HomeMy WebLinkAbout09-04-2018 Item 2 Community Choice Energy Meeting Date: 9/4/2018
FROM: Robert Hill, Interim Deputy Director, Office of Sustainability
Prepared By: Chris Read, Sustainability Manager
SUBJECT: STATUS REPORT AND DIRECTION ON COMMUNITY CHOICE ENERGY
STUDY SESSION
RECOMMENDATIONS
1. Receive the attached community choice energy reports and presentation; and
2. Provide policy direction for key community choice energy issues ; 1) joint powers agreement
components, 2) joint powers authority, 3) director assignments, 4) community choice energy
implementing ordinance, and 5) direction on technical energy study components.
REPORT IN BRIEF
This report provides and overview and high-level explanation of Community Choice Energy
(CCE, also known as Community Choice Aggregation), as well as a summary of City Council
direction and work completed to date. The September 18, 2018 City Council meeting will give
the City Council an opportunity to approve an implementing ordinance and resolution to
establish a CCE program, or to cease work on the effort. If Council decides to proceed, it will
need to approve two documents: 1) the implementing CCE Ordinance; and 2) a Resolution
approving a Joint Exercise of Powers Agreement which contractually creates the Joint Powers
Authority (JPA) that would host and operate the CCE program and appoint City representatives
to serve on the Board of Directors.
This report describes and provides four attachments to assist with City Council’s decision: 1) the
draft Technical Study assessing program feasibility (Attachment A), 2) the draft CCE
implementing Ordinance (Attachment B), 3) the draft JPA Agreement (Attachment C), and 4)
the draft JPA resolution (Attachment D). Staff will compile Council comments at the meeting on
all the attachments and return with the completed technical study and the final implementing
Ordinance, JPA Resolution, and JPA Agreement at Council’s September 18, 2018 meeting
dependent on Council direction.
DISCUSSION
Background
About Community Choice Energy
CCE, authorized by Assembly Bill 117, is a state law that allows cities, counties and other
authorized entities to aggregate electricity demand within their jurisdictions to purchase and/or
generate electricity supplies for residents and businesses within their jurisdiction while
maintaining the existing electricity provider for physical transmission and distribution services.
CCEs are typically created to provide a higher percentage of renewable energy electricity, such
as wind and solar, at competitive and potentially cheaper rates than existing Investor Owned
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Utilities (IOUs), while giv ing consumers local choices and promoting the development of
renewable power sources and local economic development. The City Council has been
supportive of the research and development of a viable regional Community Choice Energy
(CCE) program for the Cit y of San Luis Obispo and surrounding communities for the last several
years.
Previous Council Direction
In December of 2013, City staff presented the City Council with a detailed report to educate the
Council and Community about Community Choice Energy (CCE). In March of 2015, the City
Council approved Resolution No. 10609 confirming the City of San Luis Obispo’s participation
in the exploration of CCE. The Resolution authorized participation in an inter-jurisdictional
investigation into CCE feasibility allowing execution of appropriate documents to allow
technical consultants to acquire energy usage load data from the electric distribution utility for
analysis in feasibility study.
In June of 2017, the City Council adopted the 2017-2019 Financial Plan, which identifies
Climate Action as a Major City Goal. The goal includes the following objective: “Assess and
report the requirements to achieve the ’net -zero carbon City’ target including feasibility analysis
and implementation of a Community Choice Energy p rogram.” Should the City Council decide
to move forward with implementation, these actions would surpass the goals and outcomes
anticipated in the Major City Goal work program and thus Council would need to be cognizant
of the limited resources moving forward to take on other climate related actions. Given the GHG
reduction potential of taking this action, staff recommends that this is a worthwhile tradeoff and
embodies the principle of focusing sustainability resources on actions that have the highest
pot ential to reduce GHG emissions.
In December of 2017, the City Council reviewed results of CCE feasibility studies and held a
study session reviewing CCE options. The two CCE feasibility studies (one study assessing the
feasibility of a program in the counties of Santa Barbara, Ventura, and San Luis Obispo, the
other assessing the feasibility of a program including the City and County of San Luis Obispo)
provided a range of results, but across the studies, staff interpreted the results to confirm that a
CCE program in PG&E service territory could be feasible. As a result, City Council provided
staff direction to “pursue forming a new CCE, in conjunction with other interested jurisdictions
in San Luis Obispo County and/or in PG&E territory of Santa Barbara Co unty. If that option is
not feasible, then staff should pursue joining an existing CCE such as Monterey Bay Clean
Power or other comparable alternatives.”
In January of 2018, Mayor Harmon sent letters to the County of San Luis Obispo and the Cities
of Paso Robles, Atascadero, Morro Bay, Grover Beach, Pismo Beach, and Arroyo Grande. On
April 24, 2018, Morro Bay City Council committed to pursuing CCE program formation with the
City of San Luis Obispo.
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In February of 2018, the California Public Utilities Commission (CPUC) issued Resolution E-
4907, which requires new CCE programs to have one full calendar year elapse prior to serving
customers. This issue has altered timing considerations and presents the following timelines:
• If an Implementation Plan is submitted by January 1, 2019, customers can begin service on
January 1, 2020
• If an Implementation Plan is submitted after January 1, 2019, but before January 1, 2020,
customers can begin service on January 1, 2021
Since March of 2018, staff have met with representatives from operational CCE programs, trade
groups, service providers, local experts, and the SLO Climate Coalition Task Force to vet
potential approaches and understand timing and cost issues for each. The City’s preferred
approach is to operate the program through a JPA with Morro Bay with the intention of inviting
other regional jurisdictions to participate in future years.
In May of 2018, the City Council authorized the release of an RFP for a technical and energy
services vendor to refresh feasibility assessment assumptions, draft the CPUC required
Implementation Plan, provide credit solutions to financing initial power purchases, and provide
power procurement -related operational services (e.g., purchasing power on the City’s behalf,
interacting with the California Independent System Operator (CAISO), assisting with regulatory
findings, etc.). At the same meeting, City Council authorized the City Manager to enter into an
agreement with the selected vendor.
Vendor Selection Process
The City received three proposals. The proposals were reviewed, and the proposing entities were
interviewed by a six-member review team consisting of:
• Chris Read, City of San Luis Obispo, Sustainability Manager
• Bob Hill, City of San Luis Obispo, Interim Deputy Direct or, Office of Sustainability
• Scott Collins, City of Morro Bay, City Manager
• Eric Veium, SLO Climate Coalition Task Force, Chair
• Deb Emerson, Sonoma Clean Power, Director of Power Services
• Shawn Marshall, LEAN Energy, Executive Director
The Energy Authorit y (TEA) was identified as the most experienced, flexible, high quality, and
lowest cost option. After proposal review and interviews, the review team unanimously selected
TEA.
As a requirement of the RFP, TEA agreed to defer incurred costs for all technic al work until the
program becomes operational in 2020. If the City Council chooses not to proceed with
Community Choice Energy at the September 18, 2018 meeting, the City may withdraw from the
contract at no cost. Additionally, the negotiated agreement wit h TEA allows for the full transfer
of all contractual liabilities and obligations from the City to the JPA created to host the CCE. If
the City Council commits to moving forward at the September 18, 2018 meeting and the JPA
does not form, the City continue s working with TEA to form a single jurisdiction CCE program.
In the unlikely worst-case scenario that the CCE program does not launch at all, the City would
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be responsible for up to $250,000 in deferred costs to TEA. As a matter of responsible financial
planning, staff recommends reserving carryover funds from the 2017 -18 budget should the City
unexpectedly need to accommodate this contingent liability.
Technical Study
The draft Technical Study provided by TEA evaluates the feasibility of implement ing a CCE
program in three groupings of the Cities of San Luis Obispo, Morro Bay, Paso Robles, and
Grover Beach. The findings presented in this Council Agenda Report focus exclusively on the
participation scenario that includes the Cities of San Luis Obispo and Morro Bay.
The Technical Study evaluates three power supply scenarios. Each scenario contains a different
amount of California Renewable Portfolio Standard (RPS) compliant power . RPS compliant
power includes power sources such as solar, wind, small-hydroelectric, and bio-mass. Additional
power sources exist that do not generate GHG emissions, but are not legally defined as
“renewable” in California (e.g., large hydroelectric and nuclear). The Technical Study’s financial
pro forma assumes each scenario is 100 percent greenhouse-gas (GHG) free.
TEA concludes that under base-case market and regulatory conditions, all three presented supply
scenarios would be feasible while offering customers a rate-discount relative to PG&E. Table 1
shows cumulative net revenues in the third year of operations as a total and as a percent of
annual operating expenses assuming the CCA offers a 3% rate discount relative to PG&E. The
draft Technical Study is provided as Attachment A.
Table 1. Draft Technical Study Summary Findings
Metric Supply Scenario 1 Supply Scenario 2 Supply Scenario 3
Renewable Portfolio
Standard Percentage
RPS-Compliant (33% in
2020, increasing to 50%
by 2030)
50% 75%
GHG Free Percentage 100% 100% 100%
Average Rate Savings 3% 3% 3%
Cumulative Net
Revenues at End of
Year 3
$12.3 million
$11.3 million
$9.7 million
Cumulative Net
Revenues at End of
Year 3 as a
Percentage of Annual
Operating Expenses
68% 61% 51%
Generating cumulative net revenues at the levels shown in Table 1 is an indication that adequate
funds should be available for the CCE program to meet critical financial needs such as:
• Self-funding working capital requirements;
• Establishing a rate stabilization fund;
• Demonstrating the creditworthiness needed to enter into long -term contracts; and
• Investing in local programs critical to meeting the goals of the CCA.
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TEA also conducted a stress-test analysis on the results assuming 75th percentile energy market
prices (an approximately $5 per MWh increase above current forward price s), a 40 percent
increase in the Power Charge Indifference Adjustment (PCIA) rate, and lower than expected
generation rates for PG&E. Under these stress-test conditions, all three supply scenarios resulted
in negative net revenues year-over-year. Rate premiums would be required to generate a similar
level of cumulative net revenues to what is shown in the base case scenario. It is important to
note that a four city CCE scenario that also incudes Grover Beach and Paso Robles is the most
resilient to the stress-test scenario, which is consistent with the greater economies of scale
provided by this alternative.
The Power Charge Indifference Adjustment (PCIA) is one of the most critical variables in
projecting future CCE program financial viability. The PCIA is an exit fee charged by investor-
owned utilities (IOUs) to customers that switch to another provider of electricity generation
service through direct access or community choice aggregation. The fee is designed to cover
above-market costs from contracts that the utilities entered into but no longer need and cannot
sell in the market for the price they paid. The California Public Utilities Commission has an open
proceeding, the PCIA Rulemaking Proceeding R.17-06-026, intended to make changes to how
the fee is calculated. The final outcome of this proceeding is expected to be known on September
13, 2018 but may not be known until October. TEA has attempted to analyze the possible range
of outcomes that may result from this proceeding. While the Technical Study ultimately
concludes the CCE program in question would be feasible under most market and regulatory
conditions, these findings are highly subject to changes in market and regulatory conditions. As
such, it will be critical to continually re-evaluate feasibility following the PCIA ruling, and
throughout the implementation process.
TEA advises the City of San Luis Obispo and the City of Morro Bay to view the results of the
Technical Study as supportive of continuing to move forward with CCE program development,
including preparation of an Implementation Plan. However, CCE viability should continue to be
assessed on an ongoing basis at each critical step of program development.
CCE Implementing Ordinance and Joint Powers Agreement
Section 366.2(c)(12)(B) of the Public Utilities Code expressly contemplates the creation of a JPA
so that counties and cities can “participate as a group in a community choice aggregation
program.” California cities and counties can exercise this option by doing two things: 1) ente ring
into a Joint Powers Agreement forming a JPA under Section 6500, et seq. of the Government
Code; and 2) adopting an Ordinance electing to implement a community choice program within
its jurisdiction as required by Section 366.2(c)(12)(A).
Implementing Ordinance
An Ordinance that complies with the requirements of Section 366.2(c)(12)(A) is included as
Attachment B. Staff is requesting Council’s comments on Attachment B. Staff will present the
Ordinance for adoption at the September 18, 2018 meeting and will present the Ordinance for a
second reading at the October 2, 2018 meeting.
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JPA Agreement
The draft JPA Agreement and supporting resolution establishing the JPA are provided as
Attachment C and Attachment D. The draft language is recommended by the joint City of Morro
Bay and City of San Luis Obispo planning team that has been meeting on this topic for several
months. The planning team, with support from the City of San Luis Obispo and City of Morro
Bay city attorneys, and outside legal support from Greg Stepanicich of Richards, Watsons, &
Gershon, drafted the JPA document and ordinance working from discussions with key
stakeholders, the SLO Climate Coalition Task Force, and existing documents provided by other
jurisdictions that formed similar CCE pro grams (e.g. Valley Clean Energy Alliance, Peninsula
Clean Energy, East Bay Community Energy).
The JPA document establishes the framework for operation of the CCE program. Key provisions
of the JPA document address:
• Governance and Internal Organization (Ar ticle 3)
• Roles and responsibilities of the Board of Directors and Operations Board (Section 3.1)
• Recovery of initial funding by founding cities (Section 5.3)
• Addition of new member jurisdictions and withdrawal of existing members (Section 2.5)
Adoption of the Resolution approving the JPA Agreement also requires the City to appoint two
members to the Board of Directors (Section 3.1). Staff is recommending that the Council appoint
two members to the Board of Directors at the September 18, 2018 meeting to fac ilitate
scheduling of the first JPA Board meeting in November.
Proposed Agency Name
The JPA document requires an agency name to be identified. After discussions with the SLO
Climate Coalition Task Force, the City of Morro Bay, and internal discussions, st aff proposes the
name “Central Coast Community Energy.” The name is selected to resonate with all potential
regional growth partners and intentionally focuses on the “community” aspect of community
choice energy.
Operating Capital and Shared Resource Needs
Should the City Council vote to proceed with the CCE program at the September 18, 2018
meeting, the operation of the JPA will require operating capital support in the amount of
approximately $1,000,000 prior to the program launch in 2020. The operating capital
requirements for the JPA will vary depending on the level of staffing needed and the capacity for
member cities to lend staff, office, and service resources.
Many existing CCE JPAs limited pre-launch costs through shared resources with its member
agencies. For example, some CCE programs have shared office space, IT support, HR support,
meeting space, accounting and back office systems, and JPA management staffing with member
agency facilities and staff Should the cities seek to share resources in t his manner with the JPA
the costs associated with those resources will be closely tracked and reimbursed in the manner
agreed to upon by all parties through a shared services agreement or cost allocation plan. Any
arrangement of this nature would require additional approval by the City Council. Regardless of
shared resources, the JPA will need working capital to hire a General Manager and conduct pre -
launch activities. The amount, which is approximately $1,000,000, could be loaned by the
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participating citie s at their preferred interest rate, or could be obtained through a bank loan
backed by the City’s credit via cash collateral or a credit guarantee agreement between the City
or cities and the selected bank partner . Pre-launch working capital in the total o f $1.1 million
($1,000,000 plus an additional $100,000 contingency) has been incorporated into TEA’s
Technical Study financial pro forma and is projected to be reimbursed in the first 24 months of
operations.
Project Schedule
The following is an outline of the project schedule through 2020:
Activity Date
City of San Luis Obispo City Council study session to preview
Technical Study components, proposed JPA structure, and CCE
ordinance
9/4/18
City of Morro Bay City Council study session to preview Tech nical
Study components, proposed JPA structure, and CCE ordinance
9/11/18
Public hearing to present Technical Study to City of San Luis Obispo
City Council. If Council chooses to proceed, pass resolution to create
and join the JPA and conduct first reading of the CCE ordinance
9/18/18
Public hearing to present Technical Study to City of Morro Bay City
Council. If Council chooses to proceed, pass resolution to create and
join the JPA and conduct first reading of the CCE ordinance
9/25/18
Public hearing to conduct second reading of the CCE ordinance (City
of San Luis Obispo)
10/2/18
Public hearing to conduct second reading of the CCE ordinance (City
of Morro Bay)
10/9/18
First JPA Board Meeting to seat the Board of Directors and establish
initial policies
Week of 11/6/18
Second JPA Board Meeting to adopt Implementation Plan for
submittal to the California Public Utilities Commission
Week of 11/20/18
Program Implementation and Operations Preparation 2019
Begin CCE Program Operation Early 2020
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FOCUS QUESTIONS FOR STUDY SESSION
Focus Questions for Study Session
1. Technical Study (Attachment A) - Do the Technical Study and Council Agenda Report
provide sufficient information to inform Council’s decision making?
2. Technical Study (Attachment A) – If so, do you want to continue developing a CCE
program?
3. Technical Study (Attachment A) - If not, what clarifications or additions would Council like
to see at the September 18, 2018 Council meeting?
4. JPA (Attachment C) – Does the overall agreement reflect Council’s values and priorities?
5. JPA (Attachment C) – Do the proposed governance structure and voting provisions support
Council’s vision of the program? (Article 3, page 5)
6. JPA Resolution (Attachment D)– Does Council want to identify which Council Members
would be initial Directors? (Section 2, page 2)
CONCURRENCES
The City Attorney’s Office concurs with the form of this report. The Departments of Finance and
Administration concur with the intent of this report.
ENVIRONMENTAL REVIEW
The establishment of a CCE is exempt from the requirements of the California Environmental
Quality Act (“CEQA”) pursuant to the CEQA Guidelines, as it is not a “project” as it has no
potential to result in a direct or reasonably foreseeable indirect physical change to the
environment because energy will be transported through existing infrastructure (14 Cal. Code
Regs. § 15378(a)). Further, establishing a CCE is exempt from CEQA as there is no possibility
that this it would have a significant effect on the en vironment (14 Cal. Code Regs. §
15061(b)(3)). Further, the establishment of a CCE is also categorically exempt because it is an
action taken by a regulatory agency to assume the maintenance, restoration, enhancement or
protection of the environment (14 Cal. Code Regs. § 15308).
FISCAL IMPACT
Staff’s approach has been to establish a program with nearly no net cost to the City and a limited
exposure to risk by creating deferred compensation contracts that are transferable to the JPA.
Staff has so far been successful in this approach, however fiscal risks exist as described in this
report including one-time risk (upfront debt requirements of approximately $1,000,000 for
working capital and requirements to pay up to $250,000 in deferred costs to TEA in the eve nt the
program does not launch) and ongoing risk (e.g., energy market and regulatory uncertainty).
One-time risk will be managed by updating the Technical Study findings at key points through
program development to limit exposure and to reserve carryover funds as described above. To
manage recurring risk, per TEA’s risk management section of the Technical Study, the CCE
program will build financial reserves, develop and implement a risk management program, hire
qualified management and staff, build a strong relationship with the community, closely manage
key accounts, and engage in regulatory and legislative monitoring.
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Potential Community Impact
The CCE program seeks to be rate competitive with PG&E and to build reserves to ensure a
stable program that can deliver local benefits to ratepayers. The updated Technical Study
indicates that GHG free electricity, competitive rates, and a financially healthy organization are
possible under base case and forecast market conditions, with the exception of the “stress test”
case. Should the City pursue the CCE program, the intended outcomes would be energy related
local economic development opportunities and a competitively priced cleaner electricity source.
As mentioned above, under the technical study’s “stress t est” case (a scenario including
unexpected market volatility, slow PG&E rate growth, and a rapid increase in the Power Charge
Indifference Adjustment, the program would not be financially viable. In an ongoing
environment with these conditions, or in a worst -case scenario of energy market collapse, severe
agency mismanagement, or other unlikely scenarios, the JPA could fail and go bankrupt. In that
scenario, customers would be returned to PG&E service without service interruption and the
financial obligatio ns of the JPA would be limited exclusively to the JPA and would not affect the
community nor the member agencies.
Potential Agency Impact
Should the unlikely scenario occur where the City “goes it alone”, but fails to launch a program,
it would be exposed to up to $250,000 in deferred costs owed to TEA.
Consistent with the approach taken by operating CCE programs and noted above, the JPA will
require short -term resource sharing and working capital to complete the start -up phase and begin
serving customers. Should the program move forward, t he participating cities will be asked to
consider options to provide credit support for this bridge funding later this Fall/early Winter.
Although the required working capital prior to program launch will vary widely as mentioned
above, staff expects a need for approximately $1,000,000, based on member city capacity to
provide shared resources. This debt is usually short term (e.g. a one to two-year line of credit)
and is often provided by a third-party lender, although it can be municipally financed as well.
The amount of pre-revenue credit needed to support the program will require a credit guaranty
which is usually provided by one or more members of the CCE Agency. The JPA’s guaranty
requirement, would be released soon after receiving operational revenues (usually within 12
months or program launch). This basic structure of third party financing (generally a line of
credit) with a credit guarantee to support the pre-revenue portion of the credit has been used in
successful CCE launches including Valley Clean Energy Alliance, Marin Clean Energy, Sonoma
Clean Power, and Silicon Valley Clean Energy. Should the JPA form and receive operating
capital, and/or lines of credit from the cities, and should JPA operations fail to launch, the cities
would not be reimbursed, and/or would be responsible for any remaining debt.
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ALTERNATIVES
1. The City Council could direct staff to pursue a single-city (City of San Luis Obispo only)
municipal program. As identified in Attachment A, t his alternative is still financially feasible
and would provide a path for the City to achieve its climate action goals. This alternative
would require additional organizational support as it would be housed as a department within
the City. Specifics around this support would require additional research. A regional
approach (e.g., growing to allow regional cities and the County of San Luis Obispo to
participate) would be more challenging under this alternative, as future expansion would
require the creation of a JPA and a transfer of all the established services and contracts to the
JPA.
2. The City Council could direct staff to join an existing CCE program. Monterey Bay
Community Power (MBCP), which operates in Monterey, Santa Cruz, and San Benito
counties, has supported City staff in the past and could provide an alternative to starting a
local/regional program. Joining an existing program would limit initial exposure to financial
risk. However, the local economic development, program implementation, and loc al control
components of the program would be constrained.
3. The City Council could request additional information. Staff has been working on an
accelerated timeline to ensure program operation can begin in 2020. If the City Council feels
significant addit ional information is required to proceed, it can direct staff to gather that
information and return at a later date. This would delay program initiation until 2021.
4. The City Council could elect not to proceed with Community Choice Energy at this time. Not
developing a CCE program would eliminate financial risk exposure and would free staff time
to pursue other sustainability initiatives. However, not having a CCE program would
substantially constrain staff’s ability to achieve the City’s greenhouse gas em issions and
economic development objectives.
Attachments:
a - Draft CCE Technical Study
b - Draft CCE Implementing Ordinance
c - Draft Joint Exercise of Power Agreement
d - Draft JPA Resolution
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1
August 28, 2018
City of San Luis Obispo
Draft CCE Technical Study
Prepared by:
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CONTENTS
1 EXECUTIVE SUMMARY ............................................................................................. 3
2 INTRODUCTION ....................................................................................................... 4
3 PROSPECTIVE CCE MEMBER COMMUNITIES............................................................ 5
4 INDICATIVE POWER SUPPLY PORTFOLIO SCENARIOS ............................................ 11
5 FINDINGS AND CONCLUSIONS ............................................................................... 16
6 FINANCIAL PROJECTIONS ....................................................................................... 18
7 CCE RISK ANALYSIS ................................................................................................ 24
APPENDIX A: KEY ASSUMPTIONS.................................................................................. 25
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1 Executive Summary
This study evaluates the feasibility of implementing a Community Choice Energy (CCE, also
referred to as Community Choice Aggregation, or CCA) program in three groupings of the Cities
of San Luis Obispo, Morro Bay, Paso Robles, and Grover Beach. For each city participation
scenario, the study evaluates three power supply options for a total of nine scenarios. The
power supply scenarios are illustrative of potential supply options and should not be considered
prescriptive. They vary the amount of California Renewable Portfolio Standard (RPS) compliant
power in the CCE’s portfolio while maintaining a 100% greenhouse-gas (GHG) free and non-
nuclear power supply in all scenarios.
TEA concludes that under base-case market and regulatory conditions, all nine scenarios would
be feasible while offering customers a rate-discount relative to PG&E. Table ES1 shows
cumulative net revenues in the third year1 of operations as a total and as a percent of annual
operating expenses. These scenarios assume the CCE offers a 3% rate discount relative to PG&E,
which is the average discount currently being offered by operating CCE programs.
Table ES1: Cumulative net revenues in the third year of operations as a total and a percent of
annual operating expenses.
City Participation Scenario Power Supply Scenario
RPS-Compliant,
100% GHG-Free
50% RPS, 100%
GHG-Free
75% RPS, 100%
GHG-Free
San Luis Obispo $.9.9 million
63% of op. exp
$9.1 million
57% of op. exp
$7.6 million
47% of op. exp
San Luis Obispo and Morro Bay $12.3 million
68% of op. exp
$11.3 million
61% of op. exp
$9.7 million
51% of op. exp
San Luis Obispo, Morro Bay, Paso Roble,
and Grover Beach*
$23.9 million
80% of op. exp
$22.4 million
74% of op. exp
$20.1 million
64% of op. exp
* Paso Robles and Grover Beach are not joining the potential CCE in 2020, but may join in 2021. TEA modeled these
cities’ loads ramping up in 2021 in the 4-city scenario, which impacts 3rd year cumulative net revenues as a share of
annual revenue requirement.
Generating cumulative net revenues at the levels shown is an indication that adequate funds
should be available for the CCE to meet critical financial needs such as:
1 In these scenarios, net revenues are positive in all operating years modeled. Third year
cumulative net revenues are presented because it reflects a time point after which the CCE has
paid off its startup loan and phased in all loads.
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• Self-funding working capital requirements;
• Establishing a rate stabilization fund;
• Demonstrating the creditworthiness needed to enter into long-term contracts;
• Investing in local programs to meet the long-term goals of the CCE.
TEA also conducted a sensitivity analysis in which these scenarios were tested under less
favorable market and regulatory conditions referred to as the alternative prices scenario. In that
scenario, TEA assumed 75th percentile energy market prices (an approximately $5.5 per MWh
increase above current forward prices), a 40% increase in the Power Charge Indifference
Adjustment (PCIA) rate, and lower than expected generation rates for PG&E.2 Under these
conditions, all three city grouping scenarios resulted in negative net revenues year-over-year
without a 0%-2% rate premium over PG&E. Even higher rate premiums would be required to
generate a similar level of cumulative net revenues to what is shown in the base case scenario.
Of the three city-grouping scenarios, the 4-city CCE scenario was the most resilient to the
adverse market conditions, which is consistent with the greater economies of scale provided by
a program with more customers.
It is important to note that the PCIA Rulemaking Proceeding R.17-06-026 is currently underway.
The final outcome of this proceeding is expected on September 13th, but could be delayed. TEA
has attempted to analyze the possible range of outcomes that may result from this proceeding.
While this study ultimately concludes the CCE would be feasible under most market and
regulatory conditions, these findings are sensitive to changes in market and regulatory
conditions. As such, it will be critical to continually re-evaluate program feasibility throughout
the implementation process.
TEA advises SLO to view the results of this study as supportive of continuing to move forward
with CCE development, including preparation of an Implementation Plan . However, CCE
viability should continue to be assessed on an ongoing basis at each critical step.
2 Introduction
On December 12, 2017, the City of San Luis Obispo City Council directed staff to “pursue forming
a new CCE in conjunction with other interested jurisdictions in San Luis Obispo County and/or in
PG&E territory of Santa Barbara County.” On April 24, 2018, the City of Morro Bay City Council
expressed formal interest in participating in the creation of a new CCE program. Other
jurisdictions, most notably the Cities of Paso Robles and Grover Beach, provided access to their
data to understand the potential of joining a CCE program in the future.
2 The PCIA is an exit fee charged by investor-owned utilities (IOUs) to customers that switch to
another provider of electricity generation service through direct access or community choice
energy programs. The fee is designed to cover above-market costs from contracts that the
utilities entered into but no longer need and cannot sell in the market for the price they paid.
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To support the potential for a regional CCE program over time, the preferred governance
structure is the development of a new Joint Powers Authority similar to the operational and
governance approach of many currently operational CCE programs in California.
The purpose of this analysis is to assess the potential benefits and risks associated with forming
a CCE program under a few illustrative scenarios considering different configurations of
community participation and power supply portfolios. It is important to note that the
prospective scenarios evaluated in this study do not obligate an eventual CCE program to
implement a particular scenario outlined in this study. Rather, the scenarios evaluated are
intended to demonstrate program viability under a range of options and reasonable outcomes.
3 Prospective CCE Member Communities
Three alternative levels of community participation were evaluated in this study:
• Scenario 1: City of San Luis Obispo only
• Scenario 2: Cities of San Luis Obispo and Morro Bay
• Scenario 3: Cities of San Luis Obispo, Morro Bay, Paso Robles and Grover Beach
In Scenario 3, we model the customers in the Cities of Paso Robles and Grover Beach being
migrated in 2021, while customers from the Cities of San Luis Obispo and Morro Bay ramp up in
2020.
3.1 Number of Customers and Retail Load Forecast
To create a load forecast for each scenario described above, Item 16 load data provided by
PG&E for each city was aggregated by customer type by first shifting the monthly billing data
from billing cycles to calendar months. Next, TEA applied PG&E load profiles for each customer
class. The resulting hourly historical data set was summed to monthly values and then smoothed
to account for weather effects. Growth rates were applied to each customer class using
customer class growth forecasts assumed in the California Energy Commission’s California
Demand Forecast for 2018 – 20303. Total number of customers and annual load for each
scenario are shown in Table 1. Figure 1 summarizes monthly energy and peak demands for each
load scenario.
3 https://efiling.energy.ca.gov/getdocument.aspx?tn=223244
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Table 1a: CCE Scenario 1 Load Forecast: City of San Luis Obispo Only
Table 1b: CCE Scenario 2 Load Forecast: Cities of San Luis Obispo and Morro Bay
2016/17
Rate Class 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Avg # of Accts
Residential 63,255 62,877 62,806 62,591 62,854 62,739 62,704 62,681 62,659 62,636 16,730
Low Income Res 12,729 12,652 12,637 12,595 12,649 12,624 12,618 12,614 12,610 12,605 2,463
Agriculture 111 110 110 110 110 109 109 109 108 108 10
Small Commercial 59,053 59,350 59,907 60,343 61,209 61,694 62,297 62,896 63,495 64,094 3,628
Med Commercial 50,754 51,015 51,495 51,870 52,614 53,028 53,548 54,062 54,577 55,091 293
Lg Commercial 58,552 58,846 59,397 59,836 60,689 61,178 61,776 62,372 62,968 63,564 127
Industrial - - - - - - - - - - -
Street Lighting 653 651 652 653 657 658 659 661 663 664 161
Total Retail Sales 245,107 245,501 247,005 247,998 250,781 252,030 253,713 255,396 257,079 258,763 23,411
Total Wholesale Requirements 257,362 257,776 259,355 260,398 263,320 264,631 266,398 268,166 269,933 271,701
Annual Load Forecast (MWh)
2016/17
Rate Class 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Avg # of Accts
Residential 81,336 80,857 80,766 80,488 80,819 80,671 80,625 80,593 80,561 80,529 21,712
Low Income Res 17,293 17,190 17,170 17,113 17,185 17,150 17,142 17,136 17,129 17,123 3,306
Agriculture 132 131 131 130 130 130 130 129 129 129 13
Small Commercial 71,139 71,497 72,168 72,691 73,735 74,320 75,046 75,768 76,489 77,211 4,401
Med Commercial 54,295 54,574 55,088 55,488 56,285 56,727 57,283 57,834 58,384 58,935 329
Lg Commercial 64,850 65,176 65,787 66,273 67,217 67,758 68,420 69,080 69,739 70,399 150
Industrial - - - - - - - - - - -
Street Lighting 821 818 820 820 824 826 827 829 831 833 194
Total Retail Sales 289,866 290,243 291,929 293,004 296,196 297,582 299,474 301,369 303,263 305,158 30,105
Total Wholesale Requirements 304,359 304,755 306,526 307,654 311,005 312,461 314,448 316,437 318,427 320,416
Annual Load Forecast (MWh)
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Table 1c: CCE Scenario 3 Load Forecast: Cities of San Luis Obispo, Morro Bay, Paso Robles, and Grover Beach 4
4 Note that the loads in 2020 are only for the Cities and San Luis Obispo and Morro Bay because the Cities of Paso Robles and Grover Beach are modeled as
joining the CCE in 2021 in this scenario.
2016/17
Rate Class 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Avg # of Accts
Residential 81,336 148,354 148,175 147,697 148,244 147,973 147,880 147,811 147,742 147,672 35,088
Low Income Res 17,293 38,488 38,441 38,321 38,463 38,388 38,366 38,349 38,331 38,313 7,617
Agriculture 132 1,424 1,421 1,417 1,416 1,411 1,408 1,405 1,402 1,399 41
Small Commercial 71,139 117,192 118,289 119,165 120,842 121,807 122,994 124,172 125,351 126,529 7,224
Med Commercial 54,295 108,169 109,184 109,989 111,560 112,430 113,536 114,626 115,715 116,805 379
Lg Commercial 64,850 98,080 98,999 99,730 101,148 101,961 102,957 103,948 104,939 105,930 231
Industrial - - - - - - - - - - -
Street Lighting 821 1,959 1,962 1,961 1,972 1,974 1,978 1,982 1,986 1,991 278
Total Retail Sales 289,866 513,667 516,469 518,280 523,646 525,943 529,120 532,292 535,465 538,638 50,858
Total Wholesale Requirements 304,359 539,351 542,293 544,194 549,828 552,240 555,576 558,907 562,238 565,570
Annual Load Forecast (MWh)
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Figure 1a: City of San Luis Obispo Monthly Energy and Peak Demand
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMonthly Load (MWh)Scenario 1 -City of San Luis Obispo Only
Residential Low Income Res Agriculture Small Commercial
Med Commercial Lg Commercial Industrial Street Lighting
0
20
40
60
80
100
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecNon-Coindient Peak (MW)Scenario 1 -City of San Luis Obispo Only
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Figure 1b: City of San Luis Obispo and Morro Bay Monthly Energy and Peak Demand
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMonthly Load (MWh)Scenario 2 -Cities of San Luis Obispo and Morro Bay
Residential Low Income Res Agriculture Small Commercial
Med Commercial Lg Commercial Industrial Street Lighting
0
20
40
60
80
100
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecNon-Coincident Peak (MW)Scenario 2 -Cities of San Luis Obispo and Morro Bay
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Figure 1c: City of San Luis Obispo, Morro Bay, Grover Beach, & Paso Robles Monthly Energy
and Peak Demand
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMonthly Load (MWh)Scenario 3 -Cities of San Luis Obispo, Morro Bay, Paso Robles and Grover Beach
Residential Low Income Res Agriculture Small Commercial
Med Commercial Lg Commercial Industrial Street Lighting
0
20
40
60
80
100
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecNon-Coincident Peak (MW)Scenario 3 -Cities of San Luis Obispo, Morro Bay, Paso Robles and Grover Beach
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4 Indicative Power Supply Portfolio Scenarios
Three indicative supply scenarios were created to assess the viability of a CCE program.
• Supply Scenario 1: Compliance with California Renewable Portfolio Standard (33% RPS
in 2020 increasing to 50% RPS requirement in 2030).
• Supply Scenario 2: Constant 50% renewable energy portfolio content throughout the
study period.
• Supply Scenario 3: Constant 75% renewable energy portfolio content throughout the
study period.
This study presumes that the new CCE would want to meet, and ideally exceed, the renewable
and GHG-free generation component of the PG&E portfolio. However, it is difficult to estimate
PG&E’s future renewable energy and GHG-free content given uncertainty in how CCE load
migration and retirement of Diablo Canyon generation will impact PG&E’s future renewable
procurement and overall GHG-free content.
To address this uncertainty, a range of scenarios were evaluated to test financial viability under
a likely range of future outcomes that may be implemented to meet CCE program goals, as well
as to ensure that a new CCE has a renewable and GHG-free portfolio content equal to, or
greater than, that of PG&E. To meet this objective, TEA also included procurement of
incremental carbon-free supply in excess of renewable energy to achieve a projected overall
100% GHG-free emissions level in each program year. The scenarios also assume that the CCE
will not procure nuclear power as part of its clean power portfolio.
Discussion of PG&E’s future portfolio is discussed in greater detail in Section 4.1.
It is important to note that the prospective supply scenarios evaluated in this study do not
obligate an eventual CCE to implement a particular scenario outlined in this study. Rather, the
scenarios evaluated are intended to demonstrate program viability under a range of reasonable
outcomes.
4.1 Portfolio Composition
4.1.1 CCE Resource Alternatives
The following supply sources were considered in the analysis:
• Portfolio Content Category 1 (“Bucket 1”) Renewable Energy : renewable energy
produced by generating resources located inside a California Balancing Authority Area
or that is directly delivered to a California Balancing Authority Area
• Portfolio Content Category 2 (“Bucket 2”) Renewable Energy : renewable energy
produced by generating resources located outside the state of California that is “stored
and shaped” prior to redelivery to a California Balancing Authority Area.
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• Carbon Free Energy: GHG energy supply, typically large hydroelectric generation, that
does not meet the renewable eligibility requirements of California’s RPS program, which
caps RPS-eligible hydroelectric generation at 30 MW.
4.1.2 PG&E Power Content Label
Table 2 shows PG&E’s proportionate use of various power sources during the two most recent
historical years – 2015 and 2016 - for which data Power Content Label data is available.
Table 2: PG&E 2015 and 2016 Power Content Labels5
Key takeaways from this data:
• Eligible renewable generation supplied 30% and 33%, respectively, of PG&E’s energy
requirements in 2015 and 2016;
• GHG-free generation supplied 59% and 69%, respectively, of PG&E’s total energy
requirements in 2015 and 2016.
PG&E’s 2017 Power Content Label will be published in the fall of 2018, but PG&E has publically
stated that its 2017 energy requirements were sourced 33% from eligible renewable generation
and approximately 79% from GHG free generation6, with 25% of this total coming from nuclear
power.
The challenge for this study is forecasting future PG&E energy requirements met by eligible
renewables and GHG-free generation. Forecasting PG&E’s future portfolio content requires
adjustments for load migration to CCEs, the shutdown of Diablo Canyon in 2024-2025 and
5 https://www.energy.ca.gov/pcl/labels/2016_labels/Pacific_Gas__and__Electric.pdf;
https://www.energy.ca.gov/pcl/labels/2015_labels/Pacific_G as_and_Electric_(PGandE).pdf;.
6 http://www.pgecurrents.com/2018/02/20/pge-clean-energy-deliveries-already-meet-future-goals/
Energy Resources 2015
PG&E Power Mix
2016
PG&E Power Mix
2016
California Power Mix
Eligible Renewable
Biomass & biowaste
Geothermal
Eligible hydroelectric
Solar
Wind
30%
4%
5%
1%
11%
8%
33%
4%
5%
3%
13%
8%
25%
2%
4%
2%
8%
9%
Coal 0% 0% 4%
Large Hydroelectric 6% 12% 10%
Natural Gas 25% 17% 37%
Nuclear 23% 24% 9%
Other 0% 0% 0%
Unspecified sources of
power
17% 14% 15%
Total 100% 100% 100%
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potential variability in hydroelectric generation. Each of these adjustments is described in
further detail below.
4.1.2.1 CCE Load Migration (2019-2020)
Relative to 2017 data , PG&E’s load is expected to decrease by roughly 36% in future years
because of load migration to CCEs. Five new CCEs have, or are expected to, launch in 2018. The
most notable of these new CCEs are East Bay Community Energy, San Jose Clean Energy,
Monterey Bay Community Power, and the addition of Contra Costa County to Marin Clean
Energy. The projected amount of CCE load migration is taken from the CEC’s California Demand
Forecast for 2018 – 2030.
4.1.2.2 Forecasting PG&E Power Content (2020-2030)
There are three components to PG&E’s portfolio that need to be considered to forecast future
portfolio content: nuclear, hydro and renewables.
• Nuclear: Historically, Diablo Canyon has met between 23% - 24% of PG&E’s demand in
the last two years (see Power Content Labels for 2015 and 2016 respectively).
Accounting for departing load, and assuming Diablo Canyon will continue to generate
around its capacity over the remainder of its life, it could deliver over 40% of PG&E’s
needs between 2020 and 2024. Even if PG&E did not replace Diablo Canyon with
preferred resources (an unlikely scenario), expected CCE load migration will more than
offset the loss of Diablo Canyon in the second half of the evaluation period.
• Hydro: 2016 was celebrated at the time as a “wet” water year because it was
significantly better than the previous 3 years that were critical or drought years;
however, 2016 was actually a below-normal/dry water year. In contrast, 2017 was
classified as “wet” according to the California Department of Water Resources report.
Strong hydroelectric generation in 2017 helps explain PG&E’s reported 10% increase in
GHG-free power in 2017 over 2016. It also suggests that 2016 could be more the norm
than the high. Assuming 2015 hydro generation from 2020-2029 (a critical water year),
hydro would supply over 10% of PG&E’s annual energy requirements during that time
due to departing load. Assuming 2016 hydro generation from 2020-2029, hydro would
supply over 20% of PG&E’s demand during that period. Of these, 2016 appears to be
closer to the mean as well as the more conservative assumption for evaluation purposes
in this study.
• Renewables: PG&E’s existing renewable portfolio (based on deliveries in 2017) is large
enough to exceed 50% of their total power needs starting in 2019 due to departing load.
However, PG&E may continue to procure at least some RPS-eligible resources and
exceed the requirements.
Accounting for all these factors, it is highly probable that PG&E will be able to serve close to
100% of the energy requirements of bundled customers with GHG-free resources from 2020-
2025. After the retirement of Diablo, the share of GHG-free power may drop as low as 70% in
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the most critical water years and would likely be between 85% and 90% in typical years,
assuming PG&E acquired no preferred resources to replace Diablo Canyon, which seems
unlikely.
4.1.3 CCE Portfolio Assumptions
To be conservative, this study assumes all CCE power supply portfolios will be comprised of
100% GHG-free, non-nuclear power supply throughout all years of the study period to ensure
the new CCE meets or exceeds the GHG-free content of PG&E’s portfolio. Table 3 summarizes
the portfolios evaluated in this study.
Table 3: CCE Portfolio Assumptions
RPS Target GHG-Free Target
Scenario 1
RPS Compliant: 30% in 2020
ramping up to 50% by 2030 100%
Scenario 2 50% 100%
Scenario 3 75% 100%
4.1.4 Renewable Energy and Storage Procurement Requirements
As the CCE builds its portfolio, it will need to also plan to meet several mandatory requirements,
which are described below.
• Renewable Portfolio Standard (RPS): current RPS requirements are mandated by
Senate Bill 2 (1X) passed in 2011. This bill mandated RPS procurement requirements
within multi-year compliance periods. During the current 10-year forecast period, a
minimum of 75% of required RPS procurement must be sourced from PCC 1 resources
and a maximum of 10% can be sourced from PCC 3 resources. The difference can be
sourced from PCC 2. For purposes of this analysis, no PCC3 resources were included.
• SB 350: In October 2015, Senate Bill 350 (SB 350) was signed into law establishing new
clean energy, clean air and greenhouse gas reduction goals for 2030 and beyond. SB 350
established California’s 2030 GHG reduction target of 40% below 1990 levels. To
accomplish this, SB 350 set ambitious targets for renewable energy and energy
efficiency. In particular, SB 350 increases California’s RPS goal from 33% by 2020 to 50%
by 2030. The corresponding CPUC regulations require that transitions from the previous
mandate will be implemented gradually with straight line increases during each year of
the compliance regime. Additionally, SB 350 established that CCEs must have at least
65% of their RPS procurement under contracts of 10 years or longer beginning in 2021.
Table 4 summarizes the CCE’s annual RPS requirements, as well as the amount of
renewable energy that will need to be procured under a 10-year or longer agreement.
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Table 4: Annual RPS Compliance Requirements 7,8
7 In Scenario 3, RPS requirements in 2020 are only for the Cities and San Luis Obispo and Morro Bay because the Cities of Paso Robles and Grover
Beach are modeled as joining the CCE in 2021.
8 Long-term RPS refers to contracts for renewable energy of 10-years or longer that contribute to the CCE’s long-term procurement obligation
defined in SB350.
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Annual RPS Requirements 33.0% 34.8% 36.5% 38.3% 40.0% 41.7% 43.3% 45.0% 46.7% 48.3%
Scenario 1 - City of San Luis Obispo Only:
Total RPS Requirements (MWh)80,885 85,434 90,157 94,983 100,312 105,096 109,858 114,928 120,056 124,982
Total RPS Requirements (aMW)9.2 9.8 10.3 10.8 11.5 12.0 12.5 13.1 13.7 14.3
Long-Term RPS Requirement (MWh)- 55,532 58,602 61,739 65,203 68,313 71,407 74,703 78,036 81,239
Long-Term RPS Requirement (aMW)- 6.3 6.7 7.0 7.4 7.8 8.2 8.5 8.9 9.3
Scenario 2 - Cities of San Luis Obispo and Morro Bay:
Total RPS Requirements (MWh)95,656 101,005 106,554 112,220 118,478 124,092 129,672 135,616 141,624 147,391
Total RPS Requirements (aMW)10.9 11.5 12.2 12.8 13.5 14.2 14.8 15.5 16.2 16.8
Long-Term RPS Requirement (MWh)- 65,653 69,260 72,943 77,011 80,660 84,287 88,150 92,056 95,804
Long-Term RPS Requirement (aMW)- 7.5 7.9 8.3 8.8 9.2 9.6 10.1 10.5 10.9
Scenario 3 - Cities of San Luis Obispo, Morro Bay,
Paso Robles and Grover Beach:
Total RPS Requirements (MWh)95,656 178,756 188,511 198,501 209,458 219,318 229,109 239,532 250,062 260,162
Total RPS Requirements (aMW)10.9 20.4 21.5 22.7 23.9 25.0 26.2 27.3 28.5 29.7
Long-Term RPS Requirement (MWh)- 116,192 122,532 129,026 136,148 142,557 148,921 155,696 162,540 169,105
Long-Term RPS Requirement (aMW)- 13.3 14.0 14.7 15.5 16.3 17.0 17.8 18.6 19.3
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• AB 2514: The California Energy Storage Bill, AB 2514, was signed into law in September
2010 and established energy storage targets for IOUs, CCEs, and other LSEs in
September 2013. The applicable CPUC decision established an energy storage
procurement target for CCEs and other LSEs equal to 1 percent of their forecasted 2020
peak load. The decision requires that contracts be in place by 2020 and projects be
installed by 2024. Beginning on January 1, 2018, and every two years thereafter, LSEs
must file an advice letter demonstrating progress toward meeting this target and a
description of the methodologies for insuring projects are cost effective. Depending on
the particular load scenario, the prospective CCE’s storage requirement will be between
0.5 and 1.0 MW.
5 Findings and Conclusions
The major findings of this study are summarized in Table 5 below.
Table 5a: City of San Luis Obispo Only CCE Program
Metric Supply Scenario 1 Supply Scenario 2 Supply Scenario 3
RPS Percentage RPS-Compliant 50% 75%
Annual GHG emissions (MT CO2e) 0 0 0
Average Rate Savings: 3% 3% 3%
Residential Customers:
Average rate savings in 2020
Average 5-yr rate savings
$1.10/month
$1.15/month
$1.10/month
$1.15/month
$1.10/month
$1.15/month
Commercial Customers:
Average rate savings in 2020
Average 5-yr rate savings
$50.00/month
$54.88/month
$50.00/month
$54.88/month
$50.00/month
$54.88/month
Cumulative net revenues at end of year 3:
Total $
% of Annual Op. Expenses
$.9.9 million
63% of op. exp
$9.1 million
57% of op. exp
$7.6 million
47% of op. exp
Table 5b: Two-City CCE Program (San Luis Obispo and Morro Bay)
Metric Supply Scenario 1 Supply Scenario 2 Supply Scenario 3
RPS Percentage RPS-Compliant 50% 75%
Annual GHG emissions (MT CO2e) 0 0 0
Average Rate Savings 3% 3% 3%
Residential Customers:
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Average rate savings in 2020
Average 5-yr rate savings
$1.09/month
$1.15/month
$1.09/month
$1.15/month
$1.09/month
$1.15/month
Commercial Customers:
Average rate savings in 2020
Average 5-yr rate savings
$47.65/month
$52.30/month
$47.65/month
$52.30/month
$47.65/month
$52.30/month
Cumulative net revenues at end of year 3:
Total $
% of Annual Op. Expenses
$12.3 million
68% of op. exp
$11.3 million
61% of op. exp
$9.7 million
51% of op. exp
Table 5c: Four-City CCE (San Luis Obispo, Morro Bay, Paso Robles and Grover Beach)
Metric Supply Scenario 1 Supply Scenario 2 Supply Scenario 3
RPS Percentage RPS-Compliant 50% 75%
Annual GHG emissions (MT CO2e) 0 0 0
Average Rate Savings: 2020
Average Rate Savings: 5-yr
3%
3%
3%
3%
3%
3%
Residential Customers:
Average rate savings in 2020
Average 5-yr rate savings
$1.09/month
$1.28/month
$1.09/month
$1.28/month
$1.09/month
$1.28/month
Commercial Customers:
Average rate savings in 2020
Average 5-yr rate savings
$47.65/month
$62.65/month
$47.65/month
$62.65/month
$47.65/month
$62.65/month
Cumulative net revenues at end of year 3:
Total $
% of Annual Op. Expenses
$23.9 million
80% of op. exp
$22.4 million
74% of op. exp
$20.1 million
64% of op. exp
In all nine scenarios, net revenues are positive in all modeled years while offering customers a
3% rate discount relative to PG&E, which is the average discount currently being offered by
operating CCE programs. Moreover, all scenarios show that the CCE would be able to
accumulate net revenues in excess of 150 days of expenses over three years of operations under
these scenarios. Based on these findings, TEA concludes that under base-case market and
regulatory conditions, all nine scenarios would be feasible.
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6 Financial Projections
A detailed summary of key assumptions is provided in Appendix A. Below are a few key assumptions:
• January 2020 launch for customers in the Cities of San Luis Obispo and Morro Bay, and January 2021 launch for customers in the Cities of Paso
Robles and Grover Beach
• Customer opt-out rate of 10%
• CCE electric generation rates are assumed to be set 3% below PG&E, inclusive/net of PCIA exit and franchise fees.
• The PCIA charge reflects the existing PCIA rate setting structure using the market-price benchmark mechanism described in both the
Administrative Law Judges’ Proposed Decision in the PCIA Rulemaking Proceeding and the Alternative Proposed Decision.
6.1 Projected Results
Table 6a: Financial Projections for City of San Luis Obispo assuming Minimum RPS Compliance
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 12,051,583$ 12,943,149$ 13,458,921$ 13,954,627$ 14,555,244$ 15,079,528$ 15,579,292$ 16,114,000$ 16,674,750$ 17,239,420$
Portfolio & Data Management 625,906$ 644,683$ 664,023$ 683,944$ 704,462$ 725,596$ 747,364$ 769,785$ 792,879$ 816,665$
General and Administrative 1,042,628$ 1,150,686$ 1,204,491$ 1,254,843$ 1,319,580$ 1,372,791$ 1,421,860$ 1,475,262$ 1,531,706$ 1,588,011$
Cost of Credit for Procurement 231,626$ 231,999$ 233,420$ 234,358$ 236,988$ -$ -$ -$ -$ -$
PG&E Billing Services 53,121$ 53,652$ 54,189$ 54,731$ 55,278$ 55,831$ 56,389$ 56,953$ 57,523$ 58,098$
Startup Loan Repayment 697,000$ 550,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 14,701,864$ 15,574,169$ 15,615,044$ 16,182,504$ 16,871,553$ 17,233,747$ 17,804,905$ 18,416,000$ 19,056,858$ 19,702,195$
Revenues 18,352,836$ 18,596,535$ 19,182,468$ 19,293,856$ 19,701,118$ 20,095,001$ 21,096,339$ 22,212,092$ 23,437,774$ 24,696,996$
Net Revenue
Annual 3,541,185$ 2,911,120$ 3,452,674$ 2,995,936$ 2,711,712$ 2,741,045$ 3,165,235$ 3,663,218$ 4,240,710$ 4,847,062$
Cumulative ($)3,541,185$ 6,452,305$ 9,904,979$ 12,900,915$ 15,612,627$ 18,353,672$ 21,518,907$ 25,182,125$ 29,422,835$ 34,269,897$
Cumulative (% of Tot. Rev. Req.)24% 41% 63% 80% 93% 106% 121% 137% 154% 174%
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Table 6b: Financial Projections for City of San Luis Obispo assuming 50% RPS
Table 6c: Financial Projections for City of San Luis Obispo assuming 75% RPS
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 12,314,092$ 13,188,239$ 13,685,671$ 14,160,472$ 14,739,418$ 15,238,591$ 15,711,010$ 16,216,318$ 16,745,398$ 17,275,932$
Portfolio & Data Management 625,906$ 644,683$ 664,023$ 683,944$ 704,462$ 725,596$ 747,364$ 769,785$ 792,879$ 816,665$
General and Administrative 1,080,129$ 1,185,699$ 1,236,884$ 1,284,250$ 1,345,891$ 1,395,514$ 1,440,677$ 1,489,879$ 1,541,798$ 1,593,227$
Cost of Credit for Procurement 231,626$ 231,999$ 233,420$ 234,358$ 236,988$ -$ -$ -$ -$ -$
PG&E Billing Services 53,121$ 53,652$ 54,189$ 54,731$ 55,278$ 55,831$ 56,389$ 56,953$ 57,523$ 58,098$
Startup Loan Repayment 697,000$ 550,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 15,001,874$ 15,854,272$ 15,874,187$ 16,417,754$ 17,082,037$ 17,415,532$ 17,955,440$ 18,532,935$ 19,137,598$ 19,743,923$
Revenues 18,352,836$ 18,596,535$ 19,182,468$ 19,293,856$ 19,701,118$ 20,095,001$ 21,096,339$ 22,212,092$ 23,437,774$ 24,696,996$
Net Revenue
Annual 3,241,174$ 2,631,017$ 3,193,531$ 2,760,685$ 2,501,228$ 2,559,260$ 3,014,700$ 3,546,283$ 4,159,969$ 4,805,334$
Cumulative ($)3,241,174$ 5,872,191$ 9,065,722$ 11,826,407$ 14,327,635$ 16,886,895$ 19,901,594$ 23,447,877$ 27,607,847$ 32,413,181$
Cumulative (% of Tot. Rev. Req.)22% 37% 57% 72% 84% 97% 111% 127% 144% 164%
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 12,700,136$ 13,588,713$ 14,102,493$ 14,592,918$ 15,190,823$ 15,706,421$ 16,195,268$ 16,717,878$ 17,264,869$ 17,812,871$
Portfolio & Data Management 625,906$ 644,683$ 664,023$ 683,944$ 704,462$ 725,596$ 747,364$ 769,785$ 792,879$ 816,665$
General and Administrative 1,135,278$ 1,242,909$ 1,296,429$ 1,346,028$ 1,410,377$ 1,462,347$ 1,509,856$ 1,561,530$ 1,616,009$ 1,669,933$
Cost of Credit for Procurement 231,626$ 231,999$ 233,420$ 234,358$ 236,988$ -$ -$ -$ -$ -$
PG&E Billing Services 53,121$ 53,652$ 54,189$ 54,731$ 55,278$ 55,831$ 56,389$ 56,953$ 57,523$ 58,098$
Startup Loan Repayment 697,000$ 550,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 15,443,067$ 16,311,956$ 16,350,554$ 16,911,979$ 17,597,929$ 17,950,195$ 18,508,877$ 19,106,146$ 19,731,279$ 20,357,567$
Revenues 18,352,836$ 18,596,535$ 19,182,468$ 19,293,856$ 19,701,118$ 20,095,001$ 21,096,339$ 22,212,092$ 23,437,774$ 24,696,996$
Net Revenue
Annual 2,799,982$ 2,173,333$ 2,717,164$ 2,266,461$ 1,985,336$ 2,024,597$ 2,461,262$ 2,973,072$ 3,566,288$ 4,191,690$
Cumulative ($)2,799,982$ 4,973,314$ 7,690,478$ 9,956,939$ 11,942,275$ 13,966,871$ 16,428,134$ 19,401,206$ 22,967,495$ 27,159,185$
Cumulative (% of Tot. Rev. Req.)18% 30% 47% 59% 68% 78% 89% 102% 116% 133%
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Table 6d: Financial Projections for Cities of San Luis Obispo & Morro Bay assuming Minimum RPS Compliance
Table 6e: Financial Projections for Cities of San Luis Obispo & Morro Bay assuming 50% RPS
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 14,039,695$ 15,093,064$ 15,694,712$ 16,271,514$ 16,971,219$ 17,580,921$ 18,160,779$ 18,781,744$ 19,432,229$ 20,087,585$
Portfolio & Data Management 709,199$ 730,475$ 752,390$ 774,961$ 798,210$ 822,157$ 846,821$ 872,226$ 898,393$ 925,344$
General and Administrative 1,228,140$ 1,356,662$ 1,420,007$ 1,479,139$ 1,555,144$ 1,617,587$ 1,675,041$ 1,737,620$ 1,803,647$ 1,869,578$
Cost of Credit for Procurement 273,923$ 274,280$ 275,873$ 276,889$ 279,905$ -$ -$ -$ -$ -$
PG&E Billing Services 68,331$ 69,015$ 69,705$ 70,402$ 71,106$ 71,817$ 72,535$ 73,260$ 73,993$ 74,733$
Startup Loan Repayment 697,000$ 550,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 17,016,290$ 18,073,496$ 18,212,686$ 18,872,905$ 19,675,583$ 20,092,481$ 20,755,176$ 21,464,850$ 22,208,262$ 22,957,241$
Revenues 21,599,097$ 21,877,993$ 22,566,097$ 22,682,240$ 23,152,444$ 23,607,888$ 24,779,429$ 26,085,643$ 27,517,689$ 28,989,458$
Net Revenue
Annual 4,453,601$ 3,673,622$ 4,218,419$ 3,673,648$ 3,338,362$ 3,374,183$ 3,876,020$ 4,464,748$ 5,144,815$ 5,858,801$
Cumulative ($)4,453,601$ 8,127,222$ 12,345,642$ 16,019,290$ 19,357,652$ 22,731,834$ 26,607,855$ 31,072,602$ 36,217,418$ 42,076,218$
Cumulative (% of Tot. Rev. Req.)26% 45% 68% 85% 98% 113% 128% 145% 163% 183%
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 14,350,142$ 15,382,821$ 15,962,702$ 16,514,715$ 17,188,745$ 17,768,733$ 18,316,257$ 18,902,482$ 19,515,568$ 20,130,644$
Portfolio & Data Management 709,199$ 730,475$ 752,390$ 774,961$ 798,210$ 822,157$ 846,821$ 872,226$ 898,393$ 925,344$
General and Administrative 1,272,489$ 1,398,056$ 1,458,292$ 1,513,882$ 1,586,219$ 1,644,417$ 1,697,252$ 1,754,868$ 1,815,553$ 1,875,729$
Cost of Credit for Procurement 273,923$ 274,280$ 275,873$ 276,889$ 279,905$ -$ -$ -$ -$ -$
PG&E Billing Services 68,331$ 69,015$ 69,705$ 70,402$ 71,106$ 71,817$ 72,535$ 73,260$ 73,993$ 74,733$
Startup Loan Repayment 697,000$ 550,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 17,371,086$ 18,404,646$ 18,518,962$ 19,150,848$ 19,924,185$ 20,307,123$ 20,932,865$ 21,602,837$ 22,303,507$ 23,006,450$
Revenues 21,599,097$ 21,877,993$ 22,566,097$ 22,682,240$ 23,152,444$ 23,607,888$ 24,779,429$ 26,085,643$ 27,517,689$ 28,989,458$
Net Revenue
Annual 4,098,805$ 3,342,471$ 3,912,144$ 3,395,705$ 3,089,761$ 3,159,541$ 3,698,332$ 4,326,760$ 5,049,571$ 5,809,591$
Cumulative ($)4,098,805$ 7,441,276$ 11,353,420$ 14,749,125$ 17,838,885$ 20,998,426$ 24,696,758$ 29,023,518$ 34,073,089$ 39,882,680$
Cumulative (% of Tot. Rev. Req.)24% 40% 61% 77% 90% 103% 118% 134% 153% 173%
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Table 6f: Financial Projections for Cities of San Luis Obispo & Morro Bay assuming 75% RPS
Table 6g: Financial Projections for Cities of San Luis Obispo, Morro Ba y, Paso Robles, and Grover Beach assuming Minimum RPS Compliance
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 14,806,681$ 15,856,280$ 16,455,333$ 17,025,640$ 17,721,897$ 18,321,120$ 18,887,864$ 19,494,339$ 20,128,357$ 20,763,851$
Portfolio & Data Management 709,199$ 730,475$ 752,390$ 774,961$ 798,210$ 822,157$ 846,821$ 872,226$ 898,393$ 925,344$
General and Administrative 1,337,709$ 1,465,693$ 1,528,667$ 1,586,871$ 1,662,383$ 1,723,329$ 1,778,910$ 1,839,419$ 1,903,094$ 1,966,187$
Cost of Credit for Procurement 273,923$ 274,280$ 275,873$ 276,889$ 279,905$ -$ -$ -$ -$ -$
PG&E Billing Services 68,331$ 69,015$ 69,705$ 70,402$ 71,106$ 71,817$ 72,535$ 73,260$ 73,993$ 74,733$
Startup Loan Repayment 697,000$ 550,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 17,892,844$ 18,945,742$ 19,081,968$ 19,734,763$ 20,533,501$ 20,938,423$ 21,586,131$ 22,279,245$ 23,003,837$ 23,730,116$
Revenues 21,599,097$ 21,877,993$ 22,566,097$ 22,682,240$ 23,152,444$ 23,607,888$ 24,779,429$ 26,085,643$ 27,517,689$ 28,989,458$
Net Revenue
Annual 3,577,046$ 2,801,375$ 3,349,138$ 2,811,790$ 2,480,444$ 2,528,241$ 3,045,066$ 3,650,352$ 4,349,240$ 5,085,925$
Cumulative ($)3,577,046$ 6,378,421$ 9,727,559$ 12,539,349$ 15,019,793$ 17,548,034$ 20,593,100$ 24,243,453$ 28,592,693$ 33,678,618$
Cumulative (% of Tot. Rev. Req.)20% 34% 51% 64% 73% 84% 95% 109% 124% 142%
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 14,018,186$ 25,692,345$ 26,719,867$ 27,707,315$ 28,905,050$ 29,949,112$ 30,943,800$ 32,005,432$ 33,116,933$ 34,235,972$
Portfolio & Data Management 709,199$ 999,287$ 1,029,266$ 1,060,144$ 1,091,948$ 1,124,707$ 1,158,448$ 1,193,201$ 1,228,997$ 1,265,867$
General and Administrative 608,883$ 1,424,565$ 1,495,038$ 1,560,636$ 1,646,094$ 1,715,388$ 1,778,803$ 1,847,815$ 1,920,704$ 1,993,252$
Cost of Credit for Procurement 273,923$ 485,416$ 488,064$ 489,775$ 494,845$ -$ -$ -$ -$ -$
PG&E Billing Services 68,331$ 117,149$ 118,320$ 119,504$ 120,699$ 121,906$ 123,125$ 124,356$ 125,599$ 126,855$
Startup Loan Repayment 847,000$ 700,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 16,525,523$ 29,418,762$ 29,850,555$ 30,937,374$ 32,258,636$ 32,911,112$ 34,004,176$ 35,170,804$ 36,392,234$ 37,621,947$
Revenues 21,599,097$ 38,728,023$ 39,941,554$ 40,129,417$ 40,937,892$ 41,730,837$ 43,800,579$ 46,101,461$ 48,619,664$ 51,206,014$
Net Revenue
Annual 4,944,367$ 9,077,588$ 9,852,067$ 8,951,987$ 8,434,363$ 8,570,088$ 9,534,386$ 10,654,875$ 11,936,585$ 13,277,749$
Cumulative ($)4,944,367$ 14,021,955$ 23,874,021$ 32,826,008$ 41,260,371$ 49,830,460$ 59,364,845$ 70,019,720$ 81,956,305$ 95,234,055$
Cumulative (% of Tot. Rev. Req.)30% 48% 80% 106% 128% 151% 175% 199% 225% 253%
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Table 6h: Financial Projections for Cities of San Luis Obispo, Morro Bay, Paso Robles, and Grover Beach assuming 50% RPS
Table 6i: Financial Projections for Cities of San Luis Obispo, Morro Bay, Paso Robles, and Grover Beach assuming 75% RPS
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 14,328,632$ 26,205,152$ 27,193,986$ 28,137,501$ 29,289,615$ 30,281,048$ 31,218,552$ 32,218,726$ 33,264,109$ 34,311,988$
Portfolio & Data Management 709,199$ 999,287$ 1,029,266$ 1,060,144$ 1,091,948$ 1,124,707$ 1,158,448$ 1,193,201$ 1,228,997$ 1,265,867$
General and Administrative 639,587$ 1,475,282$ 1,541,929$ 1,603,182$ 1,684,128$ 1,748,217$ 1,805,976$ 1,868,910$ 1,935,260$ 2,000,770$
Cost of Credit for Procurement 273,923$ 485,416$ 488,064$ 489,775$ 494,845$ -$ -$ -$ -$ -$
PG&E Billing Services 68,331$ 117,149$ 118,320$ 119,504$ 120,699$ 121,906$ 123,125$ 124,356$ 125,599$ 126,855$
Startup Loan Repayment 847,000$ 700,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 16,866,673$ 29,982,287$ 30,371,564$ 31,410,105$ 32,681,235$ 33,275,877$ 34,306,101$ 35,405,193$ 36,553,966$ 37,705,481$
Revenues 21,599,097$ 38,728,023$ 39,941,554$ 40,129,417$ 40,937,892$ 41,730,837$ 43,800,579$ 46,101,461$ 48,619,664$ 51,206,014$
Net Revenue
Annual 4,603,217$ 8,514,063$ 9,331,057$ 8,479,255$ 8,011,764$ 8,205,324$ 9,232,461$ 10,420,486$ 11,774,853$ 13,194,216$
Cumulative ($)4,603,217$ 13,117,281$ 22,448,337$ 30,927,593$ 38,939,356$ 47,144,680$ 56,377,141$ 66,797,627$ 78,572,480$ 91,766,696$
Cumulative (% of Tot. Rev. Req.)27% 44% 74% 98% 119% 142% 164% 189% 215% 243%
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Power Supply 14,785,171$ 27,043,072$ 28,065,528$ 29,041,252$ 30,232,177$ 31,257,330$ 32,228,669$ 33,264,284$ 34,346,283$ 35,429,865$
Portfolio & Data Management 709,199$ 999,287$ 1,029,266$ 1,060,144$ 1,091,948$ 1,124,707$ 1,158,448$ 1,193,201$ 1,228,997$ 1,265,867$
General and Administrative 684,739$ 1,558,153$ 1,628,125$ 1,692,564$ 1,777,349$ 1,844,772$ 1,905,878$ 1,972,317$ 2,042,288$ 2,111,330$
Cost of Credit for Procurement 273,923$ 485,416$ 488,064$ 489,775$ 494,845$ -$ -$ -$ -$ -$
PG&E Billing Services 68,331$ 117,149$ 118,320$ 119,504$ 120,699$ 121,906$ 123,125$ 124,356$ 125,599$ 126,855$
Startup Loan Repayment 847,000$ 700,000$ -$ -$ -$ -$ -$ -$ -$ -$
Total Revenue Requirement 17,368,364$ 30,903,078$ 31,329,303$ 32,403,238$ 33,717,018$ 34,348,715$ 35,416,120$ 36,554,158$ 37,743,168$ 38,933,917$
Revenues 21,599,097$ 38,728,023$ 39,941,554$ 40,129,417$ 40,937,892$ 41,730,837$ 43,800,579$ 46,101,461$ 48,619,664$ 51,206,014$
Net Revenue
Annual 4,101,526$ 7,593,272$ 8,373,318$ 7,486,123$ 6,975,981$ 7,132,486$ 8,122,442$ 9,271,521$ 10,585,651$ 11,965,780$
Cumulative ($)4,101,526$ 11,694,798$ 20,068,116$ 27,554,239$ 34,530,220$ 41,662,706$ 49,785,148$ 59,056,668$ 69,642,319$ 81,608,099$
Cumulative (% of Tot. Rev. Req.)24% 38% 64% 85% 102% 121% 141% 162% 185% 210%
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6.2 Sensitivity Analysis
TEA created an alternative price scenario to test the financial viability of the CCE program. The
alternative price scenario modified three key assumptions and was applied to each community
participation scenario assuming a 50% RPS power portfolio. The three variables modified in the
sensitivity scenario are:
1) Market Prices were increased by an average of $5.57/MWh over base-case forward
prices for the study horizon. Based on current market price volatility, there is a 75%
chance that market prices will be lower than those assumed in this alternative scenario
but a 25% chance that actual market prices will be higher.
2) Power Charge Indifference Adjustment (PCIA) rates were increased 40% relative to the
base case. This higher PCIA estimate is representative of the possible impact if the CPUC
adopts the Alternative Proposed Decision in Rulemaking Proceeding R.17-06-026. It is
difficult to assign a probability to this scenario, but it is important to remember that the
Alternative Proposed Decision was proposed by Commissioner Peterman.
3) PG&E Generation Rates were decreased by an average of 10% over the study horizon
relative to the base-case scenario – equivalent to PG&E generation rates increasing at
2% annually from 2019 through the study period. This is in contrast to current rate
forecasts, which show a significant PG&E rate increase in 2020 due to large departing
load. Like the PCIA increase, it is difficult to assign a probability to this decreased
generation rate scenario. However, this scenario is consistent with the assumption
above regarding a larger PCIA, which would offset some of PG&E’s generation costs.
TEA views this alternative price scenario as a plausible outcome that the CCE should be prepared
to address. Results of the alternative price scenario are presented in Table 7 below.
Table 7: Alternative price scenario results for all three community participation scenarios
assuming 50% RPS under two rate discount scenarios
Community
Participation Scenario
Cumulative net revenues at end of year 3:
3% Generation Rate Discount to PG&E 0% Generation Rate Discount to PG&E
Total ($ Million) % of Annual
Expenses
Total ($ Million) % of Annual
Expenses
City of San Luis Obispo ($3.2M) (18%) ($1.0M) (6%)
Cities of San Luis
Obispo and Morro Bay
($3.2M) (16%) ($0.6M) (3%)
Cities of San Luis
Obispo, Morro Bay,
Paso Roble, and
Grover Beach
$0.6M 2% $4.5M 13%
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Under the alternative prices, the 1 and 2-city scenarios result in negative net revenues year-
over-year when maintaining the 3% rate discount relative to PG&E, while the 4-city scenario
presents slightly positive results. If the rate discount is set at zero, only the 4-city scenario yields
positive net revenue, while the 1 and 2-city scenarios require between a 1% and 2% rate
premium over PG&E in order to achieve positive net revenues. However, it’s important to note
that these scenarios do not take into account some mitigating factors such as the CCE’s ability to
make more conservative policy and budgeting decisions than were assumed for this study.
These results demonstrate the need for the potential CCE member communities to continue to
reevaluate market and regulatory conditions throughout the CCE planning and implementation
process. The participating communities will be able to adjust program design if these adverse
conditions begin to develop.
7 CCE Risk Analysis
While there are many benefits to a CCE, there are also risks that need to be identified,
monitored, and mitigated. A detailed risk assessment is beyond the scope of this study, but
there are a few primary risks associated with power supply procurement and legal/regulatory
changes that need to be considered as part of the decision to launch a CCE program.
If the new CCE’s rates become significantly higher than PG&E’s, there is a risk that customers
may revert to PG&E service, which could potentially threaten the CCE’s financial viability. It will
therefore be important for the CCE to follow industry best practices including:
• Financial Reserves – Building financial reserves as a buffer against unexpected cost
increases, as well as to serve as a means of demonstrating creditworthiness for long-
term contracting. A key measure considered in this study is how quickly the new CCE
will build financial reserves to a level equivalent to 150 to 180 days of annual operating
expenses. A financial buffer of this magnitude can help mitigate unexpected changes in
procurement costs, PG&E rates and/or other unexpected cost shocks.
• Risk Management – Implementing an energy risk management program consistent with
industry best practices, including spreading procurement over time, across
counterparties and among different generation technologies, as well as continually
monitoring open positions and the expected cost of the same.
• Qualified Staff – Employing competent and experienced staff and third-party service
providers that can enable a new CCE to quickly launch and implement best practices.
• Regulatory and Legislative Monitoring – Coordinating with Cal-CCE, other CCEs and
other interested parties to understand and influence legislative and regulatory
decisions, as well as actively monitor proceedings.
• Demonstrating Customer and Community Value Beyond Rate Savings – Implementing
customer and community-based programs and having a positive reputation in the
community will help mitigate customer opt-outs as has been demonstrated by other
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CCE programs that have been through periodic cycles of higher rates than PG&E as a
result of fluctuating PCIA charges.
7.1 PCIA Rulemaking
Arguably, the single largest risk currently facing a new CCE is the outcome of the current PCIA
Rulemaking proceeding. A final ruling in this proceeding is not expected until after completion
of this study, sometime in mid/late September. Updates that have material impact on this
report’s current analysis will be provided right away.
To test financial viability under a range of future possible scenarios, TEA has created a sensitivity
scenario that increases the PCIA charge 40% above the base case scenario. The assumed
customer class weighted PCIA charge for both base and stressed scenarios is provided in
Appendix A: Key Assumptions. Prior to submitting its Implementation Plan, TEA also
recommends updating the financial analysis after the final PCIA ruling is available.
7.2 Long-term Contracting
A unique challenge facing all CCEs launching in 2020 is the need to immediately enter into long-
term contracts to satisfy the requirement to procure 65% of renewable supply under a 10-year
or longer contract. While the long-term contract requirement is not unique, having to satisfy
the creditworthiness standards of potential generators without the benefit of accumulating
financial reserves and establishing an operating track record is a unique challenge.
For the purposes of this study, TEA has assumed base PCC1 prices are sufficient to cover the
mid-point of expected long-term renewable contracting costs (see Appendix). However, the
implied REC premium of long-term contracts must be assessed on a case-by-case basis as these
costs can vary widely depending on generation profile and congestion at the point the generator
connects with the CAISO grid. Fortunately, the extended timeline prior to implementation in
2020 gives the prospective CCE time to explore with other CCEs, as well as potential generators,
the requirements for long-term contracting that a new CCE will face. This inquiry will enable the
new CCE to incorporate these requirements into financial and operating plans and policies
established at program launch.
Possible direct and indirect means of addressing long-term contract requirements may include,
but are not limited to:
• Contracting with economically-priced local generators that are likely to be have greater
interest in establishing a mutually beneficial, long-term, relationship with a local CCE;
• Partnering with established CCEs in their procurement activities for a portion of long-
term requirements;
• Being disciplined in executing rate and financial policies to achieve and maintain a
strong liquidity positon and generate the required levels of free cash flow;
• Building a strong relationship with the local community to help ensure commitment to
the CCE program, even during a period when rates may need to be set above PG&E to
meet the procurement goals of the CCE.
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Appendix A: Key Assumptions
• Customer Opt-out rate of 10% for all scenarios
• Startup costs equal $1.25 million for the 1 and 2-city scenarios and $1.55 million for the
4-city scenario, including the $147,000 CPUC bond.
• The $500,000 posting to CAISO needed to satisfy the credit requirements for the CCE to
be a Candidate Congestion Revenue Rights (CRR) Holder is not included at this time, nor
has the revenue associated with CRRs been included. Historically, CRR revenues have
provided $0.50 to $1.50 per MWh.
• Accumulated Net Revenues
o Target by end of 2024 equal to 5-6 months of operating expenses (including
power supply expenses)
o Annual target equal to 8.3 to 10% of projected operating expenses in year 5
• Forward Power Supply Costs ($/MWh)
Table 8: Forward Power Supply Cost Assumptions
Energy (ATC) PCC1 PCC29 CF
2020 $34.16 $17.50 $7.00 $3.00
2021 $37.11 $18.00 $7.25 $3.25
2022 $38.35 $18.50 $7.50 $3.50
2023 $39.54 $19.00 $7.75 $3.75
2024 $40.68 $19.50 $8.00 $4.00
2025 $41.78 $20.00 $8.25 $4.25
2026 $42.87 $20.50 $8.50 $4.50
2027 $43.99 $21.00 $8.75 $4.75
2028 $45.14 $21.50 $9.00 $5.00
2029 $46.32 $22.00 $9.25 $5.25
• Miscellaneous Power Supply Costs
o CAISO: $1.44/MWh
o Distribution losses: 5%
9 Due to the passage of California Assembly Bill 1110, PCC2 purchases are not considered
carbon-free. Accordingly, TEA assumed carbon-free power would need to be purchased in
addition to all PCC2 purchases in order to achieve the CCE goal of zero GHG emissi ons.
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o Portfolio Management and Scheduling Coordination consistent with TEA’s
proposal
• Non-power supply costs
o Internal staffing, overhead and administration: $90,000 per month for the City
of San Luis Obispo only; $109,000 per month for the City of San Luis Obispo and
Morro Bay; and $126,000 for the City of San Luis Obispo, Morro Bay, Paso
Robles, and Grover Beach
o Data management fees: $1.15 per customer per month in 2020, escalating at 3%
per year
o PG&E service fees: $0.21 per customer per month
• PG&E Generation and PCIA Rate Forecast (Load Weighted Average)
Table 9: Forward Power Supply Cost Assumptions
PG&E Gen Rate ($/MWh) PG&E PCIA ($/MWh)
2020 $110.92 $24.71
2021 $112.55 $25.18
2022 $113.74 $25.66
2023 $115.64 $26.15
2024 $117.42 $26.65
2025 $119.23 $27.16
2026 $123.72 $27.67
2027 $128.83 $28.20
2028 $134.29 $28.74
2029 $139.99 $29.29
• Uncollected debt equals 0.3% of revenues based on the historic collection rates at public
utilities throughout California.
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O ______
ORDINANCE NO. _____ (2018 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE IMPLEMENTATION OF A
COMMUNITY CHOICE AGGREGATION PROGRAM
WHEREAS, On December 12, 2017, the City Council directed staff to investigate the
feasibility and formation of a Community Choice Aggregation (CCA) program under the
provisions of the Public Utilities Code section 366.2 (referred to locally as Community C hoice
Energy, or CCE). in order to provide electric service to customers within the City of San Luis
Obispo with the intent of providing local electric service, reduced greenhouse gas emissions, local
renewable power development, competitive electric rates, and the implementation of energy
conservation and other energy programs ; and
WHEREAS, the City of San Luis Obispo commissioned a technical study that indicated a
CCA program serving the City and surrounding communities would provide several benefits,
including:
▪ Providing customers a choice of power providers and power supply options;
▪ Increasing local control and involvement in energy rates and other energy-related
matters;
▪ Providing stable electric rates that are competitive with those provided by the
incumbent utility;
▪ Reducing greenhouse gas emissions arising from electricity use within the City and
surrounding region;
▪ Increasing local renewable generation capacity;
▪ Increasing energy conservation and efficiency projects and programs;
▪ Increasing regional energy self-sufficiency;
▪ Improving the local economy resulting from the implementation of a CCA program
and local renewable and energy efficiency projects over time; and
WHEREAS, the Cities of San Luis Obispo, Morro Bay, formed a Joint Powers Agency
creating the Central Coast Community Energy Authority (“Authority.”) Under the Joint Powers
Agreement, cities and towns within San Luis Obispo County and adjoining Counties may
participate in the Central Coast Community Energy CCA program by adopting the JPA resolution
and ordinance required by Public Utilities Code section 366.2. Cities and towns choosing to
participate in the CCA program will have membership on the Board of Directors of the Authority
as provided in the Joint Powers Agreement; and
WHEREAS, the Authority will enter into Agreements with electric power suppliers and
other service providers, and based upon those Agreements the Authority will be able to provide
power to residents and business at rates that are competitive with those of the incu mbent utility
(“PG&E”). Once the California Public Utilities Commission certifies the Implementation Plan
adopted by the Authority, the Authority will provide service to customers within the City of San
Luis Obispo and the jurisdictions of those cities and Counties that have chosen to participate in the
Central Coast Community Energy CCA program; and
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WHEREAS, under Public Utilities Code section 366.2, customers have the right to opt -
out of a CCA program and continue to receive service from the incumbent ut ility. Customers who
wish to continue to receive service from the incumbent utility will be able to do so at any time;
and
WHEREAS, on September 18 and October 2, the City Council held public hearings on the
topic of CCA at which time interested persons had an opportunity to testify either in support of or
opposition to the implementation of a CCA program serving the City of San Luis Obispo ; and
WHEREAS, this ordinance is exempt from the requirements of the California
Environmental Quality Act (CEQA) pursuant to the CEQA Guidelines, as it is not a “project” as
it has no potential to result in a direct or reasonably foreseeable indirect physical change to the
environment. (14 Cal. Code Regs. § 15378(a)). Further, the ordinance is exempt from CEQA as
there is no possibility that the ordinance or its implementation would have a significant effect on
the environment. (14 Cal. Code Regs. § 15061(b)(3)). The ordinance is also categorically exempt
because it is an action taken by a regulatory agency to assume the maintenance, restoration,
enhancement or protection of the environment. (14 Cal. Code Regs. § 15308).
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo
as follows/or that (whatever action is needed):
SECTION 1. The above recit ations are true and correct and material to this Ordinance.
SECTION 2. Authorization to Implement a Community Choice Aggregation Program.
Based upon the forgoing, and in order to provide business and residents within the City of San
Luis Obispo with a cho ice of power providers and with the benefits described above, the City
Council ordains that it shall implement a community choice aggregation program for their City by
participating as a group with other cities and towns as described above in the Central C oast
Community Energy Authority, as generally described in the Joint Powers Agreement.
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SECTION 3. This Ordinance shall be in full force and effective 30 days after its adoption,
and shall be published and posted as required by law.
INTRODUCED on the ____ day of ____, 2018, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the ____ day of ____, 201 8, on the following vote:
AYES:
NOES:
ABSENT:
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo , California, this ______ day of ______________, _________.
______________________________
Teresa Purrington
City Clerk
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JOINT EXERCISE OF POWER AGREEMENT
RELATING TO AND CREATING CENTRAL COAST COMMUNITY ENERGY
This Joint Exercise of Powers Agreement , effective as of ____________, 2018 is made and
entered into pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500
et seq.) of the California Government Code among the Parties.
RECITALS
A. The Parties share various powers under California law, including , but not limited to, the
power to purchase, supply, and aggregate electricity for themselves and customers within
their jurisdictions.
B. In 2006, the State Legislature adopted AB 32, the Global Warming Solutions Act, which
mandates a reduction in greenhouse gas emis sions in 2020 to 1990 levels. In 2016, the
State Legislature adopted SB 32, which mandates statewide greenhouse gas emissions be
reduced to 40 percent below the 1990 level by 2030. The California Air Resources Board
is promulgating regulations to impleme nt the greenhouse gas reduction targets, which
will require local governments to develop programs to reduce greenhouse gas emissions.
C. The purposes for entering into this Agreement include:
a. Reducing greenhouse gas emissions;
b. Providing electric power to customers at a competitive cost;
c. Carrying out programs to reduce energy consumption;
d. Stimulating and sustaining the local economy by developing local jobs in
renewable energy and energy efficiency; and
e. Promoting long-term electric rate stability and energy security and reliability for
residents through local control of electric generation resources.
D. It is the mission and purpose of this Agreement to build a strong Community Choice
Energy (CCE) program that is locally controlled and delivers greenhouse gas emiss ion
reductions, cost-competitive clean electricity, product choice, price stability, and energy
efficiency.
E. It is the intent of this Agreement to promote the development and use of a wide range of
renewable energy sources and energy efficiency programs, including but not limited to
solar, wind, and biomass energy production. The purchase of renewable power and
greenhouse gas-free energy sources will decrease regional greenhouse gas emissions and
accelerate the State’s transition to clean power resources to the extent feasible.
Implementing a CCE program pursuant to this Agreement also will add increasing levels
of locally generated renewable resources.
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F. The Parties desire to establish a separate public agency, known as Central Coast
Community Energy, a California joint powers authority, or CCCE, under the provisions
of the Joint Exercise of Powers Act of the State of California (Government Code
Section 6500 et seq.) (“Act”) in order to collectively study, promote, develop, conduct,
operate, and manage energy programs.
G. The Parties have each adopted an ordinance electing to implement , through the CCCE, a
common CCE program (also known as a Community Choice Aggregation
(CCA) program) hereinafter called the CCE Program, pursuant to California Public
Utilities Code, sections 331.1(b) and 366.2. The first priority of the CCCE will be the
consideration of those actions necessary to implement the CCE Program.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions
hereinafter set forth, it is agreed by and among the Parties as follows:
ARTICLE 1.
DEFINITIONS AND EXHIBITS
1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings
specified in E xhibit A, unless the context requires otherwise.
1.2 Documents Included. This Agreement consists of this document and the
following exhibits, all of which are hereby incorporated into this Agreement:
Exhibit A: Definitions
Exhibit B: List of the Parties
Exhibit C: Annual Energy Use
Exhibit D: Voting Shares
Exhibit E: Signatures
ARTICLE 2.
FORMATION OF CENTRAL COAST COMMUNITY ENERGY
2.1 Effective Date and Term. This Agreement shall become effective and CCCE
shall exist as a separate public agency on [insert date], or when both the cities of
San Luis Obispo and Morro Bay have executed this Agreement, whichever occurs
later. The CCCE shall provide notice to the Parties of the Effective Date. CCCE
shall continue to exist, and this Agreement shall be effective, until this Agr eement
is terminated in accordance with Section 6.4, subject to the rights of the Parties to
withdraw from CCCE.
2.2 Formation. There is formed, as of the Effective Date, a public agency named
Central Coast Community Energy. Pursuant to Sections 6506 and 6507 of the
Act, CCCE is a public agency separate from the Parties. Pursuant to
Sections 6508.1 of the Act, the debts, liabilities or obligations of CCCE shall not
be debts, liabilities or obligations of the individual Parties unless the governing
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body of a Party agrees in writing to assume any of the debts, liabilities or
obligations of CCCE. A Party who has not agreed to assume an CCCE debt,
liability or obligation shall not be responsible in any way for such debt, liability or
obligation even if a majorit y of the Parties agree to assume the debt, liability or
obligation of CCCE. Notwithstanding Section 7.4 of this Agreement, this
Section 2.2 may not be amended, unless such amendment is approved by the
governing body of each Party.
2.3 Name. CCCE may change its name at any time through adoption of a resolution
of the Board of Directors.
2.4 Purpose. The purpose of this Agreement is to establish an independent public
agency in order to exercise powers common to each Party to establish and operate
a CCE Program that achieves long-term GHG emission reductions by offering
clean, cost effective and price stable electricity to residents, businesses, and
agricultural producers, while carrying out innovative programs to reduce customer
energy use, substantially increase local renewable energy production, and power
the local transportation system. To that end, CCCE will study, promote, develop,
conduct, operate, and manage energy, energy efficiency and conservation, and
other energy-related programs, and to exercise all other powers necessary and
incidental to accomplishing this purpose. Without limiting the generality of the
foregoing, the Parties intend for this Agreement to be used as a contractual
mechanism by which the Parties are authorized to participat e in the CCE
Program, as further described in Section 4.1. The Parties intend other agreements
shall define the terms and conditions associated with the implementation of the
CCE Program and any other energy programs approved by CCCE.
2.5 Membership in CCCE
2.5.1 The initial members of CCCE are the City of San Luis Obispo and the
City of Morro Bay. Additional cities or counties may also become initial
members of CCCE by executing this Agreement and delivering an
executed copy of this Agreement and a copy of the ado pted ordinance
required by Public Utilities Code Section 366.2(c)(12) prior to the
Effective Date.
2.5.2 Any city or county that is not an initial member may request to become a
member of CCCE by submitting a resolution adopted by its City Council
or Board of Supervisors to the Board of CCCE. The Board shall review
the request and shall vote to approve or disapprove the request by
resolution. The Board may establish conditions, including, but not
limited, to financial conditions, under which the city or county may
become a member of CCCE. The Board shall notify the existing members
of CCCE of that request and the date the request will be on the Board’s
meeting agenda for action. The date set for Board action shall be at least
forty-five (45) days after the date the notice is mailed to the members. If
the request is approved by a two-thirds vote of the entire Board, then the
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city or county shall become a member of CCCE under the terms and
conditions set forth by the Board and upon the adoption of an ordinance
required by Public Utilities Code, section 366.2(c)(12) and the approval
and execution of this Agreement by the city or county.
2.6 Powers. CCCE shall have all powers common to the Parties and such additional
powers accorded to it by law. CCCE is authorized, in its own name, to exercise
all powers and do all acts necessary and proper to carry out the provisions of this
Agreement and fulfill its purposes, including, but not limited to, each of the
following powers, subject to the voting requirements set forth in Section 3.8:
2.6.1 Make and enter into contracts;
2.6.2 Employ agents and employees, including but not limited to an Executive
Officer and General Counsel;
2.6.3 Acquire property by eminent domain, or otherwise, except as limited
under Section 6508 of the Act, and to hold or dispose of any property;
2.6.4 Lease any property;
2.6.5 Sue and be sued in its own name;
2.6.6 Incur debts, liabilities, and obligations, including but not limited to loans
from private lending sources pursuant to its temporary borrowing powers
such as Government Code, section 53850 et seq. or any legal authority
under the Act or other laws;
2.6.7 Form other entities if necessary, to carry out energy supply and energy
conservation programs or conduct other programs or activities within the
powers of CCCE;
2.6.8 Issue revenue bonds and other forms of indebtedness;
2.6.9 Apply for, accept, and receive all licenses, permits, grants, loans or other
assistance from any federal, state, or local public agency;
2.6.10 Submit documentation and notices, register, and comply with orders,
tariffs and agreements for the establishment and implementation of the
CCE Program and other energy programs;
2.6.11 Adopt policies, rules and regulat ions governing the operation of CCCE ;
2.6.12 Make and enter into service agreements relating to the provision of
services necessary to plan, implement, operate and administer the CCE
Program and other energy programs;
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2.6.13 Designate another entity authorized to be a community choice aggregator
to act as the community choice energy aggregator on behalf of CCCE.
2.7 Limitation on Powers. As required by Government Code, section 6509, the
power of CCCE is subject to the restrictions upon the manner of exercising power
possessed by City of San Luis Obispo.
2.8 Compliance with Local Zoning and Building Laws . Notwithstanding any other
provisio ns of this Agreement or state law, any facilities, buildings or structures
located, constructed or caused to be constructed by CCCE within the territory of
CCCE shall comply with the General Plan, zoning and building laws of the local
jurisdiction within which the facilities are constructed .
ARTICLE 3.
GOVERNANCE AND INTERNAL ORGANIZATION
3.1 Board of Directors. CCCE shall be governed by a legislative body known as the a
Board of Directors. The initial Board shall consist of two Directors appointed by
the governing body of each of the initial Parties. For example, if the initial Parties
are the City of San Luis Obispo and the City of Morro Bay, the Board shall
consist of four Directors with two Directors appointed by the City Council of San
Luis Obispo and two Directors appointed by the City Council of Morro Bay.
Each Director shall serve at the pleasure of the governing body of the Party who m
appointed such Director, and may be removed as Director by such governing
body at any time. If at any time a vacancy occurs on the Board, then a
replacement shall be appointed to fill the position of the previous Director within
45 days after the date that position becomes vacant. Directors must be members
of the City Council or Board of Supervisors of a Party to this Agreement. Each
Party shall appoint an alternate(s) to serve in the absence of its Director(s).
Alternates may be members of the City Council or Board of Supervisors of the
Party or a staff member of the Party.
If additional cities or counties join CCCE, as provided in Section 2.5.2, each city
or county that becomes a member of CCCE shall be entitled to two Directors who
shall be appointed as set forth above. When the fifth member joins CCCE, the
number of Directors per Party shall be reduced to one Director per Party; and each
Party shall determine which Director shall continue as that Party’s representative
on the Board.
3.2 Quorum. A majority of the appointed Directors shall constitute a quorum, e xcept
that less than a quorum may adjourn from time to time in accordance with law.
3.3 Powers and Functions of the Board. The Board shall exercise the general
governance and legislative powers of CCCE, consistent with this Agreement and
applicable law. The Board shall provide general policy guidance on the CCE
Program and other energy programs. This Agreement delegates contracting
powers and administrative powers and oversight over the operations and activities
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of SLO to the Operations Board as further described in Section 3.5. Board of
Director approval shall be required for any of the following actions in addition to
any other actions specified by this Agreement or required by law:
3.3.1 The issuance of bonds or any other financing even if program revenues are
expected to pay for such financing.
3.3.2 The appointment or termination of the Executive Officer and General
Counsel.
3.3.3 The appointment or removal of officers described in Section 3.10.
3.3.4 Any decision to provide retirement or post-retirement benefits.
3.3.5 The adoption of the annual budget.
3.3.6 The adoption of an ordinance.
3.3.7 The initiation or resolution of claims and litigation where CCCE will be
the plaintiff, petitioner, cross complainant or cross petitioner, or
intervenor; provided, however, that the Executive Officer or General
Counsel, on behalf of CCCE, may intervene in, become a party to, or file
comments with respect to any proceeding pending at the California Public
Utilities Commission, the Federal Energy Regulatory Commission, or any
other administrat ive agency, without approval of the Board as long as such
action is consistent with any adopted Board policies.
3.3.8 The adoption of the Implementation Plan.
3.3.9 The approval of major capital expenditures, excluding power purchases, as
defined by Board resolution.
3.3.10 The setting of rates for power sold by CCCE and the setting of charges for
any other category of service provided by CCCE.
3.3.11 The approval of new members pursuant to Section 2.5.2.
3.3.12 Termination of the CCE Program.
3.4 Executive Officer. The Board of Directors shall appoint an Executive Officer for
CCCE, who shall be responsible for the day-to-day operation and management of
CCCE and the CCE Program. The Executive Officer may be retained under
contract with CCCE, be an employee of CCCE, or be an employee of one of the
Parties. The Executive Officer shall report directly to the Board of Directors and
serve as staff to CCCE. The Executive Officer also shall report to and work with
the Operations Board on those matters within the jurisdiction of the Operations
Board. Except as otherwise set forth in this Agreement, the Executive Officer
may exercise all powers of CCCE, including the power to hire, discipline and
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terminate employees, as well as the power to approve any agreement if the total
amount payable under the agreement is less than $100,000 in any fiscal year, or
such higher amount as established by the Board from time to time, by resolution
of the Board, except the powers specifically set forth in Section 3.3 or those
powers, which by law, must be exercised by the Board of Directors. The
Executive Officer shall be responsible for coordinating the actions of the Board of
Directors and the Operations Board. The Executive Officer shall serve at the
pleasure of the Board of Directors.
3.5 Operations Board. The Operations Board shall consist of the City Manager of
each city Party and the Chief Administrative Office or Chief Executive Officer of
each county Party. Each Party also may appoint an alternate Director to the
Operations Board who shall be a management level employee of the Party. The
Operations Board shall provide direction to the Chief Executive Officer on the
day-to-day operations of CCCE and shall have the authority to approve and take
action on the following matters:
3.5.1 The approval of all contracts and contract amendments except as
provided by Section 3.3.9, including, but not limited to, power purchase
agreements.
3.5.2 The adoption of personnel rules and regulations.
3.5.3 The adoption of administrative rules and regulations except as
provided otherwise by this Agreement.
3.5.4 Any matters referred to the Operations Board by the Board of
Directors for study, review, recommendation or final action.
3.6 Commissions, Boards, and Committees. The Board of Directors may establish
commissions, boards or committees, including, but not limited to, a standing
executive committee and community advisory committee, as the Board deems
appropriate, to advise and assist the Board in carrying out its authority and
functions under this Agreement and may delegate authority to such commission,
board or committee as set forth in a Board resolution. Such delegation may be
modified, amended or revoked at any time as the Board may deem appropriate.
The Board may establish rules, regulatio ns, policies, bylaws or procedures to
govern any such commissions, boards, or committees, and shall determine
whether members shall be compensated or entitled to reimbursement for
expenses. Any commission, board or committee established by the Board of
Directors shall comply with the applicable requirements of the Ralph M. Brown
Act.
3.7 Director Compensation. Directors shall serve without compensation from CCCE.
However, Directors may be compensated by their respective appointing
authorities. The Board, ho wever, may adopt by resolution a policy relating to the
reimbursement by CCCE of expenses incurred by Directors.
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3.8 Board Voting. Except when a supermajority vote is required by Section 3.8.4,
action by the Board of Directors or the Operations Board shall require a majority
vote of the total number of Directors of the entire Board; provided, however, that
so long as CCCE consists of three or less members, all actions of the Board shall
require the affirmative vote of at least one Director appointed by each Party. In
addition, as described below in Section 3.8.3, upon request of two Directors, each
from a different Party, a weighted vote by shares also will be conducted. When
such a request is made, an action must be approved by both a majority vote of
Directors present and a majority of the voting shares of the entire Board. No
action may be approved solely by a vote by shares. The voting shares of
Directors and the requirements for voting by shares shall be as follows:
3.8.1 Voting Shares.
Each Party shall have a voting share as determined by the following formula:
(Annual Energy Use/Total Annual Energy) multiplied by 100, where
(a) “Annual Energy Use” means, (i) with respect to the first two years
following the Effective Date, the annual electricity usage,
expressed in kilowatt hours (“kWh”), within the Party’s respective
jurisdiction and (ii) with respect to the period after the second
anniversary of the Effective Date, the annual electricity usage
during the prior Fiscal Year, expressed in kWh, of accounts within
a Party’s respective jurisdiction that are served by CCCE; and
(b) “Total Annual Energy” means the sum of all Parties’ Annual
Energy Use. The initial values for Annual E nergy Use will be
designated in Exhibit C, and shall be adjusted annually as soon as
reasonably practicable after January 1, but no later than March 1 of
each year. Those adjustments shall be approved by the Board of
Directors.
(c) The combined voting share o f all Directors representing a Party
shall be based upon the annual electricity usage within the Party’s
jurisdiction; the combined voting share of a county shall be based
upon the annual electricity usage within the unincorporated area of
the county.
For the purposes of weighted voting by shares, if a Party has more than one
Director on the Board of Directors present and voting, then the voting shares
allocated to the entity shall be equally divided amongst its Directors that are
present and voting.
3.8.2 Exhibit Showing Voting Shares. The initial voting shares will be set forth
in Exhibit D. Exhibit D shall be revised no less than annually, as
necessary to account for changes in the number of Parties and changes in
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the Parties’ Annual Energy Use. Adjustments to Exhibit D shall be
approved by the Board of Directors.
3.8.3 Option for Approval by Voting Shares. Any two Directors, each
appointed from a different Party, present at a meeting may demand
approval of any matter related to the CCE Program shall be determined on
the basis of both voting shares and by the affirmative vote of a majority of
Directors present at the meeting. If two Directors, each appointed from a
different Party, make such a demand with respect to approval of any such
matter, then approval of such matter shall require the affirmative vote of a
majority of Directors present at the meeting and the affirmative vote of
Directors having a majority of the voting shares of the entire Boardt. In
the event any one Party has a voting share that equals or exceeds that
which is necessary to disapprove the matter being voted on by the Board,
at least one other Party shall be required to vote in the negative in order to
disapprove such matter.
3.8.4 Special Voting Requirements for Certain Matters.
(a) Two-Thirds and Weighted Voting Approval Requirements
Relating to Specified Actions. Action of the Board on the matters
set forth in Section 2.5.2 (approval of new members), 6.2
(involuntary termination of a Party), or Section 7.4 (amendment of
this Agreement) or the approval of any bonds, loans or other
indebtedness shall require the affirmative vote of at least two -
thirds of the Directors of the entire Board. Notwithstanding the
foregoing, any two Directors present at the meeting, each
appointed from a different Party, ma y demand that the vote be
determined on the basis of both voting shares and by the
affirmative vote of Directors, and if any two Directors, each
appointed from a different Party, makes such a demand, then
approval shall require the affirmative vote of both at least two-
thirds of the Directors on the entire Board and the affirmative vote
of Directors having at least two -thirds of the voting shares of the
entire Board, as determined by Section 3.8; but, Directors from at
least two Parties must vote against a matter for the vote to fail. On
votes to involuntarily terminate a Party under Section 6.2, the
Director(s) for the Party subject to involuntary termination may not
vote, and the number of Directors constituting two-thirds of all
Directors, and the weight ed vote of each Party shall be recalculated
as if the Party subject to possible termination were not a Party.
(b) Seventy-Five Percent Special Voting Requirement for Eminent
Domain .
(i) A decision to exercise the power of eminent domain on
behalf of CCCE to acquire any property interest other than
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an easement, right -of-way, or temporary construction
easement shall require a vote of at least 75% of all the
members of the Board of Directors.
(ii) Notwithstanding the foregoing, any two Directors present
at the meeting, each appointed by a different Party, may
demand a vote under subsection (i) be determined on the
basis of voting shares and by the affirmative vote of
Directors, and if any two Directors, each appointed from a
different Party, makes such a demand, then appro val shall
require both the affirmative vote of at least 75% of the
entire Directors on the Board and the affirmative vote of
Directors having at least 75% of the voting shares of the
entire Board, but Directors from at least two Parties must
vote against a matter for the vote to fail.
3.9 Regular and Special Meetings of the Boards. The Board of Directors and
Operations Board shall hold the number of regular meetings provided by
resolution of each Board. The date, hour and place of each regular meeting shall
be fixed by resolution of each Board. Regular meetings may be adjourned to
another meeting time. Special and emergency meetings of the Boards may be
called in accordance with the provisions of California Government Code ,
sections 54956 and 54956.5. Directors may participate in meetings
telephonically, with full voting rights, only to the extent permitted by law. All
meetings shall be conducted in accordance with the provisions of the Ralph M.
Brown Act (California Government Code, sections 54950 et seq.).
3.10 Selection of Board Officers.
3.10.1 Chair and Vice Chair. The Directors shall select, from among themselves,
a Chair, who shall be the presiding officer of all Board meetings, and a
Vice Chair, who shall serve in the absence of the Chair. The Chair and
Vice Chair shall each serve for a one-year term at the pleasure of the
Board. There shall be no limit on the number of terms held by either the
Chair or Vice Chair. The office of either the Chair or Vice Chair shall be
declared vacant and a new selection sha ll be made if:
(a) the person serving dies, resigns, or the Party the person represents
removes the person as its representative on the Board, or
(b) the Party that he or she represents withdraws from CCCE pursuant
to the provisions of this Agreement.
3.10.2 Secretary. The Board of Directors shall appoint a Secretary who shall be
responsible for keeping the minutes of all meetings of the Board and all
other official records of CCCE.
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3.10.3 Treasurer and Auditor. The Board of Directors shall appoint a Treasurer
who shall function as the combined offices of Treasurer and Auditor
pursuant to Government Code section 6505.6 and shall strictly comply
with the statutes related to the duties and responsibilities specified in
Section 6505.5 of the Act. The Treasurer for CCCE shall be the
depository and have custody of all money of CCCE from whatever source
and shall draw all warrants and pay demands against CCCE as approved
by the Board. The Treasurer shall cause an independent audit(s) of the
finances of CCCE to be made by a certified public accountant, or public
accountant, in compliance with Section 6505 of the Act. The Treasurer
shall report directly to the Board of Directors and shall comply with the
requirements of treasurers of incorporated municipalities. The Board may
transfer the responsibilities of Treasurer to any person or entity as the law
may provide at the time. The duties and obligations of the Treasurer are
further specified in Article 5. The Treasurer shall serve at the pleasure of
the Board of Directors.
3.11 Administrative Services Provider. The Operations Board may appoint one or
more administrative services providers to serve as CCCE’s agent for planning,
implementing, operating and administering the CCE Program, and any other
program approved by the Board, in accordance with the provisions of an
Administrative Services Agreement. The appointed administrative services
provider may be one of the Parties. One or more of the Parties may agree to
provide all or a portion of the services in the manner set forth in an
Ad ministrative Services Agreement. Employees of the Parties utilized to perform
such services shall remain employees of the Parties and subject to the employing
Party’s control and supervision. An Administrative Services Agreement shall set
forth the terms and conditions by which the appointed administrative services
provider shall perform or cause to be performed all or enumerated tasks necessary
for planning, implementing, operating and administering the CCE Program and
other approved programs. The Administrative Services Agreement shall set forth
the term of this Agreement, the services to be provided, and the circumstances
under which the Administrative Services Agreement may be terminated by
CCCE. This section shall not in any way be construed to limit the discretion of
CCCE to hire its own employees to administer the CCE Program or any other
program.
ARTICLE 4.
IMPLEMENTATION ACTION AND CCCE DOCUMENTS
4.1 Preliminary Implementation of the CCE Program.
4.1.1 Enabling ordinance. To be eligible to participate in the CCE Program,
each Party must adopt an ordinance in accordance with Public Utilities
Code section 366.2(c)(12) for the purpose of specifying the Party intends
to implement a CCE program by and through its participation in CCCE.
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4.1.2 Implementation Plan. CCCE shall cause to be prepared an
Implementation Plan meeting the requirements of Public Utilities Code ,
section 366.2 and any applicable Public Utilities Commission regulations,
as soon after the Effective Date as reasonably practicable. The
Implementation Plan shall not be filed with the Public Utilities
Commission until it is approved by the Board of Directors.
4.1.3 Integrated Resource Plan. CCCE shall cause to be prepared an Integrated
Resource Plan in accordance with CPUC regulations that will ensure the
long-term development and administration of a variety of power resources
in compliance with the State Renewable Portfolio Standard and other
statutory and regulatory requirements of the State of California.
4.1.4 Termination of CCE Program. Nothing contained in this Article or this
Agreement shall be construed to limit the discretion of CCCE to terminate
the implementation or operation of the CCE Program at any time in
accordance with any applicable requirements of state law.
4.2 CCCE Documents. The Parties acknowledge and agree the affairs of CCCE will
be implemented through various documents duly adopted by the Board of
Directors or Operations Board through Board resolution or minute action;
provided, that any Operations Board actions must be consistent with the polices
established by the Board of Directors. The Parties agree to abide by and comply
with the terms and conditions of all such documents that may be adopted by the
Board, subject to the Parties’ right to withdraw from CCCE as described in
Article 6.
ARTICLE 5.
FINANCIAL PROVISIONS
5.1 Fiscal Year. CCCE’s fiscal year shall be 12 months commencing July 1 and
ending June 30. The fiscal year may be changed by resolution of the Board of
Directors .
5.2 Depository.
5.2.1 All funds of CCCE shall be held in separate accounts in the name of
CCCE and not commingled with funds of any Party or any other person or
entity.
5.2.2 All funds of CCCE shall be strictly and separately accounted for, and
regular reports shall be rendered of all receipts and disbursements, at least
quarterly during the fiscal year. The books and records of CCCE shall be
open to inspection by the Parties at all reasonable times. The Board of
Directors shall contract with a certified public accountant or public
accountant to make an annual audit of the accounts and records of CCCE,
which shall be conducted in accordance with the requirements of Section
6505 of the Act.
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5.2.3 All expenditures shall be made in accordance with the approved budget
and upon the approval of any officer so authorized by the Board in
accordance with its policies, rules and regulations. The Treasurer shall
draw checks or warrants or make payments by other means for claims or
disbursements not within an applicable budget only upon the prior
approval of the Board.
5.3 Budget and Recovery of Costs.
5.3.1 Budget. The initial budget shall be approved by the Board of Directors.
The Board may revise the budget from time to time as may be reasonably
necessary to address contingencies and unexpected expenses. All
subsequent budgets of CCCE shall be approved by the Board of Directors.
5.3.2 Funding of Initial Costs. In the event the CCE Program becomes
operational, any Initial Costs paid by the Parties shall be included in the
customer charges for electric services as provided by Sect ion 5.3.3 to the
extent recovery of such costs is permitted by law, and the Parties shall be
reimbursed from the payment of such charges by customers of CCCE.
Prior to such reimbursement, the Parties shall provide such documentation
of costs paid as the Board may request. CCCE may establish a reasonable
time period over which such costs are recovered. In the event the CCE
Program does not become operational, the Parties who had contributed
Initial Costs shall not be entitled to any reimbursement fro m CCCE or any
other Party. If any Party assists in funding initial costs, then that Party
shall also be entitled to reimbursement pursuant to this section.
5.3.3 CCE Program Costs. The Parties desire all costs incurred by CCCE that
are directly or indirectly attributable to the provision of electric,
conservation, efficiency, incentives, financing, or other services provided
under the CCE Program, including, but not limited to, the establishment
and maintenance of various reser ves and performance funds and
administrative, accounting, legal, consulting, and other similar costs, shall
be recovered through charges to CCE customers receiving such electric
services, or from revenues from grants or other third-party sources.
5.3.4 Additional Contributions and Advances. Pursuant to Government Code
section 6504, the Parties may, in their sole discretion, make financial
contributions, loans or advances to CCCE for the purposes of CCCE set
forth in this Agreement. The repayment of such contributions, loans or
advances will be on the written terms agreed to by the Party making the
contribution, loan or advance to the CCCE.
ARTICLE 6.
WITHDRAWAL AND TERMINATION
6.1 Withdrawal Provisions.
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6.1.1 General Right to Withdraw. A Party may withdraw its membership in
CCCE, effective as of the beginning of CCCE ’s fiscal year, by giving no
less than 6-months’ advance written notice of its election to do so, which
notice shall be given to CCCE and each Party. Withdrawal of a Party
shall require an affirmative vote of the Party’s governing body.
6.1.2 Right to Withdraw After Amendment . Notwithstanding Section 6.1.1, a
Party may withdraw its membership in CCCE following an amendment to
this Agreement adopted by the Board of Directors which the Party’s
Director(s) voted against ; provided,that such notice is given in writing
within thirty (30) days following the date of the vote. Withdrawal of a
Party under this section shall require an affirmative vote of the Party’s
governing body and shall not be subject to the six-month advance notice
provided in Section 6.1.1. In the event of such withdrawal, the Party shall
be subject to the provisions of Section 6.3.
6.1.3 The Right to Withdraw Prior to Program Launch. After receiving bids
from power suppliers before the CCE Program launch, CCCE shall
provide to the Parties a report from the consultant retained by CCCE that
compares the total estimated electrical rates that CCCE will be charging to
customers as well as the estimated greenhouse gas emissions rate and the
amount of estimated renewable energy used with that of the incumbent
utility. If the report finds that any one of the following conditions exists,
then a Party may immediately withdraw its membership in CCCE without
any financial obligation, as long as the Party provides written notice of its
intent to withdraw to CCCE Board of Directors no more than fifteen
(15) days after receiving the report. Those conditions include: 1) the
CCCE is unable to provide total electrical rates that are equal to or less
than the incumbent utility at time of program launch, 2) the CCCE is
unable to provide electricity that has equal or lower greenhouse gas
emissions than the incumbent utility, and 3) the CCCE is not able to
match or exceed the incumbent utility’s renewable energy performance
pursuant to the State Renewable Portfolio Standard. Any Party that
withdraws from CCCE pursuant to this section shall not be entitled to any
refund of the Initial Costs it has paid to CCCE prior to the date of
withdrawal unless CCCE is later terminated pursuant to Section 6.4. In
such event, any Initial Costs not expended by CCCE shall be returned to
all Parties, including any Party that has withdrawn pursuant to this section,
in proportion to the contribution that each made. Notwithstanding
anything to the cont rary in this Agreement, any Party that withdraws
pursuant to this section shall not be responsible for any liabilities or
obligations of CCCE after the date of withdrawal, including without
limitation any liability arising from power purchase agreements entered
into by CCCE.
6.1.4 Withdrawal Documents. Except as provided by Section 6.1.3, a Party that
withdraws its participation in the CCE Program may be subject to certain
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continuing financial obligations, as described in Section 6.3. Each
withdrawing Party and CCCE shall execute and deliver all further
instruments and documents, and take any further action that may be
reasonably necessary, as determined by the Board, to effectuate the
orderly withdrawal of such Party from participation in the CCE Program.
6.2 Involuntary Termination of a Party. Participation of a Party in the CCE Program
may be terminated for material non-compliance with provisions of this Agreement
or any other agreement relating to the Party’s participation in the CCE Program
upon a vote of Board members as provided in Section 3.8.4(a). Prior to any vote
to terminate participation with respect to a Party, written notice of the proposed
termination and the reason(s) for such termination shall be delivered to the Party
whose termination is proposed at least thirty (30) days prior to the regular Board
meeting at which such matter shall first be discussed as an agenda item. The
written notice of proposed termination shall specify the particular provisions of
this Agreement or other agreement that the Party has allegedly violated. The
Party subject to possible termination shall have the opportunity at the next regular
Board meeting to respond to any reasons and allegations that may be cited as a
basis for termination prior to a vote regarding termination. A Party that has had
its participation in the CCE Program terminated shall be subject to in the
provisions of Section 6.3.
6.3 Continuing Financial Obligations; Refund. Except as provided by Section 6.1.3,
upon a withdrawal or involuntary termination of a Party, the Party shall remain
responsible for any claims, demands, damages, or other financial obligations
arising from the Party membership or participation in the CCE Program through
the date of its withdrawal or involuntary termination, subject to the provisions of
Section 2.2. Thereafter, notwithstanding Section 2.2, the withdrawing or
terminated Party shall be responsible and liable for any damages, losses or costs
incurred by CCCE resulting from the Party’s withdrawal including, but are not
limited to, losses from the resale of power contracted for by CCCE to serve the
Party’s load. With respect to such financial obligations, upon notice by a Party
that it wishes to withdraw from the CCE Program, CCCE shall notify the Party of
the minimum waiting period under which the Party would have no costs for
withdrawal if the Party agrees to stay in the CCE Program for such period. The
waiting period will be set to the minimum duration required so no costs are
transferred to remaining ratepayers. If the Party elects to withdraw before the end
of the minimum waiting period, then the charge for withdrawal shall be set at a
dollar amount that would offset the estimated losses to CCCE and costs to the
remaining rat epayers, and may not include punitive charges that exceed actual
costs. For the purposes of this section, actual costs shall include not only any
financial losses or increased operating costs incurred by CCCE, but also all staff
time and consultant costs related to the withdrawal. CCCE may withhold funds
otherwise owing to the Party or may require the Party to deposit sufficient funds
with CCCE, as reasonably determined by and approved by the Board of Directors,
to cover the Party’s financial obligations for the costs described above. Any
amount of the Party’s funds held on deposit with CCCE above that which is
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required to pay any financial obligations shall be returned to the Party. If there is
a disagreement related to the charge(s) for withdrawal or ex iting, then the Parties
shall attempt to settle the amount through mediation or other dispute resolution
process as authorized by Section 7.1. If the dispute is not resolved, then the
Parties may agree in writing to proceed to arbitration, or any party ma y seek
judicial review.
6.4 Mutual Termination. This Agreement may be terminated by mutual agreement of
all the Parties; provided, however, the foregoing shall not be construed as limiting
the rights of a Party to withdraw its participation in the CCE Progr am, as
described in Section 6.1.
6.5 Disposition of Property upon Termination of CCCE. Upon termination of this
Agreement, any surplus money or assets in possession of CCCE for use under this
Agreement, after payment of all liabilities, costs, expenses, and charges incurred
under this Agreement and under any program documents, shall be returned to the
then-existing Parties in proportion to the contributions made by each.
ARTICLE 7.
MISCELLANEOUS PROVISIONS
7.1 Dispute Resolution. The Parties and CCCE shall make reasonable efforts to
informally settle all disputes arising out of or in connection with this Agreement.
Before exercising any remedy provided by law, a Party or Parties and CCCE shall
engage in nonbinding mediation or arbitration in the manner agreed upon by the
Party or Parties and CCCE. In the event nonbinding mediation or arbitration is
not commenced or does not result in the settlement of a dispute within 120 days
after the demand for nonbinding mediation or arbitration is made, the Party or
Parties and CCCE may pursue any remedy provided by law.
7.2 Liability of Directors, Officers, and Employees. The Directors, officers, and
employees of CCCE shall use ordinary care and reasonable diligence in the
exercise of their powers and in the performance of their duties pursuant to this
Agreement. No current or former Director, officer, or employee will be
responsible for any act or omission by another Director, officer, or employee.
CCCE shall defend, indemnify and hold harmless the individual current and
former Directors, officers, and employees for any acts or omissions in the scope
of their employment or duties in the manner provided by Government Code
section 995 et seq. Nothing in this section shall be construed to limit the defenses
and immunities available under the law, to the Parties, CCCE, or its Directors,
officers, or employees.
7.3 Indemnification of Parties. CCCE shall acquire such insurance coverage as is
necessary to protect the interests of CCCE, the Parties, and the public. CCCE
shall defend, indemnify, and hold harmless the Parties and each of their respective
Council and Board of Supervisors Members, officers, officials, agents and
employees, from any and all claims, losses, damages, costs, injuries, and
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liabilities of every kind arising directly or indirectly from the conduct, activities,
operations, acts, and omissions of CCCE under this Agreement.
7.4 Amendment of this Agreement . This Agreement may not be amended except by a
written amendment approved by the Board of Directors as provided in
Section 3.8.4(a). CCCE shall provide written notice to all Parties of amendments
to this Agreement, including the effective date of such amendments, at least 30
days prior to the date upon which the Board votes on such amendments.
7.5 Assignment . Except as otherwise expressly provided in this Agreement, the
rights and duties of the Parties may not be assigned or delegated without the
advance written consent of all of the other Parties, and any attempt to assign or
delegate such rights or duties in contravention of this Section 7.5 shall be null and
void. This Agreement shall inure to the benefit of, and be binding upon, the
successors and assigns of the Parties. This Section 7.5 does not prohibit a Party
from entering into an independent agreement with another agency, person, or
entity regard ing the financing of that Party’s contributions to CCCE, or the
disposition of proceeds which that Party receives under this Agreement, so lo ng
as such independent agreement does not affect, or purport to affect, the rights and
duties of CCCE or the Parties under this Agreement.
7.6 Severability. If one or more clauses, sentences, paragraphs or provisions of this
Agreement shall be held to be unlawful, invalid or unenforceable, then it is hereby
agreed by the Parties, the remainder of this Agreement shall not be affected
thereby. Such clauses, sentences, paragraphs or provision shall be deemed
reformed so as to be lawful, valid and enforced to the maximum extent possible.
7.7 Further Assurances. Each Party agrees to execute and deliver all further
instruments and documents, and take any further action that may be reasonably
necessary, to effectuate the purposes and intent of this Agreement.
7.8 Execution by Counterparts. This Agreement may be executed in any number of
counterparts, and upon execution by all Parties, each executed counterpart shall
have the same force and effect as an original instrument and as if all Parties had
signed the same instrument . Any signature page of this Agreement may be
detached from any counterpart of this Agreement without impairing the legal
effect of any signatures thereon, and may be attached to another counterpart of
this Agreement identical in form hereto but having at tached to it one or more
signature pages.
7.9 Parties to be Served Notice. Any notice authorized or required to be given
pursuant to this Agreement shall be validly given if served in writing either
personally, by deposit in the United States mail, first class postage prepaid with
return receipt requested, or by a recognized courier service. Notices given
(a) personally or by courier service shall be conclusively deemed received at the
time of delivery and receipt and (b) by mail shall be conclusively deemed given
48 hours after the deposit thereof (excluding Saturdays, Sundays and holidays) if
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the sender receives the return receipt. All notices shall be addressed to the office
of the clerk or secretary of CCCE or Party, as the case may be, or such other
person designated in writing by CCCE or Party. Notices given to one Party shall
be copied to all other Parties. Notices given to CCCE shall be copied to all
Parties.
[Signatures on next page]
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CITY OF SAN LUIS OBISPO, a
California municipal corporation
By: ______________________________
(Insert name), Mayor
ATTEST
By: ____________________________
(Insert name), City Clerk
APPROVED AS TO FORM:
By: ____________________________
(Insert name), City Attorney
CITY OF MORRO BAY, a California
municipal corporation
By: ____________________________
(Insert name), Mayor
ATTEST
_____________________________
(Insert name), City Clerk
APPROVED AS TO FORM
_____________________________
(Insert Name), City Attorney
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EXHIBIT A
DEFINITIONS
“Act ” means the Joint Exercise of Powers Act of the State of California (Government Code
section 6500 et seq.)
“Administrative Services Agreement ” means an agreement or agreements entered into after the
Effective Date by CCCE with an entity that will perform tasks necessary for planning,
implementing, operating and/or administering the CCE Program, or any portion of the CCE
Program or any other energy programs adopted by CCCE.
“Agreement ” means this Joint Powers Agreement.
“Annual Energy Use ” has the meaning given in Section 3.7.1.
“Board” means the Board of Directors of CCCE unless the context indicates that the use of the
word “Board” also is intended to include the Operations Board .
“CCE” or “Community Choice Energy” or “CCA” or “Community Choice Aggregation” means
an electric service option available to cities and counties pursuant to Public Utilities Code
Section 366.2.
“CCE Program” or “CCA Program” means CCCE ’s program relating to CCE that is principally
described in Sections 2.3, 2.4, and 4.1.
“Director” means a member of the Board of Directors or the Operations Board representing a
Party.
“Effective Date” means the date on which this Agreement shall become effective and CCCE
shall exist as a separate public agency, as described in Section 2.1.
“Implementation Plan” means the plan generally described in Section 4.1.2 of this Agreement
that is required under Public Utilities Code section 366.2 to be filed with the California Public
Utilities Commission for the purpose of describing a propo sed CCE Program.
“Initial Costs” means all costs incurred by Parties and/or CCCE relating to the establishment and
initial operation of CCCE, such as the hiring of an Executive Officer and any administrative
staff, and any required accounting, administrative, technical, or legal services in support of
CCCE’s initial activities or in support of the negotiation, preparation, and approval of one or
more Administrative Services Agreements, Power Purchase Agreements, or financing
transactions.
Operations Board means the Board established by Section 3.5.
“Parties” or “Members” means, collectively, the City of San Luis Obispo and the City of Morro
Bay and any other city or county which timely executes this Agreement pursuant to Section 2.5.1
or is added to this Agreement pursuant to Section 2.5.2 and is listed in Exhibit B .
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“Party,” “Member” or “Member Agency” means a signatory to this Agreement.
“Total Annual Energy” has the meaning given in Section 3.7.1.
“CCCE Document(s)” means document(s) duly adopted by the Board by resolution or motion
implementing the powers, functions, and activities of CCCE, including but not limited to the
annual budget, rules, regulations, plans and policies.
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EXHIBIT B
LIST OF PARTIES
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Exhibit C
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EXHIBIT C
ANNUAL ENERGY USE/VOTING SHARES (as of 2015)
City of San Luis Obispo 237,472 MWh
City of Morro Bay 45,882 MWh
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EXHIBIT D
VOTING SHARES (as of ______)
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EXHIBIT E
SIGNATURE PAGES
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R ______
RESOLUTION NO. _____ (2018 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, TO APPROVING THE JOINT POWERS
AGREEMENT ESTABLISHING CENTRAL COAST COMMUNITY
ENERGY ON BEHALF OF THE CITY OF SAN LUIS OBISPO.
WHEREAS, AB 117, adopted as California state law in 2002, permits cities, counties, or
city and county Joint Power Authorities to aggregate residential, commercial, industrial, municipal
and institutional electric loads through Community Choice Aggregation (CCA); and
WHEREAS, the City of San Luis Obispo commissioned a technical study to analyze the
feasibility of a CCA program serving the city and the San Luis Obispo region; and
WHEREAS, the City of San Luis Obispo wishes to be a community choice aggregator and
has introduced the Ordinance as required by Public Utilities Code Section 366.2 in order to do so;
and
WHEREAS, the City of Morro Bay also wishes to be a community choice aggregator and
will also introduced the Ordinance as required by Public Utilities Code Section 366.2 in order to
do so; and
WHEREAS, pursuant to Section 366.2 two or more entities authorized to be a community
choice aggregator, may participate as a group in a community choice aggregation program through
a joint powers agency established pursuant to Chapter 5 (commencing with Section 6500) of
Division 7 of Title 1 of the Government Code, if each entity adopts the aforementioned ordinance;
and
WHEREAS, the City Council has considered the proposed Joint Exercise of Powers
Agreement, a draft of which is attached hereto as Exhibit A, under which the City of San Luis
Obispo and City of Morro Bay will become the initial members of Central Coast Community
Energy (CCCE) Authority; and
WHEREAS, Once the California Public Utilities Commission certifies the
Implementation Plan created by CCCE, it will provide service to customers within the cities and
counties that choose to join CCCE and to participate in the CCA program; and
WHEREAS, under Public Utilities Code section 366.2, customers have the right to opt -
out of the CCE program and continue to receive service from the incumbent utility. Customers
who wish to continue to receive service from the incumbent utility will be able to do so.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
that :
SECTION 1. The City Council hereby approves the Joint Exercise of Powers Agreement
with the City of Morro Bay to form the Central Coast Community Energy (CCCE) Authority.
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Resolution No. _____ (2018 Series) Page 2
R ______
SECTION 2. That_______________ and _______________ are hereby appointed as the
initial Directors on the CCCE Board representing the City of San Luis Obispo.
SECTION 3. This resolution and the establishment of the Central Coast Community
Energy Authority is exempt from the requirements of the California Environmental Quality Act
(CEQA) pursuant to the State CEQA Guidelines, as it is not a “project” since this action invol ves
organizational and administrative activities of government that will not result in direct or indirect
physical changes in the environment. (14 Cal. Code Regs. § 15378(b)(5)). Further, the ordinance
is exempt from CEQA as there is no possibility that the ordinance or its implementation would
have a significant negative effect on the environment. (14 Cal. Code Regs.§ 15061(b)(3)). A
Notice of Exemption shall be filed as authorized by CEQA and the State CEQA guidelines.
SECTION 4. This resolution shall be effective upon the adoption of Ordinance No.
______, an Ordinance of the City of San Luis Obispo authorizing the implementation of a
Community Choice Aggregation (CCA) Program.
BE IT FURTHER RESOLVED that the Mayor and/or City Manager is hereby
authorized and directed to execute the Joint Exercise of Powers Agreement on behalf of the City
of San Luis Obispo , which will establish CCCE with the City as a founding member.
Upon motion of _______________________, seconded by _______________________,
and on t he following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2018.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
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Resolution No. _____ (2018 Series) Page 3
R ______
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo , California, this ______ day of ______________, _________.
____________________________________
Teresa Purrington
City Clerk
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