HomeMy WebLinkAbout10-02-2018 Item 06 Adopt Ordinance to Authorize Implementation of Community Choice Energy Meeting Date: 10/2/2018
FROM: Robert Hill, Interim Deputy Director, Office of Sustainability
Prepared By: Chris Read, Sustainability Manager
SUBJECT: ADOPTION OF AN ORDIN ANCE TO AUTHORIZE THE
IMPLEMENTATION OF A COMMUNITY CHOICE ENERGY PROGRAM
RECOMMENDATION
Adopt Ordinance No. 1654 (2018 Series) entitled “An Uncodified Ordinance of the City Council
of the City of San Luis Obispo, California, authorizing the implementation of a community
choice aggregation program” (Attachment A).
DISCUSSION
As discussed at the September 4, 2018 City Council Study Session, and September 18, 2018 City
Council Public Hearing, the City of San Luis Obispo has been studying potential benefits and
risks associated with Community Choice Energy (CCE, referred to in California Public Utility
Code as “community choice aggregation”) since 2013. 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.
Section 366.2(c)(12)(B) of the Public Utilities Code expressly contemplates the creation of a
Joint Powers Authority (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) entering 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).
On September 18, 2018 the City Council voted 5-0 to:
1. Adopt a resolution to create and join a JPA called Central Coast Community Energy (CCCE)
with the City of Morro Bay for the purpose of implementing a CCE program;
2. Introduce Ordinance No. 1654 (2018 Series) to establish and implement a Community
Choice Energy program.
The Ordinance is now ready for adoption and will become effective on November 2, 2018.
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
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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 environment (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 Cit y 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 impact risks exist as described in
the September 18, 2018 (Item #14) and September 4, 2018 (Item #2) Council Agenda Reports.
Known costs include upfront debt requirements of approximately $1,100,000 for working capital
and requirements to pay up to $250,000 in deferred costs to The Energy Authority (“TEA”) in
the event the program do es not launch.
The short-term need of $1,100,000 in working capital for CCCE to complete the start-up phase
and begin serving customers can be provided via General Fund loans from the member cities or
through third-party financing. This basic structure of third-party financing, generally a line of
credit with a credit guarantee to support the pre-revenue operating period, has been used in
successful CCE launches including Valley Clean Energy Alliance, Marin Clean Energy, Sonoma
Clean Power, and Silicon Valley Clean Energy. Should CCCE receive operating capital, and/or
lines of credit from the cities, and should CCCE operations fail to launch, the cities would not be
reimbursed, and/or would be responsible for any remaining debt. At present, the City of San Luis
Obispo and City of Morro Bay anticipate sharing exposure to the credit solution on an 80/20
split. The two cities will return to their respective councils to request credit support for this
bridge funding in late 2019 or early 2020
Regarding the pot ential for exposure to up to $250,000 in deferred costs, as part of the 2017-18
financial year-end process, $250,000 of “General Carry-Over” funds were designated as a
contingency.
ALTERNATIVES
1. Re-introduce the proposed ordinance with amendments. The City Council may continue
action, if more information is needed. Direction should be given to staff regarding additional
information needed to make the decision.
2. Reject the proposed ordinance. The City Council may reject the proposed ordinance, which
would effectively end the City’s pursuit of CCE.
Attachments:
a. CCE Implementing Ordinance
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O 1654
ORDINANCE NO. 1654 (2018 SERIES)
AN UNCODIFIED 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 Central Coast
Community Energy, or CCCE) in order to provide electric service to customers within the City of
San Luis Obispo and the San Luis Obispo region with the intent of achieving 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 showing that 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 and Morro Bay, formed a Joint Powers Agency
creating Central Coast Community Energy (“CCCE.”) Under the Joint Powers Agreement, cities
and towns within San Luis Obispo County and adjoining Counties as well as County governments
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. Public entities choosing
to participate in the CCA program will have membership on the Board of Directors of CCCE as
provided in the Joint Powers Agreement; and
WHEREAS, CCCE will enter into Agreements with electric power suppliers and other
service providers, and based upon those Agreements CCCE will be able to provide power to
residents and businesses at rates that are competitive with those of the incumbent utility (“PG&E”).
Once the California Public Utilities Commission certifies the Implementation Plan adopted by
CCCE, CCCE 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 CCCE; and
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Ordinance No. 1654 (2018 Series) Page 2
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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 utility. Customers who
wish 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.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The above recitations 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 businesses and residents within the City of San
Luis Obispo with a choice of power providers and with the benefits described above, the City
Council hereby elects to implement a community choice aggregation program within the
jurisdiction of the City by participating as a group in the Community Choice Aggregation Program
of Central Coast Community Energy, as generally described in its Joint Powers Agreement.
SECTION 3. Environmental Review. 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).
SECTION 4. Severability. If any section, sub-section, sentence, clause, or phrase of this
Ordinance is held by a court of competent jurisdiction to be invalid, such decision shall not affect
the remaining portions this Ordinance. The City Council hereby declares that it would have passed
this Ordinance, and each section, sub-section, sentence, clause, and phrase hereof, irrespective of
the fact that one or more sections, sub-sections, sentences, clauses, and phrases be declared invalid.
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Ordinance No. 1654 (2018 Series) Page 3
O 1654
SECTION 5. A summary of this Ordinance, together with the names of the Council
members voting for and against, shall be published at least five (5) days prior to its final passage,
in The Tribune, a newspaper published and circulated in this City. This Ordinance shall be adopted
as an un-codified ordinance and shall be in full force and effective 30 days after its adoption.
INTRODUCED on the 18th day of September 2018, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the 2nd day of October 2018, 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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