HomeMy WebLinkAboutPresentation - #05Community Choice AggregationCITY COUNCIL MEETINGFEBRUARY 2, 2021PRESENTATION #5CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
COMMUNITY CHOICE AGGREGATION (CCA)CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702•Customer choice program that permits cities, counties, and Joint PowerAuthorities to buy and sell electricity on behalf of utility customerswithin their jurisdiction and transmit electricity over SCE’s lines.•AB 117 – September 2002•Allows cities/counties/public agencies to buy or generate bulk power.•Investor Owned Utilities (IOU’s) will continue to serve and bereimbursed for all non-power supply services such as transmission,distribution, metering and billing.•Rules and approvals are set by California Public Utilities Commission.•All electric customers will be assumed to desire service from the CCAunless they elect to stay with the IOU. Opt-out option for customersavailable.2
HOW CCA WORKSCITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702Source Delivery CustomerCCAUTILITY(SCE)END-USERSBuys electricity supply.Delivers electricity, maintains lines and billing.Enablescustomer energy choices.3
4CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702CCA generation charges appear as new section on bill:Generation Component from CCADelivery Component from SCEBILLING DETAIL
CITY ACTIONS•2007–WorkedwithDirectEnergy,atnocosttotheCity,tostudy forming a Joint Power Authority for eight cities includingSantaAna.◦Consultant report questioned financial viability; Direct Energy did not pursue next steps.◦One conclusion: CCA’s are more attractive for cities that have high-usage residential customers.•2018 – Reexamined viability of CCA◦Impending increases in Power Cost Indifference Adjustment and Resource Adequacy called for caution.•Work since 2018 – Continuing to monitor the CCA activity andfinancial viability as profit margins drop for most CCA’s.5CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
POTENTIAL BENEFITSCITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702•Lower rates possible•Clean energy supply options*•Reduced greenhouse gasTo a lesser degree:◦Funds for local energy programs◦Job creation◦Economic development*Current SCE power mix 51% Clean, 35% Green (Renewable) 6
AREAS OF CONCERN/UNCERTAINTYCITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702•Shrinking profit margins due to: ◦Resource Adequacy (RA) costs◦Power Cost Indifference Adjustment (PCIA)•Projected long-term cost of wholesale power for CCA and SCE•Regulatory/legislative proceedings/trends•JPA partners business model and policy compatibility7
REVENUE USAGE LIMITATIONS•Revenues must stay within the CCA•Match or beat SCE’s rates•Repay startup debt•Increase rate stabilization fund•Funding for local energy programs8CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
SOUTHERN CALIFORNIA CCA’s*More than 20 CCA’s serving over 10 million customers in California. Some examples include:Clean Power AllianceDesert Community EnergyWestern Community EnergySan Diego Energy Authority**County of Santa Barbara**North San Diego Authority**Orange County Power Authority (OPCA)***In excess of 1,000 GWH annually** Planned for 2021 or 20229CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
ORANGE COUNTY POWER AUTHORITY (OCPA)CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702•Irvine studies•JPA agreement•CPUC filing for five cities in OCPA:◦Irvine, Huntington Beach, Lake Forest, Fullerton, and Buena Park•Timeline for OCPA10
IRVINE STUDIES•EES Consulting – original study January 2020•MRW Group – Peer review study June 2020•Generation rate margin benefit for CCA◦EES – 4.0%◦MRW – 2.0%•Customer rate advantage below SCE◦EES – 2.0%◦MRW – 0.5%•OCPA’s ten year pro-forma in OCPA application to CPUC uses EES spread of 4.0% for generation rate and 2.0% for rate benefit below SCE•Ten year OCPA pro-forma predicts zero money available for local energy programs until 2027.11CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
JPA AGREEMENT FOR OCPA•As filed with CPUC – Dec. 28, 2020•Each of five member Cities has one member on the Board, except for Irvine which has two, until 2027 (estimated).•When size of membership reaches nine, an executive committee is formed (original five members only).12CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
JPA AGREEMENT FOR OCPA cont.•Withdrawal from JPA requires approval of Board and payment of financial obligations.•Upon vote of two members of the Board, important votes would be made on weighted average of electrical load rather than numerical majority (one member from Irvine plus one other city member).•Irvine to up-front preliminary costs and provide credit guarantee for working capital. CCA will repay Irvine through 2027.13CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
ISSUES REQUIRING DUE DILIGENCE•10-year pro forma financials•Power Cost Indifference Adjustment (PCIA)•Resource Adequacy (RA) •Future power supply costs for CCA and SCE•JPA membership policy issues14CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
CITY’S OPTIONS•Remain with SCE and continue evaluating options as Power Cost Indifference Adjustment exit fees phase out and Resource Adequacy stabilizes. •Join an existing CCA.•Develop a single-city CCA.•Develop a multi-city JPA with cities with similar energy goals.15CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
NEXT STEPSCITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702•Continue to monitor/evaluate active CCA programs.•Track and study CCA financials and risk variables.•Identify key goals of Santa Ana energy programs.•Consult with other cities for JPA opportunities.•Identify and evaluate energy programs of interest to the community.16
CITY OF SANTA ANA, PUBLIC WORKS AGENCY, 20 CIVIC CENTER PLAZA, SANTA ANA, CA 9270217Questions