numbers in California, with thousands of new jobs and millions in savings for customers. In 2016, he said, program customers in California saved more than $33 million and that estimate is expected to climb to $90 million by the end of this year.

Read more here: Flipping the switch: Nevada County hosts discussion on Community Choice energy

Nevada Irrigation District roundtable will highlight community-owned power

Nevada County residents will be able to explore the possibility of controlling their power supply during a roundtable on Community Choice Aggregation on Thursday.

The discussion, hosted by the Nevada Irrigation District, will highlight how Community Choice Aggregation programs are administered by local governments to purchase electricity as an alternative to investor-owned utility sources such as PG&E. Topics will include the basics (the what, why and how of Community Choice Aggregation), potential benefits, the formation process, a case study presentation with “lessons learned,” and a general Q&A.

According to NID General Manager Rem Scherzinger, the water district decided to take the lead on Community Choice Aggregation because it currently is exploring the concepts of “net zero energy” and “carbon-free water.”

Specifically, Scherzinger said, the district wants to make its North Auburn water treatment plant “electrical grid neutral,” where it is either generating its own electricity or uses power generated elsewhere by NID.

The carbon-free water concept is one being implemented by other districts, where the entire water system is being run off sustainable carbon-free power.

“The district sees Community Choice Aggregation as a great opportunity to move toward a carbon-free supply” of power, Scherzinger said. ‘Our problem is, we’re buying power from PG&E, so there’s no control over where that power comes from. This would give us an opportunity to work with PG&E. to design a rate package that has carbon-free power as one of the fee structures.”

Read more here: Nevada Irrigation District roundtable will highlight community-owned power

Lawmakers: Look closely at our energy landscape

The clean energy revolution is here, now, and California is a trailblazer of its success. Solar and wind power, electric vehicle use, rooftop photovoltaics, and community choice aggregation are all on the rise in California.

The traditional centralized, fossil-fuel power plants are now competing with renewable and distributed energy sources, forcing the industry and regulators to adapt, and upending close to one hundred years of power generation and distribution.

The critical question now is what impact this will have on the grid that keeps power flowing to every corner of our state, and how policymakers can balance the multitude of details required to maximize the promise of these technologies to the benefit of all stakeholders.

Next 10’s report The Growth of Community Choice Aggregation: Impacts to California’s Grid, authored by a team of researchers at UCLA’s Luskin Center for Innovation, finds that if current growth trends continue, CCAs may serve a majority of California’s power consumers within the next 10 years, transforming California’s retail electricity sector.

While the study finds that CCAs have had a negligible impact on the grid to date, in the long-term, these CCAs can help minimize some grid issues.

Thanks to their public and local nature, they may be able to help reduce or shift energy consumption. By focusing on locally generated energy and demand-side measures, they will relieve stress on the grid. They are also offering consumers electricity with higher renewable energy content, compared to investor-owned utilities (IOUs).

Read more here: Lawmakers: Look closely at our energy landscape

CCAs Win Exit Fees Skirmish but Fight Continues

Last Wednesday afternoon, August 1, 2018, one day before the California Public Utilities Commission held a scheduled argument in the matter, Administrative Law Judge Stephen Roscow issued a Proposed Decision Modifying the Power Charge Indifference Adjustment Methodology, or PCIA. The PCIA is the bill charge assessed to a Community Choice Aggregation (CCA) customer to cover generation costs incurred by the utility prior to the customer’s change in service provider.

The Proposed Decision, if adopted by the full Commission, would be a major step both in leveling the playing field for CCAs and utilities and in ensuring fairness to customers who leave utilities for CCA service.

At the hearing Thursday afternoon, it was clear that the three major California electric utilities, Pacific Gas & Electric Company (PG&E), Southern California Edison Company (SCE) and San Diego Gas and Electric Company (SDG&E), were fighting an uphill battle. While the Proposed Decision had been a setback in many areas, utility representatives primarily focused their arguments on three issues: (1) the Proposed Decision’s implementation of a cost cap of 2.2¢/kWh; (2) its treatment of Legacy UOG; and (3) its mechanism for truing-up costs.

By contrast, CCA representatives pointed out that the Proposed Decision is “balanced and makes sense,” and moves California toward an outcome where the utilities’ portfolios will match their bundled service customers’ load. The CCAs encouraged the Commission to keep the existing paradigm for a couple of years (while changing components of the present PCIA) and to create staggered auctions of existing utility contracts over the 2020-2021 time frame.

Read more here: CCAs Win Exit Fees Skirmish but Fight Continues