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HomeMy WebLinkAboutCC AG PKT 2009-03-23 #KAGENDA STAFF REPORT DATE: March 23, 2009 TO: Honorable Mayor and City Council THRU: David Carmany, City Manager FROM: Vince Mastrosimone, Director of Public Works SUBJECT: COMMUNITY CHOICE AGGREGATION SUMMARY OF REQUEST: Staff has prepared information about the topic of Community Choice Aggregation (CCA) and its potential for the City of Seal Beach. It is recommended that the City Council receive and file this report. BACKGROUND: California State Assembly Bill No. 117 passed and was signed into law in 2002, gave California cities the ability to aggregate the electric loads of residents, businesses and public facilities to facilitate the purchase and sale of electrical energy in a more competitive market. Unlike a municipal utility, a CCA does not own the transmission and delivery systems (i.e. the poles and wires). Instead, a CCA is responsible for providing the electrical energy commodity to its constituents. It may or may not involve ownership of electric generating resources. Formation of a CCA assumes all utility customers within the boundary will become CCA customers. Customers within the boundary may choose to "op- out" and remain with their current service provider. CCA provides both pros and cons. The pros include: • Possibility of rate reduction for participants • Ability to place an emphasis on "green" power generation • Rate stabilization over long term • Local control over rates • Low rates could stimulate economic growth The risks of a CCA include: • Rates may be higher than utility company rates • Still need the utility company to operate the distribution system Difficult for a single agency or even a small partnership to administer • Will require significant staff time to administer Agenda Item K Page 2 • Will require use of consultants to set-up and administer • May expend money for feasibility study with no guarantee of the outcome • CCA must pay Exit Fee to the utility The Orange County Energy Leadership Partnership is involved with several aspects of energy conservation including formation of a CCA. The partnership includes Huntington Beach, Westminster, Costa Mesa and Fountain Valley. The CCA is still in the planning stages. The first step in examining the viability of a CCA is to determine the existing and projected "load information" from the current energy provider (SCE). It involves sending a simple request to the utility, using the approved forms. The information is analyzed (by an outside consultant) and CCA feasibility is determined. The second step would be to adopt an Implementation Plan which must be reviewed and approved by the Public Utilities Commission (PUC). Utility companies are required by law and PUC regulation to maintain a "neutral" position on CCA's. Staff recommends that the City not engage in the pursuit of formation of a CCA. There are not many CCA's in full operation in the State so not much is known about the actual operation and outcome of CCA. With limited staff, our focus should be providing fundamental services and the implementation of our Capital Improvement Program. FINANCIAL IMPACT: There are no financial impacts associated with this report. RECOMMENDATION: It is respectfully recommended that this report be received and filed. UB ITT BY: Vince Mastrosimone Director of Public Works NOTED AND APPROVED: ~~ David Carmany, City Manager Attachments: A. Local Government Commission Brochure =- ~ ~-- ~ ~ ~ e °~~ ~ ~ tY ~"~~.`bk :`'a.: .y.• t' ~ .. .~•=3` ~'°•. 'gam •. t' - k+vs. .a!>r~tit, 4.:'e'y.• °~i`,x• ,~n•. •• ~a,L~~ ~§;: F~.. -'~, Y'°j ~S't: ~'t .it a~~s~ t, k•l°i .:•t~y~•e. '~~y P.. `-- °tC:R' ~j'` _~: l~.y°''t=• ei` i ••'~1 •~^; ° ,•y• :.ii. ..,• .•e'.'S;: '; ~ =~The~~alifornia° ~P Wh.e.n Ca~l•ifornia~•dereg:u•late'c! .electricity: in 1997, r~ia:ny:C ~r'~ ~ - a• iforn•la~n's•~ -~.; ' r.F;ne gy`Co mrs iari - ~ - -.~~' ~„ ~ ° ~•' '_ ' • .• • i~ :, - -a ' _ . ~_ :. ..~_ • r;<• ~ ~.~~:-~~~~:.~. =switch.ed.~to buy g.re~e~n- energ•~:::After•.th.e- en~er• ~_ri~sis of ~200.0•r-O:T_: g.+~ ~•-is•~''e"~xcit"e~4d~~kajbout ~ ~; ' .;.: .. .•.~ gy~'• . • ~ . ~ _ b..•"~:S•!' t `~"i~ ~L'.'Y•'k!°'~~"• •~'t•.• e• } +. •~•. ~ •• :.. ~ _ j. psi .,, ,°,°-1 •y' ..~ ,,':: •{ r„ :~-th,•e~-`po..teea;'al.;fo~r co;n•sum-e.r chE}~ce o'felectr~icity,provide~rs•w.~s~suspended. MoSt~ •~~ , :~ , ~ .e •` •• _•C: .dr 3 _ _r '•°i •: s8 "v.. 1 i • _ •ikw~ .. Y ;:'`~':co~nr`riuni• cto;ce r ~F: ~Cal~forni:a~ri:s t~~~w et. their el.ectri~cit frcirri the sar~~e~•utl;Fitie.s~-th~at~' `E~~~` • ~;~.: .;gg9regatorsAto~ .~:._ ':~. ,~ . Z ~::~.-, ~;.' ;~:~- .g~`' ~:•.„ ;4`E.';;:v: ~v, :: ~~ -~ ~ q • provided: ~it~•before~ d'er-e • u~l°atian. Co:m.rn:u:n~i- q~C,h'o~i•ce~'A Y• re ato.n. ~y ~`"°~ .•,~:increase•the;amoWn •?~- _ ..: 9, •.. .tY", :.:~ ,g~g~~ 9: ,~,.. ,_-°;;:- ~~_''`~-~~~{ofrene-wable::ene offers an>:o ~ortu:nit.:'for=:Ca'I.ifori•ians~to~:onee:a~ •,a-iFn.:c'h;oose't~~eir=•>~'`" .~ .~: A, • n..., :. ~} that~ispr~oduced • e~lectric~'~:rovid:er a.nd~~the -sriu rce~~of their .eiectr•ici:t;~~ ~~`~' ~:- •_ =•~~ 'fi't ~- t(„„ ~//~}p~ ~` '• „ . • ~iyyi+ T•., . 4? -f .`~• • 'w., ~~ ~l'~• s • .1~ t •' .-_.• •~ ~Y .i: •s•''•C~:.i. •R` ` °II'I ~L~?S'~Qre~ ~9`•. •`' ••. ~' q '/. ..: _ . (.(' v.' nMk " • ~• k . ,~. e~... y ec+-!P[ . t' ~ r v.' 3v c`• .. KMnr ..+ ~x. ~'T•k: •'. n !';,• , ~,.+'.. •-L':f•9~i't wqe ~`•' y ''"1 , ,yJ•~~•4$'~Y Lr~ ~• ~.qt: ; '~. ti • ',~sii, ii',•,r~ : ~ :.., i tei. 'v ~ ~ ~ - ~ .."'„`°• .. ;W ,,,. , ; y:; ; •^• ,, i• ' • :' •?`~ ~. ; ~. :h~,~_ -o: •`~o e• ? ~.,~Illl:~:a•at~.:r~• C~om'rn~u~r~'dty~;C;I~o~~ce:~A~g.g,r~e~g~ati~~o_n•::_~=~:• :~9 ~~~: '~•T :,'~;'~"()~1~+,1•'',~~, e~S q .i •g7s:.;gr-• ~t •q.. , a• . 't,!*,~+': • ~' ~,:~": ' -'•~' ' :°~~- ' °~p:i-"'%•''.vi •°'. j.:~' Yaa"~A•: ",'a ~'~`s=Y. -_~:~;_ _~.~~~,~ , a'q~ •,Cor,~munity.:Eho.ce'Agg:r-egatiorr•.- .~~`•'° ••L•ocal~-control overFreta~il;electric"ra `s~;~~: •'_~~; ~~.~ ~ =-(CCA}•er~~bles Cafifarnia•cities a,n:d::~' ~.~~.' •is-another~i`rnportant motiuation•~fdr: -~a~_='~= - ` ,.2k `"Y as •- ~j1 -: ' :~=~•h.q~ a• ~:~~`•„ ~ ~courties••-:'or_gro~Ips of cities•a~-id~q„ • ~; :initiati•ng CCA.~ In~restor.-.-o•vtiraec!'.wtilities ". ;~'~` ~`~~~"~~'~°~~ ~ ~' ~ • •coarties~-'to su "~l ~eleetrici •fof ~'~• '-~• '~~ cu.rren~tl• ro ,ose•'ser~iee.rates'for~•`~} -•~`~' •~'~€~='•:~ ~ ~. a •• _'= the:custoriners.vuitliin tlieiu bo.rde"rs.~••• ele•.erricgeneration,.tra:ns_m~i'ss.ion.~a.rid ~ -=~:~°` ,..9~L'g.•. 1 c~, 'S• 3;q. •'..!C• .y •%i: . r. -:~. '. < .~,. - y - -; .Kd . •.,iy:3 :. .,~~W-. ,~ ti- •; -,~ ~; - '~ ••.'•~,. ~• - - .' •~'•' '° ,-list"ributon;a•nd~Che''Catiforriia-P.'ublicY •~ ~• 'Y~ ~~:,~•:M~- ,~=~q:~ ~_ .4 lJ~nl:i;lce•a•m;u~nic'ipat~•utility.,,,such'as°.f~le:• :~.::•-• ~z -°.~•''~ ~•r` :; '~~~ ,~*~,~-ti ~• .:~; -~` ~• k a~•~ • ''• - ;' - =J' ' lJti•I•it~l'e5 C07TTt7•IISSIOII~.eitfi~er-a'j?proves•' • `:'~.M- °... •,•;~~~ p ~` ~-. ..L'o-•s}Angeles;.Departmen~ of Vt/at~r,~ ~ ~ - ~~;~,~.,. ~ .>-. r,~~;,. ~,= . `~=~: "~• ,„, '" ~;; ,~ .. ~,~ - .,: ,, -~~ `~.;, . ~oc~re ects.these`• r-o ~ osa•Is~.:, :.;,.,~.. - rt;,:... Y ~;~~;,~"~, .~i ~'• ~ .."and~Pawer or~the~•Saera,m=-r~to, • ~~ '~>+.~::•-.kr,;.., p.~rp:'w -f,• = o~~~~,„:~.~°;~. •!~'` ~ •'-?~ "~~~•~;~ .~ '~:~ •1~1u.nicigv+al.`l_Jtil,'~}~~~/~~District,:a••CCA-d~esy r;~,.:xBecause:clecsi~ors~a.re:fo'r.'icl'asses~of~,r:`~-~~`''µ 1.l °'. YSE-' ~~ 1~ / •f, •' .A:: ~!• •fni `t•~' y„. .,:.;}7:.•~ Yb'3j• \•,a. T ~° 4~ .~ ~•```• `~'`-~••#°~ • ers~c.ro s.the,iutil'it 'S.te ~' ~' ,,;. t'~=• '4,-~ ; ~:'-.riot''ov,~n.th;e•transrr~•issionan~d•~d~el.ivery;:,..•:~~~'.•;•c= torn, s ~ ~ r~itary;.~~<:~~; .~• ~'q•~? .~%M: i. :s e • . •; }' - • + ~ ~~.: •~: ~ ~ , . , _`.`~ , . .:,esq. .t< ;~ ..; ~ :~. ,{i•-'. 1: a .~~ :; ~: ~; _~syste`ms,'(i.e;,:the•pole_s•'a~nd~wires~: :,' ~,~•~;s~custprneri;'inhArc~ta;•far~ e'zc;~rriple,•pa~~ f ~~.~. "~£:; ~ ~ ~ ' ^~"~~ ° .~~``. q' '~'b ',~;'';~.~~ _~the~samerr:'afes'as~:hfose in~Fresno~`~~.~~~t i°'~`•°~ ~„ ~~t?~ .. i,nStC'dd;•a~•CCA.isresp-onsible_for,~;:~: ~~- ~at,;`•• ',,+r.::~.#_g,%ei<•; ,.;.ter .::. . =,~;•: ;,y~.A,t~,•s--. '>>,~r"rd ' ~ t'. .~:`'°-`-•3^- ia~ °~•_.:'~, --? `'q~,.. -"~--. ~ :, '~• .=; :. r' ~:j::.a qw.. _ ~~. ~.'providiiig theer::ie~gy:corrimodi.yq[~ ~° fi=~~' ~f•`kls ~orica('H_y,;~publi~~utifitiesfa'crosS~tEie ~.~''•'~~ ~~~ .~ v Y;u ~•+ .~ •:i`~ • '(i•:e.'t~he ele~tcon~s,~the.~~selves};to, its ~ w',:~`g::;'riatai'o.~h,'`hav~1beersb'le=to~,offer~~ratkesx,F~j3~r~„ :.~~-. ,'~ ~ 'con'stituerit's.= which•m-ay:~:r•rtiay~.; ~ ".r• :that a,re;1.5~~D4!o.~,oa X-.•tt;' it esy~q yu~qy,w .'tw' .q .. . ,•• a •~ 1;.' J -"*1~; ~"' of .'-4'7q•4^i: vw' !.•9^. !~, T:St, ... ~y}x t y .•„ . tixl., - _. _; .- ~ .+ .~ q p, ;-> Ats.,, V' ' ' ri~~`" ~: ~~~ '~~~~riotrenta~il'o`,wnership. of~el~ctric--~,; - `~.r~ owned'.utyi.ltie's: A~i`d as'a'~•:e~ca. • : pl. ~~of~, •~• t.,,E` ,^~ n. ~,.' ~;:f~.,4~ .~ •'i .. .. n; .. :: ..~•~<' ••.3'.^.. .:~.:1, 'Y~3.•~ ~, ~• 'txs t~- ,. ~.: ~~r~4 ~<e-.,`f~. .5•~; :~- _. a Y!i? ~:~. ~ •;`q-~gerier_.ating.:resources.. R:- : ~~::-' • ~~.~` ~d~epetZdability;,Roseill~e;:Electrie'fi:,~~~ . =Y ~, r .Y i•b;• w ••~u .3 ."y+"/ s is a.xi •~•• +g ` ~.'.' i~ .r'a .s t-. ,' "•'r'~;, .•. ~: •: ;]i°{.. ', ••,"~~ •~ ;q.:~;•• .tiF=• ~r; ' _ ~ -Y~-~,-s.'=' ~. ~•-=•• ~- ,b.- 'selected':as~tfe'~`ation,smos~t~'~~-.°' ,`' Y'~' at 1 -.• r3 . p.= 0 _ +.^k> w k•:•,'t"~e. . a 7 =,• erp ~M' zG•i s aa. r 4 •ru?• ` r• , e t• . • ~, t "~. ~• ": ! - .i4'i• • 4. ~.,•n'~ Csq . , ~- ' f "w~ ..~~•3 :~' ;~;~The:val~ae~of~forti~~ing'a CCA:•~` ~~'~'• ~sre ial~le utility'gcservR.imrig:kless~th~ri 100i0L0•Q~,.: ~„.~g; Bi .~ ~•E •;. ;•S. .,••••iH+ ....`:.?•,' - •:i^•,: r,^-~:~'~'.';•~•~ ~c~:stomers=for•fve(.~ ~ •~ ~ ~~:~ ~ .: "~•..~lular~•~corn:mutlifies~wa~nt to,incr e~a52: _. ~''':: - ~;' _ 4, yy(~~.. '~ r ~~..'y~,~. ~; •~~L;° {'.,~ •. • ~ A h. n. *.. . .' ysw.' •'~'ajy .. w'~'. :•~. ~~., 5 .s~&~•-s•~•sY9 ~'-'Y~,F•.'c Pd2~ir~•'r ~~{~~the~amou.rit:of`non~pol~luti`ng,rene~w- `'•~~tJ:pr:e CCA;~deeislo:~is~abvut'.r'ates,,~"••~'•~~ •_~:e u :.~„ ab'~?energy~t~h,ey:~se;.an~d,are.loo~kin~g~ ~ •C:gene;rating'resources~a~rcl:~u.~1•ic'~`'=~~=•~?t'~~~ 1, _ '?. -• xi.. - .: ~~ei, ' ja q. ~ ~•'..~'•.y -' J sY. r :y _?°•,'. ii ~•` •at~CommunityChoiceA ~regatiori` -;;;$r p ~` a '~~' ~~'~• ,r~ :: g ~~, :berietit rogramsfvuill••be;.~n~ d~e•locat~:a ^:~/ ~ ~{' ~~i t 'q.` :... ~..: ~vF;, •' .:q'• - ?~~NT .A..is `,' .' ., a - r.. .~N' .:. = +Y~6 ~~S~.: ~~-- +~ ~~:~.~.ka5'~a¢rriechan'ism ;foi:doir~~ so: ,,+' '•and}~,~beFaccounta.f?1e:to(:localv'custortier`s.4•;~=;:~ r 9'- ~ kr • s.v -~`.'~s} ° `EA';39•p' .~ '$F~ :i.~ ;;°:. ...Syw[. ~~-., r .;5~ . ^~.sv~.4 •,,'~:: "~~'X•::: '°~.s'~w%i. ~ a; Lx'`~'i~ ~•s'v' ~•"• .r5 t+• °':. „•-f• °: ^,ya :t:• t:,F''~'••~' :~~y~'u .~,.. ..4': ',; 'S: .• . . d i+ y. s•-: ... . "' ~ i ~A•1 °,1` T`y`•• s; • • $,• . , .•Q !- ; lST• 1;k~:. G ~ 'i ; • `'n: F ^X ~« , -~' •zn':.' _ ,h`y' .: ^.,,.,Y - V'. •..... ... R L=>`. _. '` &i 4 "°S'" '' "a a ,'r = 3,, •?a, .a _ ~`'7 •• ~.' F ": ice. rE'; r< ;•°u444444'C.s'~~~~s~ 'l4'~ ',Ai'r'+,. +':.~e <Y` .>, '.d. ~• '~' n, ~ -'S. "'Yl'° ~Y ,~'T~"J' •~ ~, _ -=~ ~~ ~~~~~ `Assembl y Bill ~1 ~.7 r .en~oved u sigri~ca~it or ~ ~.~~~ ` °~t , - - o lo l r t - ~ ~ t d i ~ -~~~. 'K ~ gove :;. . ~ ° ~ n r. ca nmen sn teres e ;rr provyid~n,g~; : _ Yom. -' ~ . eleCtrlCJ1'y't0 thelr COnT1nUnltleS '.:; - ' ~:•'.../~`,-~'"~, ~' .• • •`~;` °~ ~~ ~ ' . ` r q" -. ; .., . • ~ „ .: 9 ~ Y .h•. f°q=:, 4~ s' : •4.".t . •"y"~,fi i, a' .t., < . , i • ~',+•. '~L' _ ~'."~r"si ~~~- ~ ~Afterd~ere ~ulatiori.of~Calif ~~^ a'selecfr.•• Y~.' •%" ~~'- `rc~ ~`~'t'~`g°~,~'a:~°" . g icityrrrarketsi{:1 99~~~(th'~:ou~ fi. . o r? ~s "`_'- }~• .. . .,. -•y,, ~ , .. ..~_ • • ~ AB`.1890)~~many new' poVver su;ppliers.enti=red~;tfie .state. For the~rx-ost; ~~ ~ , . ' = `~ `part,these~su'ppliers•m,arketed'to h~ig h.-volume~electricity~users ta~'~~'~°. • , . ~ . ~r' ~=acfiieve higher~retuin~s~on~thei•r:marketing investm ' :~~` '~~ ~ M• 'ents ~ . . •'"°~~~ }"However,someofEered .consu.rners-fhed ~tionofcl'ean `retie'inca~bfe~energy' ~°~_'•~ , •. ;: `:_;~r,~ln ever.~~case,the=cfi'oice"to s'witch'.from: investor-owned~~i~tility. (IOIJ).3• ~ ~ ' ~ ~ O <~ ~=t ~~»; ~ seit~ice was-m~acle~k~y`iridvidual=con urne3~ or'businesses`~ ~ • :; ~=~~4° F:-~ ` ° "~ a , . ,~:,. . , ~, • ~ . r ~•_ '~ '°VVith~.th.e elect~icity~erisis.Ei'n.;200.0-01 ; the law was~cha.nged• an~d fihesability r~ ` "'~ ~~• , , ~ ; . , ~ ''.: :~;~'~~. ~'i:of•consume.rs~:to-enter:nto~e'lectricss`:ervicecontract-s~direetly,w~tli ..a., =' ~~ , .y , . ,~.., , : ' , ~ ~ ~. ^ ,;, _ ~,~i , .. fr,~_.: ~su :~ ~''~"~ ppfier s`was~suspended~` ~, . , ~ . ~ 4 ~ ~ ` ' ~ e~•=' ,•s;; '~n '2002,,Cornmu nity~'Chai-ce Aggregation ~(AB" ~1.1 ~`•was s gned°irito:law:~, ~ - ~ ~ T_ "•°-~~~=~~'This I'egisl'atior~•removed"a sigriificant~organizatCorial.hurdle`for.-bcal ~ :•:~ ` ~~~~ N~;;;governrrien•ts'~itlterested`~iri~providing,.e( e~etricity to t(ieir.comm:tan•ities. ~• `; ~ ~.,, _ ~d' ~.:~~ .a - ; ~~" ~° a ' ' ~"Unlike AB~1'890wh°ich requi r' ed• - .'r , :_. , , , ;~ - ,_. . , : ;- ~;°R~-..::~~'..~''~~-~`'~~_'~~ ~:~~~ ~ •~=~ ~'~~`'eaehcu•stonier:to•specifically;~ ~:' :~ ' rn , . , ~$' . ~: ~ . .. -.. ... , : t.. . ` +. .L.a mar -'' g'~(aJ~ =: •~ c. ~choose r%ori-ICJU•service ('°o~it;'in":..::`j ; `~ • ~ `e ~ I' ,. ; ,, ~ ,. .~ "„ . 3 :. • .~. w ser~vice~) :fo'rmation~of .-_ :r . -_ .~; ~:~ , , , , _ _ . ~ T• - ~~ F°`°`t.a CCA~.assu~mestfiat'a.ll;utilit}i:cus- ~ ~ •~~~~`~ •r ~ ~;~'y~:~'; --toinerswith: nathe~CC~As~•bounda~ries~~ ~ ~ _•~ - . '':~>.= me~ CCA customers :fix' . rr :w :; ~ ' ~~" However; cust~dmers •with.in:the'` ` ~ ~~~~ ~`~' r> ~.'`~ • " ` _ • a r• ' ~ ~" x sr ' ~ CCA' JEjpu ' ' ~ s `" • ~ "`~ ~ ~ d~a `a ~ h o ~;: , s res. m 'n y e o se • • • ~ , ~' "to"corn ir ue the ir"utilt 'service; " ; s'~'' ~'_ E~ . , . y_ ,,, ~.. ~~~r:~:'=~=:to;"opt~out":al=ithe~CCA~~program; ~ `_ `~~'~`= .~:~c µ,~{'b~i _•=-Q%. `"S ,. .t' •I. .'- q.^ ~~ •1•:_.•.~,?' ~e.~wa=~ -'y~s'pjRn r'~R' :•.3~~..~®~~I~mplementation, rules~~ ~,: =~' ~~~<~~ ~~~.:. o . ~~ :`~ : ~; _ .~ rt v^,.? Jq~, n' .. ' ti . ' !~' i ~ 'P~: `e t tt-'y ,~,e. `'`• ~ r ~ : r • t •~ ' w };~~~;•; o:rriia~~Pu~blic:.Utilites<C~o°rn~rnissiori (CPIJ.C):is;in^cha,~geof:creating_~;;~ ~._ ` ~ ' _ -:~.~~'=~:=`guclelres;:fo~•=a.CC~A':projram~,~:l't:is~.now preparirng~rnaterials:to~felp~Y°~ >" :?'--«:a_.:;~assist:potential',CCAs:develo.p=im~plerrien~atiori~aplan's.and,'complete":~ '. "~ :r - - ~: - ` ~•:'<~;~,~_ - •g. ;t'ratior:prace's's~a~ ~r~ ;:~. ", :. . ;~'•:;~''~= ~~~:~ °• ~ ,~~ ~,The~~CP:IJiv~~a~Iso:.sets~the~Cost ~ ~`` ' • •• ~;~.x>:~.._ ~ ~,,,, ~,... . _ ;F;~esponsibil;ity.;SurcFi~arge.for-,custome~s~.~~:;Pi~~'c: who~leav..e-IOU~ service.'; -customers will:'raot paY ~l ~'(„ •c°I`OU ;Costs.: ~ `°,• ,~<. ~ . ~,: • •:~;~fe. Cos:` : . . •'~<'. tResponsik~,i{ify~Surc ~~= x~;~x uneconomicco'stsefo the-cia: y'{ :`: ;.~ rates"i'ncrease;;tkie~surcharge ~~ ~> • ~:~ =°eritered'.into _d;~uyrriig• the~;crisi'. ha~'a~ll ,re~ma'ining, IOU' ` ~' A~• 'rge~is t~etermi~:~d.t h~ ~nfi marketrates~~for s. .. il~Lrd~ecrease:.Mo'st ~c xp~r~e~by,~ 2Q12,~~ ~rm:power contcacts~ ~ - lctric ity''As ~rii°a rket'~ lie' contracts ~ " ~ ' y~e .1~4y,a •~ ,tea a , '~ ..~M~_ ~Historically,~ public utilities across the nation have been able to ~'.~`'r=~~~~: offerrates~thatare'15 20%lowerthan irivesror-owned utilities. .' _ ~ CCA,is a substantial undertaking for .~ ~ . any,communitjr; but the rewards • .~~ .- maybe worth the effort and'risk.~ ' • :; •One•of the•fi'rst things to,consider " - ~ = : is whether there is~the. political ' ~= - commitment to form-and, ulti- - - ,-° ~mately, implement.a CCA. Local ~. ~ „-;..~ elected officials~will make-the deci- Sion about'.establ~ishing a CCA and = • P• •. are _accountable for its successes ~ ' ', ~ ~~ or~shortco.mings. Many officials., -.may-not be wilirng to accept this ~ - ~~;~'~ ~` . •• political- risk.. ~. u _ Irri~plemeriti,ng~ a CCA, program will ~'.?:f :fake sever-a~l jrears:' As a result, the. - : • .elected officials who initiate the • ,• :.~ ~ , process of forming a CCA may not _ -~ be the ones~who vote to establish. _~ • '-- it,or•make~reso~urce.selection and~-• •' ' ~:~ •rate-settirg,decisions. And there -- ' •will.likely-.be opposition to'CCA .~ ~~'}.~~-- formation within the~~co'mmunity. ~~- - :- ,~ ~~~®•~The benefits of CCA '" •_-~;~~:~~ Tfie;:most:common reasons;fo'r ,~ - :~~. forming a:CCA•include:. ' , ' '.,,'' ~' ~~~•~Iricreased use of renewable ~. - ~-:;~:•~'i '~-~~Local ~control~ of rate setting. ~ " ~~~ .y;. • -~~Econornic growth. ~~ • ~• _ •..:_ A:~commu:nity will~need to present' - - ~ •. `•"strong incentives for choosing-CCA ~; -~:~ °;,' ~ =to its' potential customers:' Many . ~. • • -=`: California cities•and counties have _ •:-~;.agreed to reduce: greenhouse•gas° ~~''~' ~''_- erriissions'or have other, similar ' ' -"~~~ "" environmental goals. CCAs-can '' -~1~~~;help'by inereasiri~g~local consump==: ••~ • ':~`~,;tion-of'renewable energy. '_ -'~~- . - _ ~:. . `-•- ~ Local' control of electric rates can •~ ;also allow a community to~attract :, new businesses and retain-existing ones by offering targeted.iricentives to these customers.' ~ ' Other communities may want to. develop generation projects that increase local employment: Some may focus on creating income to offset municipal expenditures. And perhaps most importantly, p.r`eliminary feasibility studies . ' indicate that CCAs,through the - use of local g-overnmeht.fi~nancing, should be able to reduce electric rates compared.with .IOUs:. - .: This reduction is because. private financing costs are more than ~ ' twice those of aoCCA. Based on a pilot project funded by the • . California Energy Commission, CCA capital costs•were about .• 5.5%, compared'to 1.2.9~o•for IOUs. This capital financing'advaitage' ` is especially important for high- ~, . , capital, Idw-operating-cost facilities like renewable energy generation. ® The risks of CCA ' :1 • .i •-:. ..i _ ~ , ._•- _I H -':~~,; ' '~~ ;.~•:.. The biggest risk is that CCA• rates' ~~' ' x=' ~=~~`' "•r •~~'~-€`' _ •t ?`,~!• may be higherthah utility rates.,-.. ~ - - __ ,~ , ~. ~ ~'.•. •-- '~.~-~ °~~•~~-~•~"..`a ~. Well-managed`powerpurchasing: '-rio~fuel:cost-to'gen"erase:e~lectr~icty~'.~= • and development should.mitiga"te • `from wind and solar sources. ~~'-•;~' ' ~ - --~- - this•.risk. A well-balanced. portfolio . ' -~>.~ ~°' - ~ ~='•' '` ~~• - ~ ~~~ , ~ ~ - - •~'°~~ ° --'~~t~;" ~ 'Future regulatory-clecisions~co~rld` •- of resources that includes~short- result• in cost-increases'forGCA; : • -:. >;:; and long=term co~ntracts.and CCA- _ ~ -• •:• ~ ••- « • ~.~° of ttie •d~ecisiorrs: `.:':~ '• °programs: "Most financed new generation• projects - ; °about•CCA prog~rarns have~already j,.. should result.iri competitive rates:. . ~ - •-s - ._ - ~beenmade=b~theCRUC,however.;• -~.-';: One way to hedge against,volatile~ •Local governments:participated.in: ••-~: - eriergy p_r'~ces is'to crea'te~a rate..,~~ itfiat•pr>ocess,a~nd•their•concern~" •~ ~~. ~m'~ • stabilization fund which many - '•.~ those °, • ~ r'=: were favorablji;reflected ~in -municipal'utilities do..~•This will'allow •.-decisions. Contin~aed-participa~Cion :-.~ ~ ~. - a CCA to hold-prices steady, even ~ •. _ -rn CPUC proceedings will tie nec-.:--:~•~`: ~ • when fuel.prices rise.Ancl.ffere is~ .' ~essary-to_.protett-CCA interests:::: " ~ ~~;t~° • ~;. - • - • ;Steps'~yau`I~I~ need take °-Communities.co~nsidering-CC~1:• i~~~~fofm'ation .shoiald• a'na~jze: r. ~= •F.orecasted IOU• rates:. ~ •~~ ~ ~ •-~ 1 •--; ~:The~Cost •Re`spbnsibility •~~:~~' ~ `' ~ ~`.''' : $ ; ?. - a, 'r a +•. • { +•=r~CCA~cor;.nrriodityco"sts~:.--F~~~~:` '~=Y - ,a. ~• • •. (including gerjeratiort~ owner=; ~' - •. ~ i-. ship, power•pu~rehase;con~~.~:° •~"-=-,°~' •~ . tracts; ~renew,able erie.C ~•';,:• :-' -:k~ ~~'coritrac~s arid=spot-rna`rke~w. Commr~.nityener: ri's`e'••:.~-+?~ =:~°~• ' Yof les,.(cia.il and: seasonal ` =tlirou.gb,ou~t-tlie,yea~r•.';: ~ •~t~ '~;~ f- '~- Cal~iforri'ia ~Incleperiderit~ -:.``f " f~'`. ~"~ ~ ~_ - , '-Sji'st~~m;Qperato'r.:chRafg'es:`-:~~ ~;~ _~ .. C' .. :. •,,.. :- -' v0. a-: O'Aerations.and'scfiec(u,l:irtg;: . , ~~:~ •. ®~ :~~ s. CCA arnrs~ ~ ~~.',.:~ . ~- • .: ~ ....~ _"~ ® .~ :;.s: .• ~ff - . ~. •-• :'~' Another+big question for` communities considering CCA is whether or ~ ; °.~'•1 ~' . ~. ~ , ,~ ~ •~ • ' ' . ~ . not to partner with other like-minded communities. AB 117 allows ~ ~` ~ ~ ~ ,.,~: ~', . • ~ '~,groups•of.cities.and.counties to join`togetflerto establish a CCA~program. ~'• ~i•` ~~• :.~~,.;T }.-- j' _ .. -This provides economies of scale for energy contracts,administration .'a"' '~'•~` "~~ •:~:,~~ - '.~ ~° ~ • -costs a.n:d~when` interfacing; with investor-owned utilities. ' . ` ~ ~ • ~~r ~~ ~a• •~A:study of seven Bay Area communities investigating CCA found that r'' }• ` . ~.' -,' if they formed.one joint CCA program instead of seven~individuaf ones, ~• '' ~,--.~ ~°• ~- ~~'= ~ --~ .-+~ ~• - ~•~ -~ ~ ~~ ~ they could save an additional 34%. Ajoint CCA may also reduce variability ~ ~~ California cities and ~'~ ~ " ~ iri electric.loads (fewer.usage.peaksand valleys), allowing for larger : ~: ;~; counties that are'exploririg ~:- .:' - baseload•contracts (with generally lower prices than peaking or spot- ~~ • . formation of a CCA• •~ mar.~ket contracts). ~ • • ~~= • • `~ ~ ~ .. • ~: °~. - ,~ - :. -~ Berkeley. ~ •• ; .. ~: 'Joint CCA programs will-likely require a joint powers agreement. That • ~ ~ - ~ ~ .~ geVerly Hills' •; •~~..pact.could~ result•in the'creation of.a single governing body making ~ f;:~~x~ ~ ~ '_ . ~~' -'~ decisioris:(about supply and rates) on behalf of all CCA customers, or . ;'::~ `I % Chula Vista' ~ ..,.°•,~•i • ~. ~-- }::~ . , .. ..:it'could'be more limited,whel;e cities or counties act together•on, -'y> > _ ~ ~ Emer-yuille°~. ,' .:~ • ~`~ ~ ' = _ ~ ~ some. issues and independently on•others (for example, group power ~•~ h'~~ -; Kings River' Conservation •`" • ' -: .A,"•~ -~purchases..and%or resource inyestments,;but setting rates separately,). •• ~ .. District (12.cities• in~the . ' ~, ~~ ' ~~-~'~''-Aq'indiVdual CCA could also act with another CCA to provide some ~' ~~ Fresno area and Kings ' • <~ .. _ • .. i ~"''' Count :':services;~such'as project financing; billing•and regulatory 'review. Getting ; s:-~; Y) • . ~ . ~~-: ~~•gdod legal:advice from_ your city or county attorney is essential. ~ , ~~~ ~:; ~~~i =; Los Angeles County ~ b `:::-:.;~~•Initially; most CCAs will ~likely•contract for administrative: operations,. . c,~-~... ~ Marin County •~ - ~ ~ .. :-::.~~;~ which. can be~a~ccomplished by using a single energy service provider or ~ ;"~ a Oakland ~ ~ -~~ - '~ multiple=cortractors (for'_eXample,gne for scheduling power deliveries, ~.~< ~:: ~ Pleasanton' ~~ ~ - ~ - - . • ,~'.~ another for customer service; and a'third for legal or regulatory services). ~ _ ~ ~ • - ~ ~ ._ Eventually, the CCA may hire-.%ts own staff to perform some or•all of . • ',X~~ ~ =Richmond - ' `" "'.these functions. The CCA should make these decisions to ensure the' :~'`~ ° --~ San~Diega County ~• ' ' ~,., programs~success and should be based on community preferences. ~:;~~, -~ San Francisco `•~ .' ° .l :~: ~. • ^F, . ~~ i' L, ""• ~, . '' i - =,:: ;r. t.; • _.. - .. ~. The infrastructure of buying electricity from a CCA '-1i°- ~°; J°,,,bq.y t'~ ~' 2y~i,?~i~~~i• fit" . i.• ~ ~ ~ti1.,~~,' ~• ~ ^p ~t~,y1;.~~'."S~~•~~ L~'~'`*•,~.'~~~•' ~ry '.C1.-,ppj; 'A`S~ tiC~\.. `( ~''~-~-'~..,..1.'~,~,`~'! ,~??C -~ ..,~~ ~1~~ti5+;3tavti+t~.r;.,~~~:rh.S~f:'.. 1 .:~ GENERATION TRANSMISSION DISTRIBUTION CUSTOMERS - % provided •.: remains utility -.% remains utility's -% choose by CCA or only responsibility generation investor- -•:• lines open to •-~ service remains suppliers owned utility all suppliers the same -% rates remain regulated ..,~ ._ i• ~•~ % San Marcos ~ - ;. '~ ~~~~•'~ -~.Wesf'Hollywood~~ ' ..:; a~~,: ~tr'~: .. 1. =~~ ` ti s ' + c ~ ~'~~` ° ~ ~ ~ . ~ k o x ~, ® Sit a~ - ° a ~ O _ • ~~Ki y~. •e .~..• 4.~ ::n ' ~• • ~•"- This°fact sheet was madepossible uvith funding from the U.S. ~~: t ~ • ~' Department of Energy and the California Energy Commission. +' ~ 'F' . . . :t