HomeMy WebLinkAbout11-07-18CCCESpecialJointMeetingCity of San Luis Obispo, Ag enda, Planni ng Commission
CENTRAL COAST COMMUNITY ENERGY
Agenda
Joint Meeting of the Board of Directors and Operations Board
Wednesday, November 7, 2018
3:00 PM SPECIAL JOINT MEETING Council Chamber
990 Palm Street
San Luis Obispo, CA
Oaths of Office: Teresa Purrington, City Clerk City of San Luis Obispo
Roll Call: Directors Robert Davis, Aaron Gomez, Marlys McPherson,
and Andy Pease
Operations Board Members Scott Collins and Derek
Johnson
Pledge of Allegiance: Director Andy Pease
Approval of Interim Chair: Robert Hill, Interim Staff
PUBLIC COMMENT: The Board welcomes your input. You may address the Board by
completing a speaker slip and giving it to the Clerk prior to the meeting. At this time, you may
address the Board on items that are not on the agenda. Time limit is three minutes. State law does
not allow the Board to discuss or take action on issues not on the agenda, except that members of
the Board or staff may briefly respond to statements made or questions posed by persons
exercising their public testimony rights. Staff may be asked to follow up on such items.
CONSENT AGENDA: Matters appearing on the Consent Agenda are expected to be non-
controversial and will be acted upon at one time. A member of the public may request the Board
to pull an item for discussion. The public may comment on any and all items on the Consent
Agenda within the three minute time limit
1.Approve Interim General Counsel Contract (Hill/Read)
Recommendation:
1. Approve contract with Richards, Watson & Gershon for interim General Counsel
services; and
2. Approve cost reimbursement agreement with the City of San Luis Obispo.
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Central Coast Commity Energy Agenda November 7, 2018 Page 2
2. Approve Conflict of Interest Code (Hill/Read)
Recommendation:
Adopt Resolution 2018-01, titled “A Resolution of the Board of Directors of Central Coast
Community Energy Adopting a Conflict of Interest Code.”
3. Approve 2018 Meeting Schedule and Location (Hill/Read)
Recommendation:
Approve the following special meeting dates for 2018: November 28 at 9:00 a.m. and
December 12 at 9:00 a.m.
BUSINESS ITEMS
4. Organizational and Management Report (Hill/Read)
Recommendation:
Receive and file the organizational and management presentation and report.
5. Operational Options (Hill/Read)
Recommendation:
1. Receive report and presentation regarding updated financial projections and program
options including continuing to implement CCCE for a 2020 launch, delaying
implementation until 2021, or joining Monterey Bay Community Power;
2. Direct staff to return to member cities with request to join Monterey Bay Community
Power;
3. Authorize staff to submit a letter to member cities on behalf of the Board of Directors
outlining the rationale for joining Monterey Bay Community Power; and
4. Direct staff to identify a process for the City of San Luis Obispo and the City of Morro
Bay to share a seat on Monterey Bay Community Power’s Policy Board, Operations
Board, and Community Advisory Committee.
DIRECTOR/OPERATIONS BOARD MEMBER/STAFF REQUESTS: Board Members
may ask a question for clarification, make an announcement, or report briefly on their activities.
In addition, they may provide a reference to staff or other resources for factual information,
request staff to report back to the Board at a subsequent meeting concerning any matter, or take
action to direct staff to place a matter of business on a future agenda.
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Central Coast Commity Energy Agenda November 7, 2018 Page 3
ADJOURNMENT
Public records that relate to any item on the open session agenda for a regular board meeting are
available for public inspection. Those records that are distributed less than 72 hours prior to the
meeting are available for public inspection at the same time they are distributed to all members,
or a majority of the members of the Board. Until CCCE has offices, the Board has designated
the City of San Luis Obispo Administration Department, located at 990 Palm Street in San Luis
Obispo for the purpose of making those public records available for inspection. The documents
are also available on the CCCE website located at:
https://www.slocity.org/government/advisory-bodies/agendas-and-minutes/community-choice-energy.
Meetings are accessible to people with disabilities. Individuals who need special assistance or a
disability-related modification or accommodation to participate in this meeting, or who have a
disability and wish to request an alternative format for the meeting materials, should contact
Chris Read at (805) 781-7151 or cread@slocity.org.
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CENTRAL COAST COMMUNITY ENERGY
Staff Report – Item 1
To: CCCE Board of Directors and Operations Board
From: Bob Hill and Chris Read, Interim Staff
Subject: Interim General Counsel Services
Date: November 7, 2018
__________________________________________________________________
RECOMMENDATION
1. Approve contract with Richards, Watson & Gershon for interim General Counsel
services (Attachment A); and
2. Approve cost reimbursement agreement with the City of San Luis Obispo
(Attachment B).
BACKGROUND AND DISCUSSION
The Joint Exercise of Power Agreement Relating to and Creating Central Coast
Community Energy (CCCE) establishes roles and responsibilities of the CCCE Board of
Directors. Section 3.3 describes the powers and functions of the Board of Directors,
including the “Appointment of termination of the […] General Counsel.”
Through existing on-call contracts with the City of San Luis Obispo, Greg Stepanicich
from the law firm Richards Watson & Gershon (RWG) has been providing City of San Luis
Obispo staff assistance on community choice energy items including negotiating contract
terms with the technical services provider (The Energy Authority), drafting the joint
exercise of powers agreement, and reviewing all items for this November 7 Board meeting
for legal issues.
The contract for interim general counsel services (Attachment A) in the amount not to
exceed $10,000 would cover RWG’s time attending this initial CCCE Board meeting, as
well as reviewing staff reports and attending up to two additional meetings through
December of 2018. Although the contract would be held directly with CCCE, the costs
would be paid by the City of San Luis Obispo, with a request to the City of Morro Bay to
cover twenty percent ($2,000) of the costs.
Attachment B provides a cost reimbursement agreement with the City of San Luis Obispo.
Should the Board choose to proceed with creating a local program, the reimbursement
agreement provides provisions for repaying the City of San Luis Obis po (who would, in
turn, reimburse the City of Morro Bay for its contribution) once CCCE begins service
(potentially Spring 2020). Under this scenario, staff would return with the reimbursement
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agreement at the November 28, 2018 Board meeting and would provide an approach for
establishing long term general counsel services to this Board at the December 7, 2018
meeting.
Should the Board choose to not proceed with creating a local program, RWG would only
charge for the time and materials expended to date. RWG could also provide legal
guidance for pausing or dissolving CCCE. In this scenario, the funds would not be
reimbursed.
ENVIRONMENTAL REVIEW
Approving the Interim General Counsel contract is not a Project under the California
Environmental Quality Act.
ALTERNATIVES
1. The Board could direct staff to develop different cost share responsibilities or
arrangements.
2. The Board could request an alternative General Counsel arrangement. Staff does
not recommend this approach as it would significantly delay Board act ion, which
would prevent important decisions related to program operations from being made
ahead of the California Public Utilities Commission Implementation Plan filing
deadline of January 1, 2019.
ATTACHMENT
A. Interim General Counsel Services Contract
B. Draft Cost Reimbursement Agreement with the City of San Luis Obispo
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Item 1 – Attachment A
1
AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on ______________
______, _______ by and between CENTRAL COAST COMMUNITY ENERGY, a joint powers authority ,
hereinafter referred to as CCCE, and THE LAW OFFICES OF RICHARDS, WATSON & GERSHON,
hereinafter referred to as Consultant.
W I T N E S S E T H
WHEREAS, on October 31, 201, CCCE requested qualifications and proposals for legal counsel;
WHEREAS, pursuant to said request, Consultant submitted a proposal that was accepted by CCCE for
said services; and
WHEREAS, CCCE requires professional legal services for general counsel (the “services”).
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter
contained, the parties hereto agree as follows:
1. Term. The term of this Agreement shall be from November 7, 2018 until completion of said services
and the total costs for services related to this project shall not exceed $10,000 without express written
consent signed by both parties.
2. Termination. If, during the term of the contract, CCCE determines that the Consultant is not faithfully
abiding by any term or condition contained herein, CCCE may notify the Consultant in writing of such
defect or failure to perform. This notice must give the Consultant a 10 (ten) calendar day notice of
time thereafter in which to perform said work or cure the deficiency.
If the Consultant has not performed the work or cured the deficiency within the ten days specified in
the notice, such shall constitute a breach of the contract and CCCE may terminate the contract
immediately by written notice to the Consultant to said effect. Thereafter, neither party shall have any
further duties, obligations, responsibilities, or rights under the contrac t except, however, any and all
obligations of the Consultant's surety shall remain in full force and effect, and shall not be
extinguished, reduced, or in any manner waived by the termination thereof.
In said event, the Consultant shall be entitled to the reasonable value of its services performed from
the beginning date in which the breach occurs up to the day it received CCCE’s Notice of
Termination, minus any offset from such payment representing CCCE’s damages from such breach.
"Reasonable value" includes fees or charges for goods or services as of the last milestone or task
satisfactorily delivered or completed by the Consultant as may be set forth in the Agreement payment
schedule; compensation for any other work, services or goods performed or provided by the
Consultant shall be based solely on CCCE’s assessment of the value of the work -in-progress in
completing the overall works cope.
CCCE reserves the right to delay any such payment until completion or confirmed abandonment of
the project, as may be determined in CCCE’s sole discretion, so as to permit a full and complete
accounting of costs. In no event, however, shall the Consultant be entitled to receive in excess of the
compensation quoted in its proposal.
If, at any time during the term of the contract, CCCE determines that the project is not feasible due to
funding shortages or unforeseen circumstances, CCCE reserves the right to terminate the contract.
Consultant will be paid compensation due and payable to the date of termination.
3. Ability to Perform. The Consultant warrants that it possesses licenses and qualifications necessary
to carry out and complete the work hereunder in compliance with any and all applicable federal, state,
county, city, and special district laws, ordinances, and regulations.
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Item 1 – Attachment A
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4. Sub-contract Provisions. No portion of the work pertinent to this contract shall be subcontracted
without written authorization by CCCE. Any substitution of sub-consultants must be approved in
writing by CCCE.
5. Contract Assignment. The Consultant shall not assign, transfer, convey or otherwise dispose of the
contract, or its right, title or interest, or its power to execute such a c ontract to any individual or
business entity of any kind without the previous written consent of CCCE.
6. Inspection. The Consultant shall furnish CCCE with every reasonable opportunity for CCCE to
ascertain that the services of the Consultant are being performed in accordance with the
requirements and intentions of this contract. All work done and all materials furnished, if any, shall be
subject to CCCE’s inspection and approval. The inspection of such work shall not relieve Consultant
of any of its obligations to fulfill its contract requirements.
7. Conflict of Interest. The Consultant shall disclose any financial, business, or other relationship with
CCCE that may have an impact upon the outcome of this engagement. The Consultant covenants
that it presently has no interest, and shall not acquire any interest —direct, indirect or otherwise—that
would conflict in any manner or degree with the performance of the work hereunder. The Consultant
further covenants that, in the performance of this work, no sub-consultant or person having such an
interest shall be employed. The Consultant certifies that no one who has or will have any financial
interest in performing this work is an officer or employee of CCCE. It is hereby expressly agreed that,
in the performance of the work hereunder, the Consultant shall at all times be deemed an
independent Consultant and not an employee of CCCE.
8. Rebates, Kickbacks or Other Unlawful Consideration . The Consultant warrants that this contract
was not obtained or secured through rebates, kickbacks or other unlawful consideration, either
promised or paid to any CCCE employee. For breach or violation of the warranty, CCCE shall have
the right in its discretion; to terminate the contract without liability; to pay only for the value of the work
actually performed; to deduct from the contract price; or otherwise recover the full amount of such
rebate, kickback or other unlawful consideration.
9. Covenant Against Contingent Fees. The Consultant warrants by execution of this contract that no
person or selling agency has been employed, or retained, to solicit or secure this contract upon an
agreement or understanding, for a commission, percentage, brokerage, o r contingent fee, excepting
bona fide employees or bona fide established commercial or selling agencies maintained by the
Consultant for the purpose of securing business. For breach or violation of this warranty, CCCE has
the right to annul this contract without liability; pay only for the value of the work actually performed,
or in its discretion, to deduct from the contract price or consideration, or otherwise recover the full
amount of such commission, percentage, brokerage, or contingent fee.
10. Compliance with Laws and Wage Rates. The Consultant shall keep itself fully informed of and
shall observe and comply with all applicable state and federal laws and county and City of San Luis
Obispo and City of Morro Bay ordinances, regulations and adopted codes during its performance of
the work. This includes compliance with prevailing wage rates and their payment in accordance with
California Labor Code. For purposed of this paragraph, “construction” includes work performed
during the design and preconstruction phases of construction, including but not limited to, inspection
and land surveying work.
11. Payment of Taxes. The contract prices shall include full compensation for all taxes that the
Consultant is required to pay.
12. Safety Provisions. The Consultant shall conform to the rules and regulations pertaining to safety
established by OSHA and the California Division of Industrial Safety.
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Item 1 – Attachment A
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13. Immigration Act of 1986. The Consultant warrants on behalf of itself and all sub-consultants
engaged for the performance of this work that only persons authorized to work in the United States
pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall be
employed in the performance of the work hereunder.
14. Consultant Non-Discrimination. In the award of subcontracts or in performance of this work, the
Consultant agrees that it will not engage in, nor permit such sub-consultants as it may employ, to
engage in discrimination in employment of persons on any basis prohibited by State or Federal law.
15. Indemnification for Professional Liability. To the fullest extent permitted by law, the
Consultant shall indemnify, protect, defend and hold harmless CCCE and any and all of its
officials, employees and agents (“Indemnified Parties”) from and against any and all losses,
liabilities, damages, costs and expenses, including attorney’s fees and cost which arise out
of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the
Consultant.
16. Insurance.
16.1 Professional Errors and Omissions Insurance. The Consultant shall obtain and maintain
in full force and effect at all times Professional Errors and Omissions Liability Insurance. Such
insurance shall provide coverage in an amount not less than one million dollars ($1,000,000)
per occurrence. The insurance policy required under this paragraph shall be endorsed to
state that coverage shall not be suspended, voided, cancelled, reduced in coverage, or in
limits, except after thirty (30) days prior written notice, by certified mail return receipt
requested, given to CCCE.
16.2 Workers Compensation Insurance. The Consultant shall obtain and maintain workers
compensation insurance in accordance with section 3700 of the California Labor Code.
17. Non-Exclusive Contract. CCCE reserves the right to contract for the services listed in this proposal
from other consultants during the contract term.
18. Consultant Invoices and Payment. The Consultant shall deliver a monthly invoice to the City of
San Luis Obispo, itemized by project work phase or, in the case of on-call contracts, by project title.
Invoice must include a breakdown of hours billed and miscellaneous charges and any sub -consultant
invoices, similarly broken down, as supporting detail. Hourly rates include direct salary costs,
employee benefits, overhead and fee. The City of San Luis Obispo's payment terms are 30 days from
the receipt of an original invoice.
19. Agreement Parties.
City: Central Coast Community
Energy
990 Palm Street
San Luis Obispo, CA 93401
Consultant: Name
Street
City/State/Zip
All written notices to the parties hereto shall be sent by United States mail, postage prepaid by
registered or certified mail addressed as shown above.
20. Incorporation by Reference. Consultant's scope of work (Exhibit A) is hereby incorporated in and
made a part of this Agreement.
21. Amendments. Any amendment, modification or variation from the terms of this Agreement shall be
in writing and shall be effective only upon approval by CCCE.
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Item 1 – Attachment A
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22. Working Out of Scope. If, at any time during the project, the Consultant is directed to do work the
Consultant believes that the work is outside of the scope of the original contract, the Consultant shall
inform CCCE immediately. If CCCE and the Consultant both agree that the work is outside of the
project scope and is necessary to the successful completion of the project, then a fee will be
established for such work based on Consultant's hourly billing rates or a lump sum price agreed upon
between CCCE and the Consultant. Any extra work performed by Consultant without prior written
approval from the CCCE shall be at Consultant's own expense.
23. Complete Agreement. This written agreement, including all writings specifically incorporated herein
by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding or representation not reduced to writing and specifically incorporated
herein shall be of any force or effect, nor shall any such oral agreement, understanding or
representation be binding upon the parties hereto. For and in consideration of the payments and
agreements hereinbefore mentioned to be made and performed by CCCE, Consultant agrees with
CCCE to do everything required by this Agreement, the said specification and incorporated
documents.
24. Authority to Execute Agreement. Both CCCE and Consultant do covenant that each individual
executing this agreement on behalf of each party is a person duly authorized and empowered to
execute Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and
year first above written.
Central Coast Community Energy: LAW OFFICES OF RICHARDS, WATSON &
GERSHON:
_____________________________________ _______________________________
Chris Read, Its:
Interim Staff
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Item 1 – Attachment A
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Exhibit A – Consultant’s Scope of Work
As Interim General Counsel for CCCE, RWG shall provide the general legal services typically required by a
joint powers authority in addition to those general services related more specifically to the operation of
a community choice aggregation program as described below. These legal services shall include the
following:
* Attendance at the regular and special meetings of the Board of Directors and Operations Board.
* Brown Act, conflict of interest and Public Records Act advice.
* Preparation and review of contracts.
* Advice to staff on operational and administrative matters.
* Research and advice on legal questions asked by the Board, Executive Officer and designated staff.
Interim General Counsel services will not include energy contracts or regulatory matters before the
CPUC that require specialized legal services provided by energy or CPUC regulatory attorneys.
The budget for these services through December 31, 2018 is estimated at a cost not to exceed $10,000
based on the assumption that we will only be attending the three scheduled joint meetings of the Board of
Directors and Operations Board.
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Item 1 – Attachment B
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AGREEMENT BETWEEN CENTRAL COAST COMMUNITY ENERGY AND
THE CITY OF SAN LUIS OBISPO FOR ADMINISTRATIVE AND FISCAL SERVICES AND
REIMBURSEMENT
This AGREEMENT, effective ______, 2018, is by and between CENTRAL COAST
COMMUNITY ENERGY, an independent joint powers authority ("Authority"), and the CITY OF SAN
LUIS OBISPO, a municipal corporation (“City”) (collectively referred to as the “Parties”).
RECITALS:
A. Authority is an independent joint powers authority duly organized under the provisions of
the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.)
(“Act”) with the power to conduct its business and enter into agreements.
B. The City of San Luis Obispo has been a sponsoring partner for the Central Coast
Community Energy (“CCCE”), which conducted outreach and technical study to evaluate the feasibility
of a multi-jurisdictional community choice aggregation program in San Luis Obispo County and helped
lead the collaboration to form the Authority.
C. The City of San Luis Obispo provided certain administrative services to conduct the work
of CCCE, including project management, procurement, fiscal administration, and interagency
coordination.
D. The Authority seeks assistance with a variety of administrative functions as the Authority
convenes, builds its operational capacity, and hires its own staff.
E. Authority and City desire to enter into an agreement for services and reimbursement upon
the terms and conditions herein.
NOW, THEREFORE, the Parties mutually agree as follows:
1. TERM
The term of this Agreement shall commence on _____________, and shall terminate on
_____________, unless terminated earlier as set forth herein. The Agreement may be extended if mutually
agreed by the Parties in writing.
2. SERVICES AND LOANS
The City of San Luis Obispo intends on providing certain administrative services and loans to
conduct the work of CCCE until such time as the CCE is fully operational, including project management,
procurement, fiscal administration, and interagency coordination.
3. REIMBURSEMENT FOR SERVICES
City shall be reimbursed for costs incurred by City for services performed pursuant to this
Agreement in an amount not to exceed $_____________.
(a) City shall provide a monthly invoice to Authority providing a breakdown of the costs and
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Item 1 – Attachment B
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expenses incurred by City in providing services pursuant to this Agreement. For services performed by
City employees, the invoice shall provide an itemized breakdown of the time spent by each employee.
(b) City shall be reimbursed for staff time costs inclusive of salaries and benefits, but not overhead
charges.
(c) City shall be reimbursed for expenses as agreed upon in advance by Authority’s Representative.
(d) Authority shall pay proper invoices within 30 days of receipt.
4. EMPLOYEES OF CITY NOT EMPLOYEES OF AUTHORITY
Under no circumstances shall the employees of City be considered employees of Authority. City
shall be solely responsible and liable for paying all compensation and benefits owed to its employees for
the services provided by City under this Agreement.
5. NO RECOURSE AGAINST CONSTITUENT MEMBERS OF AUTHORITY.
Authority is organized as a Joint Powers Authority in accordance with the Joint Powers Act of the
State of California (Government Code Section 6500 et seq.) pursuant to a Joint Powers Agreement dated
____________, and is a public entity separate from its constituent members. Authority shall solely be
responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. City shall
have no rights and shall not make any claims, take any actions or assert any remedies against any of
Authority’s constituent members in connection with this Agreement.
6. HOLD HARMLESS AND INDEMNIFICATION
Each Party shall defend, indemnify and hold harmless the other Party (including its officers,
employees and agents) against any claim, loss or liability arising out of the performance of this Agreement
by such Party. Nothing contained herein shall be construed as a waiver of any immunities or defenses
that a Party may have under applicable provisions of the law, including the provisions of the California
Tort Claims Act (Government Code Section 801 et seq.). This mutual indemnification agreement is
adopted pursuant to Government Code Section 895.4 and in lieu of and notwithstanding the pro rata risk
allocation which might otherwise be imposed between the parties pursuant to Government Code Section
895.6. This provision shall survive expiration or termination of this Agreement.
8. PROHIBITION AGAINST TRANSFERS
City shall not assign, sublease, hypothecate, or transfer this Agreement, or any interest therein,
directly or indirectly, by operation of law or otherwise, without prior written consent of Authority. Any
attempt to do so without such consent shall be null and void, and any assignee, sublessee, pledgee, or
transferee shall acquire no right or interest by reason of such attempted assignm ent, hypothecation or
transfer.
9. SUBCONTRACTOR APPROVAL
Unless prior written consent from Authority’s Representative is obtained, City shall only use its
officers and employees in the performance of this Agreement.
10. PARTY REPRESENTATIVES
The Board President shall represent the Authority in all matters pertaining to the services to be
performed under this Agreement. Chris Read shall represent City in all matters pertaining to the services
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to be performed under this Agreement.
11. CONFIDENTIAL INFORMATION
City shall maintain in confidence and not disclose to any third party any confidential information
or records not subject to disclosure under the California Public Records Act that are prepared or generated
by City or provided to City by Authority in the performance of this Agreement.
12. RECORDS
City shall keep and maintain full and complete documentation and accounting records concerning
all services performed under this Agreement and shall make such documents and records available to
Authority for inspection and copying at any reasonable time. City shall maintain such records for a period
of five (5) years following completion of work hereunder. Any reports, data, documents or other records
prepared by City for Authority under this Agreement shall be considered the records of Authority and
shall not be destroyed without the express written approval of Authority. All financial and accounting
records shall be prepared and maintained in accordance with generally accepted accounting principles and
all applicable laws.
13. NOTICES
All notices, demands, requests or approvals to be given under this Agreement shall be given in
writing and conclusively shall be deemed served when delivered personally or on the second business day
after the deposit thereof in the United States Mail, postage prepaid, addressed as hereinafter provided.
Each party may change the address by written notice in accordance with this provision.
All notices, demands, requests, or approvals shall be addressed as follows:
TO AUTHORITY:
[Address]
TO CITY:
City of San Luis Obispo
Attention: Chris Read
990 Palm Street
San Luis Obispo, CA 94088-3707
14. TERMINATION
Either Party may terminate this agreement by providing no less than sixty (60) days’ written notice
to the other party. Authority shall pay City for services satisfactorily performed up to the effective date
of termination. In the event of termination, City, within fourteen (14) days following the date of
termination, shall deliver to Authority all records and work products generated by City under this
Agreement.
15. COMPLIANCE
City shall comply with all applicable local, state and federal laws.
16. CONFLICT OF LAW
This Agreement shall be interpreted under, and enforced by the laws of the State of California.
The Agreement and obligations of the Parties are subject to all valid laws, orders, rules, and regulations
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of the authorities having jurisdiction over this Agreement (or the successors of those authorities). Any
suits brought pursuant to this Agreement shall be filed with the Superior Court of the County of Santa
Clara, State of California.
17. WAIVER
A waiver by Authority of any breach of any term, covenant, or condition contained herein shall
not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or
condition contained herein, whether of the same or a different character.
18. INTEGRATED CONTRACT
This Agreement represents the full and complete understanding of every kind or nature whatsoever
between the Parties, and all preliminary negotiations and agreements of whatsoever kind or nature are
merged herein. No verbal agreement or implied covenant shall be held to vary the provisions hereof. Any
modification of this Agreement will be effective only by a written document signed by both Authority and
City.
19. AUTHORITY TO EXECUTE
The individual(s) executing this Agreement represent and warrant that they have the legal capacity
and authority to do so on behalf of their respective legal entities.
20. INSERTED PROVISIONS
Each provision and clause required by law to be inserted into the Agreement shall be deemed to
be enacted herein, and the Agreement shall be read and enforced as though each were included herein. If
through mistake or otherwise, any such provision is not inserted or is not correctly inserted, the Agreement
shall be amended to make such insertion on application by either party.
21. CAPTIONS AND TERMS
The captions in this Agreement are for convenience only, are not a part of the Agreement and in
no way affect, limit or amplify the terms or provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have caused the Agreement to be executed as of the date
set forth above.
CITY OF SAN LUIS OBISPO
______________________________
Derek Johnson, City Manager
CENTRAL COAST COMMUNITY
ENERGY, a Joint Powers Authority
By ___________________
Title ___________________
Date __________________
RECOMMENDED FOR APPROVAL
________________________
Name, Title
APPROVED AS TO FORM:
_________________________
Counsel for Authority
ATTEST:
__________________________
Authority Secretary
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Exhibit A
Scope of Services
For the period from ___, through _____, the City of San Luis Obispo shall provide the following
services to the Central Coast Clean Energy Authority:
1. Operational leadership and administration including
coordinating across service providers, representing the Authority
as requested, guiding or participating in program planning, and
reviewing and coordinating work product.
$xx,000
2. Board of Directors meeting support including agenda and
meeting material development and meeting clerk services.
$xx,000
3. Fiscal administration including serving as the Treasurer and
Auditor and providing accounting services including receiving
deposits, disbursing funds and paying invoices, and tracking
budget and expenditures. The fiscal administration services
shall be provided in accordance with the Financial Provisions of
Article 6 of the Central Coast Clean Energy Authority Joint
Powers Agreement and all laws applicable to the Authority.
$xx,000
4. General administration including limited office space,
IT/telecommunications support, and advice on administrative
matters.
$xx,000
Budgeted amounts described in the categories above are estimates and may be shifted across
categories or tasks provided that the total amount not to exceed cost set forth in Section 3 of this
Agreement is not exceeded.
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CENTRAL COAST COMMUNITY ENERGY
Staff Report – Item 2
To: CCCE Board of Directors and Operations Board
From: Bob Hill and Chris Read, Interim Staff
Subject: Approve Conflict of Interest Code
Date: November 7, 2018
__________________________________________________________________
RECOMMENDATION
Adopt a resolution titled “A Resolution of the Board of Directors of Central Coast
Community Energy Adopting a Conflict of Interest Code.”
BACKGROUND AND DISCUSSION
Government Code Section 87300 requires that every agency adopt and promulgate a
local Conflict of Interest Code that applies to officers and employees who are involved in
the making of governmental decisions.
An agency may choose to adopt the Model Conflict of Interest Code prepared by the Fair
Political Practices Commission and codified in Section 18730 of Title 2 of the California
Code of Regulations. The Conflict of Interest Code must list the positions within the
agency that are considered “designated positions” and must identify the “disclosure
categories” applicable for each designated position. The draft resolution (Attachment A)
includes the model code, as well as the Appendices A and B, which list Central Coast
Community Energy’s (CCCE) designated positions and identify the applicable disclosure
categories for each designated position.
Only persons holding designated positions listed in Appendix A to the Conflict of Interest
Code need to file Statements of Economic Interest (“Form 700s”). At this time, CCCE’s
designated officers and employees include Board members and alternates, the Executive
Officer, the General Counsel, and Consultants. All persons holding a designated position
must file an initial Form 700 no later than 30 days after the code reviewing body’s approval
of the Conflict of Interest Code. The Executive Officer or his or her designee will
coordinate the filing and retention of Form 700s with the San Luis Obispo County Clerk-
Recorder.
Government Code Section 82011(b) requires the San Luis Obispo County Board of
Supervisors to be the code reviewing body for CCCE’s Conflict of Interest Code. If the
Board of Directors adopts the Conflict of Interest Code, staff will forward the resolution
and the Conflict of Interest Code to the County of San Luis Obispo for review and
approval. The Board of Supervisors is required to act upon the Conflict of Interest Code
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within 90 days after receiving the Code for review. The Board of Supervisors may approve
the Code as submitted, make revisions, or return the proposed Code to CCCE’s Board of
Directors for review and resubmission back to the Board of Supervisors for approval.
The General Counsel will coordinate the preparation of a revised Conflict of Interest Code
biennially, in succeeding even-numbered years, or within 90 days of the creation of a new
position that must file a Form 700, in accordance with the requirements of Government
Code Sections 87306 and 87306.5. The revised Code should reflect any changes in
employee designations. If in an even-numbered year no revisions to the Code are
required, the General Counsel shall submit a report no later than October 1st of the same
year, stating that amendments to the Code are not required.
ENVIRONMENTAL REVIEW
Adopting the Conflict of Interest Code is not a Project under the California
Environmental Quality Act.
ALTERNATIVES
The Board could choose to amend the Conflict of Interest Code. Staff does not
recommend this alternative as it would cause the rest of this meeting to be delayed until
the November 28th meeting.
ATTACHMENT
A. Resolution of the Board of Directors Adopting a Conflict of Interest Code
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Item 2 - Attachment A
RESOLUTION NO. 2018-XX
A RESOLUTION OF THE BOARD OF DIRECTORS OF CENTRAL
COAST COMMUNITY ENERGY ADOPTING A CONFLICT OF
INTEREST CODE
THE BOARD OF DIRECTORS OF CENTRAL COAST COMMUNITY ENERGY
DOES HEREBY FIND, RESOLVE, AND ORDER AS FOLLOWS:
Section 1. Central Coast Community Energy (“CCCE”) was formed on October 5, 2018
pursuant to a Joint Powers Agreement to study, promote, develop, conduct, operate, and
manage energy, energy efficiency and conservation, and other energy-related programs
in the cities of Morro Bay and San Luis Obispo.
Section 2. The Political Reform Act, Government Code Section 81000, et seq., (the
“Political Reform Act”) requires all agencies, including CCCE, to adopt and promulgate a
local conflict of interest code.
Section 3. The Fair Political Practices Commission (the “FPPC”) has adopted a
regulation that contains the terms of a Model Conflict of Interest Code (the “Model Code”),
codified at 2 California Code of Regulations Section 18730. The Model Code can be
incorporated by reference by CCCE as its Conflict of Interest Code.
Section 4. The Model Code, and any amendments that are duly adopted by the FPPC,
are hereby incorporated by reference into the conflict of interest code of CCCE. The
Model Code, attached hereto as Attachment “A,” and Appendices “A” and “B”, which set
forth designated positions and the disclosure categories for each position at CCCE, are
hereby adopted and shall constitute CCCE’s Conflict of Interest Code.
Section 5. All officials and employees required to submit a statement of economic
interests shall file their statements with the Executive Director or his or her designee, or
electronically using the County of San Luis Obispo’s Form 700 e-filing system. The
Executive Officer or his or her designee shall make and retain a copy of all statements
filed with CCCE and forward the originals of such statements to the Office of the San Luis
Obispo County Clerk-Recorder. All retained statements, original or copied, shall be
available for public inspection and reproduction (Gov. Code Section 81008).
Section 6. The Board of Directors of CCCE hereby directs the General Counsel to
coordinate the preparation of a revised Conflict of Interest Code when necessitated by
changed circumstances, or in succeeding even-numbered years in accordance with the
requirements of Government Code Sections 87306 and 87306.5. Future revisions to the
Conflict of Interest Code should reflect changes in employee or official designations. If
no revisions to the Code are required, CCCE shall submit a report to the San Luis Obispo
Board of Supervisors no later than October 1st of the same year, stating that amendments
to CCCE’s Conflict of Interest Code are not required.
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Item 2 - Attachment A
ADOPTED AND APPROVED this ____ day of ___________, 2018.
ATTEST:
_________________
Board Secretary
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Item 2 - Attachment A
ATTACHMENT A
CENTRAL COAST COMMUNITY ENERGY
CONFLICT OF INTEREST CODE
The Political Reform Act (Government Code § 81000, et seq., hereinafter referred to as
“the Act”) requires state and local government agencies to adopt and promulgate conflict
of interest codes. The Fair Political Practices Commission (“FPPC”) has adopted a
regulation (2 California Code of Regulations § 18730) which contains the terms of a
standard conflict of interest code, which can be incorporated by reference in an agency’s
code. After public notice and hearing, the standard code may be amended by the FPPC
to conform to amendments in the Act. Therefore, the terms of 2 California Code of
Regulations § 18730 and any amendments to it duly adopted by the FPPC are hereby
incorporated by reference.
Regulation 18730 and the Appendices attached hereto, designating positions (Appendix
A) and establishing disclosure categories (Appendix B), shall constitute the conflict of
interest code of Central Coast Community Energy (“CCCE”).
The most current version of 2 Cal. Code of Regs. § 18730 is available on the FPPC
website at:
www.fppc.ca.gov/content/dam/fppc/NSDocuments/LegalDiv/Regulations/Index/Chapter
7/Article2/18730.pdf.
Individuals holding designated positions shall file their statements of economic interests
with CCCE, which will make the statements available for public inspection and
reproduction subject to Government Code § 81008. If statements are received in signed
paper format, CCCE shall make and retain a copy and forward the original statements to
the San Luis Obispo County Clerk-Recorder. If Statements are electronically filed using
the County of San Luis Obispo’s Form 700 e-filing system, both CCCE and the San Luis
Obispo County Clerk-Recorder will receive access to the e-filed Statements
simultaneously.
.
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Item 2 - Attachment A
CENTRAL COAST COMMUNITY ENERGY
CONFLICT OF INTEREST CODE
APPENDIX A
DESIGNATED POSITIONS
Designated Positions Disclosure Categories
Member of Board of Directors 1, 2, 3, 4
Member of Board of Directors (Alternate) 1, 2, 3, 4
Member of Operations Board 1, 2, 3, 4
Member of Operations Board (Alternate) 1, 2, 3, 4
Executive Officer 1, 2, 3, 4
General Counsel 1, 2, 3, 4
Consultant 5
Newly Created Position *
* Newly Created Position
A newly created position that makes or participates in the making of governmental
decisions that may foreseeably have a material effect on any financial interest of the
position-holder, and which specific position title is not yet listed in CCCE’s Conflict of
Interest Code, is included in the list of designated positions and shall disclose pursuant
to the broadest disclosure category in the Code, subject to the following limitation: The
Executive Officer of CCCE may determine in writing that a particular newly created
position, although a “designated position,” is hired to perform a range of duties that are
limited in scope and thus is not required to fully comply with the broadest disclosure
requirements, but instead must comply with more tailored disclosure requirements
specific to that newly created position. Such written determination shall include a
description of the newly created position’s duties and, based upon that description, a
statement of the extent of disclosure requirements. The Executive Officer’s determination
is a public record and shall be retained for public inspection in the same manner and
location as this Conflict of Interest Code. (Gov. Code Section 81008.)
Within 90 days of the creation of a newly created position that must file a statement of
economic interests, CCCE shall update this Conflict of Interest Code to add the actual
position title in its list of designated positions and submit the amended Conflict of Interest
Code for code-reviewing body approval by the San Luis Obispo Board of Supervisors.
(Gov. Code Section 87306.)
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Item 2 - Attachment A
CENTRAL COAST COMMUNITY ENERGY
CONFLICT OF INTEREST CODE
APPENDIX B
DISCLOSURE CATEGORIES
Designated positions must report financial interests in accordance with the assigned
disclosure categories.
Category 1: Persons in this category shall disclose interests in real property located
within the jurisdiction of Central Coast Community Energy. Real property shall be
deemed within CCCE’s jurisdiction if the property or any part of it is located within two
miles of the borders of any of the parties to the CCCE Joint Powers Agreement, or within
two miles of any land owned or used by CCCE.
Designated persons are not required to disclose property used primarily as their principal
residence.
Category 2: Persons in this category shall disclose reportable income from persons or
business entities that have contracted with CCCE, or that provide, plan to provide, or have
provided within two years from the time a statement is required under this Conflict of
Interest Code, contractual services, or other services, supplies, materials or equipment
of the type utilized by CCCE.
Category 3: Persons in this category shall disclose reportable investments in business
entities that contract with CCCE or that provide, plan to provide or have provided within
two years from the time a statement is required under this Conflict of Interest Code,
contractual services, or other services, supplies, materials or equipment of the type
utilized by CCCE.
Category 4: Persons in this category shall disclose reportable business positions in
business entities that contract with CCCE or that provide, plan to provide or have
provided within two years from the time a statement is required under this Conflict of
Interest Code, contractual services, or other services, supplies, materials or equipment
of the type utilized by CCCE.
Category 5: Each Consultant, as defined for purposes of the Political Reform Act, shall
disclose pursuant to the broadest disclosure category in CCCE’s Conflict of Interest Code
subject to the following limitation: The Executive Officer of CCCE may determine in
writing that a particular consultant, although a “designated position,” is hired to perform
a range of duties that are limited in scope and thus is not required to comply fully with
the disclosure requirements of the broadest disclosure category, but instead must comply
with more tailored disclosure requirements specific to that consultant. Such a written
determination shall include a description of the consultant’s duties and, based upon that
description, a statement of the extent of the disclosure requirements. The Executive
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Item 2 - Attachment A
Officer’s written determination is a public record and shall be retained for public
inspection in the same manner and location as this Conflict of Interest Code.
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CENTRAL COAST COMMUNITY ENERGY
Staff Report – Item 3
To: CCCE Board of Directors and Operations Board
From: Bob Hill and Chris Read, Interim Staff
Subject: Approve 2018 Meeting Schedule and Location
Date: November 7, 2018
__________________________________________________________________
RECOMMENDATION
Approve the following special meeting dates for 2018: November 28 at 9:00 a.m. and
December 12 at 9:00 a.m.
BACKGROUND AND DISCUSSION
In October of 2018, the City of San Luis Obispo and the City of Morro Bay independently
voted to create Central Coast Community Energy (CCCE) for the purpose of hosting a
community choice energy program. CCCE must file an Implementation Plan with the
California Public Utilities Commission by January 1, 2019 to begin serving customers in
2020. Due to the compressed timeline, special ad hoc joint meetings were scheduled for
the initial Board of Directors and Operations Board meetings.
The remaining 2018 meetings are scheduled for:
• November 28, 2018; 9:00 a.m.; San Luis Obispo City Hall, 990 Palm Street, San
Luis Obispo, California
• December 12, 2018; 9:00 a.m.; San Luis Obispo City Hall, 990 Palm Street, San
Luis Obispo, California
This item is brought before the Board to ensure these two dates and the reason for
scheduling them at inconsistent intervals are communicated publicly. Should the Board
wish to proceed developing a community choice energy program, staff will return with a
Board of Director and Operations Board schedule for calendar year 2019 at the November
28, 2018 meeting. Should the Board wish to pursue an alternative approach, meetings
could be cancelled as needed.
ENVIRONMENTAL REVIEW
Approving the 2018 meeting schedule is not a Project under the California
Environmental Quality Act.
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ALTERNATIVES
The Board could choose alternative dates in 2018. This would require coordinating with
all members of the Board of Directors and Operations Board, as well as with the General
Counsel and staff.
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CENTRAL COAST COMMUNITY ENERGY
Staff Report – Item 4
To: CCCE Board of Directors and Operations Committee
From: Robert Hill and Chris Read, Interim Staff
Subject: Organizational and Management Report
Date: November 7, 2018
RECOMMENDATION
Receive and file the organizational and management presentation and report.
BACKGROUND AND DISCUSSION
The report provides a brief overview of the steps that lead to the creation of Central Coast
Community Energy (CCCE), an introduction to the project team, an overview of program
goals, and an update on key regulatory issues that affect CCCE. This item will be a
standing item on CCCE’s agendas and will provide a forum for regular updates to the
Board and the public.
Project History and Milestones To Date
The City of San Luis Obispo has bee exploring community choice energy (CCE) since
2013. In December of 2017, the San Luis Obispo City Council held a study session
reviewing community choice energy options and 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 County. 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 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 December
January 1, 2020, customers can begin service on January 1, 2021
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On April 24, 2018, the City of Morro Bay City Council committed to pursuing a community
choice energy program formation with the City of San Luis Obispo.
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 .The City of San
Luis Obispo, in partnership with the City of Morro Bay and the community selected The
Energy Authority as the program’s technical vendor.
In September of 2018, the City of San Luis Obispo and the City of Morro Bay each held
a series of City Council meetings to review the refreshed feasibility assessment, pass
uncodified ordinances establishing local community choice energy programs, and adopt
resolutions to create a joint powers authority (JPA) for hosting the CCCE. In October of
2018, paperwork was filed with the California Secretary of State establishing CCCE as
an independent legal entity.
CCCE Project Team
To date, the community choice energy initiative has been managed by a cooperative team
of City of San Luis Obispo and City of Morro Bay staff and consultants lead by the City of
San Luis Obispo with support from the City of Morro Bay. As of November 2018, CCCE
is supported by the following people:
• City of San Luis Obispo
o Chris Read, Sustainability Manager and Interim Project Manager
o Robert Hill, Interim Deputy Director, Office of Sustainability
o Kevin Christian, Deputy City Clerk and Interim CCCE Clerk
• Project Consultants
o The Energy Authority -- Technical analytics and energy services
o LEAN Energy US, Agency development and program implementation
o Richards Watson & Gershon, General Counsel services
Pending the Board’s direction on Ageda Item 5, the number of staff and consultants is
expected to grow to include an Excutive Director, a community outreach coordinator and
additional vendor relationships in the areas of marketing and customer enrollment, data
management and call center services, and regulatory affairs. Should the Board choose
to pursue this path, staff and consultants will develop a detailed organization chart for
Board review and will prepare administrative service agreements for the city’s providing
interim staff support during CCCE development and implementation. These agreements
will outline the various functions performed by city staff as well as specified repayment
provisions once the CCCE is revenue positive.
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CCCE Mission and Goals
The Joint Powers Authority agreement that establishes CCCE was signed via resolution
by the City of San Luis Obispo and the City of Morro Bay. The agreement states that the
purposes of the CCE program are:
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.
Section D of the Recitals further state that “It is the mission and purpose of this Agreement
to build a strong Community Choice Energy program that is locally controlled and delivers
greenhouse gas emission reductions, cost-competitive clean electricity, product choice,
price stability, and energy efficiency.”
Should the Board direct staff to continue pursuing a community choice energy program
through CCCE, program specific mission and goals will be developed in spring of 2019.
California Public Utility Commission/Regulatory Matters
Power Charge Indifference Adjustment Decision
The Power Charge Indifference Adjustment (PCIA) is an exit fee added to customers’ bills
to cover stranded costs that have been incurred by the incumbent utility resulting from
departing electric load. Although charged as a separate line item on the customer bill, the
PCIA fee is calculated into CCA rate projections and potentially has significant bearing
on program economics, especially in the early years of program operations. As of the
October City Council meetings, the Commission was evaluating two options to amend the
PCIA, a Proposed Decision (PD) which was favored by the community chouce energy
community and an Alternate Proposed Decision (APD), which was favored by the
incumbent utilities. On October 11th, the Commission ruled in favor of of the APD.
As anticipated, the APD has had a significant impact on CCCE’s financial projections.
Over the past few weeks, the team from The Energy Authority (TEA) has been working
to amend CCCE’s financial proformas based on adjusted rate assumptions (price parity),
a significantly leaner administrative budget, lower levels of clean energy than originally
anticpated, and use of traditional bank financing rather than TEA’s credit solution option,
which turns out to be a less expensive option. Please see the staff report for agenda Item
5 which provides a more detailed explanation of the revised financial projections.
Phase 2 PCIA/Updated Energy Resource Recovery Account (ERRA) Forecast
The APD will be followed by Phase 2 of the PCIA proceeding which will focus on various
payment approaches and longer term exit fee issues. In the meantime, TEA and the
CCCE team is awaiting the outcome of the updated ERRA forecast due out in mid-
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November. This will provide reliable estimates of the 2019 PCIA fee and utility generation
rates against which we can further refine CCCE’s financial projections and continue to
assess early program viability.
Request for 21-30 Day Extension of Implementation Plan
In light of the CPUC delays on the PCIA decision and the importance of the ERRA
forecast updates, CCCE staff contacted senior staff at the CPUC to request a 21-30 day
extension on the submission deadline for its implementation plan, from December 31,
2018 to late January. This extension would give the CCCE Board additional time to adopt
the Implementation Plan. After several conversations with CPUC staff, the status of this
request is currently unknown.
ENVIRONMENTAL REVIEW
There is no action requested.
ALTERNATIVES
There is no action requested and therefore no alternatives.
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CENTRAL COAST COMMUNITY ENERGY
Staff Report – Item 5
To: CCCE Board of Directors and Operations Committee
From: Bob Hill and Chris Read, Interim Staff
Subject: CCCE Implementation and Operational Options
Date: November 7, 2018
RECOMMENDATIONS
1. Receive report and presentation regarding updated financial projections and
program options including continuing to implement CCCE for a 2020 launch,
delaying implementation until 2021, or joining Monterey Bay Community Power;
2. Direct staff to return to member cities with a request to join Monterey Bay
Community Power;
3. Authorize staff to submit a letter to member cities on behalf of the Board of
Directors outlining the rationale for joining Monterey Bay Community Power; and
4. Direct staff to identify a process for the City of San Luis Obispo and the City of
Morro Bay to share a seat on Monterey Bay Community Power’s Policy Board,
Operations Board, and Community Advisory Committee.
BACKGROUND AND DISCUSSION
As discussed in Item 4 of this meeting’s agenda packet, on October 11th, the California
Public Utilities Commission (CPUC) voted to amend the Power Charge Indifference
Adjustment (PCIA) methodology in a way that significantly impacts CCCE’s financial
projections. Staff has been closely working with its technical consultants The Energy
Authority (TEA) and LEAN Energy to assess the impacts of the decision and to review
the viability of several options for continuing to participate in a community choice energy
program in the City of Morro Bay and the City of San Luis Obispo. This report provides
the updated financial projections, an overview of implementation options, and a
comparison of those options.
Updated Financial Projections.
On November 1, 2018, The Energy Authority (TEA) provided updated CCCE financial
projections based on the Power Charge Indifference Adjustment (PCIA) ruling made by
the CPUC in October. As noted in the financial update memo (Attachment A), under the
base scenario of financial and regulatory conditions, and using updated assumptions of
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slightly less clean electricity (80 percent carbon free, instead of 100 percent carbon free),
rates set equal to PG&E, and a significantly leaner administrative budget, CCCE could
still generate positive revenues.
Upon further assessment, using the base case assumptions, it was found that CCCE
would be unable to accumulate financial reserves at the pace and to the levels required
under the conditions of the contract held with TEA. This would prevent CCCE from
accessing the credit solutions provided by TEA for power procurement and upfront power
related operational costs associated with program creation, as originally envisioned.
Because the financial projections indicated that CCCE would not meet TEA’s credit
underwriting guidelines, staff engaged in conversations with River City Bank, which
provides financing to several community choice energy programs in California, in order
to assess the viability of third-party credit to cover initial start-up costs, as well as to
replace TEA’s credit solution for power procurement. These early discussions indicate
that an alternative credit solution is likely available, and the cost of such a solution would
potentially be less expensive than TEA’s credit solution.
The updated financial results presented as Table 1 are based on preliminary indicative
terms provided by River City Bank. Under Scenario A, which includes the cities of San
Luis Obispo and Morro Bay, minimum debt requirements would be recovered, and the
program would be cash flow positive. The industry standard for financial reserve policy is
to develop reserves that cover between 90 and 180 days of operation. As noted in Table
1, the program would only have approximately 60 days (17% of annual) of operating cost
in reserves and it would take approximately 8 years to achieve approximately 150 days
(40% of annual) of operating reserves within a two-city JPA.
Table 1. Updated CCCE Financial Feasibility – Base Case
Scenario A B C D
Cities Participating 2 2 4 4
Rate Discount vs. PG&E 0% 0% 0% 0%
RPS 40% 40% 40% 40%
Carbon-Free Power 80% 100% 80% 100%
Internal Admin $500,000 $500,000 $500,000 $500,000
Startup Loan $2,100,000 $2,100,000 $2,300,000 $2,300,000
PG&E Avg. Gen Rate 2020
($/MWh) $104.75 $104.75 $104.75 $104.75
PG&E Avg. PCIA 2020 ($/MWh) $32.97 $32.97 $32.97 $32.97
Cumulative Net Revenue (Yr. 3) $3,132,480 $2,474,175 $5,812,608 $4,799,650
Meet 1.25x Debt Service Coverage
on Startup Loan1 Yes No Yes Yes
Year 3 Cumulative Net Revenue as
% of Annual Costs 17% 13% 18% 15%
Years to Cumulative Net Revenue
> 40% of Annual Costs 8 9 7 8
1The debt service coverage test assumes CCCE rate parity with PG&E. In each instance, the debt service
coverage covenant could be met by increasing CCCE rates. Each scenario is unique, but in most instances, a
rate premium to PG&E of 3-5% was enough to meet the debt service coverage requirement. The exact amount
varies by year.
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The original agreement with TEA included interest-free credit to cover the California
Independent System Operator (CAISO) credit requirement and to post the CPUC bond.
This amount, as well as additional upfront power related costs, would be added to the
initial startup loan (for a total of $2,100,000 that would have to be supported by a credit
guarantee from CCCE member cities).
It is important to note that the program performs better with scale. Scenarios C and D
presented in Table 1 include a modest growth model with two additional cities. In each
scenario, minimum debt requirements are met, and as discussed below, are more
resilient to changes in the regulatory environment and energy markets. However, it would
still likely take seven years to build reserves that are 40 percent of annual operating costs.
Although the PCIA decision has been issued by the CPUC, there is still some uncertainty
around where PG&E’s generation and PCIA rates will be set for 2019 and beyond.
Considering this uncertainty, TEA tested the same four low-cost operating scenarios but
with a 2.5% decrease in PG&E’s generation rates and a 2.5% increase in PG&E’s PCIA
rates relative to base-case assumptions. This scenario is intended to illustrate how even
relatively small movement in rates could jeopardize the viability of the program. As
illustrated in Table 2, although the outcomes show positive net revenue in three out of
four scenarios, all four scenarios fail the annual net revenue to debt service coverage
ratio requirement without raising customer rates to a level that would be higher than
PG&E’s.
Table 2. Updated CCCE Financial Feasibility – Sensitivity Analysis
Scenario A - stress B - stress C - stress D - stress
Cities Participating 2 2 4 4
Rate Discount vs. PG&E 0% 0% 0% 0%
RPS 40% 40% 40% 40%
Carbon-Free Power 80% 100% 80% 100%
Internal Admin $500,000 $500,000 $500,000 $500,000
Startup Loan $2,100,000 $2,100,000 $2,300,000 $2,300,000
PG&E Avg. Gen Rate 2020
($/MWh) $102.13 $102.13 $102.13 $102.13
PG&E Avg. PCIA 2020 ($/MWh) $33.80 $33.80 $33.80 $33.80
Cumulative Net Revenue (Yr. 3) $612,172 -$67,744 $1,871,781 $836,613
Meet 1.25x Debt Service Coverage
on Startup Loan1 No No No No
Year 3 Cumulative Net Revenue as
% of Annual Costs 3% 0% 6% 3%
Years to Cumulative Net Revenue
> 40% of Annual Costs >10 >10 10 >10
In summary, the base case scenario projections do not indicate enough revenue to
meet TEA’s credit requirements (Table 1), and the Sensitivity Analysis (Table 2) does
not indicate enough revenue to meet River City Bank’s debt service coverage ratio
requirements.
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Implementation Options
Staff has reevaluated the implementation options available to CCCE and its member
cities based on the updated financial information presented in this report. The options are:
1) continue with current plan to implement CCCE in 2020 with cities of San Luis Obispo
and Morro Bay, 2) delay implementation of CCCE by one-year (launch in 2021) to allow
time for expanded membership and greater certainty around PCIA and generation pricing;
and 3) reconsider individual member city membership in Monterey Bay Community
Power.
1. Continue with current plan to implement CCCE in 2020 with cities of San Luis Obispo
and Morro Bay, assuming amended assumptions and bank financing.
As discussed above, a narrow path forward exists to continue to develop CCCE for launch
in 2020. The benefit of continuing on this path is retaining direct local control over program
design and resources and continuing to build local knowledge and capacity. Although a
local program would be riskier and wouldn’t see direct economic development benefits
for several years, it would potentially be able to be tied more directly into local economic
development programs and strategies over the long run.
Although a path still exists to develop CCCE, it comes with significantly thinner margins
and substantial exposure to moderate fluctuations in the regulatory environment and
energy markets. Even in an advantageous regulatory and energy market future, the thin
margins may delay innovative and impactful program design and implementation until the
mid-2020s. Additionally, at 80 percent carbon free, CCCE may be more carbon intensive
than PG&E within two to three years. It should be noted that all of these outcomes assume
a CCCE strategy that sets rates equal to PG&E. Should CCCE choose to set rates higher
than PG&E (in the 3-5 percentage range), the program would be significantly more
economically viable and resilient to changes.
Should the Board wish to continue to pursue development of CCCE for launch in 2020, it
would need to direct staff to do the following:
1. Further discuss third party bank financing with River City Bank (or prepare an RFP
for banking services. This would include the $2.1 million-dollar non-revolving
startup loan (which would be guaranteed by member cities), as well as a revolving
loan for power purchase (which would not require a guarantee).
2. Direct TEA to complete the Implementation Plan for review at the November 28,
2018 CCCE Board of Directors and Operations Board meeting.
2. Delay implementation of CCCE by one year (launch in 2021) to allow time for expanded
membership and greater certainty around PCIA and generation pricing.
By January of 2019, the 2019 PCIA rate and PG&E’s generation rates will be known
factors. Unexpected positive outcomes of these items could potentially result in improved
financial projections, although it is staff’s understanding that dramatic changes are not
expected. Additionally, the legislature could act to improve the conditions created by the
CPUC’s PCIA decision, or other appeals or legal proceedings could occur, although this
is speculative with unknown timing and outcomes.
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As noted above, a larger program performs better financially than a two-city program.
Under this scenario, staff could spend 2019 recruiting additional cities to enhance the
financial viability of CCCE.
It should be noted that these potential outcomes are hypotheticals that are speculative
and there is no guarantee that market conditions will change or improve, nor is there any
guarantee that additional cities will join. The risk of pausing is that delay could slow down
project momentum, cause a delay in early implementation of carbon reduction goals, and
that a longer planning horizon would add additional pre-launch project costs.
Should the Board direct staff to pursue this option, staff would return with additional
information on next steps at the November 28, 2018 meeting.
3. Reconsider individual member city membership in Monterey Bay Community Power
Given the updated financial projections, staff re-engaged with management at Monterey
Bay Community Power to gain an updated understanding of potential to join its existing
community choice energy program; this is consistent with prior direction in the event that
a local program is not viable. Monterey Bay Community Power (MBCP) is an existing
community choice energy program that began service in early 2018 and serves the
counties of Santa Cruz, San Benito, and Monterey, as well as 16 incorporated cities
therein. Key components of MBCP are described below.
• Rate Structure: The basic product provided by MBCP is carbon free and comes
with a 3 percent rebate for all customers. Customers may choose to opt up to “MB
Prime”, which is also carbon free, but does not include electricity from large
hydroelectric generation sources. MB Prime is set at 1 percent above PG&E rates
but ends up being slightly cheaper due to the 3 percent rebate. Additional options
include “MBgreen+” and “MBshare” which allow customers to donate their 3
percent rebate to local renewable generation projects or to regional non-profits that
lower greenhouse gas emissions and support low income rate-payers.
• Governance and Representation: Of the 19 jurisdictions currently enrolled in
MBCP, the three counties and three jurisdictions with 50,000 or more residents
hold six Board seats. An additional five Board seats are shared by multiple
jurisdictions based on geography. Based on initial discussions with MBCP
management, should the cities wish to join, the City of San Luis Obispo and the
City of Morro Bay would share a new Board seat. Similar to CCCE, MBCP has a
Policy Board that meets quarterly and is comprised of elected officials and an
Operations Board that meets at least eight times per year and is comprised of city
managers and county administrative officers. MBCP also has a Community
Advisory Council. The City of San Luis Obispo and Morro Bay would share a seat
in each of the three bodies; this would require additional discussion between the
two cities about how to fairly share these seats so as to adequately represent the
interests of both communities.
• Programs and Local Benefit: In addition to the ability to donate rebates to local
projects, MBCP offers several initial programs that are expected to expand over
time. For homes and businesses with rooftop solar, MBCP offers a net energy
metering (NEM) rate that is more than double the standard PG&E rate. MBCP also
has a Request for Offerings (RFO) out for procurement of energy from local
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6
renewable energy projects. Additionally, MBCP recently teamed with Silicon Valley
Clean Energy to sign contracts for California’s largest solar-plus-storage project,
as well as a joint-procurement project from a 200-megawatt wind farm.
• Financial Health: Due to good management and being able to launch in the pre-
PCIA update environment, MBCP has been able to pay off initial debt and build
substantial reserves.
Considering the PCIA decision’s negative financial implications on CCCE, the benefits of
joining an operational community choice energy program are significantly more
compelling. As mentioned above, an existing program has existing governance, staff,
vendors and operations, credit, and has already covered initial startup costs. Additionally,
as evidenced by the MBCP JPA agreement (Attachment B), the program has similar goals
and governance structures to those contemplated by CCCE. Joining MBCP provides the
lowest cost, lowest risk path forward.
There are some opportunity costs, however, with joining MBCP. First, joining MBCP
would result in some loss of local control as compared to the CCCE model. Instead of
equal representation on the Board, the City of San Luis Obispo and the City of Morro Bay
would share one of twelve seats on the Board. This means less direct control of finances,
rate design, and program design. Additionally, although MBCP staff expressed interest in
eventually rebranding around a Central Coast identity, the program branding would
remain focused around the Monterey Bay Community Power name for the foreseeable
future.
Should the Board direct staff to pursue this option through its member cities, the following
steps would need to be accomplished:
1. City Council meetings to adopt a new CCE ordinance that references MBCP rather
than CCCE and to adopt a resolution joining MBCP and adopting its JPA
Agreement. These meetings would need to occur as soon as possible.
2. Work with MBCP and their energy consultants to update their Implementation Plan
for submittal to the CPUC by January 1, 2019.
3. Work with Richards Watson & Gershon and city attorney’s offices to review and
recommend amendments to the MBCP’s JPA Agreement.
4. Staff expects to be able to complete these tasks, estimated between $40,000-
$60,000 within the existing project budget. Given a previously discussed 80/20
split between the member agencies, this would result in an expected cost share of
$8,000 - $12,000 from the City of Morro Bay.
5. Identify a process for the City of San Luis Obispo and the City of Morro Bay to
share a seat on MBCP’s Policy Board, Operations Board, and Community Advisory
Committee in order to adequately and fairly represent the interests of both
communities.
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ENVIRONMENTAL REVIEW
Directing staff to send a recommendation to member jurisdictions to join an existing
community choice energy program is not a Project under the California Environmental
Quality Act.
ALTERNATIVES
1. Continue with current plan to establish a local community choice energy program
through CCCE, assuming amended rate and environmental assumptions and bank
requirements as described above.
2. Delay implementation of CCCE by one year (launch in 2021) to allow time for
expanded membership and greater certainty around regulatory and market
conditions.
ATTACHMENTS
A. Post-PCIA Decision CCCE Financial Projections
B. Monterey Bay Community Power JPA
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Item 5 – Attachment A
1
Memorandum
To: Robert Hill and Chris Read/City of San Luis Obispo
From: Jeff Fuller/TEA
Cc: Shawn Marshall/LEAN Energy
Colin Cameron and John Putz/TEA
Date: November 1, 2018
Subject: Updated Financial Analysis with River City Bank Credit Facility
Introduction
On October 17th, 2018, TEA provided an updated financial projection for Central Coast Community
Energy (CCCE). An unstated assumption in the updated projections was the continued use of TEA’s credit
solution to fund the working capital requirements needed for initial power procurement, satisfying
CAISO credit requirements, and posting of CPUC performance bond. However, as discussed with SLO
staff subsequent to submitting this analysis, the expected PCIA rates beginning in 2019 under the
Alternative Proposed Decision are likely to render TEA’s credit solution infeasible due to tighter margins
and the inability of CCCE to accumulate financial reserves at the pace, and to the levels, required under
the Resource Management Agreement with TEA.
In response to the changing circumstances, TEA held preliminary discussions with River City Bank to
explore the availability and indicative cost of a bank provided credit solution. These early discussions
indicate that an alternative credit solution is likely available, and the cost of such a solution is expected
to be less expensive than TEA’s credit solution. The updated financial results presented herein are based
on indicative terms provided by River City Bank. If CCCE wishes to further explore this option, the next
step would be for TEA to share its detailed financial projections with River City Bank over the next 1-2
weeks to explore in more detail the availability and cost of an alternative credit solution.
Refresh of October 17, 2018 Financial Projection
This memo updates the analysis originally presented on October 17th by incorporating two changes:
• Replace TEA’s credit solution with River City Bank’s provided credit solution;
• Change the presumed launch date for CCCE from January 1, 2020 to April 1, 2020. This change in
start date better aligns the CCE launch with the implementation of PG&E’s summer rates, which
yield higher margins than winter rates thereby reducing the total financing requirement.
All other assumptions from the October 17th analysis are unchanged at this time.
On Thursday, October 11th, 2018, the CPUC ruled in favor of the Alternative Proposed Decision in the
PCIA proceeding (R.17-06-026). In response to that ruling, this memo explores financial outcomes for
the CCCE under four low-cost operating scenarios.
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Item 5 – Attachment A
2
Key Assumption Changed
1. Rate Discount: reduced from a 3% rate savings to rate parity with PG&E
2. RPS Share: the share of CCCE’s power portfolio sourced from renewable portfolio standard-
eligible resources was reduced to 40%.
3. Carbon-Free Power (CF): the share of power sourced from carbon-free resources was reduced
from 100% carbon-free power to 80% carbon-free power, while kept at 100% in other scenarios.
4. Internal Admin: internal admin costs were reduced from over $800,000 to $500,000 per year
5. Startup Loan (Non-Revolving Line of Credit): the portion of the startup loan unrelated to
wholesale procurement, CPUC bond posting and CAISO credit requirements is unchanged from
October 17th when TEA reduced the amount from $1,100,000 and $1,400,000 for the 2- and 4-
city scenarios respectively to $900,000 and $1,100,000 respectively.
Additionally, the startup loan amount was increased by $1.2 million to fund the initial capital
requirement associated with power procurement, meeting CAISO credit requirements and
posting the CPUC bond. These elements of the startup requirements were previously provided
under TEA’s credit solution.
Additionally, the payback period for this loan was extended to 4-years, and the interest rate
(4.00%) was updated to reflect the indicative interest rate quote provided by River City Bank.
TEA had previously assumed an interest-free loan and two-year payback period for the startup
loan. A requirement of this loan will be maintaining net revenues equal to, or greater than,
1.25x the annual debt service payment amount. In some scenarios, CCCE would be unable to
meet this requirement without increasing rates.
It should also be noted that this Non-Revolving Line of Credit will need to be guaranteed by the
Cities of San Luis Obispo and Morro Bay.
6. Revolving Line of Credit: to fund payments to power suppliers in advance of receiving program
revenues, the financial forecast now includes a revolving line of credit based on indicative terms
provided by River City Bank. The assumed interest rate is 4.50%.
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Item 5 – Attachment A
3
Results
Key assumptions and results are presented for four scenarios in Table 1:
Table 1. SLO CCA Feasibility Scenario Analysis
Scenario A B C D
Cities Participating 2 2 4 4
Rate Discount vs. PG&E 0% 0% 0% 0%
RPS 40% 40% 40% 40%
Carbon-Free Power 80% 100% 80% 100%
Internal Admin $500,000 $500,000 $500,000 $500,000
Startup Loan $2,100,000 $2,100,000 $2,300,000 $2,300,000
PG&E Avg. Gen Rate 2020 ($/MWh) $104.75 $104.75 $104.75 $104.75
PG&E Avg. PCIA 2020 ($/MWh) $32.97 $32.97 $32.97 $32.97
Cumulative Net Revenue (Yr. 3) $3,132,480 $2,474,175 $5,812,608 $4,799,650
Meet 1.25x DSC on Startup Loan1 Yes No Yes Yes
Year 3 C.N.R. as % of Annual Costs 17% 13% 18% 15%
Years to C.N.R. > 40% of Annual Costs 8 9 7 8
1The debt service coverage test assumes CCCE rate parity with PG&E. In each instance, the debt service coverage covenant
could be met by increasing CCCE rates. Each scenario is unique, but in most instances, a rate premium to PG&E of 3-5% was
sufficient to meet the debt service coverage requirement. The exact amount varies by year.
Sensitivity Analysis
Although the CPUC decided on the APD in the PCIA proceeding, there is still significant uncertainty
around where PG&E’s generation and PCIA rates will be set for 2019 and beyond. In light of this
uncertainty, TEA tested the same four low-cost operating scenarios but with a 2.5% decrease in PG&E’s
generation rates and a 2.5% increase in PG&E’s PCIA rates relative to our base-case assumptions. This
scenario is not intended to be worst-case, but rather to illustrate how much movement in rates would
be needed to jeopardize the viability of the program. The assumed change in rates is unexpected, but
well within the realm of possibility. Although the outcomes show positive net revenue in three out of
four scenarios, all four scenarios fail the annual net revenue to debt service payment ratio requirement
without raising rates to a level resulting in a premium to PG&E.
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Item 5 – Attachment A
4
Table 2. SLO CCA Feasibility Scenario Analysis Sensitivity Analysis
Scenario A - stress B - stress C - stress D - stress
Cities Participating 2 2 4 4
Rate Discount vs. PG&E 0% 0% 0% 0%
RPS 40% 40% 40% 40%
Carbon-Free Power 80% 100% 80% 100%
Internal Admin $500,000 $500,000 $500,000 $500,000
Startup Loan $2,100,000 $2,100,000 $2,300,000 $2,300,000
PG&E Avg. Gen Rate 2020 ($/MWh) $102.13 $102.13 $102.13 $102.13
PG&E Avg. PCIA 2020 ($/MWh) $33.80 $33.80 $33.80 $33.80
Cumulative Net Revenue (Yr. 3) $612,172 -$67,744 $1,871,781 $836,613
Meet 1.25x DSC on Startup Loan1 No No No No
Year 3 C.N.R. as % of Annual Costs 3% 0% 6% 3%
Years to C.N.R. > 40% of Annual
Costs >10 >10 10 >10
1The debt service coverage test assumes CCCE rate parity with PG&E. In each instance, the debt service coverage covenant
could be met by increasing CCCE rates. Each scenario is unique, but in most instances, a rate premium to PG&E of 3-5% was
sufficient to meet the debt service coverage requirement. The exact amount varies by year.
Next Steps
The uncertainty around PG&E’s generation and PCIA rates will be somewhat reduced in the first half of
November 2018 when PG&E issues the “November Update” to their 2019 Energy Resource Recovery
Account (ERRA) forecast. At that time, these results will be reevaluated in time to decide whether or not
to proceed with an implementation plan.
As noted above, if CCCE is interested in further exploring a credit solution provided by River City Bank,
the next step is to share detailed financial projections with River City Bank to further explore the cost
and availability of a bank sourced credit solution.
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Item 5 - Attachment B
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