How Community Choice Energy works.
Now that Mayor Kevin Faulconer has sanctioned forming a new joint-powers entity to purchase electrical power to achieve 100 percent renewable energy citywide by 2035, the question becomes: How will that be implemented, and what are the risks?
After three years of research and analysis, Faulconer selected Community Choice Aggregation (CCA) as the preferred pathway to reach the 100 percent renewable energy goal in the City’s landmark Climate Action Plan. The proposed new CCA entity, which must first be approved by the City Council, is expected to create healthy competition benefiting San Diegans. Forming a new CCA entity is expected to lower energy costs by 5 percent or more for ratepayers, plus help the City reach its renewable energy goal by 2035 – a decade ahead of the state’s goal.
“I want San Diego to lead this region into a cleaner future,” Faulconer said. “This gives consumers a real choice, lowers energy costs for all San Diegans, and keeps our city on the cutting edge of environmental protection. We are a city where our environment is central to our quality of life and Community Choice will ensure we leave behind a better and cleaner San Diego than the one we inherited.
What is Community Choice Energy?
Community Choice Energy or Community Choice Aggregation (CCA) envisions bringing local control and freedom of choice and competition into the electricity marketplace. Currently, San Diego has only one electricity provider, San Diego Gas & Electric (SDG&E).
Community Choice allows cities and counties to purchase power on behalf of their residents and businesses to provide cleaner power options at a competitive price. Under community choice, SDG&E would continue to deliver the power over their power lines, provide customer service and handle the billing.
A local community choice program is designed to offer a choice of providers to create competition encouraging innovation and improved pricing.
But not everyone is sold on CCAs, like the Clear the Air Coalition, a group of business, environmental and taxpayer leaders, who advocate a cautious approach to changing San Diego’s existing electrical power distribution system.
Contacted by Beach & Bay Press, SDG&E spokesperson Tony Manolatos referenced the following story “San Diego Should Carefully Weigh the Costs and Benefits of Government-Controlled Energy” published at clearair.us, which he said “covers all the main points.”
“The City of San Diego should carefully weigh the costs and benefits of government-controlled energy before flipping the switch and moving residents and businesses into such a program,” states the story. “If the city decides to form a CCA, would it actually help San Diego reach its clean air goals faster and cheaper than current state laws require? … To date, CCAs have been reluctant to purchase long-term contracts for renewable energy, or build new facilities. As a result, CCAs mostly buy and sell existing green energy, a practice that does not create new local jobs or clean our air any faster. … The evidence indicates a San Diego CCA would not meet the city’s goal of 100 percent clean energy by 2035, or create many new jobs, but it would create risk for taxpayers, who are ultimately the backstop of any government-controlled energy program.”
Community choice proponent Tyson Siegele represents But It Just Might work.com, a clean energy advocacy group. Noting SDG&E under law is, “not allowed to oppose community choice energy,” Siegele pointed out SDG&E’s parent company, Sempra, “is not a regulated utility” and therefore is allowed to oppose community choice.
Nonetheless, Siegele noted that, “In theory, SDG&E shouldn’t lose any money if community choice happens, or doesn’t.”
But Siegele was quick to point out San Diego pays some of the highest per-kilowat per-unit rates for electricity in the state adding, “Californians have, on average, a 50 percent higher electricity cost than the nationwide average.”
Argued Siegele, “We’ve had a massive ramp-up in the number of community choice energy programs in the past five years statewide. It just makes sense to give our communities more control over where their energy comes from, and what it costs.”
But even if successful, a transition to community choice by San Diego will take some time, said Siegele. “In all likelihood, the entire process will take a little more than two years, and the shortest time it could be effect would be January of 2021,” he said.
Community Choice Energy Timeline
December 2018: Resolution of intent available for docketing at City Council.
Spring 2019: Begin formal meetings with potential JPA partners to negotiate structure and guiding principles.
Summer 2019: City Council action to officially form new JPA.
Fall 2019: JPA begins hiring staff, including CEO and CFO. Staff develops implementation plan for submittal to CPUC.
2020: JPA continues to establish operations. CPUC approval expected.
2021: CCA begins service to customers with phased-in approach throughout the year.