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Supporting Choice for Cities
• Public Sector Climate Task Force – comprised of cities and counties working collaboratively to reduce greenhouse gas emissions
• Smart Energy Enterprise Development Zone (SEEDZ) – private and public interests addressing energy challenges together
• Goal is to provide information our members can use to assess their energy choices
• Support powering the grid with clean & renewable energy sources, and recognize the critical role that competition and choice play
• Steve Tate, Mayor, City of Morgan Hill & Chair
• Environmental Sustainability/Climate Action Subcommittee:
– Jim Griffith, City of Sunnyvale
– Margaret Abe-Koga, City of Mountain View
– Burton Craig, City of Monte Sereno
– Rod Sinks, City of Cupertino
Marin Clean Energy
A not-for-profit, community based
renewable energy provider
About MCE
6
Agency formed in 2008
Service started in May 2010
Serving 125,000 MCE customers in Marin &
Richmond (approx. 77%)
Reduced >131 million lbs of greenhouse gases
Saving MCE customers $5.9 million in 2014
Customer Choice
7
PG&E
22% Renewable
MCE
Light Green
50%
Renewable
MCE
Deep Green
100% Renewable
MCE
Sol Shares
100%
Local Solar
MCE Power Sources 2010 - 2013
8
• Contracts with 12 energy
suppliers
• More than 54 MW of new CA
renewable energy under
development for MCE
customers
• Enough clean energy to
power approximately 23,000
homes per year
Community Benefits
Not-for-profit, public
agency
No shareholders
Local Reinvestment
9
MCE Local Development
10
Electric vehicle charging stations
Tesla pilot program
Bidgley Home Area Network pilot program
Marin Green Business program
Local Programs
11
Funded through Public Purpose Charge
No-cost energy assessments for multifamily properties and businesses
• Valued at $3,000 - $5,000
Cash rebates• Averaging 25-60% of project costs
No-cost direct installs for multifamily tenant units
Loans with on-bill repayment
$4.1M Energy Efficiency Program
12
Local Jobs
More than 1,300 California jobs created and supported
by MCE in less than 3 years
20 MCE employees
54 service vendors (34 local)
Energy efficiency jobs through: Rising Sun Energy Center,
RichmondBUILD, Marin City Community Development
District
Ruben Pendroza, RichmondBUILD graduate 13
PG&E
22%
MCE
Light
Green
50%
MCE
Deep
Green
100%
MCE
Local
Solar
100%
Delivery $36.24 $36.24 $36.24 $36.24
Generation $46.75 $40.13 $45.21 $72.14
PG&E Fees - $5.91 $5.91 $5.91
Total Cost $82.99 $82.29 $87.37 $114.29
Residential Cost Comparison
15
508 kWh E-1/Res-1
• Delivery rates stay the same
• Generation rates vary by service option
• PG&E adds exit fees on CCA customer bills
• Even with exit fees, total cost for Light Green is less
than PGE
Commercial Cost Comparison
16
PG&E
22%
MCE
Light
Green
50%
MCE
Deep
Green
100%
MCE
Local
Solar
100%
Delivery $137.97 $137.97 $137.97 $137.97
Generation $135.55 $111.00 $125.05 $199.51
PG&E Fees - $14.49 $14.49 $14.49
Total Cost $273.52 $263.46 $277.51 $351.97
1,405 kWhA-1/Com-1
• Delivery rates stay the same
• Generation rates vary by service option
• PG&E adds exit fees on CCA customer bills
• Even with exit fees, total cost for Light Green is less
than PGE
2013 Electric Power Content Mix
PG&E
MCE
Light Green
MCE
Deep Green
Renewable 22% 51% 100%
Bioenergy 4% 6% 0
Geothermal 5% 0 0
Small hydroelectric 2% 12% 0
Solar 5% <1% 0
Wind 6% 33% 100%
Large Hydroelectric 10% 10% 0
Natural Gas 28% 0 0
Nuclear 22% 0 0
Unspecified 18% 39% 0
TOTAL 100% 100% 100%
2012 GHG Emissions (lbs CO2e/MWh)
445 380 017
Seven New Local Projects Underway
1 MW solar carport shade structure in Novato (Q2, 2015)
Feed-In Tariff Projects: 286 kW rooftop solar at CostPlus building in Larkspur (Q4, 2014)
999 kW solar in Greenbrae (Q1, 2015)
1.5 MW solar at Cooley Quarry in Novato (Q1, 2015)
4 MW biogas at Redwood Landfill in Novato (Q1, 2016)
Local Renewable Development Fund Projects:2-10 MW solar at Richmond Chevron-owned property(Q3, 2015)
1.5 MW solar at Richmond Port brownfield site (Q2, 2016)
18
Community Choice Aggregation:
A Regulatory Perspective
Market Structure & Design SectionEnergy Division
California Public Utilities CommissionBy Will Maguire, Esq.
19
Community Choice Aggregators
• “CCAs” are a system adopted into law in the states of
Massachusetts, Ohio, California, New Jersey, Rhode
Island, and Illinois which allows cities and counties to
aggregate the buying power of individual customers
within a defined jurisdiction in order to secure alternative
energy supply contracts on a community-wide basis
• Goal: More local control of utility service
• Goal: More renewable energy than IOU (Critique of
Renewable Energy Credits (RECs)=“greenwashing”?)
• Consumers not wishing to participate can opt-out
20
21
Source: http://www.neuralenergy.info/2011/06/cca.html
CCA History in CA
• Authorized by AB 117 (Migden, 2001)
• Expanded by SB 790 (Leno, 2011)
– SB 790 also required CPUC to open
Rulemaking to adopt a Code of Conduct,
associated rules, and enforcement
procedures, to govern the conduct of an
electrical corporation relative to the CCAs
– D. 12-12-036
22
Code of Conduct highlights
• Limits utility marketing or lobbying against
CCAs
• No discrimination against CCA customers
or tying of benefits to bundled service
• Bi-annual audits of utility compliance
starting in 2015
23
CCAs: CPUC has a light regulatory touch
• P.U. Code 366.2 permits CCAs to enroll new customers unless they opt out of CCA
service.
• P.U. Code 366.2 (c)(3) requires CCAs to register with the CPUC and submit an
Implementation Plan and Statement of Intent for approval. The implementation plan
must contain all of the following:
• (A) An organizational structure of the program, its operations, and its funding. (B)
Rate setting and other costs to participants. (C) Provisions for disclosure and
due process in setting rates and allocating costs among participants. (D) The
methods for entering and terminating agreements with other entities. (E) The
rights and responsibilities of program participants, including, but not limited to,
consumer protection procedures, credit issues, and shutoff procedures. (F)
Termination of the program. (G) A description of the third parties that will be
supplying electricity under the program, including, but not limited to, information
about financial, technical, and operational capabilities.
24
CCAs: CPUC has a light
regulatory touchIn addition, a CCA shall provide for the following:
• Universal access
• Reliability
• Equitable treatment of all classes of customers
• Any other requirements established by state law
or by the commission
– Public Utilities Code 366.2 (c )(4)
25
CCA Registration Packet
CCA’s registration packet shall include:
• Service Agreement with the underlying utility
• Evidence of insurance, self-insurance or a bond that will cover
such costs as potential re-entry fees, penalties for failing to
meet operational deadlines, and errors in forecasting.
– $100,000 interim bond amount
– CPUC Decision 05-12-041 & Resolution E-4113
26
“Existing” CCAs
• Marin Clean Energy (MCE)
• San Joaquin Valley Power Authority
(SJVPA)
• Sonoma Clean Power (SCP)
• Lancaster Community Choice Aggregation
(LCCA)
• CleanPowerSF
27
CCAs: CPUC’s Role
• P.U. Code 366.2 (c ) (11) requires the Commission to proactively
expedite the complaint process for disputes regarding an
electrical corporation's violation of its obligations pursuant to this
section in order to provide for timely resolution of complaints made
by community choice aggregation programs.
• Informally mediate disputes between IOU and CCAs
28
• Please contact me with questions:
– http://www.cpuc.ca.gov/PUC/energy/Retail+Electric+Markets+an
d+Finance/070430_ccaggregation.htmCCAs
– [email protected], 415-703-2642
29
New Energy Choices Workshop
Melody TovarCity of Sunnyvale | Environmental Services [email protected]
Climate Action Plan adopted May 2014
Sets GHG Reduction Targets for 2020 and 2035
Exceeds AB32 Target
Energy Portfolio is 55% of GHG
Res/CommElectricity alone is 37%
0 100000 200000 300000
Open Space and Urban Forestry
Decrease Energy Consumption
Sustainable Energy Portfolio
Decrease Water Consumption
Reduce Landfilled Waste
Reduce Off-Road Eq Emissions
Improve Mobility - Land Use Planning
Sustainable Circulation and Transporation…
Optimize Vehicular Traffic
2020 GHG Reductions (MTCO2e/yr)
CCA realizes more GHG emission reductions than all other CAP measures COMBINED!
SystematicChange Big Impact Can Implement Quickly
CCA GHG Reductions
2020: 233,400 MTCO2e
2035: 338,420 MTCO2e
Assumptions for 2020 Reductions
80% participation rate
60% in Light Green (50% renewables)
20% in Dark Green (100% renewables)
Prioritized by Council for 2014 Funded for up to $30,000 “Pre-feasibility” Study:
Cities interested in a South Bay CCA
Costs and risks to establish a CCA
CAP actions that could be implemented through a CCA
How best to move forward, including framework and founding/lead agency
Contributing Funding
Sunnyvale
Mountain View
Cupertino
Interest Expressed▪ Los Altos Hills
▪ Monte Sereno
▪ Morgan Hill
▪ Santa Clara County
▪ San Mateo County
July August September October November December January
ID Study Partners
Refine Study Scope
Secure Consultants
To Council
Presentations to Community, Partners, and Commissions
Regional Workshop
Work with Partners and Consultants
Investigate similar efforts
Gathering Info & Interest
Feasibility Analysis
CCA Formation CCA Operation
• ID potential
agency partners
• ID opportunities,
costs, and risks
• Investigate other
CCAs
• Inform community
and gather
feedback
• Framework for
next steps
• ID partners &
funding
• Technical Study:
load and rate
analysis,
economics,
supply options,
environmental
outcomes
• Community
outreach & input
• Resolutions of
support
• JPA Ordinance
• Implementation
Plan to PUC
• Service
Agreements with
PG&E
• Bridge financing
to revenue
• Customer noticing
• Board of Directors
• Contracts and
Agreements
• Conservation &
Renewables
programming
• Customer service
$ X0 K $ X00 K $ X M $ XXX M
What do the
operations look like?
Is there enough Green
Energy out there?
Can CCA customers access
IOU and State programs?
How are existing customers
with rooftop solar treated?
What
happens to
Direct
Access
customers?
Wh
o o
ps o
ut?
How much funding can be
available for local conservation
and renewables programs?
How
a
re
co
mp
etin
g
lo
ca
l in
te
re
sts
ad
dre
sse
d?
How fast can we get this done?
How important is
the cost analysis?
What role does the
host or founding
agency play?
How well do the implementation
costs scale to community size?
CCA’s Top Ten List
1. Explain with a Picture
Default Provider not Opt-out Program
Community Choice -- who needs aggregation?
2. Use the Right Words
If we share a grid, how do I know my electricity is cleaner?
Really learn the answers.
3. Answer the Hard Questions
PG&E already has very low emissions
Target a small reduction at a lower price
4. Set Achievable Goals
✔ Track total emissions from household energy
✖ Build 100 MW of solar power
5. Create metrics, not plans
Use few, diverse sources
Use 3 or 4 standard contracts
6. Keep Supply Simple
Do not look at utilities for lessons
Think taco truck dance party home retrofit, not LED lighting giveaway
7. Programs Can Wait
49
SCP Generation Charge
8. Show the Bill
Killer rates = more participation = more impact
Avoid a primary supplier
Hire experienced power industry experts onto staff
9. Compete Like You Mean It
Community choice is viable for communities with:
200,000 or more people, and
Interest in competitive alternative to utility, and
Climate goals
10. Don’t Wait
Top 5 Tips for Elected Officials
1. Understand how CCA achieves your local policy objectives
2. Make the economic and business case … remember, CCA is a business concern, not a political football
3. Know the rules, do your homework, but also learn from others
4. Insist on robust public education; develop broad local support
5. Stick to your knitting… or, CCA is not the kitchen sink
The Thick Skin Rule: “Don’t Blink Unless You Have To”
For More Information:
Shawn Marshall, [email protected]
www.LEANenergyus.org(415) 888-8007
Now is the time to take control of your local energy future.
CCA is the path forward.
Why the Water Agency?
• Experience in power generation– Solar, Hydroelectric
• Member of Power and Water Resources Pooling Authority (PWRPA)
• Energy Policy– Board approved– Projects of Regional Benefit
• Experience with a multi-jurisdiction enterprise (water transmission system)
• Synchronous Boards– SCWA/County of Sonoma
Initial Approach
• Our goal was to be neutral
• Provide Information on
– Risks
– Benefits
– Process
• Answer Questions
• All inclusive
• Feasibility Study
& Peer Review of Feasibility Study
• Focus Groups to determine public interest
• JPA Formation
• Outreach to cities
• Draft Implementation Plan
& Peer Review of Draft Implementation Plan
Thorough Analysis
• Sonoma County Water Agency General Fund
– Derived from a small portion of County Property Tax
– Can be used at the discretion of our Board and General Manager
– Over 2.5 years we expended $1.7M
– Tracked costs, and converted costs into a loan to SCP
– Loan to be paid back with interest over 5-7 years
The Real Reason?
• Technical Assistance
– Local Renewable Resources Plan
• Project Development
– 36 MW of solar in development
• Local Airport
• Floating Solar
• Outreach to other communities
– Presentations/Mentoring/Etc.
On-going Involvement
The End
Governance Issues
Joint Powers Authority vs. single entity
JPA advantage – can form separate legal entity with finances that are wholly separate from participating jurisdictions Under California law, can immunize JPA
member jurisdictions from any liability for JPA debts and liabilities
Means no risk to general fund from CCA program
Governance Issues
Joint Powers Authority vs. single entity
Single entity advantage – can start up CCA program on its own, without needing to “convince” other jurisdictions at outset
Don’t have JPA liability protection but other means exist to shield general fund Can limit recovery of obligations under contract
to revenues of CCA enterprise, as is typical for revenue bonds
Governance Issues
If JPA selected, biggest political issue likely to be governance/board structure – who is in control?
Problem harder when there are large differences in sizes of participating jurisdictions
Makes one-member, one-vote board untenable to large jurisdictions and pure “weighted” voting method untenable to smaller jurisdictions
Governance Options
One director, one vote
“Pure” weighted voting (based upon load served in each jurisdiction)
“Double majority” requirement (action requires majority of board plus majority of weighted vote) Many possible permutations
Special protections for small jurisdictions for certain specific matters
How SCPA Addressed Governance Issues
SCPA has large differences among size of jurisdictions (currently Sonoma County and Santa Rosa account for 88% of load served)
Smaller jurisdictions worried about not having a significant say in Board decisions
Larger jurisdictions wanted to make sure that larger size counted for something
Through negotiations, created protections for both smaller and larger jurisdictions
SCPA Board Composition
Each participant gets to select one member to Board
Can be, but need not be, elected official
Special rule before many cities joined
County and Santa Rosa had two appointments until number of cities joining equaled 6 or more
Ensured larger, more diverse Board
SCPA JPA Voting Rules
Basic Rule – One member, one vote This has been followed to date on all votes
Option to call for weighted vote Any director can call for weighted vote on
any issues
If called, action requires both majority of members and majority of weighted votes
Promotes compromise and consensus
SCPA JPA Voting Rules
Special vote requirements
For amendments to JPA or involuntary termination of members, vote is on “weighted” basis and requires 2/3 majority
But – If member having more than 33% of voting shares votes “no,” then at least one other member must vote “no” to block action
Keeps one large member from solely blocking an action
Lessons re. Governance
Be prepared to negotiate and to accept conditions necessary to assuage fears of smaller jurisdictions
Keep “default” vote method as one member, one vote if possible
Remember governance issue is a very big deal during creation but not really an issue during operation Make sure you arrive at something practical
Lessons re. Governance
• SCPA JPA created two standing subcommittees
– Ratepayer Advisory Committee
– Business Operations Committee• RAC responded to public comment that ratepayers needed
separate institutional position; BOC seen as a way to let JPA Board devolve authority to a group with more expertise
• In practice, difficult to incorporate subcommittees, especially in start-up phase
• Advice: Refrain from setting up subcommittees in JPA; let Board form them, or form Board subcommittees to take on these roles if necessary
How to Communicate Risks?
Fully disclose and discuss the risks
Explain how they can be mitigated
Use the “worst case” scenario to the CCA’s advantage
The worst case is the status quo!
Being honest about risks increases your credibility and builds public confidence
What are the Risks?
CCA must ensure that electric load demands of customers are met at all times
CCA will meet this obligation by contracting for power or by owning generation facilities that can provide such power
Matching Demand and Supply
Challenges to matching supply and demand Electricity not storable, must balance supply
and demand in real-time
Peak demand times are few but nevertheless must be provided for
Future demands not certain, must be estimated Affected by level of opt-outs
Matching Supply and Demand
Three ways to provide supply, which can be combined
Spot market purchases
Price uncertainty
Short, medium, long-term contracts
Owned generation facilities
“Estimation” Risks
Risk exists that actual power demands will differ from estimates
In this situation CCA will have contracted for either too much or too little power
Depending upon circumstances, could result in a loss or gain
“Market” Risks
To avoid variability of “spot” prices, CCA will enter into term contracts for power supply
But this inherently gives rise to potential “market” risks
“Market” Risks
With any term contract a risk exists that the market price at any future date will be less than the price under the contract at that date – this is “market” risk
This risk is inherent and unavoidable, but can be mitigated
“Market” Risks
Mitigation method is same as that suggested for stock investing –Diversification of supply
Mix of short, medium, and longer term contracts
Mix of different types of power (although CCA goal of focusing on renewable power limits this somewhat)
“Regulatory” Risks
Power generation/distribution system highly regulated CPUC
FERC
Complex system lends itself to being “gamed” by larger players (e.g., 2001 power crisis)
Adverse regulations can increase costs to SCP (e.g., increase in “cost responsibility surcharge”)
PG&E could try to shift costs from “generation” to “transmission” or “distribution” categories, artificially decreasing its “generation” price
“Contract” Risks
Risk exists that if prevailing market prices are substantially higher than CCA contract prices, suppliers may be unable or unwilling to supply power to CCA at promised rates Particularly true of suppliers who are not supplying
from their own generation facilities
Can mitigate through contract collateral requirements (i.e., parties have to post collateral as difference between market price and contract price increases) Difficult for CCA start-up to do this
Worst Case
In the worst case situation, several risks combine to create a situation in which CCA rates rise significantly above PG&E rates
What happens?
Worst Case
High rates cause more SCP customers to return to PG&E
Leaves SCP with excess above-market rate supply, which it must sell for a loss
With smaller customer rate base, rates go even higher, causing more opt-outs, until SCP has insufficient revenues to pay debts
Worst Case
To mitigate impact of opt-outs, SCP can require imposition of “exit fee” on customers who want to opt-out
Fee would compensate SCP for “stranded costs” incurred in anticipation of serving these customers
This would be highly unpopular with customers
Worst Case
Ultimate worst case, bankruptcy of CCA
Note that worst case does not adversely affect participating jurisdictions’ general funds
JPA finances are completely separate
Customers returned to PG&E service
Who is harmed by “worst case” scenario? Creditors, suppliers – don’t get fully paid
Remaining SCP customers (higher rates until returned to PG&E)
Reputation of participants’ elected officials and staffs
At base, “worst case” is a return to the “status quo” with PG&E providing service again
The “Triple Firewall”
Three levels of protection for jurisdictions from CCA debts in a JPA structure
JPA Agreement can say no liability for members for CCA debts
Provisions in every CCA contract where counter-party agrees not to pursue CCA members
Can structure JPA so that jurisdictions in CCA program not even formally members of JPA
How Likely is Worst Case?
All risks can be mitigated through diversification and hedging strategies
Common in power industry
CCA must hire consultants to develop and carry out mitigation strategy
Structure portfolio so never get too far away from PG&E rates
How Likely is Worst Case?
Feasibility study for CCA should be based upon “conservative” assumptions
