Mayor McLaughlin and Members of the City Council

Transcription

1 AGENDA REPORT CITY MANAGER S OFFICE DATE: June 19, 2012 TO: FROM: Mayor McLaughlin and Members of the City Council Bill Lindsay, City Manager SUBJECT: COMMUNITY CHOICE AGGREGATION - MARIN ENERGY AUTHORITY STATEMENT OF THE ISSUE: The City of Richmond has an opportunity to join the Joint Powers Authority Marin Energy Authority and participate in the Marin Clean Energy Community Choice Aggregation Program. City Council adopted the enabling resolution and introduced the ordinance at the May 15, 2012, City Council Meeting. This is a second reading. RECOMMENDATION: ADOPT an ordinance (second reading) approving the Marin Energy Authority Joint Powers Agreement and AUTHORIZE the Implementation of a Community Choice Aggregation Program. FINANCIAL IMPACT OF RECOMMENDATION: There are no direct financial impacts to the City s general fund if the City Council elects to join the Marin Energy Authority. The Marin Energy Authority is funded by ratepayers that choose to participate in Marin Clean Energy program. As an electric customer and ratepayer, the City of Richmond would have the choice of purchasing electricity for municipal accounts from the Marin Clean Energy program or Pacific Gas & Electric. In the 2011 calendar year, the City spent $2,460, on electricity bills for 613 electrical accounts and used 15,047,613 kilowatt hours with Pacific Gas & Electric. Because electric rates change several times per year, staff recommends that the City complete a thorough rate comparison for the City s municipal accounts prior to municipal account enrollment in the Marin Clean Energy program in Page 1 of 5

2 2013. Rate comparisons for the average residential and commercial accounts are provided in the Discussion section of the Staff Report. DISCUSSION: Previous City Council Action On May 15, 2012, City Council adopted a resolution (Attachment 1) and introduced an ordinance (Attachment 2) to approve the Marin Energy Authority Joint Powers Agreement (Attachment 3) and authorize the implementation of a Community Choice Aggregation Program. City Council must formally adopt the ordinance at a second reading. Background - Marin Energy Authority Formed in 2008, the Marin Energy Authority (MEA) is a Joint Powers Authority (JPA) comprised of all cities and towns within Marin County including City of Belvedere, Town of Corte Madera, Town of Fairfax, City of Larkspur, County of Marin, City of Mill Valley, City of Novato, Town of Ross, Town of San Anselmo, City of San Rafael, City of Sausalito, and Town of Tiburon. MEA operates the Marin Clean Energy (MCE) program, which is a Community Choice Aggregation (CCA) program now serving electric customers in Marin County. Since the passage of the CCA enabling legislation Assembly Bill 117 in 2002, MCE is the only CCA program in California. MCE will incrementally expand to provide electricity to 95,000 customers within MEA jurisdiction by the end of The primary goals of the MCE program are 1) to decrease greenhouse gas emissions and 2) to increase the amount of renewable energy power sources. Marin local governments determined that the MCE program was the most cost effective GHG reduction measure that local governments could implement to meet their respective greenhouse gas reduction goals. The long term programmatic goal of the MCE program is to provide 100 percent renewable energy to all electric service customers. This goal far exceeds the State of California s Renewable Portfolio Standard which requires investor-owned utilities, electric service providers, and community choice aggregators to increase procurement from eligible renewable energy resources to 33 percent of total procurement by All customers within MEA territory have the choice of participating in the MCE program. Pursuant to Community Choice Aggregation law, CCA programs are opt-out programs, which mean that electric customers are automatically enrolled in the program unless they specifically choose to continue with PG&E. All electric service customers receive at least four notifications from MEA prior to being automatically opted in to the MCE program and may opt out free of charge within the first five month period. After the initial five month period, customers may choose to opt out of the MCE program at any time for a one-time fee of five dollars ($5) for residential customers and twenty five dollars ($25) for commercial customers. The opt-out fee is approved by the MEA Board as part of the MCE Implementation Plan. Page 2 of 5

3 MCE currently offers two products to electric customers: 1) The Light Green product is 50 percent California-certified renewable energy, and 2) The Deep Green product is 100 percent California-certified renewable energy. Customers are automatically enrolled and purchase the Light Green product unless the customer requests to opt-up and purchase the Deep Green product. By comparison, PG&E s 2010 electric power contained 15.9 percent sourced from California-certified renewable sources. Electricity must be generated by renewable sources such as wind, solar, geothermal, landfill gas, small hydroelectric and tidal to be considered certified renewable energy by the California Public Utilities Commission. (Source: Date retrieved: 4/10/12). Updated Rate Comparison Staff is providing an updated rate comparison between PG&E and the MCE program for the average residential and commercial customer in Richmond. The rate comparisons in the May 15, 2012, City Council staff report stated that if electric customers choose MCE electric service, it would result in a $6.50 monthly increase for the average residential customer (400 kwh) and a $33.35 monthly increase for the average commercial customer (5,000 kwh). These rate comparisons are no longer applicable as updated electric rates will be implemented on July 1, The updated electric rates have changed because of the following two rate determining factors: 1) the California Public Utilities Commission approved PG&E s request to increase electric rates and 2) the California Public Utilities Commission reduced the Power Charge Indifference Act (PCIA) charge that is applied to MCE customers. As a result, starting July 1, 2012 MCE rates will be more competitive with PG&E rates. If electric customers choose MCE electric service, it would result in a $1.90 monthly increase for the average residential customer and a $2.60 monthly increase for the average commercial customer for the Light Green product. Figure 1 and Figure 2 below demonstrate the rate comparison between PG&E and MCE s Light Green and Deep Green products effective July 1, Figure 1 - Customer Cost Comparison for Average Residential Monthly Bill (400 kwh) 400 kwh RES-1 PG&E MCE Light Green MCE Deep Green Generation $29.20 $27.60 $31.60 T&D, Other Fees $42.02 $42.02 $42.02 PCIA Fee - $3.36 $3.36 Franchise Fee Included in Rates $0.14 $0.14 Total Cost $71.22 (20% Renewable) $73.12 (50% Renewable) $77.12 (100% Renewable) Page 3 of 5

4 Figure 2 - Customer Cost Comparison for Average Commercial Annual Bill (5,000 kwh) 5,000 kwh COM- PG&E MCE Light Green MCE Deep Green 1 (Annual) Generation $ $ $ T&D, Other Fees $ $ $ PCIA Fee - $34.20 $34.20 Franchise Fee Included in Rates $2.10 $2.10 Total Cost $ (20% Renewable) $ (50% Renewable) $ (100% Renewable) Synergy with Existing City Policy The City Council has made the goal of preventing global climate change and increasing local renewable energy a top priority for the City of Richmond. By joining MEA, the City would expect to increase the renewable energy content of electricity consumed in Richmond and reduce the City s greenhouse gas footprint. Examples of City Council support of renewable energy and greenhouse gas reduction initiatives include: Policy EC3.A Community Choice Aggregation of the General Plan Update (2030) Climate Change Element encourages the City to Conduct an assessment to determine the fiscal and operational feasibility of partnering in Community Choice Aggregation. Collaborate with neighboring jurisdictions to support local efforts to expand the generation and use of energy from renewable sources while increasing revenue for City. The municipally owned utility should explore purchasing surplus electricity generated by private sources to encourage large warehouse and retail operators to add solar panels to the roofs of their buildings and maximize generation of renewable energy. On May 4, 2010, City Council passed a resolution opposing State Proposition 16 on the June 16, 2010, ballot, which would have required a two-thirds vote requirement for public electricity providers. City Council stated the City of Richmond wishes to support citizens' ability to opt for locally controlled public power by forming municipal utility districts or CCAs in Contra Costa County and communities throughout the state. On September 17, 2007, Richmond s City Council directed staff to develop a comprehensive policy to lead by example in the fight against global warming. At the same City Council meeting, the City Council passed a resolution committing to the GHG emissions reduction targets established by California s Global Warming Solutions Act, or Assembly Bill 32 (AB 32) which are 2000 levels by CY 2010, 1990 levels by CY 2020, and 80 percent below 1990 levels by CY On September 16, 2008, the Richmond City Council became a signatory to the Urban Page 4 of 5

5 Environmental Accords which encourages the City to Adopt and implement a policy to increase the use of renewable energy to meet ten per cent of the city s peak electric load within seven years. In January 2007, the City of Richmond signed onto the U.S. Mayor s Climate Protection Agreement committing to reducing GHG emissions to meet or surpass the Kyoto Protocol targets of a seven percent reduction from 1990 levels by Goal HW10 Promote Green and Sustainable of the Health and Wellness Element of General Plan Update (2030) states that The City should promote green and sustainable development and practices to support a healthy local economy, protect the environment and improve quality of life for all residents. Policy EC5.1 Green Businesses and Jobs of the Energy and Climate Change Element of General Plan Update (2030) encourages the City to Promote a green economy that can provide new jobs in the emerging green industry. A cluster of green businesses can provide goods and services to support the growing need for clean and sustainable technologies, fuels, vehicles and equipment, while providing jobs and training to Richmond residents. The green economy can support Richmond s economic development and environmental protection goals. Joining MEA will help the City reach the above stated renewable energy and greenhouse gas reduction goals. DOCUMENTS ATTACHED: Attachment 1 Resolution Attachment 2 Ordinance Attachment 3 JPA Agreement Page 5 of 5