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Commissions contemplate energy choices

Posted: August 26th, 2016 | News, Top Stories | No Comments

By Jeff Clemetson | Editor

On Aug. 3, the La Mesa Planning Commission and the Environmental Sustainability Commission held a joint special meeting to discuss and learn about creating and operating a Community Choice Energy program, also known as Community Choice Aggregation (CCA).

Speaking to the mostly full council chambers, attorney Ty Tosdal explained what a CCA is.

“It is a local program that allows local governments to purchase power and sell it to customers,” he said.

La Mesa and other cities like Del Mar, Solana Beach, Encinitas and San Diego are looking at CCAs as way to meet statewide obligations to fight climate change by offering residents another choice in where to purchase energy.

“A CCA is one of the most cost-effective ways to provide renewable energy with rates that are competitive and sometimes lower than the utility,” Tosdal said, pointing to three current CCA programs that he has worked with: Marin Clean Energy, Sonoma Clean Power and the city of Lancaster.

Tosdal CCAwebtopFor example, he said the average residential monthly bill for Southern California Edison (SCE) customers is $124. Lancaster Choice Energy’s (LCE) base product is about $1 cheaper with a higher renewable energy content of 35 percent, compared to Southern California Edison’s renewable content of around 24 percent. Average commercial rates are cheaper, too.

One of the advantages CCAs have in fighting climate change is that cities can set up programs that allow customers to choose what level of renewable energy they want.

“So if you want to pay a little more and you are so inclined, you can get a 100 percent renewable energy in the program,” Tosdal said. “That’s not something you can get from SDG&E or Southern California Edison.”

For Lancaster, that option averages costing about $10 more per month.

“There’s a premium on 100 percent renewable,” Tosdal added.

So how does a CCA stay competitive with utilities like SCE and SDG&E?

“There are some different components in the cost structure when you compare a CCA to a traditional utility,” he said. “There is less overhead that comes along with a CCA program. They don’t have the same tax obligation. They don’t have the same incentives to return profits to their shareholders, so they are able to save costs on those sorts of things.”

Just as some CCAs give residents choices on what kind of energy they want to buy, the CCA program itself is a choice.

“The program is optional to customers and they can opt-out at any time and return to service by the utility,” Tosdal said.

However, there is no opt-in.

When a city decides to form or join a CCA, residents are automatically enrolled. Four separate notices are sent to residents about the switch to the CCA and residents must opt-out if they do not want to be in the program.

“That’s just the way the law was structured; there’s nothing that can be done about that.”

Also, the CCA wouldn’t completely replace SDG&E.

“Forming a CCA does not mean you displace the utility,” Tosdal said. “It means you provide an alternative service just to buy and sell energy. The utility continues to operate the transmission and distribution services and provides billing to customers.”

What does change is where the energy is purchased and how rates are determined.

“If you start a CCA program here in La Mesa, the City Council will ultimately be responsible for general decisions about rates, power sources and you do that with input from experts in the field,” Tosdal said.

Another option would be for the city to join other municipalities to form a larger CCA. In that case, a Joint Powers Authority (JPA) would be set up with elected officials to run the CCA. Tosdal pointed to Marin Clean Energy, which services residents in Marin County, parts of Napa and the city of Richmond, as an example of a multi-jurisdictional CCA.

A JPA is a good possibility for La Mesa to consider as several local cities have already taken steps to form CCAs. The city of San Diego has funded a CCA feasibility study, Solana Beach has already conducted a feasibility study and Del Mar has a Climate Action Plan with a goal of 100 percent clean energy, which would likely use a CCA to meet that goal.

Tosdal said implementing a CCA has a specific order of steps for cities. First, learn what the program is through informational presentations like the Aug. 3 meeting. Next, a feasibility study is conducted that looks at rates, renewable content and program offerings. Then the city will design the program. After that it must pass a resolution, meaning a vote by the City Council to form the CCA. The council will then need to decide whether to join or form a JPA with other cities or form an enterprise program on its own. Finally, the CCA will procure power from sources, develop an organizational plan, enroll and serve customers.

After his presentation, Tosdal took questions from the commissioners and the audience.

Planning commissioner Janine Hurd Glenn asked what would happen to the CCA if SDG&E decides it will just purchase more renewables itself and offer its customers similar programs; basically cut out the middle man.

“That may be very far off in the future,” Tosdal answered. “We currently have an energy system that is run by a monopoly and even though a lot of these programs are small in the jurisdictions that have launched these programs, the monopoly ends. So I think that is something concerning for the utilities.”

Commissioner Polly Kanavel questioned whether a CCA offers enough competition to significantly bring down costs, using gas stations as an example.

“At Navajo [Road] and Lake Murray Boulevard there are three gas stations on the corners and it hasn’t driven the price down,” she said. “It has everyone within a penny of each other because [people] buy gas at which direction they’re going, what’s more convenient. There’s not one that’s 10 cents cheaper to lure in all the traffic.”

“It’s a better economic dynamic to have some competition than no competition,” Tosdal replied.

During comments, Masada Diesenhouse of the environmental group San Diego 350 spoke in favor of CCAs.

“A lot of the reason that other places have put these plans into place is to be able to comply with the state greenhouse gas emission reduction requirements,” she said. “One of the reason [CCAs] are an improvement over SDG&E is because cities don’t have any control over what the utilities do. So if the city wants to commit to reaching a certain target, this gives them the ability to say, ‘We actually know where our power is going to come from; we can make these decisions.’”

Residents who want to learn more about CCA programs can attend the La Mesa City Council meeting on Sept. 13. The council will not be voting on CCAs but will hear Tosdal’s presentation in order to consider the program.

—Reach Jeff Clemetson at jeff@sdcnn.com.

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