HomeMy Public PortalAbout12) 7D Information about Los Angeles Community Choice Energy ProgramAGENDA
ITEM 7.0.
COMMUNITY DEVELOPMENT DEPARTMENT
MEMORANDUM
DATE: July 5, 2017
TO: The Honorable City Council
FROM: Bryan Cook, City Manager
By: Michael D. Forbes , Community Development Director
SUBJECT: INFORMATION ABOUT LOS ANGELES COMMUNITY CHOICE ENERGY
·PROGRAM
RECOMMENDATION:
The City Council is requested to receive and file this report regarding the Los Angeles
Community Choice Energy (LACCE) program.
BACKGROUND:
1. In March 2015 , the Los Angeles County Board of Supervisors approved a motion
asking County staff to conduct a feasibility study regarding the establishment of a
Community Choice Aggregation (CCA) program for Los Angeles County .
2 . On September 27, 2016 , the Board of Supervisors directed County staff to work with
interested cities to negotiate a Joint Powers Agreement (J PA) to create a joint cities-
county CCA program, to be modeled after such programs already in place in
northern California.
3. From December 2016 to March 2017 , staff fror:n the County and various cities met
regularly and conducted public outreach to create a JPA agreeable to all
stakeholders.
4. On April 18, 2017, the Board of Supervisors approved the creation of the LACCE
JPA and allocated $10 million in startup funding. Attachment "A " is an informational
packet about LACCE prepared by the Los Angeles County Chief Sustainability
Office .
City Council
July 5, 2017
Page 2 of 4
ANALYSIS:
Purpose and Role of CCA Programs
CCA programs are authorized in California under Assembly Bill 117, approved by the
legislature in 2002. The purpose of CCAs is to provide consumers with more options to
purchase electricity and select the proportion of their electricity that comes from
renewable sources (e.g. solar or wind). CCAs negotiate contracts to purchase power in
the energy market and sell that power to consumers. CCAs are able to purchase and sell
power at rates that are typically lower than investor owned utility (IOUs) such as Southern
California Edison (SCE). There are currently seven CCAs operating in California, with 70
participating cities and counties. CCA programs may only operate in areas where electric
service is provided by an IOU; they may not operate in cities with municipal utilities, such
as Los Angeles or Pasadena.
As with other CCAs, the role of LACCE will be only to purchase and sell power. LACCE
will use SCE's existing infrastructure, and SCE will continue to operate its infrastructure
to deliver power to customers. SCE will continue to construct and maintain the
infrastructure for power transmission and distribution; and will also continue to handle all
service requests, billing, and other customer service functions. Customers will continue
to receive their bills from SCE and make payments to SCE; the only difference will be that
the line item on the bill for the purchase of power will reflect that the power was purchased
from LACCE rather than SCE.
SCE has officially taken a neutral position on the formation of LACCE and has said that
it is committed to ensuring a smooth transition for LACCE customers.
CCA Electric Rates
Most CCAs in California have rates that are lower than those of the IOU. This is because
they have less overhead, can take advantage of low-cost government debt financing, and
are nonprofit government entities that do not need to make profits for shareholders, unlike
IOUs. In some cases, CCA customer rates are about the same as those of the IOU;
however in those cases the CCA's power has a significantly higher proportion of
renewable sources than the lOU's power. Some CCAs have a primary goal of providing
power at a reduced price for a comparable renewable portfolio, while others have a
primary goal of providing a higher proportion of renewable power.
LACCE estimates that its customers will have bills that are on average about five percent
lower than SCE customers. LACCE anticipates providing three power portfolio choices,
priced accordingly: 33 percent renewable, 50 percent renewable, and 100 percent
renewable. Each customer will be able to choose for themselves from the available
options. LACCE may also offer customer rebate programs such as those for electric
vehicle chargers, solar panels, and energy efficient appliances, which would not be
available to non-LACCE customers.
City Council
July 5, 2017
Page 3 of 4
Enrollment and Opt Out
The only way for SCE customers to become LACCE customers is for their city to join
LACCE as a member of the JPA. When a city joins LACCE, all customers within the city
are automatically enrolled in LACCE and will be phased in per the schedule below.
However, customers will have the opportunity opt out at any time, before or after LACCE
is phased in. All customers will receive two notices before LACCE is implemented in their
city and two notices after implementation notifying them of their right to opt out. There is
no deadline to opt out, and a customer may do so at any time.
LACCE will be phased in over the next two years on the following tentative schedule:
Phase 1, January 2018: County government accounts; Phase 2, July 2018: city
government, commercial, and industrial accounts; and Phase 3, January 2019: residential
accounts.
Membership and Governance
Thus far, only the County has approved the JPA. Once the first city approves the JPA,
LACCE will be officially formed and a six-month enrollment period will be begin. Any cities
that join within this six-month period will be considered "Initial Participants" of the JPA.
There are two main benefits to being an Initial Participant: 1) Initial Participants will
participate in foundational decisions such as forming committees, developing bylaws, and
hiring an executive director; and 2) Initial Participants will not have to commit any of their
own funds to join the JPA. Cities that choose to join after the initial six-month period are
subject to approval by the board of directors and any conditions imposed by the board,
which may include commitment of city funds.
LACCE will be governed by a board of directors consisting of one director from each
member agency, such that all agencies have equal representation. Most decisions by
the board will require only a simple majority vote, and certain items will require a two-
thirds majority vote. There are also provisions for a weighted vote based on each agency's
share of the electrical load, when requested by at least three board members following
an affirmative vote.
Each agency will be required to appoint a Primary Director and two Alternate Directors to
the board. Each Primary Director must be an elected official. Alternate Directors may be
elected or appointed officials, agency staff, or members of the public with electric industry
expertise.
Cities wishing to join LACCE would take the following steps:
1. Adopt the LACCE enabling ordinance and the JPA;
2. Designate a Primary Director and Alternative Directors to serve on the board;
3. Evaluate constituents' priorities for services and programs to help provide initial
direction to LACCE; and
4. Assist with public outreach and noticing to constituents.
City Council
July 5, 2017
Page 4 of4
Advantages and Risks
The primary advantage to joining LACCE would be to provide choices to residents and
businesses about how they purchase their power and how much of their power they want
to be from renewable sources. It is likely, although not guaranteed, that LACCE
customers would see a reduction in their electric bills.
The primary risk to joining LACCE is that it would be unable to remain competitive with
SCE. This could be caused by sudden changes in the energy market, high customer opt-
out rates, unreasonable costs imposed by SCE, or new State laws or regulations. This
risk will be managed by LACCE by maintaining a diverse power portfolio from varied
sources, following sound fiscal policies and a rate stabilization plan, and staying engaged
with State agencies and elected officials.
Member cities will have the option to withdraw from LACCE at any time. However
payment of a withdrawal fee may be required, to the extent that a city's withdrawal may
have a financial impact on the JPA. A member city could also opt out of the program as
a customer, while remaining a member of the JPA to provide choices for its constituents.
CITY STRATEGIC GOALS:
Participation in LACCE is related to the City Strategic Goals of Good Governance,
Economic Development, and Citizen Education and Communication.
FISCAL IMPACT:
Were the City to enroll in LACCE during the six-month enrollment period, there would be no
cost. Were the City to enroll in LACCE after the initial six-month period, there may be a
commitment of City funds required, as determined by the board at that time. The amount of
funds required, if any, is unknown at this time. If the City enrolls at any time, there are likely
to be costs associated with implementing the program including assisting with public
outreach and noticing.
As an LACCE customer, there would be a future budget impact as the City's electric rates
would be different than current rates under SCE. Bills would likely be lower based upon
current projections, resulting in a cost savings for the City. The City's estimated total SCE
bills for Fiscal Year 2016-17 is about $402,000. At the projected five percent savings, the
City would save about $20,000 annually.
ATTACHMENT:
A. LACCE information packet for cities prepared by Los Angeles County Chief
Sustainability Office
ATTACHMENT A
LOS ANGELES COUNTY
CHIEF SUSTAINABILITY OFFICE
Los Angeles Community Choice Energy FAQ
. What is Los Ange les Community Choice Energy (LACCE)?
LACCE is the name for a Community Choice Aggregation (CCA) program in Los Angeles County. California
law allows local governments to control the source and the price of the electricity consumed by their
residents and businesses using a CCA program.
How does LACCEwork?
LACCE will negotiate contracts for power supply and offer renewable electricity at competitive rates.
Southern California Edison (SCE) delivers it through its existing utility lines . SCE continues to bill the
customer, maintain power lines and handle new se rvice requests and emergencies.
How will LACCE be run?
LACCE will be run by an Executive Directo r and a small staff. It will be overseen by elected officials from
cities and the county who will serve on a Board of Directors of the LACCE Authority, a nonprofit agency
established to operate the program. The Board will be advised by a public Community Advisory
Committee.
Will LACCE just create another layer of bureaucracy?
No. LACCE will be entirely self-funded by revenues it receives from the sale of electricity to customers.
None of its expenses are paid by taxes , and its revenues cannot be diverted to pay for non-LACCE uses.
Have other communities done this before?
Yes, more than 70 cities and counties in California are already doing this. There are currently seven
operational CCAs in California: Apple Valley Choice Energy, CleanPowerSF, Lancaster Choice Energy,
MCE Clean Energy, Peninsula Clean Energy, Silicon Valley Clean Energy and Sonoma Clean Power. More
and more communities in California continue to investigate Community Choice Aggregation. In addition,
Illinois, Ohio, Massachusetts, New Jersey, Rhode Island, and New York also have community power
programs. Furthermore, the State of California estimates that by the mid-2020s, more than 80% of
Investor Owned Utility {IOU) customers will receive their power from non-lOU providers like CCAs.
Have the 70 cities and counties in California that have already formed CCAs experienced rate
increases?
No. Almost every city has reduced its residents' utility bills. Some CCAs in California offer rates
approximately equal to those offered by their existing utility. However, in these cases the CCAs power is
significantly greener than the power offered by the existing utility.
How can CCAs offer lower rates than the existing utilities?
There are many factors that contribute to CCA's ability to offer cheaper rates than incumbent utilities.
CCAs have less overhead and can acquire low-cost government debt financing. Also, because CCAs are
nonprofit governmental entities, they do not need to make profits for shareholders
Who can participate?
LACCE is available to all residents and businesses in L.A. County cities serviced by SCE. The only cities
that cannot participate are cities with their own municipal utility (like LADWP in Los Angeles or Glendale
Water & Power in Glendale)
How does a city join LACCE?
Cities join LACCE by having their city councils approve the LACCE Joint Powers Agreement and the CCA
enabling ordinance. Once a city chooses to participate, all its residents and businesses will automatically
be enrolled for LACCE service, starting in 2018. Importantly, customers can opt out of LACCE service and
return to SCE at any time.
There are many cities in LA County. Won 't they have different goals in terms of how much
renewable energy to purchase and the importance of maintaining lower rates?
Yes. That is w hy each city can ma ke its own choice o n the leve l of rene wab l e energy it wa nts to pu rchase
for its residents (e.g., 33%, 50%, o r 100%).
Is there a liability or legal risk to a city or its residents for joining?
No. Th e city and its residents are protect ed because LAC CE is a separate lega l entity as defined in
Ca li fornia law. Its liabilities and obligations are its own, not those of the individual ci ti es that are
membe rs.
Won't L.A. County just make all the decisions for the cities that join?
No. Decisions w ill be made by the LACCE Boa rd of Direc tors . L.A. Co unt y wi ll ha ve one seat on the Board,
as w ill any participa ting city. So L.A. County w ill not be ab le t o ma ke decisions on behal f of cit i es.
Does it cost for customers opt out of LACCE?
Custo mers can opt out of LA CCE at no cost during the first 60 days of th e program. After that, a sma ll
processing fee (aro und $1 .50 ) may be charged.
How much does it cost a city to join?
There are no m emb e rship fees or other cos t s f o r c iti es to partici pate. Ci ties m ay choose to spend money
on public inform ation materials and may ded ica t e so m e sta ff time to su p porting their represe ntative on
the Board of Directors of th e LACCE Authority.
Does LACCE replace SCE?
No. LACCE o nly r epla ces SCE's elec tric procurement serv i ces with its LACCE's own electri c generation
se rvices . LACCE wi ll generate cleaner el ectricity, and pay SCE t o carry and de liver it to your h ome or
business through their wires. SCE is sti ll responsible for elect ric delivery, billing and powerli ne
maintenance, in clud in g handling power outages and othe r emergencies.
How does SCE feel about LACCE?
SCE is officially neutral on the formation of LACCE and is committed to ensuring a smooth transition for
all LACCE customers.
Willi get two electric bills?
Customers will see no change with their billing and will continue to receive one monthly bill from SCE.
The only difference will be a few line items that note that the customer's electricity was generated by
LACCE . And, their bill may be lower.
Will SCE programs still be available to LACCE customers?
Yes, almost all SCE programs are still available to LACCE customers. Furthermore, LACCE will offer other,
separate programs for its customers in addition to the existing programs offered by SCE.
When does LACCE begin serving customers?
LACCE will begin serving customers through a three-phase enrollment period. The initial group of
customers begin enrollment in January, 2018. The second and third phases will take place later in 2018
LOS ANGELES
COMMUNITY CHOICE
ENERGY (LACCE)
1. What is LACCE?
Los Angeles Community Choice Energy (LACCE)
is the name for a regional Community Choice
Aggregation program in Los Angeles County.
Community Choice Aggregation (CCA), authorized in
California under AB 117 (2002) and SB 790 (2011),
allows local governments, including counties and
cities, to purchase electricity in the wholesale
power market and sell it to their residents and
businesses at competitive rates as an alternative to
electricity provided by an investor owned utility (IOU).
2. About the LACCE Feasibility Study
The County of Los Angeles, at the direction of the
Board of Supervisors, initiated a technical feasibility
study to determine if the County can meet the
electricity load requirements for 82 eligible cities
and County unincorporated areas with rates that are
competitive with the local IOU, Southern California
Edison. This feasibility study culminated in a
Business Plan. This Business Plan concluded that
the formation of a CCA in Los Angeles County
is financially feasible and would yield considerable
benefits for all participating County residents
and businesses.
3. LACCE Benefits
Perhaps the greatest benefit of CCA to local
governments is the economic vitality it can bring
to the community, and the region as a whole.
Benefits to the local community include:
• Local control over energy mix-meet or exceed
Renewable Portfolio Standard (RPS)
• Create quality jobs and local,
renewable generation assets
• Meet or exceed Climate Action Plan goals
• Invest in local energy programs-
integrated demand side management
• Provide rate stability-lower costs
for homeowners and businesses
• Consumer choice-competition for lower rates
and options for cleaner energy
LA's got GREEN POWER
#GreenLA #EnergyChoice
4. Process of Formation and Funding
From December 2016-March 2017, the County worked
with relevant stakeholders and interested cities to
negotiate a Joint Powers Agreement (JPA) to govern
the LACCE program.
On Tuesday, April 18, 2017, the Los Angeles County
Board of Supervisors unanimously approved a motion
to begin the implementation of LACCE, including
the JPA and the $10 Million in funding needed
to begin pre-operation and start up activities.
5. Options for Cities
Initial Participants
Cities that execute the LACCE JPA within 180 days
of LACCE's formation will become Initial Participants
of the program. Initial Participants will benefit from
the $10 Million loan from Los Angeles County and
will not have to commit any funds of their own.
Furthermore, Initial Participants will have the
opportunity to make important, foundational
decisions at the inception of LACCE. These include
the establishment of committees to ensure sound
governance and the hiring of an Executive Director
to oversee LACCE operations.
(Continued on back)
Membership after Formation
If cities do n ot wish to be In itia l Participants, they wil l
have t he optio n to become a membe r o f LACCE
afte~ its formation. In this scenario, a city's membership
w ill be subject to approval of the LACCE Board of
Directors, and a ny cond it ions that the Board of
Directors finds reasonable, potentia ll y including
a monetary contri butio n.
Implementation Schedule
First City adopts JPA
First LACCE Board Meeting
Executive Director Search
Phase 1 begins
6 . Next Steps for Cities
Cities that would li ke to participate in
the LACCE program sh o uld reac h out to
the County of Los Angel es for more information.
The Co unty wi ll provide information o n upcoming
meetings a nd a more detai led timeli ne of
LACCE formati on and lau nch.
The County ca n a lso sc hedu le individual briefin gs for
c ity councilmembe r s and/or cit y staff.
For more information, p l ease contact:
GARY GERO
Chief Susta inability Officer
County of Los Angeles
Phone 213-974 -1160
Email ggero@ceo.lacounty.gov
Community Choic e Energy in California
Sonoma Clean Power Peninsula Clean Energy I I Marin Clean Ener2Y
• Santa Rosa • San Mateo County • Mill Valley
• Sonoma County • City of San Mateo • Walnut Creek
• Mendocino County • Atherton • County of Marin
• Town of Windsor • Belmont • Richmond
• Sebastopol • Brisban • Benicia
• Petaluma • Burlingame • San Rafael
• Cloverdale • Colma • El Cerrito
• Cotati • Daly City • Town of Ross
• Town of Sonoma • Foster City • Larkspur
• Rohnert Park • East Palo Alto • Sausalito
• Fort Bragg • Hillsborough • Town of San Anselmo
I I • Menlo Park • County of Napa Silicon Valley Clean Energy • Half Moon Bay • San Pablo
Cupertino • Millbrae • Town of Tiburon •
Los Gatos • Pacifica • Novato •
Mountain View • Portola Valley • Belvedere •
Santa Clara County • Redwood City • Town of Corte Madera •
Los Altos Hills • San Bruno • Town of Fairfax •
Los Altos • San Carlos I I Clean Power San Francisco •
Campbell • Woodside •
• Gilroy • South San Francisco I I • San Francisco
• Morgan Hill I I Lancaster Choice Energy I I AJ2J2Ie Vallex Choice Energx • Sunnyvale
• Monte Sereno I I • Lancaster I I • Apple Vall ey
• Saratoga • Pice Rivera
• San Jacinto