HomeMy WebLinkAboutItem No. 13 WCECC Aggreation ProgramText File
City of Lake Elsinore 130 South Main Street
Lake Elsinore, CA 92530
www.lake-elsinore.org
File Number: ID# 17-545
Agenda Date: 2/27/2018 Status: BusinessVersion: 1
File Type: ReportIn Control: City Council / Successor Agency
Agenda Number: 13)
Page 1 City of Lake Elsinore Printed on 2/22/2018
Page 1 of 2
REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Grant Yates, City Manager
Prepared by: Nicole Dailey, Senior Management Analyst
Date:February 27, 2018
Subject:Western Community Energy Community Choice Aggregation Program
Recommendation
Receive and file.
Background
In 2002, the California legislature passed Assembly Bill 117 (this bill amended by Senate Bill
790 in 2011), which allows all cities, counties, or groups of cities and counties to provide electric
service to customers currently served by Investor-Owned Utilities (IOUs) such as Southern
California Edison (SCE). Community Choice Aggregation (CCA) is the legislative organization
empowered to provide this service.
California CCAs are customer opt-out programs that provide power supply, data management
and behind the meter services, while the incumbent IOUs continue to provide transmission and
distribution (wires) service.
To summarize, CCAs allow cities and counties to aggregate their buying power to secure
electrical energy supply contracts on a region-wide basis.
In 2016, the Western Riverside Council of Governments (WRCOG) completed a Feasibility
Study to explore the potential formation of a Community Choice Aggregation (CCA) and its
potential benefits. Using conservative numbers and assumptions, this study indicated that
forming a CCA would be favorable for the sub-region.
Several local jurisdictions throughout California have or are currently exploring the formation of
CCAs to lower energy costs and/or provide a “greener” energy supply.
Western Community Energy CCA Program
Page 2 of 2
Discussion
Based on its Feasibility Study, WRCOG has developed a proposed CCA program called the
Western Community Energy (WCE): Your Neighborhood Power Authority to serve interested
communities in Western Riverside County. WRCOG’s program objectives include:
Provide local control over programs, rates, and power supply/generation options.
Provide consumers a choice in energy supply.
Offer competitive utility rates.
Provide economic development through implementation of renewable energy projects.
WRCOG anticipates launching its WCE program in late 2018 with several participating
jurisdictions. Initially, WRCOG will administer the WCE program while it establishes a Joint
Powers Authority (JPA) and Governing Board.
The City’s Energy Subcommittee, comprised of Mayor Natasha Johnson and Mayor Pro-Tem
Steve Manos, have met with both WRCOG and SCE regarding the proposed program and/or
CCAs.
WRCOG staff will provide an informational presentation on WCE and respond to any questions
from the City Council or members of the community at the meeting.
Fiscal Impact
There is no fiscal impact associated with this presentation.
Exhibits
A – PowerPoint Presentation
B – Frequently Asked Questions for Local Governments
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
Community Choice Aggregation
Program Summary Overview
CITY OF LAKE ELSINORE COUNCIL MEETING
February 27, 2017
1
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
2
What is Community Choice
Aggregation (CCA)?
AB 117 allows local governments to provide
electricity to customers as an alternative to the
current energy provider (SCE)
ANSWER
HOW LOCAL ENERGY AGGREGATION WORKS
Buying and building
electricity supply
Delivering energy,
maintaining lines,
billing customers
Benefitting from
affordable rates, local
control, cleaner
energy
source
CCA
delivery
UTILITY
customer
YOU
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
3
Why are jurisdictions
participating in CCA’s?
•Creates local control over programs, rates,
power supply/generation options
•Provides customers with choices
•Lower / competitive rates and greener mix, if
desired
•Creates favorable economic development
opportunities by offering energy at reduced rates
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
4
The concept is NOT new
MCE Clean Energy (includes Marin and Napa County
and parts of Contra Costa Solana Counties
Sonoma Clean Power (includes Mendocino County)
Lancaster Choice Energy
Clean Power San Francisco
Peninsula Clean Energy (San Mateo County)
Pico Rivera Innovative Municipal Energy
Redwood Coast Energy Authority (Humboldt County)
Silicon Valley Clean Energy (Santa Clara County)
Town of Apple Valley
OPERATIONAL CCA’S9 City of San Jacinto
City of Solano Beach
Coachella Valley
East Bay Community Energy (Alameda
County)
Los Angeles Community Choice
Monterrey Bay Community Power
City of Rancho Mirage
Sierra Valley Energy (Placer County)
Riverside County unincorporated
Valley Clean Energy Alliance (Yolo County,
Cities of Davis and Woodland
2018 LAUNCH10
Butte County
City of Corona
City of Hermosa Beach
City of San Jose
Inyo County
Kings County
Nevada County
WRCOG
San Diego County
San Joaquin County
Tri-County (San Luis Obispo, Santa Barbara, and
Ventura Counties
EXPLORING11+
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
5
Current process for how electricity gets to you?
HOW LOCAL ENERGY AGGREGATION WORKS
Buying and building
electricity supply
Delivering energy,
maintaining lines,
billing customers
Benefitting from
affordable rates, local
control, cleaner energy
source
SCE
delivery
SCE
customer
YOU
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
6
What would a CCA do?
HOW LOCAL ENERGY AGGREGATION WORKS
Buying and building
electricity supply
Delivering energy,
maintaining lines,
billing customers
Benefitting from
affordable rates, local
control, cleaner energy
source
CCA
delivery
SCE
customer
YOU
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
7
Do CCA’s save money for consumers?
•Marin and Sonoma County (SCP) residents saved $6 million in utility costs combined in 2014
•City of San Rafael saved $47,000 in its municipal facility utility costs the first year (3% savings from PG&E)
•SCP was net positive in 60 days. After 18 months, reserve built up to $36 million
•For WCE (our) region, feasibility study indicates that savings to consumers could be up to approximately $30 million
annually depending on the number of jurisdictions participating
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
8
What are the potential residential savings?
ANSWER
~2% Savings –Residential
$16.83 per year = $2,474,336 for 147,000 residential units
$16.83 per year = ~$306,000 for Lake Elsinore residential
units (~18,000)
~4% Savings –Residential
$33.66 per year = $4,948,673 for 147,000 residential units
$33.66 per year = ~$612,000 for Lake Elsinore residential
units (~18,000)
Is it worth the effort?
ANSWER
•Yes
~2% Savings in 10 years = $24+ million (residential only)
~4% Savings in 10 years = $49+ million (residential only)
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
9
What would my bill look like if I was a CCA customer?
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
Revenue and Expenses Summary (millions)CY 2019 CY 2020
Total Electric Sales Revenues $126.0 $133.1
Operating Expenses
Power Supply $93.2 $101.3
SCE Fees, Billing and Data Management $2.7 $2.7
Staffing, General & Admin $1.5 $1.4
Debt Service $2.1 $0.2
Total Operating Expenses $99.5 $105.6
Operating Reserves $8.4 $9.0
CCA Program Surplus $18.1 $18.5
Cumulative Program Surplus $26.7 $45.2
•Revenues include rate savings of 2% vs. SCE 2018 rates
Proforma Summary
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
11
How will it work? Must all residents and businesses
participate?
•Per state law, CCA is an “opt out” program –once City joins, it is joining on behalf of its residents and businesses
•CCA required to notify consumers 2 times prior to program launch and 2 times after program launch
•Provides consumers an opportunity to opt out if they wish
•After that, customers can still opt out at any time
•Customers can opt-out / join at any time
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
12
Will I be able to compare CCA vs. SCE rates?
•Yes
•Annual statement provided to customers
•Prepared mutually by the CCA and the utility (SCE)
•Provides comparison of energy bills
•Annual rate comparisons will be posted on WCE’s website
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
13
What are additional CCA benefits?
•Enhance existing SCE Programs:
1.Income Qualified Programs
2.Comprehensive Mobile/Manufactured Home
Program
3.CARE and FERA program outreach and incentives
4.Demand Response outreach programs
5.Flex Alert outreach
6.Commercial/Municipal Direct Install Programs
ANSWER
•Develop new Energy programs, initiative pilots:
1.Incentive and support electric vehicle (EV) and EV
infrastructure deployment
2.Develop and pilot Innovative energy
measures/projects:
a)Energy Storage (Batteries)
b)Thermal Storage (Ice, natural gas)
c)Existing building Weatherization products
3.Micro-grid development/support
4.Zero Net Energy incentives/development/support
5.School and Community Energy outreach/education
programs
6.LED Holiday Light Exchange Programs
7.Residential LED Light exchange program
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
14
What are the risks?
•Legislation and regulatory changes
•Increased energy costs
•Decrease in SCE generation charges
ANSWER
How can the risks be
minimized?
•Active engagement with State agencies
•Due diligence in contract management and
oversight
•Creation of a rate stabilization fund
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
15
What are start-up the costs?
•~$4 million
•WRCOG will cover these costs or WCE (once
established) can take out a loan
•Start-up costs would be recouped by revenues
realized during the first year of operation and
would be returned to WRCOG or applied
towards loan repayment
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
16
How do cities join?
•Council action to join the JPA
•Council holds public hearing for CCA ordinance
ANSWER
What happens next?
•Once a few cities have joined the JPA (~2.2 m MWh)
•Staff begins to engage outreach to the Community
•Conduct 1st WCE Board meeting
•Adopt Implementation Plan at 2nd WCE Board
meeting
•Staff submits Plan to CPUC
ANSWER
What are City staff impacts?
•Provide information at front counters
•Direct any phone calls to WCE staff
ANSWER
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
17
Next steps and draft timetable
DEVELOP AND BEGIN IMPLEMENTING
MARKETING STRATEGYJuly 2017
DETERMINE WHO IS “IN”Ongoing
FORM NEW JPA HOUSE AND THE CCAOngoing
JURISDICTIONS PASS ORDINANCE TO JOIN March 2018+
ESTABLISH INITIAL GOVERNING BOARDApril 2018
DEVELOP IMPLEMENTATION PLAN FOR CPUC FILINGApril 2018
TRANSMIT OPT-OUT NOTICES TO CCA CUSTOMERS May –Sept. 2018
POTENTIAL LAUNCH PHASE 1 (~170,000 accounts)October 2018
W E S T E R N C O M M U N I T Y E N E R G Y
A C O M M U N I T Y C H O I C E A G G R E G A T I O N P R O G R A M
Contacts
RICK BISHOP
Executive Director
951-405-6701
rbishop@wrcog.us
BARBARA SPOONHOUR
Director of CCA Development
951-405-6760
bspoonhour@wrcog.us
TYLER MASTERS
Program Manager
951-405-6732
tmasters@wrcog.us
FAQ: LOCAL GOVERNMENTS
WESTERN COMMUNITY ENERGY1
Western Riverside Council of Governments 3390 University Avenue, Suite 450 | Riverside, CA 92501
www.wrcog.us | (951) 405-6760
WRCOG is developing a Program, Western Community Energy (WCE),
which will provide the community a choice in the energy supply it receives,
enable local control over rate setting and customer programs, and offer rates
competitive to Southern California Edison (SCE).
In 2016, WRCOG completed a Feasibility Study to identify the potential benefits
of implementing a Community Choice Aggregation (CCA) Program. Using
conservative numbers and assumptions, the Feasibility Study indicates a CCA will
reduce costs, yield positive environmental impacts, and increase local control.
The Program will give residents and business owners control over their rates,
power supply and generation options. A CCA will also offer local investment
opportunities, compounding the economic benefits of the Program throughout the
community and economy as a whole.
WCE is anticipated to launch in late 2018 with five or six jurisdictions, representing
over 160,000 residential and commercial accounts. Initially, the Western Riverside
Council of Governments (WRCOG) will administer WCE while it establishes its
Joint Powers Authority (JPA) and Governing Board.
Frequently Asked Questions
for Local Governments
WESTERN COMMUNITY ENERGY HAS
ECONOMIC AND ENVIRONMENTAL BENEFITS
PROGRAM
OBJECTIVES
1. Provide local control over programs, rates, power supply/generation options.
2. Provide consumers a choice in energy supply.
3. Offer competitive utility rates.
4. Provide economic development through implementation of renewable energy projects.
FAQ: LOCAL GOVERNMENTS
WESTERN COMMUNITY ENERGY2
Western Riverside Council of Governments 3390 University Avenue, Suite 450 | Riverside, CA 92501
www.wrcog.us | (951) 405-6760
What is a “Community Choice
Aggregation” Program?
ANSWER
Community Choice Aggregation (CCA) enables local governments
(alone or with others through a JPA) to buy electricity and offer it to
customers in their communities. The electricity will still be distributed
and delivered over the existing Southern California Edison (SCE)
electricity lines. Essentially, a CCA provides consumers with choices in
their energy sources instead of being locked into the choices and rates
set by SCE.
What is Western Community
Energy?
ANSWER
Western Community Energy (WCE) will be a JPA that local
governments can join to provide a choice of energy generation to its
residents and businesses.
What are the benefits of WCE?
ANSWER
1. Consumers (residents and businesses) can choose what type of energy
resources are serving the community.
2. Local elected officials will be in charge of energy resources, rate-
setting, and administration, which provides local accountability and
transparency.
3. Energy can be provided at lower and/or competitive rates through
negotiation of energy prices below those offered by SCE.
4. Communities can spur economic development by investing in the
development of local renewable energy production.
Are there any CCAs in California?
ANSWER
Yes. There are eight CCA programs up and running in California:
Marin Clean Energy, Sonoma Clean Power, Lancaster Choice Energy,
CleanPowerSF, Peninsula Clean Energy, Redwood Coast Energy
Authority, Silicon Valley Clean Energy, and Apple Valley Choice
Energy.
Are existing CCAs successful?
ANSWER
Yes. These CCAs are offering their customers 20-30% more renewable
energy than the incumbent utility at prices that are competitive and
in most cases lower than the utility rates. Marin and Sonoma are also
procuring and co-developing in-state and local renewable resources and
offering specialized energy programs designed for its local service areas.
How would a local government
join Western Community Energy?
ANSWER
A local government would take formal action to join the WCE JPA
and then adopt an ordinance to participate. The 2nd reading to the
ordinance could be waived. Templates are available
Are all local governments in the
subregion required to participate?
ANSWER
No. WCE does not have the authority to compel any local government
to participate; any local government can choose to remain with SCE.
A local government may also decide to join WCE after it has been
established.
Can a local government opt-out
of a CCA after it joins? How does
that work?
ANSWER
Yes. A member would have the ability to opt-out and could do so for
only its municipal facilities or for its entire community.
Who will manage WCE?
ANSWER
WRCOG will provide management and administrative services for
the first three years of operation, or until the WCE Governing Board
determines the JPA is prepared to take on full administration.
What does WCE need to “start
business”?
ANSWER
Once its Governing Board is established, WCE must prepare and
submit an Implementation Plan to the California Public Utilities
Commission (CPUC) for certification.
What is an Implementation Plan?
ANSWER
The Implementation Plan outlines how WCE will function, set rates,
purchase electricity, and carry out all other functions required under
CPUC regulations.
FAQ: LOCAL GOVERNMENTS
WESTERN COMMUNITY ENERGY3
Western Riverside Council of Governments 3390 University Avenue, Suite 450 | Riverside, CA 92501
www.wrcog.us | (951) 405-6760
What start-up costs are needed?
ANSWER
Start-up costs (consultants, administration functions, legal, staffing, data
management, etc.) are estimated to be between $3-7 million. WRCOG
will cover these costs or WCE (once established) can take out a loan.
Start-up costs would be recouped by revenues realized during the
first year of operation and would be returned to WRCOG or applied
towards loan repayment.
What are the working capital
requirements?
ANSWER
Power procurement is estimated to be between $21-50 million,
depending on the number of WCE customers. Only 5-10% will be
needed to cover the initial months of operations (billing, staffing, legal,
and internal operations, etc.) until a revenue stream is established
through customer utility bill payments. The remainder will accumulate
over time in a reserve to build credit worthiness for WCE. The majority
of the working capital funds can be realized from WCE bonding and/or
securing a loan, which will be built into the rates.
How have other CCAs dealt with
working capital costs?
ANSWER
Existing CCAs in California secured loans for the initial capital and
repaid the loans within the first three years.
Are municipal General Funds
at risk?
ANSWER
No. There is no risk to local government general funds. A CCA’s budget
is completely separate from the general funds of participating local
governments.
Is this an “Opt-in” or an “Opt-out”
Program?
ANSWER
California law states that CCAs are “Opt-out” Programs, meaning once
a local government takes action, all the residents and businesses will be
automatically enrolled in the CCA. Residents can choose to opt-out at
any time and stay with SCE.
What if a jurisdiction joins the
CCA but individual businesses or
residents desire to stay with SCE?
ANSWER
Every customer can choose to remain with SCE for their energy supply.
State law requires that customers receive several notifications so they
can “opt-out” and remain with SCE at no charge, both before and
just after a CCA Program launches. All customers can choose which
electricity provider is best for them.
Will customers be able to switch
back and forth between WCE and
SCE?
ANSWER
Yes. Pursuant to state law, once a CCA becomes active, all customers are
automatically transferred under the CCA. However, customers may go
back to SCE at any time. SCE may charge a fee to accept the customers
back and will require the customers to stay with SCE service for one year.
What if customers don’t want
their energy provided by WCE and
just want to stay with SCE?
ANSWER
Every customer can choose to remain with SCE for both power
resources and delivery. State law requires that customers receive several
notifications so they can “opt-out” and remain with SCE at no charge,
both before and just after WCE launches. All customers will now have a
choice in which electricity provider is best for them.
Does SCE have a say in whether
or not a CCA can be formed?
ANSWER
No.
What is SCE’s role in WCE?
ANSWER
SCE will:
• Continue to own and operate the distribution lines.
• Be responsible for the reliable and safe delivery of electricity to the
customer.
• Continue metering services.
• Continue meter reading and usage data acquisition.
• Handle billing and payment services.
• Provide customer care and account maintenance.
FAQ: LOCAL GOVERNMENTS
WESTERN COMMUNITY ENERGY4
Western Riverside Council of Governments 3390 University Avenue, Suite 450 | Riverside, CA 92501
www.wrcog.us | (951) 405-6760
What will WCE do?
ANSWER
WCE will:
• Procure and provide the generation portion of customer electricity
needs.
• Ensure that power generated is delivered to the necessary grid location
required to service the customers.
• Comply with the Resource Adequacy and Renewable Portfolio
Standards (RPS) requirements.
• Respond to customer inquiries regarding energy supply, management,
and oversight of WCE.
What role does the CPUC have
in a CCA?
ANSWER
The CPUC has limited jurisdiction over CCA operations. The CPUC
will certify WCE’s Implementation Plan and ensure WCE is meeting its
Renewable Portfolio Standards (RPS) requirements. WCE must annually
file proof of resource adequacy / capacity and submit a number
of regulatory reports to other agencies. The CPUC will oversee the
relationship between SCE and WCE.
You say that WCE can provide
energy at lower cost, but how can
I know for sure?
ANSWER
The CCA Feasibility Study prepared for Western Riverside County
concluded that a CCA could offer cost savings as compared to SCE.
While there is no guarantee, other CCAs operating in California are
experiencing savings compared to their respective investor owned utilities
(IOUs). Each year WCE will work with SCE to compare the energy costs
offered by both energy providers. This information will be distributed to
all WCE customers. For information on additional benefits beyond cost
savings, please see page 2.
How will the rates be set?
ANSWER
Energy rates will be set regularly, based on the projected cost of
energy. Unlike SCE rates, which are set by the CPUC, WCE’s energy
rates will be set by local elected officials representing the participating
communities. The public will be encouraged to attend and participate at
rate setting meetings to ensure a more transparent process.
Will taxes increase?
ANSWER
No. WCE does not have the ability to tax and there are no impacts on
taxes. WCE will be funded entirely by revenues from the ratepayers,
requiring zero tax dollars from customers or participating communities.
Isn’t renewable power more
expensive than non-renewable
electricity? Wouldn’t a CCAs rates
be higher?
ANSWER
In today’s markets, that is not the case. To date, CCAs in California have
been able to offer 25-30% cleaner energy at lower costs to customers
compared to higher carbon-based energy sources.
What’s the catch?
ANSWER
There are risks involved with any CCA. These include a potential
reduction in SCE rates, higher “opt-out” rates than estimated (i.e.,
over 25%; current CCAs in CA have opt-out rates between 4% and
16%), higher exit fees charged by SCE, or legislative and/or regulatory
changes. These scenarios were contemplated in the Feasibility Study.
Does this mean the CCA would be
in the commodity market? How
risky is this?
ANSWER
Yes. Electricity is a commodity and markets exist where electricity is
traded daily with multiple buyers and sellers. While electricity can be
purchased on a daily spot market with variable pricing, this is not how
WCE would purchase its power needs. WCE would enter into contracts
on the wholesale energy market.
ADDITIONAL QUESTIONS?
Contact WRCOG at 951.405.6760
or www.wrcog.us for additional information