City of Los Altos CA : Community Choice Energy - Wed, 01/20/2016

On Tuesday, January 26, 2016, the Los Altos City Council will receive a final report from the Environmental Commission regarding Community Choice Energy and consider whether Los Altos should move forward with joining a group of neighboring cities planning to form a Community Choice Energy (CCE) agency here in Silicon Valley.

To view the City Council report regarding this topic, click here.

What is Community Choice Energy (CCE)?

California state policy allows city and county governments to form a local non-profit 'Community Choice Energy' agency to pool electricity demand within and across their communities. The new CCE agency then competitively purchases energy on behalf of participating residents and businesses within these communities. Under Community Choice, the local investor-owned utility (PG&E in our case) continues to maintain responsibility for transmission and distribution of power, and for customer service and billing functions. Energy bills continue to come from PG&E, but list the CCE as the provider of electricity generation.

Where is CCE operating, and what are the potential benefits?

In California, CCE agencies in Marin County, Sonoma County, and the City of Lancaster are now providing hundreds of thousands of customers with cleaner, greener energy - at rates less than the commercial utility. They have increased the amount of electricity procured from renewable sources, such as solar, wind and geothermal. In addition, they are actively developing local sources of renewable energy in their communities, and offering specialized energy efficiency and solar feed-in tariff programs relevant to their customers. See this animated video for a five-minute primer on Community Choice from the Silicon Valley Community Choice Energy Partnership.

At least seven other regions in the State of California are considering formation of local CCE agencies, including all remaining counties in the San Francisco Bay Area. In addition, six other states have also adopted CCE enabling legislation.

Which Silicon Valley communities are evaluating participation in the CCE?

The cities of Sunnyvale, Cupertino and Mountain View, and the County of Santa Clara (unincorporated areas) have formed the Silicon Valley Community Choice Energy Partnership to study formation of a local CCE agency. An initial assessment report, completed in May 2015, assessed high-level risks and benefits of forming a local CCE, and determined that eight additional communities were also interested in participating: Campbell, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill and Saratoga.

In November 2015, a detailed Technical Feasibility Study was completed which analyzed the energy needs of the service area (defined by the jurisdictions involved) and potential rate impacts. The 100-page study considers three energy sourcing scenarios, and concludes that a local Community Choice agency has the potential to offer significant economic and environmental benefits to the area.

What are the environmental advantages of CCE?

Electricity generated from fossil fuel sources such as coal or natural gas is a major source of greenhouse gas (GHG) emissions and generally considered a leading cause of climate change. CCEs in California are choosing to purchase and/or develop electricity from sources that are more heavily weighted towards renewable energy. Renewable energy can provide electricity with little or no GHG emissions.

How does this relate to the Los Altos Climate Action Plan?

The Los Altos Climate Action Plan has set a GHG emissions reduction target for the year 2020, and outlines a wide variety of measures that the City must take to meet this target. CCEs have helped communities reduce GHG emissions and meet local climate goals in a cost-effective fashion - with the potential to deliver rate payer savings and encourage local investment in renewable energy. The cities of Sunnyvale and Cupertino estimate that the single action of participating in a CCE would achieve at least 25-50% of their 2020 GHG reduction targets. Similar results would be anticipated for Los Altos.

What are the costs?

CCEs are established as a Joint Powers Authority (JPA) agency. Operational CCEs are completely funded through program (rate payer) revenues, and are not subsidized by taxpayer dollars. Start-up costs are shared by participating jurisdictions and subsequently reimbursed from program revenues. The CCE is staffed with full-time personnel responsible for ongoing operation. Time required from participating agencies is limited primarily to periodic Board of Directors meetings. While there is no guarantee that CCE rates will always be lower than PG&E rates, CCEs have cost advantages in that they are typically small and agile non-profit agencies with low overhead and no shareholder dividends or income taxes.

What are the risks?

Risk to individual customers is low, as there is always the option to buy energy from PG&E instead of the CCE. Also, PG&E continues to maintain the distribution grid and provide the same delivery services regardless of whether a home or business is a CCE customer. CCEs are exposed to energy market, regulatory and operational risks, which must be managed by CCE staff. Participating jurisdictions are separated by the JPA structure from risks associated with the financial operation of the CCE.

For more information on the Silicon Valley Community Choice Energy Partnership, and to sign up for email updates, visit www.SVCleanEnergy.org.