Conversion to green energy could mean rate hikes for Claremont consumers
As the old song goes, it’s not easy being green. Claremont’s participation in the Clean Power Alliance is causing confusion with many residents and, unfortunately, things may get more complicated as the city once again finds itself at the mercy of the California Public Utilities Commission.
Claremonters will be automatically enrolled in the CPA February 1, just one day after the California Public Utilities Commission (CPUC) will enter its judgment on a request from Southern California Edison to recoup lost revenue through a “power charge indifference adjustment” (PCIA).
In concept, PCIA is similar to Golden State Water Company’s water revenue adjustment mechanism, or WRAM, a surcharge approved by the CPUC in 2008 to cover operating expenses.
The CPUC regulates investor-owned utilities operating in California. The entity is probably most familiar to Claremonters who watched their water rates skyrocket the last decade or so.
Established to protect consumers, the CPUC is tasked with reviewing rate increase proposals from utility companies, like its most recent request from Edison to significantly increase rates after a $983 million shortfall last year.
Edison says last year’s losses are due to under collection of fees after increased energy use during one of the hottest California summers. Another component is that Edison expects even greater losses this year as a result of customers abandoning the utility to join community choice aggregate programs across the state.
“While it is true that [Southern California Edison] has not sought to collect under collections from departing load customers in the past, it is a simple fact that the magnitude of [community choice aggregate] load departure in 2019 will be materially larger than previous load departures,” Edison said in a document filed with the commission.
In its recent proposed decision in favor of Edison’s request, the CPUC “authorizes Southern California Edison Company to collect in rates, over an 18-month amortization period, a $983.8 million under collection in the utility’s Energy Resource Recovery Account,” granting Edison’s request to collect not only from its bundled customers but from departing customers through a PCIA.
Claremont Public Information Officer Bevin Handel explains that as a member of the Alliance—a handful of cities working under a joint powers agreement to purchase low-cost renewable energy—Claremonters will be represented in efforts to contest the CPUC’s potential approval of surcharges.
“We don’t know the final decision yet,” Ms. Handel said, “but we’re included [in appeals] by the League of California Cities the same way we are with water. We have mandates we have to reach, and we have roadblocks to reaching those mandates.”
The mandates came under SB100, which calls for California utilities to offer 33 percent renewable power by 2020, 40 percent by 2024, 45 percent by 2027, and 50 percent by 2030. The final goal is for the state to achieve 100 percent clean electricity by 2045.
“We’re all trying to meet those goals, which is why the CPA and all of these things are coming about,” Ms. Handel said. “SB100 also applies to Edison, but they fought it.”
Edison initially resisted the schedule of implementing SB100—along with Pacific Gas and Electric Company and San Diego Gas and Electric Company—saying early on that the mandates could prove expensive for consumers.
But, by the fall of 2017, Pedro Pizzarro, president of Edison International, released a statement saying the utility looked forward to “working with regulators and stakeholders to ensure the cost-effective, reliable delivery of clean energy for customers.”
Edison’s application to the CPUC seeks to charge departing customers for the net cost of unused renewable power purchased under contract. In plain language, Edison purchased clean power for its customers and believes its customers who left for community choice aggregates (like Clean Power Alliance) should pay for the energy it bought, even if they’re paying for power elsewhere.
The CPUC indicated in its proposed decision that it approves of Edison’s request to recover its losses from customers who, at the behest of city councils and municipal governments across the state, were automatically enrolled in green energy programs.
Community choice energy programs are designed to allow local governments and cities to join together to purchase renewable energy as one entity, an exercise that often results in lower rates. Locally, green energy is offered through the Alliance at three tiers—30, 50 or 100 percent renewable—but Edison is expected to distribute the power, maintain power lines and provide billing and customer service.
Edison’s base rate customers are already receiving 28 percent renewable energy, which comes from a combination of sources—biomass, geothermal, hydroelectric, solar and wind. SCE also offers Green Rates at two additional tiers of 50 or 100 percent, both of which come almost entirely from solar sources.
Enrollment in the Green Rate option for Edison customers results in about a 3.15 cent higher charge for each kilowatt hour of usage, and customers can de-enroll at any time without penalty.
Clean Power Alliance “periodically purchases wholesale electric energy and capacity from generators and suppliers, including local renewable and carbon-free energy,” according to its website. A specific percentage breakdown of energy sources is not yet available.
Originally called the Los Angeles Community Choice Energy (LACCE), the Clean Power Alliance launched with just three agencies and by April 2017, the LA County Board of Supervisors approved a motion for LACCE to negotiate a joint powers agreement, along with $10 million in funding to begin operation.
Its purpose was to “be a national leader in providing members with choices of lower cost, greener, and locally-produced energy by creating a model for a new, sustainable 21st century economy.”
In February 2018, through a media release from the Los Angeles Chief Sustainability Office, LACCE re-branded to Clean Power Alliance, which is governed by a board of directors, whose members serve as the rate-setting entity and establish policies for power procurement.
In late 2017, LACCE began actively recruiting cities in Los Angeles County to join, with each member agency appointing a director to the governing board.
The previous Claremont City Council voted in favor of joining the community choice aggregate at its October 24, 2017 meeting.
At the November 14, 2017 council meeting, as previously reported by the COURIER, councilmembers received a written explanation from Diana Mahmud, a South Pasadena city councilmember. In a somewhat complicated explanation, Ms. Mahmud addressed Edison’s request for rate recovery from the CPUC.
“IOU’s ‘stranded costs’ resulting from departing load that is being served by CCAs, there is proceeding at the CPUC that will address the IOUs’ contention that they are not recovering from such costs,” she wrote to the council. “I have asked around and everyone I have spoken to believes any change in the PCIA will only take prospective effect. If the PCIA increases, it shouldn’t cause CCA rates to increase above SCE’s rates…because we don’t know the outcome of the PCIA proceeding at the CPUC. I think the major advantage to LACEE participation is local control.”
With a 3-2 vote, the council narrowly approved joining the Alliance—Councilmembers Sam Pedroza, Corey Calaycay and Joe Lyons voted in favor, and Larry Schroeder and Opanyi Nasiali voted no. Mr. Calaycay currently represents Claremont on the CPA board.
The Clean Power Alliance has now grown to include 29 cities in Los Angeles and Ventura counties. How Edison rates are ultimately impacted for community choice aggregate customers will be decided today, February 1, when the CPUC renders its final decision.
Edison customers can opt out of the Clean Power Alliance during the first 60 days with no penalty and the freedom to return during the first year without a fee. Visit cleanpoweralliance.org, go under the “rates and options” tab and click “opt out.” Those who wait until after the 60 day grace period to opt out can return to the Alliance for a transitional fee.
Those who do nothing are automatically enrolled at the “Clean Power” tier, which provides 50 percent renewable energy. For more on Edison’s Green Rates, visit sce.com or call the customer service number on your bill.