The cities of Morro Bay and San Luis Obispo have joined forces and are moving forward with plans to buy and sell electricity, do their parts to battle climate change, and maybe save residents a little money.
The JPA, or officially — “Central Coast Community Energy Authority” — will take part in the State’s “Community Choice Aggregation Program” (CCAP), also known as “Community Choice Energy” (CCE) and take over delivery of electricity to participating customers in their communities.
Simply put, the JPA would scout electricity sources a year ahead of time, entering into contracts that set deliveries and prices and then deliver that energy through the State’s power grid, which in this area is maintained by Pacific Gas & Electric.
In a monthly bill there are two basic line items for electricity — the source and delivery — and just the source would change. PG&E would still charge customers for delivery of electricity, no matter who generates it.
This way the JPA can enact the community’s wishes to buy energy from certain sources, ideally, ones that don’t produce greenhouse gases and exacerbate climate change.
City of SLO Sustainability Manager, Chris Read, explained that in California, a public utility company provides a number of activities related to energy — customer service, maintaining the power grid and purchasing electricity for the customers and then delivering that energy. A CCAP is “another option in purchasing electricity,” he said.
For example, the JPA might look at weather data and predictions by forecasters that say next winter will be a wet year in the Pacific Northwest and/or the Sierras, with healthy snow packs. Therefore, with the spring melt it could be expected that hydro-electric power would be plentiful and cheap, too.
So the JPA would arrange in advance through the California Independent System Operator or Cal-ISO (the agency that controls the power grind) to purchase power from those sources and pass savings on to the customers.
“We can save money in the open energy market,” Read said. “JPA’s can offer one to three percent cheaper than PG&E. It’s a policy decision. The margins are there for parity or savings.”
The JPA, which will have to hire a staff including an executive director experienced in buying power on the open market, will be able to shop around to find the least expensive electricity available — be it solar, geothermal, wind or hydro — lock in a price and deliver that power at a cost comparable to what PG&E is now charging locally.
“With the revenues,” Read said, “instead of going to PG&E and shareholders, it stays here and must be reinvested in local energy programs.”
Read said such programs could be building electric car charging infrastructure, weatherization of homes and energy efficient appliance rebate programs, or even building a power plant to feed the local electricity demand.
Read said Bay Area communities formed a JPA and have built a 200-megawatt solar plant in the Central Valley to provide electricity.
This money can’t be spent on general fund expenses like police and fire departments. Read explained that conversely, by forming a JPA the two cities’ general funds are protected from liability, too. “There’s a legal and financial firewall between the JPA and the cities,” Read said.
So how much might someone save? Read said a 1-percent savings would only be $1 to $1.50 a month for a regular customer and the program predicts a 1%-3% savings over current charges from PG&E.
Read said the added benefits for a community will be through whatever programs the JPA board of directors decides to pursue. With the State’s lofty goals on electric cars in the future, having more places to plug in will be a necessity.
The Governor also recently signed executive orders setting a goal of generating 100% of the state’s electricity from non-carbon sources by 2045. CCAP programs would seem to give participating cities a leg up on that goal.
Indeed, SLO’s City Council majority, since taking office nearly 2-years ago, has set the City on a certain course and recently approved a climate action plan that set a goal of so-called “carbon neutrality” by 2035.
In a Morro Bay City Council report, the stated goals of the CCAP and the JPA with SLO are:
• Providing customers a choice of power providers and power supply options;
• Increasing local control and involvement in energy rates and other energy-related matters;
• Providing stable electric rates that are competitive with those provided by the incumbent utility;
• Reducing greenhouse gas emissions arising from electricity use within the City and surrounding region;
• Increasing local renewable generation capacity;
• Increasing energy conservation and efficiency projects and programs;
• Increasing regional energy self-sufficiency; and,
• Improving the local economy resulting from the implementation of a CCE program and local renewable and energy efficiency projects over time.
Read noted that the JPA agreement was written in a way that invites the other cities in SLO County and outlying cities and counties as well, to join the efforts.
Right now the JPA board of directors will consist of Council members Aaron Gomez and Andy Pease of SLO and Red Davis and Marlys McPherson of Morro Bay, and should any other cities decide to join in, they need simply pass a Resolution and would also have two council persons sit on the JPA board.
But Read said that once the number of cities reaches five, each would be cut to a single representative, so as not to have the board get too large.
There will also be an “operator’s board” made up of staff people that will hold regular meetings governed by the State’s open meetings law (Brown Act). As such, the operator board’s meetings will be open to the public and require public noticing as well.
There is of course, some risk to the proposition. “Staff has so far been successful in this approach,” reads a CMB staff report, “however fiscal risks exist as described later in this report including one-time risk — upfront debt requirements of approximately $1,100,000 for working capital and requirements to pay up to $250,000 in deferred costs to The Energy Authority [TEA] in the event the program does not launch and ongoing risk, e.g., energy market and regulatory uncertainty, with the City of Morro Bay assuming up to 20% of that risk [SLO City Council is agreeable, as of their Sept. 18, 2018 meeting, to assume 80% of the risk].”
Read explained that the $1.1 million would likely be in the form of a line of credit until the program can get up and running. Once it does, there’s a great deal of money involved.
A draft technical study done by SLO’s consultants, TEA, pegs the “cumulative net revenues” at the end of the third year at $12.3 million under one scenario, and $11.3M and $9.7M under others. With an 80:20 split, Morro Bay would stand to get about $2.46M under that first scenario.
And these “profits” would be cut out of monies that now go to PG&E’s shareholders. CCEs are one of the factors that PG&E stated went into its decision to shutter Diablo Canyon Nuclear Plant in 2024 and 2025 when its operating licenses run out.
But as Read said, that money is limited in what it can be used for, and bolstering sagging or stagnant general fund revenues isn’t one of them.
Also, individual electricity customers will have the choice of opting in or staying out of the program.
Several steps remain before the JPA starts buying power including needing the approval of the Public Utilities Commission. Essentially, the CCAPs or CCEs are a huge bookkeeping issue.
“It is a big accounting enterprise,” Read said, adding that Cal-ISO would do all the bookkeeping, with the Public Utilities Commission overseeing the program.
And while the savings to the average customer really isn’t much, that isn’t really the point of the program. Rather, the point is to give people an easy means to pitching in against climate change and create a demand for renewable energy production, such as a potential 1,000 MW wind farm that’s currently being planned for an area about 34 miles offshore from Hearst Castle.
While that power is slated to be sold to Cal-ISO and sent to the power grid via the Morro Bay Power Plant, the local JPA could arrange to buy it when it’s available. It could also tap the large solar farms that have been built in California Valley.
The first public meeting of the new JPA board of directors is set for 3-5 p.m. Wednesday, Nov. 7 at the SLO City Hall, corner of Palm and Osos streets.
More information about CCE is posted on SLO’s website, see: www.slocity.org/cce.
By Neil Farrell