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HomeMy WebLinkAboutItem 3.3 Update on the Countywide Community Choice Energy Projector 19 82 !ii � 111 DATE: TO: FROM: SUBJECT STAFF REPORT CITY COUNCIL April 19, 2016 Honorable Mayor and City Councilmembers Christopher L. Foss, City Manager " Update on the Countywide Community Choice Energy Project Prepared by Linda Smith, Assistant City Manager EXECUTIVE SUMMARY: CITY CLERK File #1020 -10 Alameda County and the cities therein are exploring the possibility of establishing a community choice aggregation program also known as a community choice energy program. At this meeting, County staff will present an overview of community choice energy, the current status, and next steps for the potential County- sponsored program. FINANCIAL IMPACT: The County has indicated that member agencies are not expected to contribute to start -up costs. The County's expenses associated with the current exploratory efforts would be repaid by program revenues. RECOMMENDATION: Staff recommends that the City Council receive the report. DESCRIPTION: In June 2014, the Alameda County Board of Supervisors allocated $1.3 million to explore the possibly of establishing a Community Choice Aggregation (CCA) program Countywide, which is being called East Bay Community Energy (EBCE). If established, EBCE would be a joint powers authority (JPA) that aggregates electricity demand from participating Alameda County jurisdictions in order to procure electricity for its residents and businesses. Unlike a municipal utility, a CCA does not own the transmission and delivery systems, but is responsible for purchasing the electricity used within its jurisdiction. At the same time, energy transmission, distribution, repair, customer service, and billing would continue to be administered by PG &E. Importantly, customers have a choice to continue to purchase power directly from PG &E by opting out of the CCA if they so choose, and customers who receive electricity from a CCA are still entitled to PG &E's special pricing, efficiency programs, and rebates. The Alameda County Community Development Agency (CDA) is currently in the process of conducting a feasibility study for the establishment of the EBCE program. In June 2015, the CDA established a Steering Committee to advise the Board of Supervisors during this process. On April 7, 2015, the City Council received a report that the County was researching the CCA Page 1 of 3 ITEM NO. 3.3 program, and designated City Staff to the County CCA Steering Committee (Attachment 1). The Committee is made up of both experts and stakeholders from across Alameda County. It provides a forum through which interested parties and the public can express their views. The Steering Committee has been meeting monthly since June 2015 and has 39 members. Steering Committee meetings are focused on discussing the feasibility of an EBCE and preparing for the potential creation of a JPA. EBCE would seek to provide cleaner and less expensive energy to residents and businesses in its service area. The CDA issued an RFP in August 2015 and subsequently awarded a contract to conduct a technical feasibility study to establish the Countywide CCA program, and City Staff has submitted Dublin's PG &E electricity load data to evaluate the City's potential inclusion within the analysis. This analysis is critical to assessing whether a CCA Program will make economic sense, can provide competitive electricity rates with PG &E, and can meet local environmental objectives, including the projected impacts of various clean energy and greenhouse gas reduction scenarios. The preliminary results of the study are expected in May 2016. The Steering Committee has established the following goals for the potential EBCE program. The goals, as ranked by the Steering Committee, are that EBCE should offer: 1. An electric supply portfolio with a lower greenhouse gas (GHG) intensity than PG &E. 2. An electric supply portfolio that has a higher renewable energy content than is offered by PG &E and also meets or exceeds the State's renewable portfolio standard. 3. An electric supply portfolio and CCA program offerings that support the achievement of city and county Climate Action Plan goals. The following two issues tied for fourth: 4. Overall rates and customer bills that are lower than or competitive with those offered by PG &E. 4. An administering agency that is financially sustainable, responsive to County and regional priorities, and well- managed. As part of the report to the Dublin City Council„ Alameda County staff will provide a presentation including an overview of EBCE, the potential benefits and risks of EBCE, the status of the technical study, the timeline leading to the potential launch of the program, and plans for outreach to community groups and customers. A staff memo provided by the County and Frequently Asked Questions document about CCAs are included for reference as Attachments 2 and 3. Assuming the EBCE program is established, after two to three years of operation it may have the revenue and credit history needed to invest in local renewable energy generation that will create local jobs. As noted above, the Steering Committee's priority for "overall rates and customer bills that are lower than or competitive with those offered by PG &E" ranked fourth, below GHG emissions, renewable energy content, and achievement of climate action goals. More specific information about job creation and rates will be available when the technical study is released later this year. The Steering Committee meetings have been open to the public. This City Council meeting is the beginning of a robust public education and outreach campaign that County staff will manage through and beyond launch of the program. Page 2 of 3 Staff will return to the City Council in the summer with results from the technical study, which will include information about possible rates and percentages of renewable energy that would be offered. Staff will likely return to the City Council in September for consideration of participation in EBCE. The tentative deadline to join the JPA is October 31, 2016 and the first JPA Board meeting envisioned for November 2016. The County's goal is to launch EBCE in the spring of 2017. NOTICING REQUIREMENTS /PUBLIC OUTREACH: None required. ATTACHMENTS 1. Staff Report — April 7, 2015, Item 4.3 2. Correspondence — Alameda County Community Development Agency 3. Frequently Asked Questions — Community Choice Aggregation Page 3 of 3 or r�(r DATE: TO: FROM: SUBJECT: STAFF REPORT CITY COUNCIL April 7, 2015 Honorable Mayor and City Councilmembers CITY CLERK File #610 -40 Christopher L. Foss, City Manager ' Appointing a City Representative to the Alameda County Community Choice Aggregation Steering Committee Prepared by Assistant to the City Manager, Roger Bradley EXECUTIVE SUMMARY: The City Council will consider appointing a representative to the Alameda County Community Choice Aggregation Steering Committee. FINANCIAL IMPACT: None. RECOMMENDATION: Staff recommends that the City Council: 1) Appoint Assistant to the City Manager Roger Bradley as the City's representative to the Alameda County Community Choice Aggregation Steering Committee, 2) Appoint Environmental Coordinator Martha Aja as the alternate representative, and 3) authorize the City Manager to send a letter to the County indicating these appointments. DESCRIPTION: The City received correspondence from Alameda County Supervisor Scott Haggerty (Attachment 1), indicating that the County is forming a steering committee to provide direction and input on the analysis and potential deployment of Community Choice Aggregation (CCA) within Alameda County and perhaps to the surrounding region. A CCA is a program available within the service areas of investor -owned utilities, such as PG &E, which allows cities and counties to aggregate their residents' and businesses' energy demand and purchase and/or generate electricity on their behalf, using PG &E's energy distribution system. Similar programs are currently operational within Marin and Sonoma counties, and Alameda County had begun the exploratory process for a program of its own. The attached correspondence indicates that the Steering Committee will begin meeting in May 2015, and Staff would recommend that the City participate in the process, allowing the City to be formally represented on the Committee and present the City's unique perspective and gain access to first -hand information helping the City evaluate opting into any potential Alameda County CCA in the future. The County has requested that the City appoint both a primary and alternate representative to the Steering Committee. Page 1 of 2 ITEM NO. 4.3 Staff recommends that Assistant to the City Manager Roger Bradley be the primary representative and Environmental Coordinator Martha Aja be the alternate. Both these individuals have been involved with the CCA process to date, and will be able to provide technical information regarding the City to the County as it proceeds thorough the CCA process. An official letter from the City is requested appoint the City representatives, and Staff is recommending that the City Council authorize the City Manager to send correspondence indicting these appointments. NOTICING REQUIREMENTS/PUBLIC OUTREACH: No noticing required. ATTACHMENTS: 1. Letter from Alameda County Supervisor Scott Haggerty Page 2 of 2 N�r BOARD OF SUPERVISORS SCOTT IIAGGERTY PRESIDENT SUPERVISOR. FIKHT IIISTRICT Date: March 12, 2015 To: Mayors and City Managers, all municipalities in Alameda County From: Scott Haggerty, President, Alameda County Board of Supervisors Subject: Community Choice Aggregation (CCA) Program, Steering Committee Formation; Invitation to Appoint Members Dear Mayors and City Managers: As you may recall, the Alameda County Board of Supervisors has directed the Community Development Agency (CDA) to determine if a Community Choice Aggregation (CCA) program is feasible for Alameda County. A CCA program would allow for competition in electricity generation services and accelerate investments in clean energy resources and local energy projects. Central to this initiative is the creation of a CCA Steering Committee that will advise the Board on key aspects of the program's development and provide a folurn through which key stakeholders and the public can express their views, The Alameda County Board of Supervisors Transportation and Planning (T &P) Committee, at its March 12, 2015 meeting, directed County staff to assemble the Steering Committee to help guide the ongoing process of establishing a CCA program for Alameda County and any municipal jurisdictions within the County who wish to participate. This letter to your Municipality is an invitation to appoint a member, plus an alternate, to the Committee, such that your jurisdiction may be formally represented on the Committee. The cities have already assisted the CCA process by allowing the County to request electrical load data, and designating Steering Committee membership is the next logical step in the CCA process. The T &P Committee, based on feedback from earlier meetings, input from stakeholders, and CDA internal discussions, determined that a single steering committee with the composition outlined below would be the most productive, streamlined, and inclusive approach for all concerned. County CDA will prepare all materials for the Committee meetings and will serve as committee staff. The Committee would act in an advisory fashion to the County of Board of Supervisors. It is expected that the Committee would function for a period up to approximately two (2) years, until a possible Joint Powers Agency (JPA) takes over implementation of the CCA Program. Some of the earliest tasks of the Committee will be to finalize the scope of the CCA technical study, which will be required to size the CCA program and determine its overall feasibility; and also to help refine the goals and objectives of the CCA program going forward for ultimate guidance to the JPA and CCA agency that would be formed to carry the program forward once it is established. As time passes, the Committee will undoubtedly discuss many other matters related to CCA formation. The single CCA Steering Committee would consist of the fallowing groups: 1. Two to three appointees from each of the five Supervisorial Districts. These appointees will represent both geographical diversity across the county and diversity in stakeholder interests and expertise (see more detail below), 1221 OAK STREET * SUITE 536 • OART AND, CALIFORNIA 94612 • 510 272.6691 P FAX 510 208.3910 4501 PLEASANTON AVENUE • PLEASANTON, CALIFORNIA 94566 • 925 551 -6995 • FAX 925 484.2809 PRIN'TE'D BY U141ON JAROR • LOCALs a42 & 016 2. One representative from each of the County's 14 cities, These participants will be selected by city officials and may or may not be city staff or councilmembers, Whoever is designated will, by proxy, participate on behalf of their jurisdictions and should have decision - making authority. In addition, one representative from the County's unincorporated area, appointed by the Board. 3. A small number of "at large" representatives (three to five) that have either: (a) particular energy expertise (e.g., distributed generation /clean power technology); or (b) county -wide or regional interests (such as major public entities or organizations). Staff recommends that these committee members be appointed by their respective organizations. This composition would mean the Committee would have a minimum of 26 and maximum of 33 members (we feel it would be difficult for the body to be effective if it is larger than this). For Category I described above, the County has adopted a simple application process to fairly solicit and qualify interested participants. For your information, attached is a sample application form for the County Application process, which will be posted on the CDA website, distributed through the County's CCA list serve, and also be made available to a wide array of stakeholders through traditional means. As mentioned above, it will be important to have a diverse set of interests represented, including end users, labor unions, environmental organizations, civic and business groups, community organizations, social justice groups, etc. Given size limitations intrinsic to any committee of this type, there may be some interested parties who are not formally appointed; however, all meetings will be open to the public, and sub - committees may be formed as appropriate. The Committee will be subject to the Brown Act and will meet on a monthly or bi- monthly basis throughout the CCA formation process. Proposed Timeline: The County has adopted the following rough timeline for creation of the Committee: • Application form posted and sent: March 12, 2015 • Application Deadline: March 7, 2015 • CDA review and preliminary recommendations completed: April 20, 2015 • Board of Supervisors Approval: Week of May 5, 2015 • Notification to Steering Committee Participants: Week of May 5, 2015 • First Meeting of Steering Committee: Week of May 18 or May 25, 2015 If an individual City camiot meet this schedule, the first meeting would still be held at the specified date; however, each City would be welcome to join as its appointments are made. In conclusion, I request that you provide my office with a letter, on your City's letterhead and under your signature, indicating that your municipality wishes to participate in the Steering Committee and will select a representative to the CCA Steering Committee. There is, of course, no obligation on your part to reply to this letter or to participate in the Committee, but we feel that your participation would help the CCA process to be as comprehensive and inclusive as possible, and would result in the best possible committee process, and ultimately, a CCA program that works effectively for all interested municipalities. Thank you for your consideration in this matter. If you have any questions or comments, please contact Mr, Bruce Jensen, Senior Planner with the County Community Development Agency, at (510) 670 -6527 or at Sincerely, Scott Haggerty, President Alameda County Board of Supervisors ±" ATTACHMENT -1 ALAMEDA COUNTY COMMUNITY DEVELOPMENT .AGENCY Chris Bazar Agency Director MEMORANDUM 224 West Minton Ave Roorn 110 DATE: March 29, 2016 Hayward, Cafifomia 94544 -1215 TO: Alameda County City Councils and City Managers ty tY ty � i Phone FROM: Chris Bazar, Alameda County Community Development Director 510.670-6333 4 51 0.670.6374 I � RE East Bay Community Ener gy www.aogov.orglcda I Thank you for the opportunity to address your elected body; we are very excited about the road ahead as we make our way towards the creation of an Alameda County Community Choice Aggregation {CCA} energy program. i As you may know, the Alameda County Board of Supervisors voted unanimously in June 2014 to allocate $13M to explore the creation of a CCA program, and directed County staff to undertake the steps necessary to evaluate its feasibility. CCA enables local jurisdictions to procure electricity on behalf of customers within their borders. Established by A.B117 in 2042, California currently has four active CCA Programs in Marin, Sonoma, and San Francisco Counties, as well as the City of Lancaster. Dozens of other local governments are exploring CCA options across the State. Here in Alameda County we are now more than 18 months into a rigorous community process that includes representation from all eligible cities in our County, as well as a robust steering committee that includes stakeholders from environmental and social justice organizations, labor, regional government, and more. One of the major milestones in assessing the viability of a CCA prograin is completion of a technical/feasibility study, which we expect will be completed in the next two months. Assuming we get results from our technical study comparable to what other jurisdictions have seen, we expect a CCA program would be very feasible and could result in an East Bay Clean Energy program serving 1.5 million residents that would be the largest in the state. Our technical study also includes an economic development and job creation element to ensure project benefits can be achieved locally. Our work in creating a Joint Powers Agency (JPA) is also well underway. A draft document is being reviewed by your City Attorneys in coordination with our County Counsel; the object is to help City Attorneys become comfortable with the terms and language for eventual inclusion of the jurisdiction into the JPA. We hope to have every eligible city in Alameda County as a member of the JPA by Fall 2016. Through the spring and summer we will be visiting each city represented . on the steering i committee (all cities in the County except Alameda) with a brief introduction/preview into the CCA concept, plus an update on the work to date. These presentations are intended to cover CCA generally, answer any questions about the process, and help prepare the various City Councils/City Managers to take the necessary steps to join the JPA in the fall of 2015. Page I of I i C11W 9 Choice Aggregation The County welcomes your participation and that of all interested stakeholders. As a stakeholder, you are invited to receive updates and notices about the County's exploration of a Community Choice Aggregation program. Sign up for this Alameda County list serve at, www.aegov.org/cda/planning/ esubscribe.htm For any questions or comments, please contact Bruce Jensen bruce.jensen @acgay.org 510 -670 -5400 i ! 1 This document is intended to clarify questions about a potential Community Choice Aggregation (CCA) program in Alameda County. County staff is working with stakeholders and local government officials to examine the economic benefits, risks, and feasibility of CCA in Alameda County. What is Community Choice Aggregation [CCA]? Community Choice Aggregation enables the County and /or its cities to pool the electricity demand of participating communities' homes, businesses, and municipal facilities to buy and /or develop power on their behalf. The electricity continues to be distributed and delivered over the existing electricity lines by the incumbent utility, which is Pacific Gas and Electric {PG &E} in Alameda County. How does CCA work? The CCA operates as a non - profit public agency with a publicly accountable board of directors. Based on the values of participating communities, the CCA can choose what type of electricity to purchase and where the electricity originates (or is produced) geographically. This means that the CCA program can buy renewable, low carbon emission energy and support the State and local economy by purchasing energy produced in the State of California, regionally and locally. It can also offer locally tailored energy programs and attractive financial tools that support energy efficiency programs, ownership of rooftop solar and other renewable technologies and strategies. How tai linwgy AggiegatYort Works A ■■ a4 iii i MEN , K_-V,T;DZ delivery customr G -Al UTILITY YOU buying & building debverpn� energy, benOttirg from elecOcity supply rnaintoirr ng iine!5, arfordalgle rtes. billing custorner5 IOC8l Control, cleaner energy CCA , r. -'ty A" dfi+d Choice page 2 of 4 Aggregation Is CCA a market -based approach? What other California Counties /Communities Yes, CCA is a market -based approach enabled through Public- Private Partnerships. Unlike other services such as phone, cable, and internet, owners of homes and businesses do not currently have a choice of electricity supplier. As a regulated monopoly, PG &E does not have any competitors forcingthern to provide lower rates, cleaner energy, or innovative services. What makes CCA so powerful is that it supports several levels of market competition: first by providing a choice to consumers and second by sourcing its power through a competitive process whereby private energy companies and project developers compete to provide clean power at the lowest price. Are CCA programs successful? Community Choice Aggregation is currently available in seven states including California, Illinois, Massachusetts, New York, Ohio, New Jersey, and Rhode Island. CCA is a flexible tool that is successful in both small rural counties and in large urban cities. In California, Marin Clean Energy was the first CCA program in the state. It started with 14,000 customers three years ago and now has over 165,000 customers. Sonoma County also successfully launched a CCA program in 2014, and the City of Lancaster began its own program in May 2015, and the City and County of San Francisco will launch its program in May 2016. are exploring CCA? Communities throughout California are exploring CCA, including the cities of San Francisco and San Diego, San Mateo County, Monterey County, San Luis Obispo County, Santa Cruz County, San Benito County, Santa Barbara County, Yolo County, and several cities in Silicon Valley. How will customers be impacted if a CCA is created in Alameda County? Day -to -day, most customers will not notice any change other than a CCA line item on their utility bill that replaces PG &E electric generation charges with the CCA's electric generation charges. The real difference is that the electricity procured on their behalf is cleaner, with fewer greenhouse gas emissions than what is currently offered by PG &E. In addition, customers will probably notice that their electric generation rates are lower and remain more stable, and that they have access to new energy efficiency and other clean energy programs helping to make their home or business more comfortable and cost effective. They may also notice more clean energy projects going on in their community (e.g., new solar installations on schools or municipal buildings). How would an Alameda County CCA be funded? Like any worthwhile investment, CCA formation requires an initial start -up investment and an attractive return. Start -up costs are estimated at about $3.25 million. This small investment establishes a much larger publicly held joint powers agency focused on clean energy and investment of electricity revenues here at home. After operation begins, the CCA is self - funded through ratepayer revenues and the start- up investment provided by the County will be paid back. Are all cities in the County required to participate? A CCA does not have the authority to compel any city to participate, and any city can choose to remain with the original utility (in this case, PG &E). A City may also decide to join at some point after CCA program establishment. CCAity Choice Aggregation Would customers have to participate in a CCA if they are in the service area? No. Although the CCA would become the default service provider of electricity for the County and any participating cities, customers always have the choice to purchase their energy from the existing investor -awned utility company. Prior to the beginning of a CCA's operation, all electricity customers will receive at least four "opt -out" notices during a sixty -day period at which time anyone can opt -out of the program at no cost. There is an additional sixty -day period after the start of the program during which any customers can opt out at no cost. After that, customers may still opt -out for a nominal fee. After opting -out, the customer is prohibited from returning to the CCA for a period of one year. Will taxes increase? A CCA does not have the ability to tax and has no impact on taxes. A CCA is completely revenue funded, requiring zero tax dollarsfrom customers or participatingcommunities. What about PG &E? Where do they fit in? PG &E remains an important partner in an Alameda County CCA program. Under a CCA, PG &E continues to deliver reliable power, maintain the power lines, respond to service outages, and handle customer billing. Customers will still notice PG &E's distinct blue service trucks working in their neighborhood and community. Alameda County is committed to supporting a successful partnership with PG &E. PG &E is an investor -owned utility, operating as a regulated monopoly by the State of California. Under its agreement with the State, PG &E is guaranteed an annual shareholder return to reliably deliver power and to build and maintain power lines. Per statute and codified in the CCA/ UtiIity Service Agreement, PG &E must fully cooperate with any community that wishes to form a CCA progra m. Would County or City General Funds be at risk? Within the joint powers agency structure, there is no risk to local government general funds. A CCA's budget is completely separate from the general funds of participating local governments, protecting both local governments and the CCA. Additionally, pressure on general funds may be alleviated due to an increase in financial and human resources focused on energy and climate goals throughout the region. 1- -1 page 3 of 4 How would a CCXs rates compare to current rates? Studied observation of both forming and operating CCAs in California indicates that rates will be competitive with PG &E and are likely to remain so for the foreseeable future. Though there is no guarantee, Community Choice Aggregation programs in California and other states have frequently offered lower rates than their investor -owned utility competitors. How would a County /Regional CCA be structured? A CCA operates as a non - profit public agency with a publicly accountable board of directors made up of elected officials from participating communities. A CCA uses a very common legal structure for municipal public entities called a Joint Powers Authority (J PA). The JPA creates a legal structure that separates participating local governments and the CCA from any transfer of financial risk. Since a CCA operates as a public business, it would strategically maintain a lean staff; operation and administration expenses in both Merin and Sonoma account for only 5 -6% of their CCA's overall operating budget. CCA . ��nity I M �'� �j�(�df1Md Choice ��1 - -- page 4 of 4 Aggregation How is a CCA program set up? Do the electrons purchased or generated by Local governments must pass an ordinance to join a CCA program, and the CCA agency must draft an Implementation Plan that is approved by the CPUC. This is typically done after an initial technical study to determine the amount of electricity that will be required and to examine a CCA's ability to be cost competitive with PG &E. The Implementation Plan outlines how the CCA will function, how it will set rates, how it will procure electricity, and how it will carry out all other functions required under CPUC regulations. Isn't renewable power more expensive than regular electricity? Wouldn't a CCA's rates be higher? The dominant trend over the past thirty years for the classic fossil - fueled source of electricity has been towards increased costs. The dominant trend over that same time period for renewable energy has been towards decreased costs, and this trend continues to accelerate. Once the initial investment is made, the fuel for most renewable technologies, like wind and solar, is free. In many places in the United States, including California, renewable energy is competitive or cheaper than fossil fuels. California has abundant solar, geothermal, wind and (potentially) tidal energy resources that have yet to be tapped. To date, CCAs in California have been able to offer 25 -30% cleaner energy at lower costs to the customer than PG &E. What about natural gas? Isn't it cheap right now? Yes, compared to historical levels, natural gas is inexpensive right now. Future natural gas prices are uncertain, however, and many experts expect prices to rise in the near future when considering increasing US exports to meet growing demand in developing markets such as China and India. A CCA would strive to achieve the best balance between cost and environmental benefits, which may include a natural gas component. Some CCA programs, however, have made policy decisions to not procure coal or nuclear resources to supply their local power needs. the CCA actually go to my house? No, when we say that the CCA supplies power to customers, we mean that the CCA puts the same amount of electricity onto the grid that its customers use. When the individual electrons from all power resources go onto the grid no one can determine which electrons go where. Think of it as depositing $100 in one ATM and taking out $100 in another. It's not the same $100 bill, but it's still your money. One can think of electricity in the same way. If you consume 500 kilowatt-hours in a month, the CCA must supply 500 kilowatt-hours to the grid on your behalf. The advantage of a CCA is that what's supplied to the grid on your behalf can be both cleaner and less expensive than what PG &E is putting on the grid. If I installed solar panels on my home or business, would I need a Power Purchase Agreement to sell our excess energy to a CCA? No. This is called net metering, and the CCA would be able to offer property owners fair market rates for their excess energy production without a Purchase Power Agreement, even if that solar installation took place before the CCA launched. CCAs have been able to offer better net metering rates for customers who generate surplus electricity, and those customers would automatically be enrolled into a CCA's net metering program, unless they choose to opt -out and remain with PG &E. Larger solar projects that are "in front of the meter" can also be facilitated under a CCA's feed -in -tariff program which uses a standard power contract with set prices to buy all the power generated from that facility on behalf of CCA customers. Are there other websites /resources I can check out? Yes. For information about Marin's CCA program, visit: www.mcecleanenergy.com For information Sonoma's CCA program, visit: www.sonomacleanpower.org For general information about CCA, visit: www.leanenergyus.org