HomeMy Public PortalAbout10) 9A Ordinance 17-1030 authorizing City to sign Joint Power Agreement with Los Angeles Community Choice Energy Program LACCECity Council
December 5, 2017
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3. On April18, 2017, the Board of Supervisors approved the creation of the LACCE JPA
and allocated $10 million in startup funding based on the LACCE business plan
(Attachment "C").
4. On June 27, 2017, the City of Rolling Hills Estates became the first city to join the
JPA. This started a six-month period during which other cities may join the JPA as
"Initial Participants."
5. On July 5, 2017, staff provided a report to the City Council on LACCE that included
background information about the purpose and role of LACCE.
6. On September 19, 2017, staff provided a follow-up report to the City Council that
included a status update on LACCE and recommended that staff continue to monitor
LACCE's progress. The City Council requested that staff provide a status update at
the City Council meeting in three months.
7. On November 21, 2017, City Council directed staff to reach out to Los Angeles
County and the San Gabriel Valley Council of Governments for additional information
regarding the LACCE program and to prepare an ordinance for City Council's
consideration authorizing the City to enter into the LACCE JPA.
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). In addition to LACCE, there are seven other CCAs
operating in California, with 70 participating cities and counties. CCA programs may
only operate in areas where electric service is provided by an Investor Owned Utilities
(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.
City Council
December 5, 2017
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The LACCE program has the potential to provide cost savings to residents, businesses,
and the City of Temple City by providing lower utility rates. There is no upfront cost to
join the JPA for cities that join as Initial Participants during the first six months, as Los
Angeles County is providing up to $10 million to start the program.
To be considered an Initial Participant and take advantage of the no-upfront cost
benefit, the City must adopt the ordinance to join the JPA by December 27, 2017. After
that time, the JPA board will have the discretion to require contributions of city funds to
join the JPA. LACCE will be phased in over the next year on the following tentative
schedule:
Phase 1, January 2018: County government accounts will be enrolled in
LACCE;
Phase 2, July 2018: city government, commercial, and industrial accounts
will be enrolled LACCE; and
Phase 3, January 2019: residential accounts will be enrolled in LACCE.
The only way for SCE customers to be enrolled in LACCE 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 above.
However, customers will have the opportunity to 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.
The JPA expressly allows the City to withdraw its membership in the LACCE (and its
participation in the CCA program) at any time, including prior to the actual
implementation of the program, diminishing the risk taken on by the City in joining the
LACCE.
Other Follow Ups
At the November 21, 2017, City Council meeting, the City Council requested additional
information regarding JPA members, the JPA governing structure, and the County's
motivation in establishing the LACCE program.
In consultation with the San Gabriel Valley Council of Government (COG) staff, the
following eight cities have joined the LACCE JPA: Alhambra, Calabasas, Claremont,
Downey, Rolling Hills Estates, Sierra Madre, South Pasadena, and West Hollywood. As
of November 28, 2017, the following seven cities will be introducing ordinances to join
by December 14, 2017: Beverly Hills, Paramount, Carson, Manhattan Beach, West
Covina, Culver City, and Agoura Hills. Several other cities have indicated their interest
but have not taken formal action. Of the 88 cities in Los Angeles County, 82 cities are
eligible to join LACCE; the remaining cities are served by publicly owned utilities and
are not eligible for this program. Two of the 82 eligible cites (i.e., Lancaster and Pico
Rivera) are part of another CCA.
City Council
December 5, 2017
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As previously mentioned in the July 5, 2017, staff report, 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.
Regarding the County's motivations in establishing the LACCE program, the motion
adopted by the Board of Supervisors on September 27, 2016, that started the process
of forming the LACCE identified benefits of lower electricity rates for customers and
power that is "significantly greener and more local than what is offered by SCE." The
motion further stated that cheaper rates for cleaner energy would "produce a significant
reduction in regional greenhouse gas emissions." California law allows local
government to control the source and price of the electricity consumed by their
residents and businesses using a CCA program (Attachment "D").
CITY STRATEGIC GOALS:
City Council's consideration to join the Joint Power Agreement with the Los Angeles
Community Choice Energy Program will promote the City's Strategic Goals of
Sustainable Infrastructure.
FISCAL IMPACT:
Were the City to enroll in LACCE as an Initial Participant prior to December 27, 2017,
there would be no cost. Were the City to enroll in LACCE after December 27, 2017,
there may be a commitment of City funds required, as determined by the LACCE Board
of Directors 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 for city owned assets and
facilities. At the projected five percent savings, the City would save about $20,000
annually.
City Council
December 5, 2017
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ATTACHMENTS:
A. Ordinance No. 17-1030
B. Los Angeles Community Choice Energy Authority Joint Powers Agreement
C. Los Angeles Community Choice Energy Business Plan Update (April17, 2017)
D. Los Angeles County Chief Sustainability Office LACCE FAQ
ATTACHMENT A
ORDINANCE NO. 17-1030
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMPLE
CITY, CALIFORNIA, APPROVING THE JOINT POWERS AGREEMENT
FOR LOS ANGELES COMMUNITY CHOICE ENERGY AND
AUTHORIZING THE IMPLEMENTATION OF A COMMUNITY CHOICE
AGGREGATION PROGRAM
THE CITY COUNCIL OF THE CITY OF TEMPLE CITY, CALIFORNIA, DOES
HEREBY ORDAIN AS FOLLOWS:
SECTION 1. The City of Temple City has been actively investigating options to provide
electric services to constituents within its service area with the intent of achieving
greater local involvement over the provisions of electric services and promoting
competitive and renewable energy.
SECTION 2. On September 24, 2002, the Governor signed into law Assembly Bill 117
(Stat. 2002, ch. 838; see California Public Utilities Code section 366.2; hereinafter
referred to as the "Act"), which authorizes any California city or county, whose
governing body so elects, to combine the electricity load of its residents and businesses
in a community-wide electricity aggregation program known as Community Choice
Aggregation.
SECTION 3. The Act expressly authorizes participation in a Community Choice
Aggregation (CCA) program through a joint powers agency, and to this end the County
of Los Angeles has been participating since 2015 in the evaluation of a CCA program
for the County and the cities and towns within it.
SECTION 4. Through Docket No. R.03-1 0-003, the California Public Utilities
Commission has issued various decisions and rulings addressing the implementation of
Community Choice Aggregation programs, including the recent issuance of a procedure
by which the California Public Utilities Commission will review "Implementation Plans,"
which are required for submittal under the Act as the means of describing the
Community Choice Aggregation program and assuring compliance with various
elements contained in the Act.
SECTION 5. Representatives from the City along with representatives of its JPA
partners, have developed the Los Angeles Community Choice Energy Authority Joint
Powers Agreement ("Joint Powers Agreement") (attached hereto as Exhibit A) in order
to accomplish the following:
(a) To form a Joint Powers Authority (JPA) known as "Los Angeles Community Choice
Energy" ("LACCE") and;
(b) To specify the terms and conditions by which participants may participate as a
group in energy programs, including but not limited to the preliminary
implementation of a Community Choice Aggregation program.
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Ordinance No. 17-1030
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SECTION 6. Representatives from the City along with its partner JPA members have
developed a Business Plan (attached hereto as Exhibit B) that describes the formation
of Los Angeles Community Choice Energy and the Community Choice Aggregation
program to be implemented by and through the LACCE Authority.
SECTION 7. A final Implementation Plan will be submitted for review and adoption by
the Board of Directors of the LACCE Authority as soon after the formation of the
Authority as reasonably practicable.
SECTION 8. As described in the Business Plan, Community Choice Aggregation by and
through the LACCE Authority appears to provide a reasonable opportunity to
accomplish all of the following:
(a) To provide greater levels of local involvement in and collaboration on energy
decisions.
(b) To increase significantly the amount of renewable energy available to LACCE
energy customers,
(c) To provide initial price stability, long-term electricity cost savings and other benefits
for the community, and
(d) To reduce greenhouse gases that are emitted by creating electricity for the
community.
SECTION 9. The Act requires Community Choice Aggregation program participants to
individually adopt an ordinance ("CCA Ordinance") electing to implement a Community
Choice Aggregation program within its jurisdiction by and through its participation in the
LACCE Authority.
SECTION 10. The Joint Powers Agreement expressly allows the City to withdraw its
membership in the LACCE Authority (and its participation in the Community Choice
Aggregation program) prior to the actual implementation of a Community Choice
Aggregation program through Program Agreement.
THE CITY COUNCIL OF THE CITY OF TEMPLE CITY HEREBY ORDAINS AS
FOLLOWS:
SECTION 1. That the recitals set forth above are true and correct and are incorporated
as though fully set forth herein.
SECTION 2. Based upon the findings and declarations set forth in this ordinance, and
in order to provide businesses and residents within the jurisdictional boundaries of the
City with a choice of power providers and with the benefits described in the recitals
above, the City Council hereby elects to implement a CCA program within the City's
jurisdiction boundaries. Upon approval of the LACCE Joint Powers Agreement, the City
LA #4834-3171-0294 vi 2
Ordinance No. 17-1030
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will implement the CCA program by and through the City's participation in the LACCE
Authority), a joint powers authority established pursuant to California Government Code
section 6500 et seq. and California Public Utilities Code section 366(c)(12).
SECTION 3. That the City Council hereby approve and direct that the City proceed with
the participation in the LACCE Joint Powers Authority.
SECTION 4. That the City Council declares that, should any provision, section,
paragraph, sentence or word of this ordinance be rendered or declared invalid by any
final court action in a court of competent jurisdiction or by reason of any preemptive
legislation, the remaining provisions, sections, paragraphs, sentences or words of this
ordinance as hereby adopted shall remain in full force and effect.
SECTION 5. That all the provisions of any of the City's ordinances as heretofore
adopted by the City that are in conflict with the provisions of this ordinance are hereby
repealed.
SECTION 6. That this ordinance shall take effect thirty (30) days after its adoption.
SECTION 7. The Mayor shall sign and the City Clerk shall attest to the passage of this
Ordinance. The City Clerk shall cause the same to be published once in the official
newspaper within 15 days after its adoption. This Ordinance shall become effective 30
days from its adoption.
PASSED, APPROVED, AND ADOPTED ON this 19th day of December, 2017.
Cynthia Sternquist, Mayor
ATTEST: APPROVED AS TO FORM
Peggy Kuo, City Clerk Eric S. Vail, City Attorney
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Ordinance No. 17-1030
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I, Peggy Kuo, City Clerk of the City of Temple City, certify Ordinance No. 17-
1030 was introduced by the City Council at a regular meeting of December 5th, 2017
and adopted by the City Council at a regular meeting held on the 19th day of December,
2017, by the following vote:
AYES:
NOES:
ABSENT:
Councilmember-
Councilmember-
Councilmember-
LA #4834-3171-0294 vi
Peggy Kuo, City Clerk
4
ATTACHMENT B
LOS ANGELES COMMUNITY CHOICE ENERGY AUTHORITY
JOINT POWERS AGREEMENT
This Joint Powers Agreement (the "Agreement"), effective as of , is made and
entered into pursuant to the provisions of Title I, Division 7, Chapter 5, Article 1 (Section 6500
et seq.) of the California Government Code relating to the joint exercise of powers among the
public agencies set forth in Exhibit A.
RECITALS
1. The Parties are public agencies sharing various powers under California laws, including
but not limited to the power to purchase supply, and aggregate electricity for themselves and
their inhabitants.
2. In 2006, the State Legislature adopted AB 32, the Global Warming Solutions Act, which
mandates a reduction in greenhouse gas emissions in 2020 to 1990 levels. The California Air Resources
Board is promulgating regulations to implement AB 32 which will require local government to develop
programs to reduce greenhouse emissions.
3. The purposes for the Initial Participants (as such term is defined in Section 2.3 below) entering
into this Agreement include addressing climate change by reducing energy related greenhouse gas
emissions and securing energy supply and price stability; energy efficiencies and local economic benefits,
such as jobs creation, community energy programs; and local power development. It is the intent of this
Agreement to promote the development and use of a wide range of renewable energy sources and energy
efficiency programs, including but not limited to solar and wind energy production.
4. The Pmiies desire to establish a separate public agency, known as the Los Angeles Community
Choice Energy Authority ("Authority"), under the provisions of the Joint Exercise of Powers Act of the
State of California (Government Code Section 6500 et seq.) ("Act") in order to collectively study,
promote, develop, conduct, operate, and manage energy programs.
5. The Initial Pmticipants have each adopted an ordinance electing to implement through the
Authority a Community Choice Aggregation program pursuant to California Public Utilities Code Section
366.2 ("CCA Program"). The first priority of the Authority will be the consideration of those actions
necessary to implement the CCA Program.
6. By establishing the Authority, the Pmties seek to:
(a) Develop an electric supply portfolio with overall lower greenhouse gas intensity and
lower greenhouse gas (GHG) emissions than Southern California Edison ("SCE"), and one that suppmts
the achievement of the pmiies' greenhouse gas reduction goals and the comparable goals of all
participating jurisdictions;
(b) Establish an energy pmifolio that encourages the use and development of cost-effective
local renewable and distributed energy resources and that discourages the use unbundled renewable
energy credits;
(c) Promote an energy portfolio that incorporates energy efficiency and demand response
programs and pursues ambitious energy consumption reduction goals;
LA #4823-8293-8198 vi 4
(d) Provide electricity rates that are lower or at worst competitive with those offered by SCE
for similar products;
(e) Offer differentiated energy options (e.g. 33% or 50% qualified renewable) for default
service, and a 100% renewable content option in which customers may "opt-up" and voluntarily
participate;
(f) Achieve quantifiable economic benefits to the region;
(g) Recognize the value of current workers in existing jobs that suppmt the energy
infrastructure of Los Angeles County and Southern California (e.g. union and prevailing wage jobs, local
workforce development, apprenticeship programs, and local hire). The Authority, as a leader in the shift
to clean energy, commits to ensuring it will take steps to minimize any adverse impacts to these workers
to ensure a "just transition" to the new clean energy economy;
(h) Suppmt a stable, skilled workforce through such mechanisms as project labor
agreements, collective bargaining agreements, or community benefit agreements, or other workforce
programs that are designed to avoid work stoppages, ensure quality, and benefit local residents by
delivering cost-effective clean energy programs and projects (e.g. new energy programs and increased
local energy investments);
(i) Promote supplier and workforce diversity, including returning veterans and those
fi·om disadvantaged and under-represented communities, to better reflect the diversity ofthe
regron;
U) Promote personal and community ownership of renewable resources, spurring equitable
economic development and increased resilience, especially in low income communities;
(k) Provide and manage its energy pmtfolio and products in a manner that provides cost
savings to customers and promotes public health in areas impacted by energy production;
(I) Ensure that low-income households and communities are provided with affordable and
flexible energy options, including the provision of energy discounted rates to eligible low-income
households;
(m) Recognize and address the impmtance of healthy communities, including those
dispropmtionately affected by air pollution and climate change;
(n) Use program revenues to provide energy-related programs and services; and
(o) Create an administering Authority that is financially sustainable, responsive to regional
priorities, well-managed, and a leader in fair and equitable treatment of employees.
1. DEFINITIONS
1.1 "AB 117" means Assembly Bill 117 (Stat. 2002, Ch. 838, codified at Public
Utilities Code Section 366.2), which created Community Choice Aggregation.
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1.2 "Act" means the Joint Exercise of Powers Act of the State of California
(Chapter 5, Division 7, Title I of the Government Code commencing with
Section 6500).
1.3 "Agreement" means this Joint Powers Agreement.
1.4 "Authority" means Los Angeles Community Choice Energy Authority.
1.5 "Authority Document(s)" means document(s) duly adopted by the Board by
resolution or motion implementing the powers, functions and activities ofthe
Authority, including but not limited to the Operating Policies and Procedures, the
annual budget, and plans and policies.
1.6 "Board" means the Board of Directors of the Authority.
I. 7 "Community Choice Aggregation" or "CCA" means an electric service option
available to cities, counties, and other public agencies pursuant to Public Utilities
Code Section 366.2.
1.8 "CCA Program" means the Authority's program relating to CCA that is
principally described in Section 2.4 (Purpose) of this Agreement.
1.9 "Days" shall mean calendar days unless otherwise specified by this Agreement.
1.10 "Director" means a member of the Board representing a Party, including up to two
alternate Directors appointed in accordance with Sections 4.1 (Board of Directors)
and 4.2 (Appointment and Removal of Directors) of this Agreement.
1.11 "Effective Date" means the date on which the Agreement shall become effective
and the Authority shall exist as a separate public agency, as further described in
Section 2.1 (Effective Date and Term) ofthis Agreement.
1.12 "Initial Costs" means all costs incurred by the Authority relating to the
establishment and initial operation of the Authority, such as the hiring of the
executive, technical, and any administrative staff, any required accounting,
administrative, technical and legal services in support of the Authority's initial
formation activities or in support of the negotiation, preparation and approval of
power purchase agreements. The Board shall determine the termination date for
the Initial Costs.
1.13 "Initial Patiicipants" means, for purpose of this Agreement, the County of
Los Angeles, and the cities of , and any
other Parties joining in accordance with Section 2.3 (Initial Patiicipants) of this
Agreement.
1.14 "Operating Policies and Procedures" means the rules, regulations, policies, bylaws
and procedures governing the operation of the Authority.
LA #4823-8293-8198 vi 6
1.15 "Parties" means, collectively, the signatories to this Agreement that have satisfied
the conditions in Sections 2.3 (Initial Participants) or 2.5 (Addition of Parties) of
this Agreement, such that they are considered members of the Authority.
1.16 "Party" means, singularly, a signatory to this Agreement that has satisfied the
conditions in Sections 2.3 (Initial Participants) or 2.5 (Addition of Parties) of this
Agreement, such that it is considered a member of the Authority.
1.17 "Public Agency" as defined in the Act includes, but is not limited to, the federal
government or any federal department or agency, this state, another state or any
state department or agency, a county, a county board of education, county
superintendent of schools, city, public corporation, public district, regional
transportation commission of this state or another state, a federally recognized
Indian tribe, or any joint powers authority formed pursuant to the Act.
2. FORMATION OF LOS ANGELES COMMUNITY CHOICE ENERGY
AUTHORITY
2.1 Effective Date and Term. This Agreement shall become effective and the
Authority shall exist as a separate public agency on the date this Agreement is
executed by the County of Los Angeles and at least one other public agency after
the adoption of the ordinances required by Public Utilities Code
Section 366.2(c)(12). The Authority shall provide notice to the Pa1ties of the
Effective Date. The Authority shall continue to exist, and this Agreement shall be
effective, until the Agreement is terminated in accordance with Section 8.3
(Mutual Termination) of this Agreement, subject to the rights of the Pmties to
withdraw from the Authority.
2.2 Formation of the Authority. Under the Act, the Parties hereby create a separate
joint exercise of power agency which is named Los Angeles Community Choice
Energy Authority. Pursuant to Sections 6506 and 6507 ofthe Act, the Authority
is a public agency separate from the Parties. The debts, liabilities or obligations
of the Authority shall not be debts, liabilities or obligations of the individual
Parties unless the governing body of a Pmiy agrees in writing to assume any of
the debts, liabilities or obligations of the Authority. The jurisdiction of the
Authority shall be all territory within the geographic boundaries of the Parties;
however the Authority may, as authorized under applicable law, undertake any
action outside such geographic boundaries as is necessary and incidental to the
accomplishment of its purpose.
2.3 Initial Participants. In addition to Parties executing this Agreement on or prior
to the Effective Date, any incorporated municipality, county, or other eligible
public agency may become a Pmiy and recognized as an Initial Pa1iicipant
provided during the first 180 days after the Effective Date it executes this
Agreement and delivers an executed copy of this Agreement and a copy of the
adopted ordinance required by Public Utilities Code Section 366.2(c)(l2) to the
LA #4823-8293-8198 vi 7
Authority. All Initial Participants to this Agreement shall be required to
commence electric service as soon as practicable, as determined by the Board.
2.4 Purpose. The purpose and objectives ofthis Agreement are to establish the
Authority, to provide for its governance and administration, and to define the
rights and obligations of the Parties. This Agreement authorizes the Authority to
provide a means by which the Parties can more effectively develop and
implement sustainable energy initiatives that reduce energy demand, increase
energy efficiency, and advance the use of clean, efficient, and renewable
resources in the region for the benefit of the Parties and their constituents,
including, but not limited to, establishing and operating a Community Choice
Aggregation program.
2.5 Addition of Parties. After 180 days from the Effective Date any incorporated
municipality, county, or other public agency may become a Pmiy to this
Agreement if all of the following conditions are met:
2.5.1 The adoption of a resolution of the Board admitting the public agency to
the Authority;
2.5.2 The adoption by an affirmative vote of the Bom·d satisfying the
requirements described in Section 4.10 (Board Voting) of this Agreement,
of a resolution authorizing membership into the Authority and establishing
its pro rata share of organizational, planning and other pre-existing
expenditures, and describing additional conditions, if any, associated with
membership;
2.5.3 The adoption by the public agency of an ordinance required by Public
Utilities Code Section 366.2(c)(l2) and approval and execution of this
Agreement and other necessary program agreements by the public agency;
2.5.4 Payment of the membership payment, if any; and
2.5.5 Satisfaction of any reasonable conditions established by the Board.
Pursuant to this Section 2.5 (Addition of Parties), all pmiies shall be required to
commence electric service as soon as is practicable, as determined by the Board,
as a condition to becoming a Party to this Agreement.
2.6 Continuing Participation. The Parties acknowledge that membership in the
Authority may change by the addition, withdrawal and/or termination of Parties.
The Pmiies agree to pmiicipate with such other Pmiies as may later be added, as
described in Section 2.5 (Addition of Parties) of this Agreement. The Parties also
agree that the withdrawal or termination of a Party shall not affect this Agreement
or the remaining Parties' continuing obligations under this Agreement.
3. POWERS
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3 .1 General Powers. The Authority shall have the powers common to the Parties
and which are necessary or convenient to the accomplishment of the purposes of
this Agreement, subject to the restrictions set forth in Section 3.4 (Limitation on
Powers) of this Agreement. As provided in the Act, the Authority shall be a
public agency separate and apart from the Parties.
3.2 Specific Powers. The Authority shall have all powers common to the Parties and
such additional powers accorded to it by law. The Authority is authorized, in its
own name, to exercise all powers and do all acts necessary and proper to cany out
the provisions of this Agreement and fulfill its purposes, including, but not limited
to, each of the following:
3 .2.1 make and enter into contracts;
3.2.2 employ agents and employees, including but not limited to an Executive
Director;
3 .2.3 acquire, contract, manage, maintain, and operate any buildings, works or
improvements;
3 .2.4 acquire property by eminent domain, or otherwise, except as limited under
Section 6508 of the Act, and to hold or dispose of any property;
3.2.5 lease any property;
3 .2.6 sue and be sued in its own name;
3 .2. 7 incur debts, liabilities, and obligations, including but not limited to loans
from private lending sources pursuant to its temporary borrowing powers
authorized by law pursuant to Government Code Section 53850 et seq. and
authority under the Act;
3.2.8 issue revenue bonds and other forms of indebtedness;
3 .2.9 apply for, accept, and receive all licenses, permits, grants, loans or other
aids from any federal, state or local public agency;
3.2.10 form independent corporations or entities, if necessary to carry out energy
supply and energy conservation programs at the lowest possible cost or to
take advantage of legislative or regulatory changes;
3 .2.11 submit documentation and notices, register, and comply with orders,
tariffs and agreements for the establishment and implementation of the
CCA Program and other energy programs;
3 .2.12 adopt rules, regulations, policies, bylaws and procedures governing the
operation of the Authority ("Operating Policies and Procedures"); and
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3.2.13 make and enter into service agreements relating to the provision of
services necessary to plan, implement, operate and administer the CCA
Program and other energy programs, including the acquisition of electric
power supply and the provision of retail and regulatory supp01t services.
3.3 Additional Powers to be Exercised, In addition to those powers common to
each of the Parties, the Authority shall have those powers that may be conferred
upon it as a matter of law and by subsequently enacted legislation.
3.4 Limitation on Powers. As required by Section 6509 of the Act, the powers of
the Authority are subject to the restrictions upon the manner of exercising power
possessed by the County of Los Angeles.
3.5 Obligations of the Authority. The debts, liabilities, and obligations of the
Authority shall not be the debts, liabilities, and obligations of the Parties unless
the governing body of a Party agrees in writing to assume any of the debts,
liabilities, and obligations of the Authority. In addition, pursuant to the Act, no
Director shall be personally liable on the bonds or subject to any personal liability
or accountability by reason of the issuance of bonds.
3.6 Compliance with the Political Reform Act and Government Code
Section 1090. The Authority and its officers and employees shall comply with
the Political Reform Act (Government Code Section 81000 et seq.) and
Govetnment Code Section 1090 et seq. The Board shall adopt a Conflict of
Interest Code pursuant to Government Code Section 87300. The Board may
adopt additional conflict of interest regulations in the Operating Policies and
Procedures.
4. GOVERNANCE
4.1 Board of Directors. The governing body of the Authority shall be a Board of
Directors ("Board") consisting of one director for each Party appointed in
accordance with Section 4.2 (Appointment and Removal of Directors) of this
Agreement. The Board, in consultation with the Executive Director, may
determine at any time to consider options to reduce the size of the Board if it
determines that the efficient functioning and operation of the Board would be
improved by having a smaller number of Directors. Any such change to the size
of the Board would require amendment of this Joint Powers Agreement in
accordance with Section 4.11 (Special Voting).
4.2 Appointment and Removal of Directors. The Directors shall be appointed and
may be removed as follows:
4.2.1 The governing body of each Patty shall appoint and designate in writing
one regular Director who shall be authorized to act for and on behalf of the
Party on matters within the powers of the Authority. The governing body
of each Patty shall appoint and designate in writing up to two alternate
Directors who may vote on matters when the regular Director is absent
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from a Board meeting. The person appointed and designated as the
regular Director shall be an elected or appointed member of the governing
body of the Party. The persons appointed and designated as the alternate
Directors may be an elected or appointed member of the governing body
of the Party, an appointed member of an advisory body of the Party, a staff
member of the Party or a member of the public who meets the criteria
below. All Directors and alternates shall be subject to the Board's adopted
Conflict of Interest Code.
(a) Any alternate Director that is a member of the public must have
demonstrated knowledge in energy-related matters through
significant experience in either: I) an electric utility or company,
agency, or nonprofit providing services to a utility, 2) a regulatory
agency or local government body overseeing an electric utility or a
company, agency, or nonprofit providing services to such an
agency, 3) an academic or nonprofit organization engaged in
research and/or advocacy related to the electric sector.
4.2.2 The Operating Policies and Procedures, to be developed and approved by
the Board in accordance with Section 3.2.12 (Specific Powers), shall
specify the reasons for and process associated with the removal of an
individual Director for cause. Notwithstanding the foregoing, no Patty
shall be deprived of its right to seat a Director on the Board and any such
Patty for which its Director and/or alternate Directors have been removed
may appoint a replacement.
4.3 Terms of Office. Each regular and alternate Director shall serve at the pleasure
of the governing body of the Patty that the Director represents, and may be
removed as Director by such governing body at any time. If at any time a
vacancy occurs on the Board, the affected Party shall appoint to fill the position of
the previous Director within 90 days ofthe date that such position becomes
vacant.
4.4 Purpose of Board. The general purpose of the Board is to:
4.4.1 Provide structure for administrative and fiscal oversight;
4.4.2 Retain an Executive Director to oversee day-to-day operations;
4.4.3 Retain legal counsel;
4.4.4 Identify and pursue funding sources;
4.4.5 Set policy;
4.4.6 Maximize the utilization of available resources; and
4.4. 7 Oversee all Committee activities.
LA #4823-8293-8198 vI II
4.5 Specific Responsibilities of the Board. The specific responsibilities of the
Board shall be as follows:
4.5.1 Identify Patty needs and requirements;
4.5.2 Formulate and adopt the budget prior to the commencement of the fiscal
year;
4.5.3 Develop and implement a financing and/or funding plan for ongoing
Authority operations;
4.5.4 Retain necessary and sufficient staff and adopt personnel and
compensation policies, rules and regulations;
4.5.5 Adopt rules for procuring supplies, equipment, and services;
4.5.6 Adopt rules for the disposal of surplus property;
4.5.7 Establish standing and ad hoc committees as necessary to ensure that the
interests and concerns of each Party are represented and to ensure
operational, technical, and financial issues are thoroughly researched and
analyzed;
4.5.8 The setting of retail rates for power sold by the Authority and the setting
of charges for any other category of retail service provided by the
Authority;
4.5.9 Termination of the CCA Progratn;
4.5.10 Address any concerns of consumers and customers;
4.5.11 Conduct and oversee Authority audits at intervals not to exceed three
years;
4.5.12 Arrange for an annual independent fiscal audit;
4.5.13 Adopt such bylaws, rules and regulations as are necessary or desirable for
the purposes hereof; provided that nothing in the bylaws, rules and
regulations shall be inconsistent with this Agreement;
4.5.14 Exercise the Specific Powers identified in Sections 3.2 and 4.6 except as
the Board may elect to delegate to the Executive Director; and
4.5.15 Discharge other duties as appropriate or required by statute.
4.6 Startup Responsibilities. The Authority shall have the duty to do the following
within one year of the Effective Date of the Agreement:
LA #4823-8293-8198 vi 12
4.6.1 To adopt an implementation plan prepared by the County of Los Angeles,
pursuant to Public Utilities Code Section 366.2( c )(3), for electrical load
aggregation;
4.6.2 To prepare a statement of intent, pursuant to Public Utilities Code
Section 366.2(c)(4), for electrical load aggregation;
4.6.3 To encourage other qualified public agencies to participate in the
Authority;
4.6.4 To obtain financing and/or funding as is necessary or desirable;
4.6.5 To evaluate the need for, acquire, and maintain insurance.
4. 7 Meetings and Special Meetings of the Board. The Board shall hold at least one
regular meetings per year but the Board may provide for the holding of regular
meetings at more frequent intervals. The date, hour and place of each regular
meeting shall be fixed by resolution or ordinance of the Board. Regular meetings
may be adjourned to another meeting time. Special meetings of the Board may be
called in accordance with the provisions of Government Code Section 54956.
Directors may participate in meetings telephonically, with full voting rights, only
to the extent permitted by law.
4.8 Brown Act Applicable. All meetings of the Board shall be conducted in
accordance with the provisions of the Ralph M. Brown Act (Government Code
Section 54950, et seq.).
4.9 Quorum; Approvals. A majority of the Directors shall constitute a quorum,
except that less than a quomm may adjoum from time to time in accordance with
law. The affirmative votes of a majority of the Directors who are present at the
subject meeting shall be required to take any action by the Board.
4.10 Board Voting.
4.1 0.1 Percentage Vote. Each Director shall have one vote. Action of the Board
on all matters shall require an affirmative vote of a majority of all
Directors who are present at the subject meeting, except when a
supermajority vote is expressly required by this Agreement. When a
supermajority vote is required under Section 4.11 (Special Voting), action
of the Board shall require an affirmative vote of the specified
supermajority of all Directors who are present at the subject meeting. All
votes taken pursuant to this Section 4.1 0.1 shall be referred to as a
percentage vote. Notwithstanding the foregoing, in the event of a tie in a
percentage vote, the Board can break the tie and act upon an affirmative
voting shares vote as described in section 4.1 0.2 (Voting Shares Vote).
4.1 0.2 Voting Shares Vote. In addition to and immediately after an affirmative
percentage vote three or more Directors may request that a vote of the
LA #4823-8293-8198 vl 13
voting shares shall be held. In such event, the corresponding voting
shares, as described in section 4.1 0.3, of all Directors voting in order to
take an action shall exceed 50%, or such other higher voting shares
percentage expressly required by this Agreement or the Operating Policies
and Procedures of all Directors who are present at the subject meeting.
All votes taken pursuant to this Section 4.1 0.2 shall be referred to as a
voting shares vote. In the event that any one Director has a voting share
that equals or exceeds that which is necessary to disapprove the matter
being voted on by the Board, at least one other Director shall be required
to vote in the negative in order to disapprove such matter. When a voting
shares vote is held, action by the Board requires both an affirmative
percentage vote and an affirmative voting shares vote.
4.10.3 Voting Shares Formula. When a voting shares vote is requested by
three or more Directors, voting shares of the Directors shall be determined
by the following formula:
(Annual Energy Use/Total Annual Energy) multiplied by 100, where (a)
"Annual Energy Use" means (i) with respect to the first two years
following the Effective Date, the annual electricity usage, expressed in
kilowatt hours ("kWh"), within the Party's respective jurisdiction and (ii)
with respect to the period after the second anniversary of the Effective
Date, the annual electricity usage, expressed in kWh, of accounts within a
Patty's respective jurisdiction that are served by the Authority and (b)
"Total Annual Energy" means the sum of all Patties' Annual Energy Use.
4.11 Special Voting.
4.11.1 Except as provided below, matters that require Special Voting as
described in this Section shall require 72 hours prior notice to any Brown
Act meeting or special meeting. Two-thirds vote (or such greater vote as
required by state law) of the appointed Directors shall be required to take
any action on the following:
LA#4823-8293-8J98 vi
(a)
(b)
(c)
(d)
Change the designation of Treasurer or Auditor of the Authority;
Issue bonds or other forms of debt;
Exercise the power of eminent domain, subject to prior approval
by the passage of an authorizing ordinance or other legally
sufficient action by the affected Patty; and
Amend this Agreement or adopt or amend the bylaws of the
Authority. At least 30 days advance notice shall be provided for
such actions. The Authority shall also provide prompt written
14
notice to all Parties of the action taken and enclose the adopted or
modified documents.
5. INTERNAL ORGANIZATION
5.1 Chair and Vice Chair. For each fiscal year, the Board shall elect a Chair and
Vice Chair from among the Directors. The term of office of the Chair and Vice
Chair shall continue for one year, but there shall be no limit on the number of
terms held by either the Chair or Vice Chair. The Chair shall be the presiding
officer of all Board meetings, and the Vice Chair shall serve in the absence of the
Chair. The Chair shall sign all contracts on behalf of the Authority, and shall
perform such other duties as may be imposed by the Board. In the absence of the
Chair, the Vice-Chair shall sign contracts and perform all of the Chair's duties.
The office of the Chair or Vice Chair shall be declared vacant and a new selection
shall be made if: (a) the person serving dies, resigns, or the Party that the person
represents removes the person as its representative on the Board, or (b) the Party
that he or she represents withdraws from the Authority pursuant to the provisions
of this Agreement. Upon a vacancy, the position shall be filled at the next
regular meeting of the Board held after such vacancy occurs or as soon as
practicable thereafter. Succeeding officers shall perform the duties normal to said
offices.
5.2 Secretary. The Board shall appoint a Secretary, who need not be a member of
the Board, who shall be responsible for keeping the minutes of all meetings of the
Board and all other office records of the Authority.
5.3 Treasurer. The Board shall appoint a qualified person to act as the Treasurer,
who need not be a member of the Board. Unless otherwise exempted from such
requirement, the Authority shall cause an independent audit to be made by a
certified public accountant, or public accountant, in compliance with Section 6506
of the Act. The Treasurer shall act as the depositary of the Authority and have
custody of all the money of the Authority, from whatever source, and as such,
shall have all of the duties and responsibilities specified in Section 6505.5 of the
Act. The Board may require the Treasurer to file with the Authority an official
bond in an amount to be fixed by the Board, and if so requested the Authority
shall pay the cost of premiums associated with the bond. The Treasurer shall
report directly to the Board and shall comply with the requirements of treasurers
of incorporated municipalities. The Board may transfer the responsibilities of
Treasurer to any person or entity as the law may provide at the time.
5.4 Auditor. The Board shall appoint a qualified person to act as the Auditor, who
shall not be a member of the Board. The Board may require the Auditor to file
with the Authority an official bond in an amount to be fixed by the Board, and if
so requested the Authority shall pay the cost of premiums associated with the
bond.
LA #4823-8293-8198 vi 15
5.5 Executive Director. The Board shall appoint an Executive Director for the
Authority, who shall be responsible for the day-to-day operation and management
of the Authority and the CCA Program. The Executive Director may exercise all
powers of the Authority, except those powers specifically reserved to the Board
including but not limited to those set forth in Section 4.5 (Specific
Responsibilities of the Board) ofthis Agreement or the Operating Policies and
Procedures, or those powers which by law must be exercised by the Board. The
Executive Director may enter into and execute any Energy Contract, in
accordance with criteria and policies established by the Board.
5.6 Bonding of Persons Having Access to Property. Pursuant to the Act, the Board
shall designate the public officer or officers or person or persons who have charge
of, handle, or have access to any prope1ty of the Authority exceeding a value as
established by the Board, and shall require such public officer or officers or
person or persons to file an official bond in an amount to be fixed by the Board.
5.7 Other Employees/Agents. The Board shall have the power by resolution to hire
employees or appoint or retain such other agents, including officers, loan-out
employees, or independent contractors, as may be necessary or desirable to carry-
out the purpose of this Agreement.
5.8 Privileges and Immunities from Liability. All of the privileges and immunities
from liability, exemption from laws, ordinances and rules, all pension, relief,
disability, workers' compensation and other benefits which apply to the activities
of officers, agents or employees of a public agency when performing their
respective functions shall apply to the officers, agents or employees of the
Authority to the same degree and extent while engaged in the performance of any
of the functions and other duties of such officers, agents or employees under this
Agreement. None of the officers, agents or employees directly employed by the
Board shall be deemed, by reason of their employment by the Authority to be
employed by the Parties or by reason of their employment by the Authority, to be
subject to any of the requirements of the Parties.
5.9 Commissions, Boards and Committees. The Board may establish any advisory
commissions, boards and committees as the Board deems appropriate to assist the
Board in carrying outs its functions and implementing the CCA Program, other
energy programs and the provisions of this Agreement. The Board may establish
rules, regulations, policies, bylaws or procedures to govern any such
commissions, boards, or committees and shall determine whether members shall
be compensated or entitled to reimbursement for expenses.
5.9.1 The Board shall establish the following Advisory Committees:
LA #4823-8293-8198 vi
(a) Executive Committee. The Board shall establish an executive
committee consisting of a smaller number of Directors. The Board
may delegate to the Executive Committee's such authority as the
Board might otherwise exercise, except that the Board may not
16
LA #4823-8293-8198 vi
delegate authority regarding certain essential functions, including
but not limited to, approving the fiscal year budget or hiring or
firing the Executive Director, and other functions as provided in
the Operating Policies and Procedures. The Board may not
delegate to the Executive Committee or any other committee its
authority under Section 3.2.12 to adopt and amend the Operating
Policies and Procedures.
(b) Finance Committee. The Board shall establish a finance
committee consisting of a smaller number of Directors. The
primary purpose of the Finance Committee is to review and
recommend to the Board:
(c)
(d)
(e)
(I) A funding plan;
(2) A fiscal year budget;
(3) Financial policies and procedures to ensure equitable
contributions by Parties;
( 4) Such other responsibilities as provided in the Operating
Policies and Procedures, including but not limited to
policies, rules and regulations governing investment of
surplus funds, and selection and designation of financial
institutions for deposit of Authority funds.
Community Advisory Committee. The Board shall establish a
community advisory committee comprised of members of the
public representing key stakeholder communities. The primary
purpose of the Community Advisory Committee shall be to
provide a venue for ongoing citizen support and engagement in the
operations of the Authority.
Meetings of the Advisory Committees. All meetings of the
Advisory Committees shall be held in accordance with the Ralph
M. Brown Act. For the purposes of convening meetings and
conducting business, unless otherwise provided in the bylaws, a
majority of the members of the Advisory Committee shall
constitute a quorum for the transaction of business, except that less
than a quorum or the secretary of each Advisory Committee may
adjourn meetings from time-to-time. As soon as practicable, but no
later than the time of posting, the Secretary of the Advisory
Committee shall provide notice and the agenda to each Party,
Director and Alternate Directors.
Officers of Advisory Committees. Unless otherwise determined
by the Board, each Advisory Committee shall choose its officers,
comprised of a Chairperson, a Vice-Chairperson and a Secretary.
17
6. IMPLEMENTATION ACTION AND AUTHORITY DOCUMENTS
6.1 Preliminary Implementation of the CCA Program.
6.1.1 Enabling Ordinance. In addition to the execution of this Agreement,
each Party shall adopt an ordinance in accordance with Public Utilities
Code Section 366.2(c)(12) for the purpose of specifying that the Party
intends to implement a CCA Program by and through its participation in
the Authority.
6.1.2 Implementation Plan. The Authority shall cause to be prepared and
secure Board approval of an Implementation Plan meeting the
requirements of Public Utilities Code Section 366.2 and any applicable
Public Utilities Commission regulations as soon after the Effective Date as
reasonably practicable ..
6.1.3 Termination of CCA Program. Nothing contained in this Section 6 or
this Agreement shall be construed to limit the discretion of the Authority
to terminate the implementation or operation of the CCA Program at any
time in accordance with any applicable requirements of state law.
6.2 Authority Documents. The Parties acknowledge and agree that the affairs of the
Authority will be implemented through various documents duly adopted by the
Board through Board resolution or minute action, including but not necessarily
limited to the Operating Policies and Procedmes, the annual budget, and specified
plans and policies defined as the Authority Documents by this Agreement. The
Parties agree to abide by and comply with the terms and conditions of all such
Authority Documents that may be adopted by the Board, subject to the Parties'
right to withdraw from the Authority as described in Section 8 (Withdrawal and
Termination) of this Agreement.
7. FINANCIAL PROVISIONS
7 .I Fiscal Year. The Authority's fiscal year shall be 12 months commencing July 1
and ending June 30. The fiscal year may be changed by Board resolution.
7.2 Depository.
7 .2.1 All funds of the Authority shall be held in separate accounts in the name
of the Authority and not commingled with funds of any Party or any other
person or entity.
7.2.2 All funds of the Authority shall be strictly and separately accounted for,
and regular reports shall be rendered of all receipts and disbursements, at
least quarterly during the fiscal year. The books and records of the
Authority shall be open to inspection and duplication by the Parties at all
reasonable times. The Board shall contract with a certified public
accountant or public accountant to make an annual audit of the accounts
LA #4823-8293-8198 vl 18
and records of the Authority, which shall be conducted in accordance with
the requirements of Section 6506 of the Act.
7.2.3 All expenditures shall be made in accordance with the approved budget
and upon the approval of any officer so authorized by the Board in
accordance with its Operating Policies and Procedures. The Treasurer
shall draw checks or warrants or make payments by other means for
claims or disbursements not within an applicable budget only upon the
prior approval of the Board.
7.3 Budget and Recovery Costs.
7.3.1 Budget. The initial budget shall be approved by the Board. The Board
may revise the budget from time to time as may be reasonably necessary
to address contingencies and unexpected expenses. All subsequent
budgets of the Authority shall be prepared and approved by the Board in
accordance with the Operating Policies and Procedures.
7.3.2 Funding oflnitial Costs. Subject to the approval of the Board of
Supervisors, the County of Los Angeles has agreed to provide up to $10
million for funding Initial Costs in establishing the Authority and
implementing the CCA Program. In the event that the CCA Program
becomes operational, the County of Los Angeles shall be reimbursed for
the Initial Costs. The County and the Authority will execute an agreement
specifying the terms and conditions of the Initial Costs provided by the
County, including but not limited to: (a) Repayment of this amount,
which shall be first priority in relation to all other indebtedness of the
Authority; and (b) authorization for the County Auditor-Controller to
conduct an audit of the Authority's books and records (including personnel
records, as necessary) and/or investigation, following reasonable advance
notice from the County, to ensure compliance with the terms and
conditions of the agreement. The Authority may establish a reasonable
time period over which such costs are recovered. In the event that the
CCA Program does not become operational, the County shall not be
entitled to any reimbursement of the Initial Costs they have paid from the
Authority or any other Party.
7.3.3 Program Costs. The Parties desire that, to the extent reasonably
practicable, all costs incurred by the Authority that are directly or
indirectly attributable to the provision of electric services under the CCA
Program, including the establishment and maintenance of various reserve
and performance funds, shall be recovered through charges to CCA
customers receiving such electric services.
7.3.4 General Costs. Costs that are not directly or indirectly attributable to the
provision of electric services under the CCA Program, as determined by
the Board, shall be defined as general costs. General costs shall be shared
LA #4823-8293·8198 vi 19
among the Parties on such bases as the Board shall determine pursuant to
the Authority documents.
7.4 Contributions. Parties are not required under this Agreement to make any
financial contributions. Consumers may subscribe as customers of the Authority
pursuant to the Act and outside of this Agreement and through their on-bill
selections.
7.4.1 A Party may, in the appropriate circumstance, and when agreed-to:
(a) Make contributions from its treasury for the purposes set forth in
this Agreement;
(b) Make payments of public funds to defray the cost of the purposes
of the Agreement and Authority;
(c) Make advances of public funds for such purposes, such advances
to be repaid as provided by written agreement; or
(d) Use its personnel, equipment or property in lieu of other
contributions or advances.
(e) No Party shall be required to adopt any tax, assessment, fee or
charge under any circumstances.
7.5 Accounts and Reports. The Treasurer shall establish and maintain such funds
and accounts as may be required by good accounting practice or by any provision
of any trust agreement entered into with respect to the proceeds of any bonds
issued by the Authority. The books and records of the Authority in the hands of
the Treasurer shall be open to inspection and duplication at all reasonable times
by duly appointed representatives of the Parties. The Treasurer, within 180 days
after the close of each fiscal year, shall give a complete written report of all
financial activities for such fiscal year to the Parties.
7.6 Funds. The Treasurer shall receive, have custody of and/or disburse Authority
funds in accordance with the laws applicable to public agencies and generally
accepted accounting practices, and shall make the disbursements required by this
Agreement in order to carry out any of the purposes of this Agreement.
8. WITHDRAWAL AND TERMINATION
8.1 Withdrawal
8.1.1 Withdrawal by Parties. Any Party may withdraw its membership in the
Authority, effective as of the beginning of the Authority's fiscal year, by
giving no less than 180 days advance written notice of its election to do
so, which notice shall be given to the Authority and each Party.
LA #4823-8293-8198 vi 20
Withdrawal of a Pmty shall require an affirmative vote of the Party's
governing board.
8.1.2 Amendment. Notwithstanding Section 8.1.1 (Withdrawal by Pmties) of
this Agreement, a Pmty may withdraw its membership in the Authority
upon approval and execution of an amendment to this Agreement provided
that the requirements of this Section 8.1.2 are strictly followed. A Party
shall be deemed to have withdrawn its membership in the Authority
effective 180 days after the Board approves an amendment to this
Agreement if the Director representing such Party has provided notice to
the other Directors immediately preceding the Board's vote of the Party's
intention to withdraw its membership in the Authority should the
amendment be approved by the Board.
8.1.3 Continuing Liability; Further Assm·ances. A Pa1ty that withdraws its
membership in the Authority may be subject to certain continuing
liabilities, as described in Section 8.4 (Continuing Liability; Refund) of
this Agreement, including, but not limited to, Power Purchase
Agreements. The withdrawing Party and the Authority shall execute and
deliver all further instruments and documents, and take any further action
that may be reasonably necessary, as determined by the Board, to
effectuate the orderly withdrawal of such Pmty from membership in the
Authority. The Operating Policies and Procedures shall prescribe the
rights if any of a withdrawn Pmty to continue to participate in those Board
discussions and decisions affecting customers of the CCA Program that
reside or do business within the jurisdiction of the Party.
8.2 Involuntary Termination. This Agreement may be terminated with respect to a
Pmty for material non-compliance with provisions of this Agreement or the
Authority Documents upon an affirmative vote of the Board in which the
minimum percentage vote and percentage voting shares, as described in
Section 4.10 (Board Voting) of this Agreement, shall be no less than 67%
excluding the vote and voting shares of the Party subject to possible termination.
Prior to any vote to terminate this Agreement with respect to a Pmty, written
notice of the proposed termination and the reason( s) for such termination shall be
delivered to the Pmty whose termination is proposed at least 30 days prior to the
regular Board meeting at which such matter shall first be discussed as an agenda
item. The written notice of proposed termination shall specify the pmticular
provisions of this Agreement or the Authority Documents that the Party has
allegedly violated. The Party subject to possible termination shall have the
opportunity at the next regular Board meeting to respond to any reasons and
allegations that may be cited as a basis for termination prior to a vote regarding
termination. A Pmty that has had its membership in the Authority terminated may
be subject to certain continuing liabilities, as described in Section 8.4 (Continuing
Liability; Refund) of this Agreement. In the event that the Authority decides to
not implement the CCA Program, the minimum percentage vote of 67% shall be
conducted in accordance with Section 4.10 (Board Voting) of this Agreement.
LA#4823-8293-8198 vl 21
8.3 Mutual Termination. This Agreement may be terminated by mutual agreement
of all the Parties; provided, however, the foregoing shall not be construed as
limiting the rights of a Party to withdraw its membership in the Authority, and
thus terminate this Agreement with respect to such withdrawing Party, as
described in Section 8.1 (Withdrawal) of this Agreement.
8.4 Continuing Liability; Refund. Upon a withdrawal or involuntary termination of
a Party, the Party shall remain responsible for any claims, demands, damages, or
liabilities arising from the Party's membership in the Authority through the date
of its withdrawal or involuntary termination, it being agreed that the Party shall
not be responsible for any claims, demands, damages, or liabilities arising after
the date of the Party's withdrawal or involuntary termination. In addition, such
Party also shall be responsible for any costs or obligations associated with the
Party's participation in any program in accordance with the provisions of any
agreements relating to such program provided such costs or obligations were
incurred prior to the withdrawal of the Party. The Authority may withhold funds
otherwise owing to the Party or may require the Party to deposit sufficient funds
with the Authority, as reasonably determined by the Authority, to cover the
Party's liability for the costs described above. Any amount of the Party's funds
held on deposit with the Authority above that which is required to pay any
liabilities or obligations shall be returned to the Party.
8.5 Disposition of Authority Assets. Upon termination of this Agreement and
dissolution of the Authority by all Parties, and after payment of all obligations of
the Authority, the Board:
8.5.1 May sell or liquidate Authority propetty; and
8.5.2 Shall distribute assets to Parties in propmtion to the contributions made by
the existing Parties.
Any assets provided by a Pmty to the Authority shall remain the asset of that
Pmty and shall not be subject to distribution under this section.
9. MISCELLANEOUS PROVISIONS
9.1 Dispute Resolution. The Pmties and the Authority shall make reasonable effmts
to settle all disputes arising out of or in connection with this Agreement. Before
exercising any remedy provided by law, a Pmty or the Pmties and the Authority
shall engage in nonbinding mediation or arbitration in the manner agreed upon by
the Party or Parties and the Authority. The Pmties agree that each Party may
specifically enforce this section 9.1 (Dispute Resolution). In the event that
nonbinding mediation or arbitration is not initiated or does not result in the
settlement of a dispute within 60 days after the demand for mediation or
arbitration is made, any Party and the Authority may pursue any remedies
provided by law.
LA 114823-8293-8198 vi 22
9.2 Liability of Directors, Officers, and Employees. The Directors, officers, and
employees of the Authority shall use ordinary care and reasonable diligence in the
exercise of their powers and in the performance of their duties pursuant to this
Agreement. No current or former Director, officer, or employee will be
responsible for any act or omission by another Director, officer, or employee.
The Authority shall defend, indemnify and hold harmless the individual current
and former Directors, officers, and employees for any acts or omissions in the
scope of their employment or duties in the manner provided by Government Code
Section 995 et seq. Nothing in this section shall be construed to limit the defenses
available under the law, to the Parties, the Authority, or its Directors, officers, or
employees.
9.3 Indemnification of Parties. The Authority shall acquire such insurance coverage
as is necessary to protect the interests of the Authority, the Parties and the public.
The Authority shall defend, indemnify and hold harmless the Parties and each of
their respective governing board members, officers, agents and employees, from
any and all claims, losses, damages, costs, injuries and liabilities of every kind
arising directly or indirectly from the conduct, activities, operations, acts and
omissions ofthe Authority under this Agreement.
9.4 Notices. Any notice required or permitted to be made hereunder shall be in
writing and shall be delivered in the manner prescribed herein at the principal
place of business of each Party. The Parties may give notice by (I) personal
delivery; (2) e-mail; (3) U.S. Mail, first class postage prepaid, or a faster delivery
method; or (3) by any other method deemed appropriate by the Board.
Upon providing written notice to all Parties, any Party may change the designated
address or e-mail for receiving notice.
All written notices or correspondence sent in the described manner will be
deemed given to a party on whichever date occurs earliest: (I) the date of personal
delivery; (2) the third business day following deposit in the U.S. mail, when sent
by "first class" mail; or (3) the date of transmission, when sent by e-mail or
facsimile.
9.5 Successors. This Agreement shall be binding upon and shall inure to the benefit
of the successors of each Party.
9.6 Assignment. Except as otherwise expressly provided in this Agreement, the
rights and duties ofthe Parties may not be assigned or delegated without the
advance written consent of all of the other Parties, and any attempt to assign or
delegate such rights or duties in contravention of this Section 9.6 shall be null and
void. This Agreement shall inure to the benefit of, and be binding upon, the
successors and assigns of the Parties. This Section 9.6 does not prohibit a Pmty
from entering into an independent agreement with another agency, person, or
entity regarding the financing of that Party's contributions to the Authority, or the
disposition of the proceeds which that Party receives under this Agreement, so
LA #4823·8293·8198 vl 23
long as such independent agreement does not affect, or purport to affect, the rights
and duties of the Authority or the Parties under this Agreement.
9.7 Severability. If any one or more of the terms, provisions, promises, covenants, or
conditions of this Agreement were adjudged invalid or void by a court of
competent jurisdiction, each and all of the remaining terms, provisions, promises,
covenants, and conditions of this Agreement shall not be affected thereby and
shall remain in full force and effect to the maximum extent permitted by law.
9.8 Governing Law. This Agreement is made and to be performed in the State of
California, and as such California substantive and procedural law shall apply.
9.9 Headings. The section headings herein are for convenience only and are not to
be construed as modifying or governing the language of this Agreement.
9.10 Counterparts. This Agreement may be executed in any number of counterparts,
and upon execution by all Parties, each executed counterpart shall have the same
force and effect as an original instrument and as if all Parties had signed the same
instrument. Any signature page of this Agreement may be detached from any
counterpart of this Agreement without impairing the legal effect of any signatures
thereon, and may be attached to another counterpart of this Agreement identical in
form hereto but having attached to it one or more signature pages.
CITY OF ___________ _
By: ___________ __
Mayor
ATTEST:
By:_~~~--------
City Clerk
LA #4823-8293-8198 vi 24
Contents
Background ............................................................................................................................... 1
Updated Findings ...................................................................................................................... 1
Phase-In Assumptions ............................................................................................................... 1
Load Forecast ............................................................................................................................ 2
SCE Rate Forecast ...................................................................................................................... Z
Power Supply ............................................................................................................................ 3
Proforma Analysis ................................................................................................................... 11
Administrative Costs ............................................................................................................... 12
Financing ................................................................................................................................. 13
Rates ....................................................................................................................................... 13
Risks ....................................................................................................................................... 15
Summary ................................................................................................................................ 19
LACCE BUSINESS PlAN UPDATE
Background
On September 15, 2015, the Board of Supervisors ("Board") of the County of Los Angeles ("County")
instructed the County's Internal Services Department (lSD) and the Chief Executive Officer (CEO) to
assess the feasibility of establishing a Community Choice Aggregation (CCA) for County
unincorporated areas, with the potential to expand to other public agencies within the County. The
County fulfilled that directive by issuing the County of Los Angeles Community Choice Energy
Business Plan ("Business Pian") on July 28, 2016.
On September 27, 2016, the Board directed the CEO, Chief Sustain ability Officer, County Counsel,
and lSD to form a Joint Powers Authority (JPA) with other interested public agencies, negotiate a
governance structure, and determine an operations plan. As part of those negotiations, the CEO
requested that the Information in the Business Plan be updated to reflect current market prices,
regulatory fees, and operational plans to provide potential LACCE JPA member agencies with the
most accurate possible assessment of LACCE's financial outlook. This document ("Business Plan
Update") details the changed inputs, assumptions, and outcomes.
Updated Findings
• Power supply costs are approximately 21% lower than in the initial business plan due to
lower renewable and market price projections.
• It is assumed that LA County provides the initial working capital funding during FY 2018. LA
County is then reimbursed by the end of the fiscal year using funds obtained by LACCE once
financing has been obtained. This plan does not assume vendor funding; however, it is
estimated that cash working capital can be reduced by approximately 50% if LACCE can
negotiate a delayed payment contract with power supply vendors (i.e. vendors do not get
paid until revenues have been received).
• The residential PCIA increased from $0.00098 to $0.00776 per kWh and is projected to
continue to increase in the next few years. Non-residential PCIA rates increased by a similar
margin.
• There is no significant cost saving between a 75% residential/55% non-residential
participation scenario and a 95% residential/85% non-residential participation scenario
because the administrative costs are minor compared to the power supply costs and non-
bypassable charges vary based on load.
• Updated projected rates for two scenarios were developed: 75% residential/55% non-
residential participation scenario and a 95% residential/85% non-residential participation
scenario. The projected rates can be found in the tables below:
Phase-In Assumption
This Business Plan Update assumes LACCE will launch in January 2018 with the same phase-in
strategy that was used in the original Business Plan:
lACCE BUSINESS PlAN UPDATE 1
" P h a s e 1 i n c l u d e C o u n t y - o w n e d f a c i l i t i e s w i t h i n t h e u n i n c o r p o r a t e d C o u n t y a r e a s
" P h a s e 2 s e r v e s a l l c u s t o m e r s l o c a t e d i n t h e u n i n c o r p o r a t e d C o u n t y
" P h a s e 3 s e r v e s a l l c u s t o m e r s w i t h i n L A C C E
E x h i b i t 1 s u m m a r i z e s t h e p o t e n t i a l l o a d , d e m a n d , r e v e n u e , a n d a c c o u n t i n f o r m a t i o n f o r e a c h
a s s u m e d p h a s e .
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. - - - ' - P a r i i ~ l p a t l o n s ~ n e d u l e . � - - - ; \ - ; : - , - 2 : " ' - , ; ' "
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A v e r a g e l A C C E
C u s t o m e r P e a k L o a d L o a d A n n u a l
P h a s e S t a r t E l i g i b i l i t y A c c o u n t s ( M W ) a M W R e v e n u e s
P h a s e 1 J a n u a r y 2 0 1 8 L A C o u n t y F a c i l i t i e s I n 1 , 7 2 8 4 0 2 0 $ 2 5 M
U n i n c o r p o r a t e d A r e a
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C u s t o m e r s
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D e p e n d i n g o n t h e C i t i e s j o i n i n g L A C C E , L A C C E m a y l a u n c h a d i f f e r e n t c o m b i n a t i o n o f a c c o u n t s f o r
P h a s e 2 s u c h a s c o m m e r c i a l a n d i n d u s t r i a l a c c o u n t s o p e r a t i n g w i t h i n t h e u n i n c o r p o r a t e d C o u n t y
a n d i n a n y o t h e r p a r t i c i p a t i n g p u b l i c a g e n c i e s . M o d e l i n g t h o s e a c c o u n t s f o r t h i s B u s i n e s s P l a n
U p d a t e w o u l d h a v e p r e s e n t e d t w o c h a l l e n g e s . F i r s t , b e c a u s e i t r e m a i n s u n c e r t a i n w h i c h c i t i e s w i l l
p a r t i c i p a t e i n t h e L A C C E J P A , i t w o u l d b e i m p o s s i b l e t o d e t e r m i n e t h e l o a d , d e m a n d , a n d n u m b e r
o f a c c o u n t s . S e c o n d , t h e s p e c i f i c a c c o u n t s t o i n c l u d e i n P h a s e 2 d e p e n d s o n t h e t o t a l l o a d i n L A C C E
i n o r d e r t o e n s u r e a s m o o t h t r a n s i t i o n f r o m S C E t o L A C C E . T h i s B u s i n e s s P l a n U p d a t e t h e r e f o r e
p r o v i d e s a n u p d a t e o f L A C C E ' s r a t e s b a s e d o n t h e i m p l e m e n t a t i o n p l a n l i s t e d i n E x h i b i t 1 .
L o a d F o r e c a s t
T h i s b u s i n e s s p l a n a s s u m e s l a u n c h i n J a n u a r y 2 0 1 8 . T h e l o a d f o r e c a s t w a s u p d a t e d t o r e f l e c t
p r o j e c t e d l o a d s a n d p a r t i c i p a t i o n r a t e s . T h i s B u s i n e s s P l a n U p d a t e m o d e l s t w o C C A p a r t i c i p a t i o n
s c e n a r i o s . T h e f i r s t s c e n a r i o ( " C o n s e r v a t i v e P a r t i c i p a t i o n S c e n a r i o " } m o d e l e d p a r t i c i p a t i o n r a t e s o f
7 5 p e r c e n t f o r r e s i d e n t i a l c u s t o m e r s a n d 6 5 p e r c e n t f o r n o n - r e s i d e n t i a l c u s t o m e r s . T h e s e c o n d
s c e n a r i o ( " M o s t l i k e l y P a r t i c i p a t i o n S c e n a r i o " ) a s s u m e d 9 5 % p a r t i c i p a t i o n f o r r e s i d e n t i a l c u s t o m e r s
a n d 8 5 % f o r n o n - r e s i d e n t i a l c u s t o m e r s w h i c h i s b a s e d o n t h e a v e r a g e p a r t i c i p a t i o n o f a l l c u r r e n t l y
o p e r a t i n g C C A s i n C a l i f o r n i a .
S C E R a t e F o r e c a s t
S o u t h e r n C a l i f o r n i a E d i s o n ' s ( S C E ) r a t e s a r e u p d a t e d b a s e d o n t h e J a n u a r y 1 , 2 0 1 7 p o s t e d r a t e s . I n
a d d i t i o n , t h e P o w e r C h a r g e I n d i f f e r e n c e A d j u s t m e n t ( P C I A } i s a l s o u p d a t e d a s o f J a n u a r y 1 , 2 0 1 7 .
A n u p d a t e d P C I A f o r e c a s t w a s a l s o d e v e l o p e d t o r e f l e c t e x p e c t e d c h a n g e s i n r e n e w a b l e r e s o u r c e
b e n c h m a r k i n g c o s t s . E x h i b i t 2 s h o w s t h e u p d a t e d P C I A r a t e f o r e c a s t u s e d .
L A C C E B U S I N E S S P l A N U P O A T E 2
-!' -' ',-,, ' ' '' ~~ " ''
' ' • . , Exhlblt2 · " •. · ' '' '
' ' '~" -:::-' :~ ·' ' '" ,,:_ ' ! -' ) -~ -', '
' ' -~ ' .. .. ,_ PillA R~te$ ~y !latt! Class and Y~nr , ' -' ' ' ' '' " ' ' ' ' ,' "' ~ ' ' ' ' c' ~ -,-)~ -~ "~-~'' )j •
Actual Forecast
2016 2017 2018 2019 2020
Domestic 0,00098 0,00776 0.01009 0.01160 0.01117
TC·1 0.00048 0.00348 0,00452 0.00520 0.00501
TOU·GS-1 0.00071 0.00635 0,00826 0,00949 0.00914
TOU-G$·2 0.00079 0.00590 0.00767 0.00882 0.00850
TOU·GS·3 0.00070 0.00524 0.00681 0.00783 0,00754
TOU·PA·2 0.00055 0.00533 0.00693 0.00797 0.00767
TOU·PA·3 0.00042 0.00399 0.00519 0.00597 0.00575
TOU·8·PRI 0.00061 0.00395 0.00514 0.00591 0.00569
TOU-8-SEC 0.00052 0.00457 0.00594 0.00683 0.00658
TOU-8·SUB 0.00045 0.00339 0.00441 0.00507 0.00488
In addition to the PCIA, SCE's generation and distribution rates were updated for each rate class.
Power Supply
The forecast cost of power was updated to reflect the most recent trends in the power market.
Natural gas-fired power plants define the base power price in southern California and throughout
the Western Energy Coordinating Council (WECC) footprint as they serve as the marginal resource.
As the market price of electricity is usually set by the cost of the marginal unit, EES developed a
wholesale market price forecast using a forecast of natural gas prices and projected market-implied
heat rates or spark spreads.
The projected market-Implied heat rates reflect the average efficiency of gas-fired power plants in
California. The projected heat rates are based on historic market-implied heat rates calculated by
dividing historic southern California (SP15) wholesale market prices by historic southern California
natural gas prices. EES developed a natural gas price forecast based on NYMEX forward gas prices
for the Henry Hub trading hub and southern California basis differentials. Projected market heat
rates were then applied to the southern California natural gas price forecast to calculate a wholesale
electric market price forecast for southern California.
The following steps were taken to produce the wholesale electric market price forecast:
1. Forward prices for natural gas at Henry Hub are available through December 2029.
2. The southern California basis differential is used to adjust the Henry Hub forward prices to
southern California prices. Southern California forward natural gas prices are equal to NYMEX
forward prices (Henry Hub) plus the southern California basis. The southern California basis
forward curve is available through December 2022. After December 2022, the monthly
southern California basis differentials are assumed to escalate at the same escalation rate at
which Henry Hub forward prices escalate or near 2.3 percent on average.
3. Projected monthly market-implied heat rates are multiplied by forecast southern California
natural gas prices to calculate forecast southern California wholesale market prices.
4. Projected heat rates are based on historic heat rates (southern California wholesale electricity
prices divided by SoCal natural gas prices).
lACCE BUSINESS PlAN UPDATE 3
11!1 Power Supply Costs
111 Non-Power Supply Costs:
• Start-up costs
• LACCE staffing and administration costs
• Consulting Support
• SCE and regulatory charges
• Financing costs
Ill Pass-Through Charges to SCE:
• Transmission and distribution charges
• Power Cost Indifference Adjustment (PICA) Charge
• Other SCE non-bypassable charges
Once the costs of the LACCE operations have been determined, the total costs and resulting revenue
needs were compared to SCE's projected rates and revenues for the potential LACCE customers.
Administrative Costs
The administrative costs were updated based on the most recent LACCE budget. At this time, it is
assumed that $10 million in initial funding will be provided by LA County as part of the FY2018
budget to support the start-up of the LACCE Authority. This funding includes $8 million for power
procurement to support Phase I of the program and up to $2 million for administrative costs.
In addition to administrative costs, expenses such as power supply costs, non-bypassable charges,
data management costs, utility fees, and estimated uncollectibles are included in the proforma.
The LACCE budget assumes only the Executive Director and one administrative staff will be hired
prior to Phase 2 as LACCE will rely on consultant help initially. However, LACCE could hire additional
staff earlier and reduce the cost of consultants to remain within budget. Exhibit 12lists the assumed
expenses.
LACCE BUSINESS PLAN UPDATE 12
·~::·~",f~'~,r~~~~'-~ _'J-~ ,,~,-=: >_· ' Exhibit 12 -' ,, ' "" ~ ' -'' ~ ., .
--' -'--,--~,-·_ , c'
--' --Admlnlstra,iye !Zos's :" : · -~ -~';'_ ~ ---
~ , l "•', t, -s~_," ~'-~ ~;,;~"-" --• ·-.:;-=~";:,-,", ;,-;_«' "-~,-.,__ -, ~~-•'C'F>" ' " -
FY17 FV18
EXPENSES
Consultants
Financial $30,000 $120,000
Legal $0 $200,000
Executive Support $50,000 $180,000
Technical & Regulatory $40,000 $460,000
Communication & Outreach $0 $80,000
'' County Staff (borrowed)_
Chief Sustainabllity Officer $20,000 $40,000
lSD Staff $40,000 $80,000
County Couns_~l $30,000 $30,000
Administrative Support $10,000 $20,000
NewJPAStaff
Executive Director $0 $150,000
Assistant $0 $50,000
General & Admin $0 $295,000
Contingency $0 $50,000 -Budgeted Expenses Off-set ($220,000) ($630,000)
Total Administrative Cost $0 $1,125,000
Financing
The $10 million provided by LA County as part of the FY2018 budget will need to be repaid to LA
County by the end of June 2018. For ongoing cash flow needs, this Business Plan Update assumes
that LACCE must provide sufficient working capital to cover 60 days of lag between when expenses
occur and when revenues are received. LACCE will therefore need to finance approximately $50
million by June 2018 either with a Joan or a line of credit. A more likely scenario, would be that the
power supply and data management consultants will not get paid until revenues have been
collected from customers. This methodology has become more common with recent CCAs and
would reduce LACCE's financing needs by approximately 50%. This option will be explored during
the RFP process for power supply and data management services.
Rates
Exhibits 13 and 14 compare the revised LACCE rates with those of the comparable SCE product for
each rate class under the Conservative Participation Scenario and the Most Likely Participation
Scenario.
LACCE BUSINESS PlAN UPDATE 13
~-----, -·''·' -, ·,_ · · ,-, ·-· -'-Exhlbit13· "• ·• -··· --' _, ' -' ~ ::Oc \~;; : /.· ~ , ~ : · : / · -· c~~~ei'Jil!~ive scemiito-~und~~ Rates ;~ · _ ' ,--' ---
' ' ~ 'I, , ~ ,_ ~ ~~
'·
Customer SCE 50% LACCE 50% SCE 100% LACCE 100%
Rate Class Type SCE Basic* LACCE RPS Renewable Renewable Renewable Renewable
Residential Domestic 17.2 16.3 18.9 16.5 20.7 18.3
GS-1 Commercial 16.6 15.7 18.2 15.9 19.8 17.7
GS·2 Commercial 15.7 14.9 17.8 15.1 19.8 16.7 -GS-3 Industrial 14.2 13.4 16.5 13.6 18.7 15.1
PA-2 Public 12.4 11.7 14.6 11.9 16.7 13.2
Authority
PA-3 Public 10.8 10.2 13.6 10.4 16.3 11.5
Authority
TOU-8 Commercial 12.6 11.9 14.9 12.1 17.1 13.4
Secondary
TOU-8 Commercial 11.5 10.9 13.9 11.0 16.2 12.2
Primary
TOU-8 Industrial 7.5 7.1 10.3 7.2 13.2 8.0
Substation
LACCE 5.3% 4.1% ~6.3%
Savings vs.
SCE Basic
LACCE 5.3% -13.7% -12.9%
Savings vs.
SCE
Equivalent
*SCE bundled average rate based on Table 3 m Advlce 3515wE-A.
' -" -' : --EKhibit14 -' . ---
'---' " ---''----'~--,_, ---,-'-, .-:;-:: ~' <
-., ' --_Mo~t Ukely S>enarlo--Bt.[g(Ued llates ·:--
---''-. '•' ~ -r \ -_, ----:-=-;-~· " -' ~ ----
Customer SCE SO% LACCE SO% SCE 100% LACCE 100%
Rate Class Type SCE Basic* LACCE RPS Renewable Renewable Renewable Renewable
Residential Domestic 17.2 16.3 18,9 16.5 20,7 18.3 --
GH Commercial 16,6 15.7 18.2 15.9 19.8 17.6
G5·2 Commercial 15.7 14.9 17.8 15.0 19.8 16.7
G5·3 Industrial 14.2 13.4 16.5 13.6 18.7 15.1
PA-2 Public 12.4 11.7 14,6 11.9 16.7 13.2
Authority
¥-·~--
PA-3 Public 10.8 10.2 13.6 10.3 16.3 11.5
Authority
TOU-8 Domestic 12_6 11.9 14.9 12,1 17.1 13.4
Secondary --TOU-8 Commercial 11.5 10.9 13.9 11.0 16.2 12.2
Primary
TOU-8 Industrial 7.5 7.1 10.3 7.2 13.2 8.0
Substation
LACCE 5.3% 4.2% -6.3%
Savings vs.
SCE Basic
LACCE 5.3% -13.7% M13.0%
Savings vs.
SCE
Equivalent
*SCE bundled average rate based on Table 3m Advice 3515-E-A.
LACCE BUSINESS PIAN UPDATE 14
LACCE customers are likely to see rates that on average are 5.3% lower than SCE in the portfolio
meeting RPS standards, 4.1% to 4.2% lower than SCE with 50% renewable power supply and 6.3%
higher than SCE with 100% renewable power supply.
Risks
The results of this Business Plan Update are subject to uncertainties. The list below provides a
summary discussion of the key uncertainties of this Plan. These have not changed since the Initial
Business Plan. A comparative table of risks to CCA viability is also provided in Exhibit 15.
• Market Price Forecasts -Market prices (and forecasts) are continually changing. The market
price forecasts for electricity and natural gas utilized in this Plan are based on the best currently
available information regarding future natural gas and electricity prices, and have been
confirmed by recent wholesale power transactions in southern California. However, these types
of forecasts vary over time.
• Retail Rate Forecasts-The Plan forecasts retail rates for both LACCE and SCE over the study
period. These forecasts are based on current information regarding inflation, RPS requirement
and other cost drivers.
• Forecast Load and Customer Growth -The Pian bases the load forecasts on customer growth
and participation. Both variables are inherently uncertainty.
• Regulatory Risks-Unforeseen changes in legislation (California Public Utility Commission, state
legislation and federal legislation) may impact the results of this Plan.
This sensitivity analysis from the initial Business Plan show that the LACCE rates could be greater
than SCE rates If:
• The Power Charge indifference Adjustment (PCIA) increases significantly without an offsetting
power supply cost reduction.
• LACCE loads are much less than forecast. For example, if LACCE only achieves Phase 1
participation, it would be difficult to operate LACCE at lower rates than SCE.
• Wholesale market prices drop to 25% lower than present levels. As power costs to both SCE
and LACCE are decreased, the PCIA would increase. This causes additional risks to LACCE even
though power procurement costs could be lower.
Each of these three scenarios can be managed if they occur (see Exhibit 15). LACCE can mitigate
risk from PCIA increases or from wholesale market price drops by investing in a power portfolio that
is balanced between long and short-term contracts and by maintaining a healthy reserve fund to
cushion rates through periods of high PCIA rates (as Marin Clean Energy and Sonoma Clean Power
have done repeatedly). If LACCE's load becomes significantly lower than expected due to poor
customer participation, LACCE could expand its service territory, merge with another existing CCA,
or reduce overhead expenses.
In the long-term, the PCIA is expected to decline as contracts expire and market prices increase. In
addition, SCE is now taking into account the potential loss of load to CCAs and is not purchasing
purchase power on behalf of CCA customers, thus not incurring additional stranded costs on behalf
of CCA customers.
LACCE BUSINESS PlAN UPDATE 15
Finally, the extremely low levels of participation needed to undermine the financial viability of
LACCE is extremely unlikely given the increasing precedent set by other CCAs In California and their
success in retaining customers. The results of this update demonstrate that there is sufficient load
in LA County such that participation as low as 75% residential and 65% non-residential will not have
an impact of the feasibility of LACCE.
LACCE BUSINESS PLAN UPDATE 16
Summary
This updated Business Plan supports the initial findings that the formation of a CCA in Los Angeles
County is financially viable and will yield considerable benefits for the County's residents and
businesses. These benefits include competitive rates for electricity and increased renewable
resource deployment. With the achievement of Phase 2 operations, LACCE could reduce GHG
emissions by as much as 500,000 tons of C02e per year, add hundreds of jobs, generate over $24
million in additional GDP, and give the County and its residents local control over their power supply
and distributed energy resource programs.
LACCE BUSINESS PlAN UPDATE 19
ATTACHMENT C
LOS ANGELES COMMUNITY CHOICE ENERGY AUTHORITY
JOINT POWERS AGREEMENT
This Joint Powers Agreement (the "Agreement"), effective as of , is made and
entered into pursuant to the provisions of Title I, Division 7, Chapter 5, Article I (Section 6500
et seq.) of the California Government Code relating to the joint exercise of powers among the
public agencies set fmih in Exhibit A.
RECITALS
1. The Parties are public agencies sharing various powers under California laws, including
but not limited to the power to purchase supply, and aggregate electricity for themselves and
their inhabitants.
2. In 2006, the State Legislature adopted AB 32, the Global Warming Solutions Act, which
mandates a reduction in greenhouse gas emissions in 2020 to 1990 levels. The California Air Resources
Board is promulgating regulations to implement AB 32 which will require local government to develop
programs to reduce greenhouse emissions.
3. The purposes for the Initial Pmiicipants (as such term is defined in Section 2.3 below) entering
into this Agreement include addressing climate change by reducing energy related greenhouse gas
emissions and securing energy supply and price stability; energy efficiencies and local economic benefits,
such as jobs creation, community energy programs; and local power development. It is the intent of this
Agreement to promote the development and use of a wide range of renewable energy sources and energy
efficiency programs, including but not limited to solar and wind energy production.
4. The Pa1ties desire to establish a separate public agency, known as the Los Angeles Community
Choice Energy Authority ("Authority"), under the provisions of the Joint Exercise of Powers Act of the
State of California (Government Code Section 6500 et seq.) ("Act") in order to collectively study,
promote, develop, conduct, operate, and manage energy programs.
5. The Initial Pmticipants have each adopted an ordinance electing to implement through the
Authority a Community Choice Aggregation program pursuant to California Public Utilities Code Section
366.2 ("CCA Program"). The first priority of the Authority will be the consideration of those actions
necessary to implement the CCA Program.
6. By establishing the Authority, the Pmties seek to:
(a) Develop an electric supply pmtfolio with overall lower greenhouse gas intensity and
lower greenhouse gas (GHG) emissions than Southern California Edison ("SCE"), and one that suppmts
the achievement of the parties' greenhouse gas reduction goals and the comparable goals of all
pa1ticipating jurisdictions;
(b) Establish an energy pmtfolio that encourages the use and development of cost-effective
local renewable and distributed energy resources and that discourages the use unbundled renewable
energy credits;
LA #4823-8293-8198 vi 4
(c) Promote an energy pmtfolio that incorporates energy efficiency and demand response
programs and pursues ambitious energy consumption reduction goals;
(d) Provide electricity rates that are lower or at worst competitive with those offered by SCE
for similar products;
(e) Offer differentiated energy options (e.g. 33% or 50% qualified renewable) for default
service, and a I 00% renewable content option in which customers may "opt-up" and voluntarily
patiicipate;
(f) Achieve quantifiable economic benefits to the region;
(g) Recognize the value of current workers in existing jobs that suppmi the energy
infrastructure of Los Angeles County and Southern California (e.g. union and prevailing wage jobs, local
workforce development, apprenticeship programs, and local hire). The Authority, as a leader in the shift
to clean energy, commits to ensuring it will take steps to minimize any adverse impacts to these workers
to ensure a "just transition" to the new clean energy economy;
(h) Suppmt a stable, skilled workforce through such mechanisms as project labor
agreements, collective bargaining agreements, or community benefit agreements, or other workforce
programs that are designed to avoid work stoppages, ensure quality, and benefit local residents by
delivering cost-effective clean energy programs and projects (e.g. new energy programs and increased
local energy investments);
(i) Promote supplier and workforce diversity, including returning veterans and those
from disadvantaged and under-represented communities, to better reflect the diversity of the
regton;
Ul Promote personal and community ownership of renewable resources, spurring equitable
economic development and increased resilience, especially in low income communities;
(k) Provide and manage its energy pmifolio and products in a manner that provides cost
savings to customers and promotes public health in areas impacted by energy production;
(I) Ensure that low-income households and communities are provided with affordable and
flexible energy options, including the provision of energy discounted rates to eligible low-income
households;
(m) Recognize and address the impmtance of healthy communities, including those
dispropmiionately affected by air pollution and climate change;
(n) Use program revenues to provide energy-related programs and services; and
( o) Create an administering Authority that is financially sustainable, responsive to regional
priorities, well-managed, and a leader in fair and equitable treatment of employees.
1. DEFINITIONS
1.1 "AB 117" means Assembly Bill 117 (Stat. 2002, Ch. 838, codified at Public
Utilities Code Section 366.2), which created Community Choice Aggregation.
LA #4823-8293-8198 vl 5
1.2 "Act" means the Joint Exercise of Powers Act of the State of California
(Chapter 5, Division 7, Title I of the Government Code commencing with
Section 6500).
1.3 "Agreement" means this Joint Powers Agreement.
1.4 "Authority" means Los Angeles Community Choice Energy Authority.
1.5 "Authority Document(s)" means document(s) duly adopted by the Board by
resolution or motion implementing the powers, functions and activities of the
Authority, including but not limited to the Operating Policies and Procedures, the
annual budget, and plans and policies.
1.6 "Board" means the Board of Directors of the Authority.
I. 7 "Community Choice Aggregation" or "CCA" means an electric service option
available to cities, counties, and other public agencies pursuant to Public Utilities
Code Section 366.2.
1.8 "CCA Program" means the Authority's program relating to CCA that is
principally described in Section 2.4 (Purpose) of this Agreement.
1. 9 "Days" shall mean calendar days unless otherwise specified by this Agreement.
1.10 "Director" means a member of the Board representing a Party, including up to two
alternate Directors appointed in accordance with Sections 4.1 (Board of Directors)
and 4.2 (Appointment and Removal of Directors) of this Agreement.
1.11 "Effective Date" means the date on which the Agreement shall become effective
and the Authority shall exist as a separate public agency, as fmiher described in
Section 2.1 (Effective Date and Term) of this Agreement.
1.12 "Initial Costs" means all costs incurred by the Authority relating to the
establishment and initial operation of the Authority, such as the hiring of the
executive, technical, and any administrative staff, any required accounting,
administrative, technical and legal services in support of the Authority's initial
formation activities or in suppoti of the negotiation, preparation and approval of
power purchase agreements. The Board shall determine the termination date for
the Initial Costs.
1.13 "Initial Participants" means, for purpose of this Agreement, the County of
Los Angeles, and the cities of , and any
other Parties joining in accordance with Section 2.3 (Initial Participants) of this
Agreement.
1.14 "Operating Policies and Procedures" means the rules, regulations, policies, bylaws
and procedures governing the operation of the Authority.
LA #4823-8293-8198 vi 6
1.15 "Parties" means, collectively, the signatories to this Agreement that have satisfied
the conditions in Sections 2.3 (Initial Participants) or 2.5 (Addition of Patties) of
this Agreement, such that they are considered members of the Authority.
1.16 "Party" means, singularly, a signatory to this Agreement that has satisfied the
conditions in Sections 2.3 (Initial Pmticipants) or 2.5 (Addition of Patties) of this
Agreement, such that it is considered a member of the Authority.
1.17 "Public Agency" as defined in the Act includes, but is not limited to, the federal
government or any federal department or agency, this state, another state or any
state depmtment or agency, a county, a county board of education, county
superintendent of schools, city, public corporation, public district, regional
transportation commission of this state or another state, a federally recognized
Indian tribe, or any joint powers authority formed pursuant to the Act.
2. FORMATION OF LOS ANGELES COMMUNITY CHOICE ENERGY
AUTHORITY
2.1 Effective Date and Term. This Agreement shall become effective and the
Authority shall exist as a separate public agency on the date this Agreement is
executed by the County of Los Angeles and at least one other public agency after
the adoption of the ordinances required by Public Utilities Code
Section 366.2(c)(l2). The Authority shall provide notice to the Patties of the
Effective Date. The Authority shall continue to exist, and this Agreement shall be
effective, until the Agreement is terminated in accordance with Section 8.3
(Mutual Termination) of this Agreement, subject to the rights of the Patties to
withdraw from the Authority.
2.2 Formation of the Authority. Under the Act, the Parties hereby create a separate
joint exercise of power agency which is named Los Angeles Community Choice
Energy Authority. Pursuant to Sections 6506 and 6507 of the Act, the Authority
is a public agency separate from the Patties. The debts, liabilities or obligations
of the Authority shall not be debts, liabilities or obligations of the individual
Patties unless the governing body of a Party agrees in writing to assume any of
the debts, liabilities or obligations of the Authority. The jurisdiction of the
Authority shall be all territory within the geographic boundaries of the Patties;
however the Authority may, as authorized under applicable law, undettake any
action outside such geographic boundaries as is necessary and incidental to the
accomplishment of its purpose.
2.3 Initial Participants. In addition to Parties executing this Agreement on or prior
to the Effective Date, any incorporated municipality, county, or other eligible
public agency may become a Patty and recognized as an Initial Patticipant
provided during the first 180 days after the Effective Date it executes this
Agreement and delivers an executed copy of this Agreement and a copy of the
adopted ordinance required by Public Utilities Code Section 366.2(c)(12) to the
LA#4823·8293·8198 vi 7
Authority. All Initial Participants to this Agreement shall be required to
commence electric service as soon as practicable, as determined by the Board.
2.4 Purpose. The purpose and objectives of this Agreement are to establish the
Authority, to provide for its governance and administration, and to define the
rights and obligations of the Parties. This Agreement authorizes the Authority to
provide a means by which the Parties can more effectively develop and
implement sustainable energy initiatives that reduce energy demand, increase
energy efficiency, and advance the use of clean, efficient, and renewable
resources in the region for the benefit of the Parties and their constituents,
including, but not limited to, establishing and operating a Community Choice
Aggregation program.
2.5 Addition of Parties. After 180 days from the Effective Date any incorporated
municipality, county, or other public agency may become a Party to this
Agreement if all of the following conditions are met:
2.5.1 The adoption of a resolution of the Board admitting the public agency to
the Authority;
2.5 .2 The adoption by an affirmative vote of the Board satisfying the
requirements described in Section 4.10 (Board Voting) of this Agreement,
of a resolution authorizing membership into the Authority and establishing
its pro rata share of organizational, planning and other pre-existing
expenditures, and describing additional conditions, if any, associated with
membership;
2.5.3 The adoption by the public agency of an ordinance required by Public
Utilities Code Section 366.2(c)(12) and approval and execution of this
Agreement and other necessary program agreements by the public agency;
2.5.4 Payment of the membership payment, if any; and
2.5.5 Satisfaction of any reasonable conditions established by the Board.
Pursuant to this Section 2.5 (Addition of Parties), all parties shall be required to
commence electric service as soon as is practicable, as determined by the Board,
as a condition to becoming a Party to this Agreement.
2.6 Continuing Participation. The Parties acknowledge that membership in the
Authority may change by the addition, withdrawal and/or termination of Parties.
The Parties agree to participate with such other Pmiies as may later be added, as
described in Section 2.5 (Addition ofPmiies) of this Agreement. The Parties also
agree that the withdrawal or termination of a Party shall not affect this Agreement
or the remaining Pmiies' continuing obligations under this Agreement.
3. POWERS
LA #4823-8293-8198 vi 8
3 .I General Powers. The Authority shall have the powers common to the Parties
and which are necessary or convenient to the accomplishment of the purposes of
this Agreement, subject to the restrictions set forth in Section 3.4 (Limitation on
Powers) of this Agreement. As provided in the Act, the Authority shall be a
public agency separate and apmi from the Parties.
3.2 Specific Powers. The Authority shall have all powers common to the Parties and
such additional powers accorded to it by law. The Authority is authorized, in its
own name, to exercise all powers and do all acts necessary and proper to carry out
the provisions of this Agreement and fulfill its purposes, including, but not limited
to, each of the following:
3.2.1 make and enter into contracts;
3.2.2 employ agents and employees, including but not limited to an Executive
Director;
3.2.3 acquire, contract, manage, maintain, and operate any buildings, works or
improvements;
3.2.4 acquire property by eminent domain, or otherwise, except as limited under
Section 6508 of the Act, and to hold or dispose of any property;
3 .2.5 lease any property;
3.2.6 sue and be sued in its own name;
3.2.7 incur debts, liabilities, and obligations, including but not limited to loans
from private lending sources pursuant to its temporary borrowing powers
authorized by law pursuant to Government Code Section 53850 et seq. and
authority under the Act;
3 .2.8 issue revenue bonds and other forms of indebtedness;
3.2.9 apply for, accept, and receive all licenses, permits, grants, loans or other
aids from any federal, state or local public agency;
3.2.10 form independent corporations or entities, if necessary to carry out energy
supply and energy conservation programs at the lowest possible cost or to
take advantage of legislative or regulatory changes;
3 .2.11 submit documentation and notices, register, and comply with orders,
tariffs and agreements for the establishment and implementation of the
CCA Program and other energy programs;
3.2.12 adopt rules, regulations, policies, bylaws and procedures governing the
operation of the Authority ("Operating Policies and Procedures"); and
LA #4823-8293-8198 vi 9
3 .2.13 make and enter into service agreements relating to the provision of
services necessary to plan, implement, operate and administer the CCA
Program and other energy programs, including the acquisition of electric
power supply and the provision of retail and regulatory support services.
3.3 Additional Powers to be Exercised. In addition to those powers common to
each of the Patiies, the Authority shall have those powers that may be conferred
upon it as a matter oflaw and by subsequently enacted legislation.
3.4 Limitation on Powers. As required by Section 6509 of the Act, the powers of
the Authority are subject to the restrictions upon the manner of exercising power
possessed by the County of Los Angeles.
3.5 Obligations of the Authority. The debts, liabilities, and obligations of the
Authority shall not be the debts, liabilities, and obligations of the Patiies unless
the governing body of a Patiy agrees in writing to assume any of the debts,
liabilities, and obligations of the Authority. In addition, pursuant to the Act, no
Director shall be personally liable on the bonds or subject to any personal liability
or accountability by reason of the issuance of bonds.
3.6 Compliance with the Political Reform Act and Government Code
Section 1090. The Authority and its officers and employees shall comply with
the Political Reform Act (Government Code Section 81000 et seq.) and
Govemment Code Section 1090 et seq. The Board shall adopt a Conflict of
Interest Code pursuant to Government Code Section 87300. The Board may
adopt additional conflict of interest regulations in the Operating Policies and
Procedures.
4. GOVERNANCE
4.1 Board of Directors. The governing body of the Authority shall be a Board of
Directors ("Board") consisting of one director for each Patiy appointed in
accordance with Section 4.2 (Appointment and Removal of Directors) of this
Agreement. The Board, in consultation with the Executive Director, may
determine at any time to consider options to reduce the size of the Board if it
determines that the efficient functioning and operation of the Boat·d would be
improved by having a smaller number of Directors. Any such change to the size
of the Board would require amendment of this Joint Powers Agreement in
accordance with Section 4.11 (Special Voting).
4.2 Appointment and Removal of Directors. The Directors shall be appointed and
may be removed as follows:
4.2.1 The governing body of each Party shall appoint and designate in writing
one regular Director who shall be authorized to act for and on behalf of the
Patiy on matters within the powers of the Authority. The governing body
of each Party shall appoint and designate in writing up to two alternate
Directors who may vote on matters when the regular Director is absent
LA #4823-8293-8198 vI 1 0
from a Board meeting. The person appointed and designated as the
regular Director shall be an elected or appointed member of the governing
body of the Patiy. The persons appointed and designated as the alternate
Directors may be an elected or appointed member of the governing body
of the Party, an appointed member of an advisory body ofthe Pmiy, a staff
member of the Pmiy or a member of the public who meets the criteria
below. All Directors and alternates shall be subject to the Board's adopted
Conflict of Interest Code.
(a) Any alternate Director that is a member of the public must have
demonstrated knowledge in energy-related matters through
significant experience in either: 1) an electric utility or company,
agency, or nonprofit providing services to a utility, 2) a regulatory
agency or local government body overseeing an electric utility or a
company, agency, or nonprofit providing services to such an
agency, 3) an academic or nonprofit organization engaged in
research and/or advocacy related to the electric sector.
4.2.2 The Operating Policies and Procedures, to be developed and approved by
the Board in accordance with Section 3.2.12 (Specific Powers), shall
specify the reasons for and process associated with the removal of an
individual Director for cause. Notwithstanding the foregoing, no Pmiy
shall be deprived of its right to seat a Director on the Board and any such
Party for which its Director and/or alternate Directors have been removed
may appoint a replacement.
4.3 Terms of Office. Each regular and alternate Director shall serve at the pleasure
of the governing body of the Party that the Director represents, and may be
removed as Director by such governing body at any time. If at any time a
vacancy occurs on the Board, the affected Party shall appoint to fill the position of
the previous Director within 90 days of the date that such position becomes
vacant.
4.4 Purpose of Board. The general purpose of the Board is to:
4.4.1 Provide structure for administrative and fiscal oversight;
4.4.2 Retain an Executive Director to oversee day-to-day operations;
4.4.3 Retain legal counsel;
4.4.4 Identify and pursue funding sources;
4.4.5 Set policy;
4.4.6 Maximize the utilization of available resources; and
4.4.7 Oversee all Committee activities.
LA #4823-8293-8198 vi 11
4.5 Specific Responsibilities of the Board. The specific responsibilities of the
Board shall be as follows:
4.5.1 Identify Party needs and requirements;
4.5.2 Formulate and adopt the budget prior to the commencement of the fiscal
year;
4.5.3 Develop and implement a financing and/or funding plan for ongoing
Authority operations;
4.5.4 Retain necessary and sufficient staff and adopt personnel and
compensation policies, rules and regulations;
4.5.5 Adopt rules for procuring supplies, equipment, and services;
4.5.6 Adopt rules for the disposal of surplus property;
4.5.7 Establish standing and ad hoc committees as necessary to ensure that the
interests and concerns of each Patty are represented and to ensure
operational, technical, and financial issues are thoroughly researched and
analyzed;
4.5.8 The setting of retail rates for power sold by the Authority and the setting
of charges for any other category of retail service provided by the
Authority;
4.5.9 Termination of the CCA Program;
4.5.1 0 Address any concerns of consumers and customers;
4.5.11 Conduct and oversee Authority audits at intervals not to exceed three
years;
4.5.12 Arrange for an annual independent fiscal audit;
4.5.13 Adopt such bylaws, rules and regulations as are necessary or desirable for
the purposes hereof; provided that nothing in the bylaws, rules and
regulations shall be inconsistent with this Agreement;
4.5.14 Exercise the Specific Powers identified in Sections 3.2 and 4.6 except as
the Board may elect to delegate to the Executive Director; and
4.5.15 Discharge other duties as appropriate or required by statute.
4.6 Startup Responsibilities. The Authority shall have the duty to do the following
within one year of the Effective Date of the Agreement:
LA #4823-8293-8198 vl 12
4.6.1 To adopt an implementation plan prepared by the County of Los Angeles,
pursuant to Public Utilities Code Section 366.2(c)(3), for electrical load
aggregation;
4.6.2 To prepare a statement of intent, pursuant to Public Utilities Code
Section 366.2(c)(4), for electrical load aggregation;
4.6.3 To encourage other qualified public agencies to participate in the
Authority;
4.6.4 To obtain financing and/or funding as is necessary or desirable;
4.6.5 To evaluate the need for, acquire, and maintain insurance.
4. 7 Meetings and Special Meetings of the Board. The Board shall hold at least one
regular meetings per year but the Board may provide for the holding of regular
meetings at more frequent intervals. The date, hour and place of each regular
meeting shall be fixed by resolution or ordinance of the Board. Regular meetings
may be adjourned to another meeting time. Special meetings of the Board may be
called in accordance with the provisions of Government Code Section 54956.
Directors may pmiicipate in meetings telephonically, with full voting rights, only
to the extent permitted by law.
4.8 Brown Act Applicable. All meetings of the Board shall be conducted in
accordance with the provisions of the Ralph M. Brown Act (Government Code
Section 54950, et seq.).
4.9 Quorum; Approvals. A majority of the Directors shall constitute a quorum,
except that less than a quorum may adjourn from time to time in accordance with
law. The affirmative votes of a majority of the Directors who are present at the
subject meeting shall be required to take any action by the Board.
4.10 Board Voting.
4.1 0.1 Percentage Vote. Each Director shall have one vote. Action of the Board
on all matters shall require an affirmative vote of a majority of all
Directors who are present at the subject meeting, except when a
supermajority vote is expressly required by this Agreement. When a
supermajority vote is required under Section 4.11 (Special Voting), action
of the Board shall require an affirmative vote of the specified
supermajority of all Directors who are present at the subject meeting. All
votes taken pursuant to this Section 4.1 0.1 shall be referred to as a
percentage vote. Notwithstanding the foregoing, in the event of a tie in a
percentage vote, the Board can break the tie and act upon an affirmative
voting shares vote as described in section 4.10.2 (Voting Shares Vote).
4.10.2 Voting Shares Vote. In addition to and immediately after an affirmative
percentage vote three or more Directors may request that a vote of the
LA 114823-8293-8198 vi 13
voting shares shall be held. In such event, the corresponding voting
shares, as described in section 4.1 0.3, of all Directors voting in order to
take an action shall exceed 50%, or such other higher voting shares
percentage expressly required by this Agreement or the Operating Policies
and Procedures of all Directors who are present at the subject meeting.
All votes taken pursuant to this Section 4.1 0.2 shall be referred to as a
voting shares vote. In the event that any one Director has a voting share
that equals or exceeds that which is necessary to disapprove the matter
being voted on by the Board, at least one other Director shall be required
to vote in the negative in order to disapprove such matter. When a voting
shares vote is held, action by the Board requires both an affirmative
percentage vote and an affirmative voting shares vote.
4.1 0.3 Voting Shares Formula. When a voting shares vote is requested by
three or more Directors, voting shares of the Directors shall be determined
by the following formula:
(Annual Energy Use/Total Annual Energy) multiplied by I 00, where (a)
"Annual Energy Use" means (i) with respect to the first two years
following the Effective Date, the annual electricity usage, expressed in
kilowatt hours ("kWh"), within the Party's respective jurisdiction and (ii)
with respect to the period after the second anniversary of the Effective
Date, the annual electricity usage, expressed in kWh, of accounts within a
Pmiy's respective jurisdiction that are served by the Authority and (b)
"Total Annual Energy" means the sum of all Parties' Annual Energy Use.
4.11 Special Voting.
4.11.1 Except as provided below, matters that require Special Voting as
described in this Section shall require 72 hours prior notice to any Brown
Act meeting or special meeting. Two-thirds vote (or such greater vote as
required by state law) of the appointed Directors shall be required to take
any action on the following:
LA #4823-8293-8198 vl
(a)
(b)
(c)
(d)
Change the designation of Treasurer or Auditor of the Authority;
Issue bonds or other forms of debt;
Exercise the power of eminent domain, subject to prior approval
by the passage of an authorizing ordinance or other legally
sufficient action by the affected Party; and
Amend this Agreement or adopt or amend the bylaws of the
Authority. At least 30 days advance notice shall be provided for
such actions. The Authority shall also provide prompt written
14
notice to all Parties of the action taken and enclose the adopted or
modified documents.
5. INTERNAL ORGANIZATION
5.1 Chair and Vice Chair. For each fiscal year, the Board shall elect a Chair and
Vice Chair from among the Directors. The term of office of the Chair and Vice
Chair shall continue for one year, but there shall be no limit on the number of
terms held by either the Chair or Vice Chair. The Chair shall be the presiding
officer of all Board meetings, and the Vice Chair shall serve in the absence of the
Chair. The Chair shall sign all contracts on behalf of the Authority, and shall
perform such other duties as may be imposed by the Board. In the absence of the
Chair, the Vice-Chair shall sign contracts and perform all of the Chair's duties.
The office of the Chair or Vice Chair shall be declared vacant and a new selection
shall be made if: (a) the person serving dies, resigns, or the Party that the person
represents removes the person as its representative on the Board, or (b) the Party
that he or she represents withdraws from the Authority pursuant to the provisions
of this Agreement. Upon a vacancy, the position shall be filled at the next
regular meeting of the Board held after such vacancy occurs or as soon as
practicable thereafter. Succeeding officers shall perform the duties normal to said
offices.
5.2 Secretary. The Board shall appoint a Secretary, who need not be a member of
the Board, who shall be responsible for keeping the minutes of all meetings of the
Board and all other office records of the Authority.
5.3 Treasurer. The Board shall appoint a qualified person to act as the Treasurer,
who need not be a member of the Board. Unless otherwise exempted from such
requirement, the Authority shall cause an independent audit to be made by a
certified public accountant, or public accountant, in compliance with Section 6506
of the Act. The Treasurer shall act as the depositary of the Authority and have
custody of all the money of the Authority, from whatever source, and as such,
shall have all of the duties and responsibilities specified in Section 6505.5 of the
Act. The Board may require the Treasurer to file with the Authority an official
bond in an amount to be fixed by the Board, and if so requested the Authority
shall pay the cost of premiums associated with the bond. The Treasurer shall
repmi directly to the Board and shall comply with the requirements of treasurers
of incorporated municipalities. The Board may transfer the responsibilities of
Treasurer to any person or entity as the law may provide at the time.
5.4 Auditor. The Board shall appoint a qualified person to act as the Auditor, who
shall not be a member of the Board. The Board may require the Auditor to file
with the Authority an official bond in an amount to be fixed by the Board, and if
so requested the Authority shall pay the cost of premiums associated with the
bond.
LA #4823·8293·8198 vi 15
5.5 Executive Director. The Board shall appoint an Executive Director for the
Authority, who shall be responsible for the day-to-day operation and management
of the Authority and the CCA Program. The Executive Director may exercise all
powers of the Authority, except those powers specifically reserved to the Board
including but not limited to those set fmih in Section 4.5 (Specific
Responsibilities of the Board) of this Agreement or the Operating Policies and
Procedures, or those powers which by law must be exercised by the Board. The
Executive Director may enter into and execute any Energy Contract, in
accordance with criteria and policies established by the Board.
5.6 Bonding of Persons Having Access to Property. Pursuant to the Act, the Board
shall designate the public officer or officers or person or persons who have charge
of, handle, or have access to any prope1iy of the Authority exceeding a value as
established by the Board, and shall require such public officer or officers or
person or persons to file an official bond in an amount to be fixed by the Board.
5.7 Other Employees/Agents. The Board shall have the power by resolution to hire
employees or appoint or retain such other agents, including officers, loan-out
employees, or independent contractors, as may be necessary or desirable to cany-
out the purpose of this Agreement.
5.8 Privileges and Immunities from Liability. All of the privileges and immunities
from liability, exemption from laws, ordinances and rules, all pension, relief,
disability, workers' compensation and other benefits which apply to the activities
of officers, agents or employees of a public agency when performing their
respective functions shall apply to the officers, agents or employees of the
Authority to the same degree and extent while engaged in the performance of any
of the functions and other duties of such officers, agents or employees under this
Agreement. None of the officers, agents or employees directly employed by the
Board shall be deemed, by reason of their employment by the Authority to be
employed by the Parties or by reason of their employment by the Authority, to be
subject to any of the requirements of the Pmiies.
5.9 Commissions, Boards and Committees. The Board may establish any advisory
commissions, boards and committees as the Board deems appropriate to assist the
Board in carrying outs its functions and implementing the CCA Program, other
energy programs and the provisions of this Agreement. The Bom·d may establish
rules, regulations, policies, bylaws or procedures to govern any such
commissions, boards, or committees and shall determine whether members shall
be compensated or entitled to reimbursement for expenses.
5.9.1 The Board shall establish the following Advisory Committees:
Lil #4823-8293-8198 vi
(a) Executive Committee. The Board shall establish an executive
committee consisting of a smaller number of Directors. The Board
may delegate to the Executive Committee's such authority as the
Board might otherwise exercise, except that the Bom·d may not
16
LAI/4823-8293-8198 vi
delegate authority regarding certain essential functions, including
but not limited to, approving the fiscal year budget or hiring or
firing the Executive Director, and other functions as provided in
the Operating Policies and Procedures. The Board may not
delegate to the Executive Committee or any other committee its
authority under Section 3 .2.12 to adopt and amend the Operating
Policies and Procedures.
(b) Finance Committee. The Board shall establish a finance
committee consisting of a smaller number of Directors. The
primary purpose of the Finance Committee is to review and
recommend to the Board:
(c)
(d)
(e)
( 1) A funding plan;
(2) A fiscal year budget;
(3) Financial policies and procedures to ensure equitable
contributions by Parties;
(4) Such other responsibilities as provided in the Operating
Policies and Procedures, including but not limited to
policies, rules and regulations governing investment of
surplus funds, and selection and designation of financial
institutions for deposit of Authority funds.
Community Advisory Committee. The Board shall establish a
community advisory committee comprised of members of the
public representing key stakeholder communities. The primary
purpose of the Community Advisory Committee shall be to
provide a venue for ongoing citizen support and engagement in the
operations of the Authority.
Meetings of the Advisory Committees. All meetings of the
Advisory Committees shall be held in accordance with the Ralph
M. Brown Act. For the purposes of convening meetings and
conducting business, unless otherwise provided in the bylaws, a
majority of the members of the Advisory Committee shall
constitute a quorum for the transaction of business, except that less
than a quorum or the secretary of each Advisory Committee may
adjourn meetings from time-to-time. As soon as practicable, but no
later than the time of posting, the Secretary of the Advisory
Committee shall provide notice and the agenda to each Pmiy,
Director and Alternate Directors.
Officers of Advisory Committees. Unless otherwise determined
by the Board, each Advisory Committee shall choose its officers,
comprised of a Chairperson, a Vice-Chairperson and a Secretary.
17
6. IMPLEMENTATION ACTION AND AUTHORITY DOCUMENTS
6.1 Preliminary Implementation of the CCA Program.
6.1.1 Enabling Ordinance. In addition to the execution of this Agreement,
each Party shall adopt an ordinance in accordance with Public Utilities
Code Section 366.2( c )(12) for the purpose of specifying that the Party
intends to implement a CCA Program by and tlu·ough its participation in
the Authority.
6.1.2 Implementation Plan. The Authority shall cause to be prepared and
secure Board approval of an Implementation Plan meeting the
requirements of Public Utilities Code Section 366.2 and any applicable
Public Utilities Commission regulations as soon after the Effective Date as
reasonably practicable ..
6.1.3 Termination of CCA Program. Nothing contained in this Section 6 or
this Agreement shall be construed to limit the discretion of the Authority
to terminate the implementation or operation of the CCA Program at any
time in accordance with any applicable requirements of state law.
6.2 Authority Documents. The Parties acknowledge and agree that the affairs of the
Authority will be implemented tlu·ough various documents duly adopted by the
Board through Board resolution or minute action, including but not necessarily
limited to the Operating Policies and Procedures, the annual budget, and specified
plans and policies defined as the Authority Documents by this Agreement. The
Parties agree to abide by and comply with the terms and conditions of all such
Authority Documents that may be adopted by the Board, subject to the Parties'
right to withdraw from the Authority as described in Section 8 (Withdrawal and
Termination) of this Agreement.
7. FINANCIAL PROVISIONS
7.1 Fiscal Year. The Authority's fiscal year shall be 12 months commencing July I
and ending June 30. The fiscal year may be changed by Board resolution.
7.2 Depository.
7.2.1 All funds of the Authority shall be held in separate accounts in the name
of the Authority and not commingled with funds of any Party or any other
person or entity.
7 .2.2 All funds of the Authority shall be strictly and separately accounted for,
and regular repotis shall be rendered of all receipts and disbursements, at
least qmuierly during the fiscal year. The books and records of the
Authority shall be open to inspection and duplication by the Pmiies at all
reasonable times. The Board shall contract with a certified public
accountant or public accountant to make an annual audit of the accounts
LA #4823-8293-8198 vl ]8
and records of the Authority, which shall be conducted in accordance with
the requirements of Section 6506 of the Act.
7.2.3 All expenditures shall be made in accordance with the approved budget
and upon the approval of any officer so authorized by the Board in
accordance with its Operating Policies and Procedures. The Treasurer
shall draw checks or warrants or make payments by other means for
claims or disbursements not within an applicable budget only upon the
prior approval of the Board.
7.3 Budget and Recovery Costs.
7.3.1 Budget. The initial budget shall be approved by the Board. The Board
may revise the budget from time to time as may be reasonably necessary
to address contingencies and unexpected expenses. All subsequent
budgets of the Authority shall be prepared and approved by the Board in
accordance with the Operating Policies and Procedures.
7.3.2 Funding oflnitial Costs. Subject to the approval of the Board of
Supervisors, the County of Los Angeles has agreed to provide up to $10
million for funding Initial Costs in establishing the Authority and
implementing the CCA Program. In the event that the CCA Program
becomes operational, the County of Los Angeles shall be reimbursed for
the Initial Costs. The County and the Authority will execute an agreement
specifying the terms and conditions of the Initial Costs provided by the
County, including but not limited to: (a) Repayment of this amount,
which shall be first priority in relation to all other indebtedness of the
Authority; and (b) authorization for the County Auditor-Controller to
conduct an audit of the Authority's books and records (including personnel
records, as necessary) and/or investigation, following reasonable advance
notice from the County, to ensure compliance with the terms and
conditions of the agreement. The Authority may establish a reasonable
time period over which such costs are recovered. In the event that the
CCA Program does not become operational, the County shall not be
entitled to any reimbursement of the Initial Costs they have paid from the
Authority or any other Party.
7.3.3 Program Costs. The Parties desire that, to the extent reasonably
practicable, all costs incurred by the Authority that are directly or
indirectly attributable to the provision of electric services under the CCA
Program, including the establishment and maintenance of various reserve
and performance funds, shall be recovered through charges to CCA
customers receiving such electric services.
7.3.4 General Costs. Costs that are not directly or indirectly attributable to the
provision of electric services under the CCA Program, as determined by
the Board, shall be defined as general costs. General costs shall be shared
LA #4823-8293-8198 vi I 9
among the Parties on such bases as the Board shall determine pursuant to
the Authority documents.
7.4 Contributions. Parties are not required under this Agreement to make any
financial contributions. Consumers may subscribe as customers of the Authority
pursuant to the Act and outside of this Agreement and through their on-bill
selections.
7.4.1 A Party may, in the appropriate circumstance, and when agreed-to:
(a) Make contributions from its treasury for the purposes set forth in
this Agreement;
(b) Make payments of public funds to defray the cost of the purposes
of the Agreement and Authority;
(c) Make advances of public funds for such purposes, such advances
to be repaid as provided by written agreement; or
(d) Use its personnel, equipment or property in lieu of other
contributions or advances.
(e) No Party shall be required to adopt any tax, assessment, fee or
charge under any circumstances.
7.5 Accounts and Reports. The Treasurer shall establish and maintain such funds
and accounts as may be required by good accounting practice or by any provision
of any trust agreement entered into with respect to the proceeds of any bonds
issued by the Authority. The books and records of the Authority in the hands of
the Treasurer shall be open to inspection and duplication at all reasonable times
by duly appointed representatives of the Parties. The Treasurer, within 180 days
after the close of each fiscal year, shall give a complete written report of all
financial activities for such fiscal year to the Parties.
7.6 Funds. The Treasurer shall receive, have custody of and/or disburse Authority
funds in accordance with the laws applicable to public agencies and generally
accepted accounting practices, and shall make the disbursements required by this
Agreement in order to carry out any of the purposes of this Agreement.
8. WITHDRAWALANDTERMINATION
8.1 Withdrawal
8.1.1 Withdrawal by Parties. Any Party may withdraw its membership in the
Authority, effective as of the beginning of the Authority's fiscal year, by
giving no less than 180 days advance written notice of its election to do
so, which notice shall be given to the Authority and each Patty.
LA #4823-8293-8198 vi 20
Withdrawal of a Party shall require an affirmative vote of the Party's
governing board.
8.1.2 Amendment. Notwithstanding Section 8.1.1 (Withdrawal by Parties) of
this Agreement, a Party may withdraw its membership in the Authority
upon approval and execution of an amendment to this Agreement provided
that the requirements of this Section 8.1.2 are strictly followed. A Party
shall be deemed to have withdrawn its membership in the Authority
effective 180 days after the Board approves an amendment to this
Agreement if the Director representing such Party has provided notice to
the other Directors immediately preceding the Board's vote of the Party's
intention to withdraw its membership in the Authority should the
amendment be approved by the Board.
8.1.3 Continuing Liability; Further Assurances. A Party that withdraws its
membership in the Authority may be subject to certain continuing
liabilities, as described in Section 8.4 (Continuing Liability; Refund) of
this Agreement, including, but not limited to, Power Purchase
Agreements. The withdrawing Party and the Authority shall execute and
deliver all further instruments and documents, and take any further action
that may be reasonably necessary, as determined by the Board, to
effectuate the orderly withdrawal of such Party from membership in the
Authority. The Operating Policies and Procedures shall prescribe the
rights if any of a withdrawn Patty to continue to participate in those Board
discussions and decisions affecting customers of the CCA Program that
reside or do business within the jurisdiction of the Party.
8.2 Involuntary Termination. This Agreement may be terminated with respect to a
Party for material non-compliance with provisions of this Agreement or the
Authority Documents upon an affirmative vote of the Board in which the
minimum percentage vote and percentage voting shares, as described in
Section 4.10 (Board Voting) of this Agreement, shall be no less than 67%
excluding the vote and voting shares of the Party subject to possible termination.
Prior to any vote to terminate this Agreement with respect to a Party, written
notice of the proposed termination and the reason(s) for such termination shall be
delivered to the Patty whose termination is proposed at least 30 days prior to the
regular Board meeting at which such matter shall first be discussed as an agenda
item. The written notice of proposed termination shall specify the patticular
provisions of this Agreement or the Authority Documents that the Party has
allegedly violated. The Patty subject to possible tetmination shall have the
opp01tunity at the next regular Board meeting to respond to any reasons and
allegations that may be cited as a basis for termination prior to a vote regarding
termination. A Party that has had its membership in the Authority terminated may
be subject to certain continuing liabilities, as described in Section 8.4 (Continuing
Liability; Refund) of this Agreement. In the event that the Authority decides to
not implement the CCA Program, the minimum percentage vote of 67% shall be
conducted in accordance with Section 4.10 (Board Voting) of this Agreement.
LA #4823-8293-8198 vi 21
8.3 Mutual Termination. This Agreement may be terminated by mutual agreement
of all the Parties; provided, however, the foregoing shall not be construed as
limiting the rights of a Party to withdraw its membership in the Authority, and
thus terminate this Agreement with respect to such withdrawing Party, as
described in Section 8.1 (Withdrawal) ofthis Agreement.
8.4 Continuing Liability; Refund. Upon a withdrawal or involuntary tetmination of
a Party, the Party shall remain responsible for any claims, demands, damages, or
liabilities arising from the Party's membership in the Authority through the date
of its withdrawal or involuntmy termination, it being agreed that the Patiy shall
not be responsible for any claims, demands, damages, or liabilities arising after
the date of the Party's withdrawal or involuntary termination. In addition, such
Party also shall be responsible for any costs or obligations associated with the
Patiy's patiicipation in any program in accordance with the provisions of any
agreements relating to such program provided such costs or obligations were
incurred prior to the withdrawal of the Patiy. The Authority may withhold funds
otherwise owing to the Party or may require the Pmiy to deposit sufficient funds
with the Authority, as reasonably determined by the Authority, to cover the
Party's liability for the costs described above. Any amount of the Party's funds
held on deposit with the Authority above that which is required to pay any
liabilities or obligations shall be returned to the Pmiy.
8.5 Disposition of Authority Assets. Upon termination of this Agreement and
dissolution of the Authority by all Parties, and after payment of all obligations of
the Authority, the Board:
8.5.1 May sell or liquidate Authority property; and
8.5.2 Shall distribute assets to Parties in proportion to the contributions made by
the existing Parties.
Any assets provided by a Party to the Authority shall remain the asset of that
Party and shall not be subject to distribution under this section.
9. MISCELLANEOUS PROVISIONS
9.1 Dispute Resolution. The Patiies and the Authority shall make reasonable efforts
to settle all disputes arising out of or in connection with this Agreement. Before
exercising any remedy provided by law, a Party or the Parties and the Authority
shall engage in nonbinding mediation or arbitration in the manner agreed upon by
the Patiy or Parties and the Authority. The Patiies agree that each Party may
specifically enforce this section 9.1 (Dispute Resolution). In the event that
nonbinding mediation or arbitration is not initiated or does not result in the
settlement of a dispute within 60 days after the demand for mediation or
arbitration is made, any Patiy and the Authority may pursue any remedies
provided by law.
LA #4823·8293-8198 vi 22
9.2 Liability of Directors, Officers, and Employees. The Directors, officers, and
employees of the Authority shall use ordinary care and reasonable diligence in the
exercise of their powers and in the performance of their duties pursuant to this
Agreement. No current or former Director, officer, or employee will be
responsible for any act or omission by another Director, officer, or employee.
The Authority shall defend, indemnifY and hold harmless the individual current
and former Directors, officers, and employees for any acts or omissions in the
scope of their employment or duties in the manner provided by Government Code
Section 995 et seq. Nothing in this section shall be construed to limit the defenses
available under the law, to the Parties, the Authority, or its Directors, officers, or
employees.
9.3 Indemnification of Parties. The Authority shall acquire such insurance coverage
as is necessary to protect the interests of the Authority, the Parties and the public.
The Authority shall defend, indemnify and hold harmless the Parties and each of
their respective governing board members, officers, agents and employees, from
any and all claims, losses, damages, costs, injuries and liabilities of every kind
arising directly or indirectly from the conduct, activities, operations, acts and
omissions of the Authority under this Agreement.
9.4 Notices. Any notice required or permitted to be made hereunder shall be in
writing and shall be delivered in the manner prescribed herein at the principal
place of business of each Party. The Parties may give notice by (1) personal
delivery; (2) e-mail; (3) U.S. Mail, first class postage prepaid, or a faster delivery
method; or (3) by any other method deemed appropriate by the Board.
Upon providing written notice to all Parties, any Party may change the designated
address or e-mail for receiving notice.
All written notices or correspondence sent in the described manner will be
deemed given to a party on whichever date occurs earliest: (1) the date of personal
delivery; (2) the third business day following deposit in the U.S. mail, when sent
by "first class" mail; or (3) the date of transmission, when sent by e-mail or
facsimile.
9.5 Successors. This Agreement shall be binding upon and shall inure to the benefit
of the successors of each Party.
9.6 Assignment. Except as otherwise expressly provided in this Agreement, the
rights and duties of the Parties may not be assigned or delegated without the
advance written consent of all of the other Patiies, and any attempt to assign or
delegate such rights or duties in contravention of this Section 9.6 shall be null and
void. This Agreement shall inure to the benefit of, and be binding upon, the
successors and assigns of the Parties. This Section 9.6 does not prohibit a Party
from entering into an independent agreement with another agency, person, or
entity regarding the financing of that Party's contributions to the Authority, or the
disposition of the proceeds which that Party receives under this Agreement, so
LA ff4823-8293-8198 vi 23
long as such independent agreement does not affect, or purport to affect, the rights
and duties of the Authority or the Parties under this Agreement.
9.7 Severability. If any one or more of the terms, provisions, promises, covenants, or
conditions of this Agreement were adjudged invalid or void by a court of
competent jurisdiction, each and all of the remaining terms, provisions, promises,
covenants, and conditions of this Agreement shall not be affected thereby and
shall remain in full force and effect to the maximum extent permitted by law.
9.8 Governing Law. This Agreement is made and to be performed in the State of
California, and as such California substantive and procedural law shall apply.
9.9 Headings. The section headings herein are for convenience only and are not to
be construed as modifying or governing the language of this Agreement.
9.10 Counterparts. This Agreement may be executed in any number of counterparts,
and upon execution by all Parties, each executed counterpart shall have the same
force and effect as an original instrument and as if all Pmiies had signed the same
instrument. Any signature page of this Agreement may be detached from any
counterpart of this Agreement without impairing the legal effect of any signatures
thereon, and may be attached to another counterpart of this Agreement identical in
form hereto but having attached to it one or more signature pages.
CITY OF ___________ _
By:------------
Mayor
ATTEST:
By: ___________ ___
City Clerk
LA #4823-8293-8198 vi 24
Sonoma Clean Power Peninsula Clean Ener&)' Marin Clean Ener&Y
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• Mendocino County
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Silicon Valley Clean Ener&)' • Menlo Park
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• County of Napa
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