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- Cities and counties are ditching their electric utilities by starting community choice programs
- Community choice aggregators, or CCAs, are frequently able to offer lower rates and cleaner energy
- The California Public Utilities Commission could make it more costly to leave utilities like Edison
Riverside County residents may soon be able to buy electricity from a government-run energy program, at lower rates than those offered by Southern California Edison — depending on what state regulators decide next summer.
The county’s board of supervisors voted Tuesday to submit a plan to state officials to start a community choice aggregator, or CCA, in which the county would buy electricity for residents and decide how much to charge. The program would cover unincorporated areas now served by SoCal Edison, including North Palm Springs and Snow Creek in the Coachella Valley. Palm Springs and Cathedral City are working to form their own CCA, with Palm Desert’s city council recently voting to join and a vote scheduled in Desert Hot Springs next week. Rancho Mirage is also developing its own program.
Community choice is an increasingly popular option for cities and counties looking to lower their electric bills and increase their reliance on climate-friendly energy sources like solar and wind. There are nine CCAs now operating in California, from Lancaster Choice Energy in the desert to Sonoma Clean Power north of the Bay Area. Investor-owned utilities like Edison and Pacific Gas & Electric still run the power lines that serve CCA customers and sometimes send out the bills, but they don’t play any other role.
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Local officials hope to promote the growth of solar power, both on rooftops and through bigger solar plants. They think they can offer rates at least as low as Edison’s in large part because of the region’s abundant sunshine and the falling costs of solar power.
“We fully envision having a 100 percent renewable option, so people can opt up to 100 percent percent renewable if they want to. And that kind of goes along with the benefit of CCAs in general. It’s providing a choice,” said Isaiah Hagerman, director of administrative services for Rancho Mirage. “Before you had none, you were with Southern California Edison. Now you have a choice.”
A study prepared last year by EES Consulting found that a community choice program run by the Coachella Valley Association of Governments could offer a 50 percent renewable energy mix while cutting electricity costs by 2.1 percent in 2018. Riverside County’s proposed CCA would save the average home between $50 and $55 annually, according to Good Energy, a consultant the county has hired to run its energy program.
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But the California Public Utilities Commission could still throw a wrench in the works.
CCA customers are required to make a monthly payment known as the “exit fee” to their former investor-owned utility. Edison and other utilities sign long-term power contracts based on the amount of electricity they expect they’ll need to provide to their customers, and when they lose customers, suddenly they don’t need some of that power. State regulators allow investor-owned utilities to charge CCA customers for some of that contracted energy, so the utilities don’t have to raise rates for their remaining customers.
But Edison, PG&E and San Diego Gas & Electric don’t like how the exit fee is currently calculated. They think the formula doesn’t allow them to recover enough of their costs. In June, the public utilities commission opened a rulemaking process to reconsider the exit fee formula, with a timeline that calls for making a decision by July 2018.
In a filing to the utilities commission earlier this year, Edison, PG&E and SDG&E said the exit fee formula “is not fair, just, or reasonable” to their customers.
“The current methodology is broken and must be fundamentally reformed to prevent cost increases to (remaining) customers,” the investor-owned utilities wrote.
Critics, though, say the utilities are exaggerating the cost impacts to stunt the growth of CCAs and protect their electricity monopolies. Some community choice advocates also say CCAs provide a financial benefit to the customers who remain with the investor-owned utilities, and they’re urging state regulators to take those benefits into account.
In a joint filing to the public utilities commission in July, the Coachella Valley Association of Governments and the Western Riverside Council of Governments, which is working on its own community choice program, said they are “concerned with the outcome of this rulemaking due to the tremendous financial impact it will have on the planning, start-up and implementation of the CCAs developing in Riverside County.”
Riverside County officials are concerned, too.
Uncertainty over future exit fees led two county supervisors, Kevin Jeffries and Chuck Washington, to vote against submitting a CCA implementation plan to the public utilities commission at Tuesday’s meeting. The board passed the CCA resolution in a 3-2 vote, but not before Jeffries and Washington questioned the logic of moving forward when it’s possible the required exit fees will increase, undermining the financial benefits of a CCA.
“It is a gamble. It is risky,” Jeffries said.
Brian Nestande, the county’s deputy CEO, said the county will submit a community choice implementation plan to the utilities commission in the next few weeks. But even if the commission approves the plan, Nestande said, county supervisors won’t be asked to start implementing the program until there’s a decision on the exit fees next summer.
“Exit fees are a potential road block to having a CCA,” Nestande said in an interview.
Rancho Mirage has already sent its community choice implementation plan to the public utilities commission. The city council voted last month to join California Choice Energy Authority, a joint powers authority formed by Lancaster to help other cities run CCAs while still leaving most decision-making in local hands. In addition to Rancho Mirage, two other cities, Pico Rivera and San Jacinto, have joined the Lancaster-led program.
RELATED: Rancho Mirages ditches CVAG energy plan, says more local control needed
Other Coachella Valley cities aren’t as far along in developing their CCAs.
Palm Springs and Cathedral City recently formed a joint powers authority, known as Desert Community Energy, to administer a multi-city program. Palm Desert is in the process of joining and Desert Hot Springs could come on board soon, while Indian Wells has taken a wait-and-see approach. Desert Community Energy plans to hire a team of consultants led by The Energy Authority, a Florida-based nonprofit, and Calpine, a national power company, to write an implementation plan and help run the program.
Like Riverside County and the other Coachella Valley cities, Rancho Mirage still hasn’t decided whether to go through with community choice. A key factor will be the power prices offered by solar companies and other energy generators when it comes time to sign contracts, according to Hagerman, the city’s director of administrative services.
“Ultimately what it comes down to is, is it a benefit to the community?” Hagerman said.
Sammy Roth writes about energy and the environment for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.
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