Community Choice Aggregation Update. Garrett Wong, Senior Sustainability Analyst

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1 Community Choice Aggregation Update Garrett Wong, Senior Sustainability Analyst

2 Why Community Choice Aggregation (CCA)? CCA allows local governments to purchase and sell electricity to customers in their jurisdictions instead of investor owned utility (IOU) power procurement. CCA allows for communities to have a higher percentage of renewables sooner than with Southern California Edison (SCE) In order for Santa Monica to reach carbon neutrality by 2050 or sooner, sourcing electricity from renewable sources is an essential strategy

3 Background Jan 30, 2015 Council adopts a non-binding resolution to join South Bay Clean Power feasibility study SBCP approaches LA County to take the lead in financing the feasibility study for a countywide CCA. June 20, 2016 LA County publishes the feasibility study in the form of a Business Plan. The Business Plan determined that a CCA is feasible and could yield in costsavings for residential and commercial electricity customers. Sept 27, 2016 The LA County Board of Supervisors (LACBOS) authorizes CEO to engage stakeholders, determine governance structure and begin negotiations with eligible and interested cities. Oct/Dec 2016 SBCP and LA County hold stakeholder meetings to update members on the process Interested cities are invited to participate in JPA negotiations starting Jan 2017

4 LA County Business Plan findings Lower Rates- LACCE rate with 50% renewals content could be 4% lower than the SCE base rate of 28% renewables. The LACCE rate with 100% renewables could be only 6% higher than SCE s base rate. Greenhouse Gas Reductions- At full implementation, GHG emissions in LA county could be reduced by 7% at a 50% renewable content and 14% at a 100% renewable content. Economic Development and Jobs- LACCE could support local and regional energy projects, creating local jobs. Local Control and Energy Management- The County and cities would have choices for retail rate offerings. Funding could be acquired for end-user programs such as energy efficiency, retail distributed generation, energy storage, water efficiency, and electric vehicle charging

5 CCA Options for Santa Monica 1. Engage the Los Angeles Community Choice Energy program, and participate in Joint Powers Authority formation 2. Engage the South Bay Clean Power sub regional CCA program, and participate in Joint Powers Authority formation 3. Independently seek to become a CCA as a city, and contract services for initiation from Lancaster Choice Energy, or a private third party.

6 Los Angeles Community Choice Energy (LACCE) The City would be a part of the stakeholder working group and participate in discussions to form a Joint Powers Authority The City would have a seat on the LACCE JPA Board of Directors The City would have the opportunity to work with the five Supervisor districts and the 82 cities within the County The County has initially proposed a voting structure that would give each city one vote, unless a board member calls for a weighted vote. The weighting of votes could be based on the electric power load of the members.

7 Los Angeles Community Choice Energy (LACCE) Benefits Financial strength and human resources Experiences with Countywide programs Potentially largest CCA with 5 districts and 82 eligible cities County would secure funding and services for participating cities County would assume all risk Strong support from County supervisor and staff The City of Santa Monica has more CCA knowledge and is more likely to influence the JPA Disadvantages The County could move slowly due to size and miss important deadlines and milestones dates No prior experience with CCA and would rely on outside consultants that are also available to South Bay Clean Power cities and the City of Santa Monica Because of size and diversity of County cities, the JPA may not reflect the values and goals of the City of Santa Monica There would be less local control and influence City would not receive direct revenue

8 South Bay Clean Power (SBCP) The City could form a JPA with other interested South Bay Westside cities and establish a sub regional CCA Each participating city would be represented with a seat on the JPA Board of Directors SBCP would issue a Request for Services that includes all CCA funding and development costs with no cost to any individual city The City would have the opportunity to approve all goals and objectives of the program SBCP would maximize distributed energy resources

9 South Bay Clean Power (SBCP) Benefits Access to same funding and services as County Collaboration with County available Could have the lowest possible rates SBCP would support new economic opportunities and environmental justice Committed to revenue maximizing positive economic and environmental impacts locally Statewide leader in Distributed Energy Resources 2 years of working group experience Disadvantages SBCP cities could drop out and undermine the viability of the JPA There would be less local control and influence Feasibility of SBCP has not been studied May not be able to attract for retain a top quality Executive Director or CEO County could oppose SBCP and refuse to collaborate or inhibit SBCP s ability to operate to its fullest extent desired City would not receive direct revenue

10 Lancaster Choice Energy (LCE) Pay LCE $77,000 in two phases for its services to produce load forecasting, data analysis, and pro-forma development based on the City s energy data LCE would prepare an Ordinance of Intent to Form a CCA and Implementation Plan Document for the City Once the CCA is operating, the City would pay a monthly fee for LCE services Council would set the rates, determine the percentage of renewables, set the policy and program elements, do community outreach marketing, and have local Governance oversight. The City would be free to use any revenue from the program for any General Fund purpose.

11 Lancaster Choice Energy (LCE) Benefits Lancaster has experience operating the only CCA in SCE territory Could be SM-branded, creating an integrated utility (electricity, water, waste) Revenue would go directly to City The City staff and Council would have complete control over the program Council and staff would have direct control; no participation in a JPA required Access to Lancaster s current and future renewable energy portfolio Disadvantages Up-front cost Not be anchored by a JPA, which places risk on the City Start up and ongoing cost may not be as competitive as other options LCe is the smallest CCA, less than 2 yrs old, only single city CCA No apparent value added: all consultants and vendors that would provide key services are also available to cities, County, or SBCP directly LCE has no Distributed Energy goals

12 Private Third Party Service Providers The City hire a third party provider to develop and implement a CCA Power services companies provide a broad array of expert services and are experienced in risk management and scheduling for public power agencies. They have options and flexibility when buying power Agnostic to the combination of wholesale power and distributed energy The City could issue a request for proposals to conduct a feasibility study, develop a business plan, and initiate CCA services on behalf of the City, with no startup costs.

13 Private Third Party Service Providers Benefits Service providers bear risk of formation Service providers have incentive to ensure success in order to recoup costs; keeping rates low Council and staff would have direct control; no participation in a JPA required Could be SM-branded, creating an integrated utility (electricity, water, waste) Revenue from the CCA would go directly to City Disadvantages Not be anchored by a JPA, which places risk on the City Additional City staff and resources need to be dedicated Start up and ongoing cost may not be as competitive as other options Santa Monica would be a small CCA, and the second non-jpa CCA There is no apparent value-added: all consultants and vendors that would provide key services are available to other options

14 Next Steps Participate informally in both LACCE & SBCP JPA formation discussions; both are looking to have a JPA agreement by Spring 2017 Present options to Council, recommending that Council: Appoint a Council representative, staff liaison and alternate liaison to formally participate in the LACCE and SBCP formation discussions Adopt a resolution affirming the City s position on overall goals and objectives and preferred JPA structure

15 Goals To eliminate carbon emissions associated with Santa Monica s electricity generation sources by 2050 or sooner To increase the deployment of energy efficiency and demand response services, distributed energy resource, electric vehicle infrastructure, and other clean technologies in Santa Monica and the Los Angeles metro area

16 Objectives Participate in a community choice energy/aggregation joint powers authority with goals and objectives that are aligned with Santa Monica s goals and objectives. Ensure that Santa Monica has voting representation that reflects its achievements in energy efficiency, solar and electric vehicles deployment, or population, instead of total electrical load Ensure that all Santa Monicans will have equitable access to clean energy and energy services