Should Claremont have Community Choice Energy Aggregation
by Freeman Allen
Claremont is considering an arrangement under current legislation and under the auspices of the California Public Utilities Commission where the city would purchase its own electricity and SCE would continue to transmit it and manage monthly billings.
This would be under an optional program called Community Choice Aggregation (CCA) that allows users to choose how much of their electrical power comes from renewable sources such as wind or solar: 28 percent as at present, 50 percent or 100 percent. There is also a cost saving over what SCE charges, and it would give us the advantage of local control over how those savings, and other funds, can be deployed in our city. Individuals could opt out of the CCA and go with SCE at any time.
It is not a simple matter to run an electrical utility. Claremont could choose to do so alone, or join with other cities in a Joint Powers Authority (JPA) where tasks such as contracting with energy suppliers and billing would be shared. Our city staff recommended Claremont join a relatively new JPA for cities in Los Angeles County: the Los Angeles Community Choice Energy program (LACCE). The city council will make this important decision at its next meeting on November 14, but it is not easy as there are many unknowns and questions to consider.
Members of CHERP and Sustainable Claremont asked Howard Choy, retired general manager of the County Office of Sustainability and initiator of LACCE efforts, to help answer questions. His replies, and those of others, are summarized here.
Question: If decisions are made by a large board with representatives from many cities won’t Claremont’s voice be drowned out?
Answer: A 30, 40 or 50-plus member board won’t work well, but it may be years before that happens, if ever. By joining LACCE now, Claremont will have more influence on any future governance changes.
Q: What are the advantages of having Community Choice Aggregation?
A: Local control, greener energy options and money saved. Local control includes making decisions on where we buy power, the mix of power to purchase, setting rates to meet special needs such as low income or supporting local solar generation, leveraging additional funds (such as cap and trade) for city energy needs, and design of customer programs that help save or generate energy.
Q:?This is very complicated. How will it work? What are the advantages?
A:?For a description of the program, visit the LACCE website green.lacounty.gov/wps/portal/green/lacce.
Q:?How can LACCE provide power at a cheaper rate than SCE?
A:?SCE makes a profit, provides shareholder returns and corporate bonuses; SCE salaries are typically higher than in CCAs; SCE administrative costs are higher than CCAs. CCAs throughout California have a history of providing lower rates than SCE or PG&E. LACCE’s 50 percent renewable rate is 13 percent lower than SCE’s 50 percent renewable rate, LACCE’s 50 percent renewable rate is four percent lower than SCE’s base rate (28 percent renewables). LACCE provides higher levels of renewables than SCE and at lower rates across the board!
Q:?Two decades ago there was a fiasco caused by energy deregulation. How do we know this won’t happen again?
A: This is not a similar situation. The “fiasco” was caused by a shortage of energy within the state. Now there is an abundant energy supply in California, especially at peak periods such as hot summer afternoons, thanks to a huge amount of solar and wind power being generated. CCA boards, with their staff and consultants, will decide from whom and where to purchase power, not a private-for profit investor-owned utility.
Q:?In Marin, CCA customers saved only $1 per month. Is a CCA worth the effort?
A: I believe there are temporary periods where northern CCAs, like Marin, have chosen to manage revenues so that they stay “competitive” with PG&E (e.g., even $1 per month lower). These temporary periods are driven by variable “stranded costs” such as long-term energy supply contracts that CCAs must reimburse PG&E for that were executed in the past. Marin and other CCAs conserve their revenues and use them periodically to maintain their rate competitiveness with PG&E. CCAs should be cost-competitive with investor owned utilities, and they have important advantages other than saving money, such as increasing local control and reliance upon renewable sources of energy.
Q:?Setting power delivery schedules and rates is complicated. Do we want to take that on?
A: CCAs routinely use industry-knowledgeable consultants to do this.
Q:?California already has alternate energy mandates. Customers may not choose high-renewable options. Why are CCAs needed?
A: CCAs are accelerating demand for renewable energy by providing less costly options for customers to choose plans with higher renewables content. For example, Los Angeles has a 50 percent renewable mix which is at a lower cost than SCE’s 28 percent renewable mix.
Q: Rather than allow a CCA option, why didn’t the state simply mandate that a higher rate of alternate energy be supplied by the utilities?
A: Legislation in this past session would have accelerated the rate that utilities and CCAs must provide alternate energy, but it did not pass (it will probably come up again next year). CCAs provide a local decision-making mechanism for a city to provide leadership in GHG reduction—a top California goal.
Q: Under SB 100 California would mandate 100 percent renewables, so why should we become involved with a CCA?
A: See the answer above. As experience has shown, even when the state mandates minimum levels of renewable power, CCAs have led the way in offering cost effective rates which go beyond the state’s minimum mandates. Even the proposed legislation (SB 100) would not get us to 100 percent renewables until 2045. CCAs can achieve this much faster.
There is risk not only in pursuing a CCA program, but also in not doing so with escalating and unknown SCE rates, climate change and not knowing if or when state mandates will be ambitious or timely enough. Joining a CCA is consistent with Claremont’s General Plan/Sustainable City Plan as well as the city’s desire to be a leader in sustainability.
Please consider if you would like Claremont to join a CCA, either as part of LACCE or in another way, and make your views known. Write Councilmember Sam Pedroza, preferably by Friday, November 10 in front of the Tuesday, November 14 council meeting. The council put him in charge of collecting information.
Demystifying Sustainability” is a project of Sustainable Claremont (sustainableclaremont.org, facebook.com/sustainableclaremont, Twitter @GreenClaremont.)