HomeMy Public PortalAbout15) 9B LA Community Choice Energy Program UpdateAGENDA
ITEM 9.8.
COMMUNITY DEVELOPMENT DEPARTMENT
MEMORANDUM
DATE: November 21 , 2017
TO: The Honorable City Council
FROM: Bryan Cook , City Manager
By: Michael D. Forbes , Community Development Director
SUBJECT: LOS ANGELES COMMUNITY CHOICE ENERGY PROGRAM UPDATE
RECOMMENDATION:
The City Council is requested to direct staff to continue monito ring the progress of the
Los Angeles Community Choice Energy (LACCE) program and to report back to the City
Council in six months.
BACKGROUND:
1. On April 18 , 2017 , the Los Angeles County Board of Superv isors approved the
creation of the LACCE Joint Powers Authority (JPA) and a llocated $10 million in
startup funding.
2 . On June 27 , 2017 , the City of Rolling Hills Estates became the first city to j oin the
JPA. This started a six-month period during which other cities may join the JPA as
"In itial Participants ."
3. 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 .
4 . 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 on November 21 , 2017 .
City Council
November 21, 2017
Page 2 of 3
ANALYSIS:
LACCE Status
Since the last update on September 19, 2017 , three additional cities have joined the JPA,
bringing the total number of member cities to six : Alhambra , Calabasas , Rolling Hills
Estates, Sierra Madre , South Pasadena , and West Hollywood . Three additional cit ies
have approved first reading of their ordinances and are expected to join as "Initia l
Participants " before December 27 , 2017 : Agoura Hills , Claremont, and Downey . The
LACCE Board of Directors has started having regular meetings and is recruiting for an
Executive Director.
LACCE Financial Liabilities
On September 19 , 2017 , the City Council inquired about the financial liab il ities the City
could potentially face if it joined LACCE and later withdrew. Staff has learned that once
energy purchase contracts are executed , each member w i ll be apportioned its share of
the contracts based on each member's load share at that time . If a member later
withdraws from the JPA, its portion of the energy would be resold. The withdrawing city
would be responsible for the difference between the purchase and sale prices of the
energy , if the sale price were below the purchase price due to energy market conditions .
The amount cannot be predicted now, since it would be determined by numerous
variables .
A similar situation that could affect the financial viability of LACCE exists w ith Southern
California Edison . Edison has entered into energy contracts based on its current customer
volume and electric load. These numbers will decrease as Edison customers join LACCE,
and Edison may lose money by having to sell excess energy at a lower rate than it was
purchased . This cost would be passed on to Edison customers, as those remaining
customers would bear the costs of the outstanding energy contracts . Other investor
owned util ities around the state have started raising this issue in Sacramento to have it
addressed legislatively . If there is some future leg islation or i ntervention by the Publ ic
Utilities Commission that would require LACCE to engage in cost sharing with Ed ison,
that could adversely affect LACCE's financial projections and long-term viab i lity .
City Considerations for Joining LACCE
One of the uncertainties about LACCE noted in the September 19 , 201 7, staff report was
whether the Board of Directors would adequately represent Temp le C ity 's i nterests . It is
possible that some of the cities joining LACCE are doing so with the primary policy
consideration being increased choices for purchasing energy from renewable sources ,
rather than the potential cost savings . If Temple City joined LACCE w ith the primary policy
consideration being cost savi ngs rather than energy cho ice , this could be incons istent
with the policy considerations of other members and as such inconsistent w ith the Board 's
decisions and direction .
City Council
November 21 , 2017
Page 3 of 3
Recommendation
Given the continually evolving issues discussed i n the September 19, 2017 , staff report
and this report , staff recommends that Temple City continue to monitor LACCE 's progress
and the experiences of other cities as the program is implemented , and provide another
update to the City Council in three months .
CITY STRATEGIC GOALS:
The LACCE program is related to the City Strategic Goals of Good Governance ,
Economic Development, and Citizen Education and Communication.
FISCAL IMPACT:
Continuing to monitor the LACCE program will not have an impact on the Fiscal Year 2017 -
18 City Budget.
ATTACHMENT:
None
City Council staff report from July 5 , 2017 available online at
www. tern p lecity. us/Docu mentCenterNiew/8692
City Council staff report from September 19, 2017 available online at
www.templecity . us/DocumentCenter/ View/9070