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HomeMy WebLinkAbout11-27-2018 Item 09 - 2nd Reading for revised Community Choice Energy Meeting Date: 11/27/2018 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 1. Adopt Ordinance No. 1656 (2018 Series) entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, repealing the existing community choice aggregation ordinance and authorizing the implementation of a community choice aggregation program by participating in Monterey Bay Community Power’s community choice aggregation program” (Attachment A). 2. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, terminating the Central Coast Community Energy Joint Powers Agreement on behalf of the city of San Luis Obispo” (Attachment B). 3. Authorize the Mayor to execute an Agreement entitled, “An Agreement between the City of San Luis Obispo and the City of Morro Bay terminating the Joint Exercise of Powers Agreement Establishing Central Coast Community Energy” (Attachment C). DISCUSSION Community Choice Energy Ordinance Community Choice Energy (CCE, referred to in California Public Utility Code as “community choice aggregation”), 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. As discussed at the November 13, 2018 City Council meeting, the City of San Luis Obispo has been studying potential benefits and risks associated with CCE since 2013. On September 18, 2018 the City Council approved Resolution No. 10943 (2018 series) approving the joint powers agreement creating Central Coast Community Energy (CCCE) on behalf of the City of San Luis Obispo and in partnership with the City of Morro Bay for the purpose of implementing a community choice energy program. On October 11, 2018 the California Public Utilities Commission amended the Power Charge Indifference Adjustment, which negatively impacted CCCE’s ability to develop a program with the desired f inancial and environmental benefit. In response, staff engaged Monterey Bay Community Power (MBCP), which is an established community choice energy program capable of providing the desired financial and environmental benefits. On November 7, 2018, the CCCE Board of Directors unanimously voted to direct staff to staff to return to member cities with request to join MBCP. On November 13, 208, the City Council voted 5-0 to join MBCP. Item 9 Packet Pg. 225 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 November 13, 2018 the City Council voted 5-0 to: 1. Adopt a resolution to join a JPA called Monterey Bay Community Power (MBCP) for the purpose of implementing a CCE program; 2. Introduce Ordinance No. 1656 (2018 Series) to rescind the existing ordinance naming CCCE as the implementing agency, and adopt a new ordinance establishing MBCP as the City’s CCE program provider. The Ordinance is now ready for adoption and will become effective on December 27, 2018. Termination of Central Coast Community Energy CCCE was established to host a regional CCE program. As the program will now be hosted by MBCP, staff recommends terminating the CCCE JPA. Section 6.4 of the CCCE Joint Exercise of Powers Agreement says that, “This Agreement may be terminated by mutual agreement of all the Parties; provided, ho wever, the foregoing shall not be construed as limiting the rights of a Party to withdraw its participation in the CCE Program, as described in Section 6.1.” The only other member of CCCE, Morro Bay, also intends to take City Council action to terminate the CCCE Agreement . Section 6.5 of the CCCE Joint Exercise of Powers Agreement says that, “Upon termination of this Agreement, any surplus money or assets in possession of CCCE for use under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred under this Agreement and under any program documents, shall be returned to the then-existing Parties in proportion to the contributions made by each.” CCCE is free of all debts, liabilities, surplus money, and asset. Attachment B provides the Resolution and Attachment C provides the Agreement to terminate CCCE. ENVIRONMENTAL REVIEW The establishment of a CCE is exempt from the requirements of the California Environmental Quality Act (“CEQA”) pursuant to the CEQA Guidelines, as it is not a “project” as it has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment because energy will be transported through existing infrastructure (14 Cal. Code Regs. § 15378(a)). Further, establishing a CCE is exempt from CEQA as there is no possibility that this it would have a significant effect on the 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 regu latory agency to assume the maintenance, restoration, enhancement or protection of the environment (14 Cal. Code Regs. § 15308). Item 9 Packet Pg. 226 FISCAL IMPACT The City set aside $250,000 in carryover funding from the fiscal year 2017-18 budget. At the November 13, 2018 City Council meeting, staff requested that this set aside be used to cover approximately $66,000 ($30,000 in TEA consultant fees, $15,000 in outside legal counsel fees, $6,000 for a contract extension with LEAN Energ y, and $15,000 to repay MBCP for updating their Implementation Plan). There are no known additional direct costs. ALTERNATIVES 1. Reject the proposed ordinance. The City Council may reject the proposed ordinance, which would effectively end the City’s pursuit of CCE. 2. Reject the proposed resolution. The City Council may choose to retain the Central Coast Community Energy JPA. Staff does not recommend this as retaining the JPA would require administrative costs without providing any clear benefit. Attachments: a - CCE Implementing Ordinance b - Resolution Terminating Central Coast Community Energy c - Agreement Terminating Central Coast Community Energy Item 9 Packet Pg. 227 O ______ ORDINANCE NO. 1656 (2018 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, REPEALING THE EXISTING COMMUNITY CHOICE AGGREGATION ORDINANCE AND AUTHORIZING THE IMPLEMENTATION OF A COMMUNITY CHOICE AGGREGATION PROGRAM BY PARTICIPATING IN MONTEREY BAY COMMUNITY POWER’S 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 in order to provide electric service to customers within the City of San Luis Obispo 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 prov ide 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, on September 18, 2018 the Cities of San Luis Obispo and Morro Bay, formed a Joint Powers Authority called Central Coast Community Energy (“CCCE.”) to host a CCA program; and WHEREAS, on October 2, 2018 the City of San Luis Obispo adopted Ordinance No. 1654 (2018 Series) as required by Public Utilities Code section 366.2 authorizing the implementation of a Community Choice Aggregation program through CCCE; and WHEREAS, on October 11, 2018 the California Public Utilities Commission amended the Power Charge Indifference Adjustment, which negatively impacted CCCE’s ability to develop a program with the desired financial and environmental benefit ; and WHEREAS, Monterey Bay Community Power (MBCP) is an established CCA program capable of providing the desired financial and environmental benefits, and Item 9 Packet Pg. 228 Ordinance No. 1656 (2018 Series) Page 2 O ______ WHEREAS, MBCP will enter into Agreements with electric power suppliers and other service providers, and based upon those Agreements MBCP 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 amended Implementation Plan adopted by MBCP, MBCP will be able to provide service to customers within the City of San Luis Obispo; and 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; and WHEREAS, on November 13 and November 27, the City Council held public hearings on the manner in which San Luis Obispo will participate in a CCA program 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 through MBCP; and WHEREAS, this ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to the CEQA Guidelines, as it is not a “project” as it has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment. (14 Cal. Code Regs. § 15378(a)). Further, the ordinance is exempt from CEQA as there is no possibility that the ordinance or its implementation would have a significant effect on the environment. (14 Cal. Code Regs. § 15061(b)(3)). The ordinance is also categorically exempt because it is an action taken by a regulatory agency to assume the maintenance, restoration, enhancement or protection of the environment. (14 Cal. Code Regs. § 15308). NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. The above recitations are true and correct and material to this Ordinance. SECTION 2. Repeal of Ordinance No. 1654 (2018 Series). Based upon the forgoing, the City Council hereby repeals Ordinance No. 1654 (2018 Series) SECTION 3. Authorization to Implement a Community Choice Aggregation Program. Based upon the forgoing, and in order to provide business es 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 Monterey Bay Community Power, as generally described in its Joint Powers Agreement. Item 9 Packet Pg. 229 Ordinance No. 1656 (2018 Series) Page 3 O ______ SECTION 4. This Ordinance shall be in full force and effective 30 days after its adoption and shall be published and posted as required by law. INTRODUCED on the ____ day of ____, 2018, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ____, 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 Item 9 Packet Pg. 230 R ______ RESOLUTION NO. _____ (2018 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, TERMINATING THE CENTRAL COAST COMMUNITY ENERGY JOINT POWERS AGREEMENT ON BEHALF OF THE CITY OF SAN LUIS OBISPO WHEREAS, on September 18, 2018 the City Council approved Resolution No. 10943 (2018 series) approving the Joint Exercise of Power Agreement Relating to and Creating Central Coast Community Energy (CCCE) on behalf of the City of San Luis Obispo for the purpose of implementing a community choice energy program; and WHEREAS, on October 11, 2018 the California Public Utilities Commission amended the Power Charge Indifference Adjustment, which negatively impacted CCCE’s ability to develop a program with the desired financial and environmental benefit; and WHEREAS, Monterey Bay Community Power (MBCP), a joint powers authority, is an established community choice energy program capable of providing the desired financial and environmental benefits, and WHEREAS, on November 7, 2018, the CCCE Board of Directors unanimously voted to direct staff to staff to return to the member cities with a request to join MBCP; and WHEREAS, on November 13, 2018, the City Council voted 5-0 to join MBCP; and WHEREAS, Section 6.4 of the CCCE Joint Exercise of Powers Agreement provides that the Agreement may be terminated by mutual agreement of all the Parties; and WHEREAS, the only other member of CCCE, Morro Bay, intends to take City Council action to terminate the CCCE Agreement; WHEREAS, Section 6.5 of the CCCE Joint Exercise of Powers Agreement says that, “Upon termination of this Agreement, any surplus money or assets in possession of CCCE for use under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred under this Agreement and under any program documents, shall be returned to the then-existing Parties in proportion to the contributions made by each.”; and WHEREAS, CCCE is free of all debts, liabilities, surplus money, and assets. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that : SECTION 1. The City Council hereby approves the termination of the Joint Exercise of Powers Agreement Relating to and Creating Central Coast Community Energy (the “JPA Agreement”), and authorizes the Mayor to enter into the written agreement with the City of Morro Bay, attached hereto, formally terminating the JPA Agreement. Item 9 Packet Pg. 231 Resolution No. _____ (2018 Series) Page 2 R ______ SECTION 2. This resolution and the termination of the Central Coast Community Energy Authority is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, as it is not a “project” since this action involves organizational and administrative activities of government that will not result in direct or indirect physical changes in the environment. (14 Cal. Code Regs. § 15378(b)(5)). SECTION 3. This resolution shall be effective immediately upon passage and adoption. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2018. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: _____________________________________ 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 Item 9 Packet Pg. 232 AN AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND THE CITY OF MORRO BAY TERMINATING THE JOINT EXERCISE OF POWERS AGREEMENT ESTABLISHING CENTRAL COAST COMMUNITY ENERGY This Termination Agreement is made and entered into this _______ day of November 2018 by and between the City of San Luis Obispo and the City of Morro Bay (hereinafter collectively referred to as the “Parties”). WHEREAS, the City of San Luis Obispo and the City of Morro Bay entered into a Joint Exercise of Powers Agreement, effective October 5, 2018, establishing Central Coast Community Energy (CCCE); and WHEREAS, on October 11, 2018, the California Public Utilities Commission amended the Power Charge Indifference Adjustment, which negatively impacted CCCE’s ability to develop a program with the desired financial and environmental benefits; and WHEREAS, Monterey Bay Community Power (MBCP), a joint powers authority, is an established community choice energy program capable of providing the desired financial and environmental benefits, and WHEREAS, on November 13, 2018, the City Councils for both San Luis Obispo and Morro Bay voted 5-0 to join MBCP; and WHEREAS, Section 6.4 of the CCCE Joint Exercise of Powers Agreement provides that such Agreement may be terminated by mutual agreement of all the Parties; and WHEREAS, the Parties are the only members of CCCE, and have the authority to terminate the CCCE Joint Exercise of Powers Agreement pursuant to this Agreement; and WHEREAS, CCCE is free of all debts, liabilities, surplus money, and assets and therefore no further actions are required by the Parties when the Joint Exercise of Powers Agreement is hereby terminated. NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions hereinafter set forth, it is agreed by and between the Parties as follows: SECTION 1. Pursuant to Section 6.4 of the Joint Exercise of Powers Agreement Relating to and Creating Central Coast Community Energ y, effective October 5, 2018, the Parties hereby terminate such Agreement effective upon the execution of this Termination Agreement by both the City of San Luis Obispo and the City of Morro Bay. Item 9 Packet Pg. 233 Page 2 CITY OF SAN LUIS OBISPO ____________________________________ Heidi Harmon, Mayor CITY OF MORRO BAY ____________________________________ Jamie L. Irons, Mayor ATTEST: ____________________________________ Teresa Purrington City Clerk ATTEST: ____________________________________ Dana Swanson City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney APPROVED AS TO FORM: _____________________________________ Joseph W. Pannone City Attorney Item 9 Packet Pg. 234 THENewspaper of the Central Coast MBUNE RECEIVED NOV 2 6 2018 SLO CITY CLERI{ 3825 South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 • (805) 781-7800 In The Superior Court of The State of California In and for the County of San Luis Obispo 49 �� ORIM AD #3959277 ORDINANCE NO. 1656 (2018 SERIES) CITY OF SAN LUIS OBISPO AN ORDINANCE OF THE CITY COUN- OFFICE OF THE CITY CLERK CIL OF THE CITY OF SAN LUIS OBI - SPO, CALIFORNIA, REPEALING THE EXISTING COMMUNITY CHOICE AG - STATE OF CALIFORNIA GREGATION ORDINANCE AND AU- THORIZING THE IMPLEMENTATION OF SS. A COMMUNITY CHOICE AGGREGA- County of San Luis Obispo TION PROGRAM BY PARTICIPATING IN MONTEREY BAY COMMUNITY POW- ER'S COMMUNITY CHOICE AGGREGA- I am a citizen of the United States and a resident of the TION PROGRAM County aforesaid; I am over the age of eighteen and not NOTICE IS HEREBY GIVEN that the City interested in the above entitled matter; I am now, and at Council of the City of San Luis Obispo, Cal - ifornia, at its Regular Meeting of November all times embraced in the publication herein mentioned 13, 201§, introduced the above titled ordi. was, the principal clerk of the printers and publishers of nance upon a motion by Council Member Pease, second by -Vice Mayor Chrlslien- THE TRIBUNE, a newspaper of general Circulation, son, and on the following roll call vote: printed and published daily at the City of San Luis AYES: Council Members Gomez, Pease, Obispo in the above named county and state; that notice and Rivoire; Vice Mayor Christianson, and Mayor Harmon at which the annexed clippings is a true copy, was NOES: None published in the above-named newspaper and not in any �_rdinan_�eNo. 165$ 20ip_�gdI_@q) —This supplement thereof — on the following dates to wit; is a City Ordinance authorizing the imple- mentation of a community choice aggraga- NOVEMBER 21, 2018 that said newspaper was duly tion program in the jurisdiction of the City and regularly ascertained and established a newspaper of by pa rticfpal Ing as a group In the Com muni. ty Choice Aggregation PrOgram of Monte - circulation b Decree entered in the Superior g Y P My rey Bay Community Power, as generally described In Its Joint Powers Agrcaamanl. Court of San Luis Obispo County, State of California, on June 9 1952 Case #19139 under the Government Code > ti laid and complete copy of the r inspfo ection Honed Ordinance is available for irrspecticn of the State of California, at 090 Palm Siree SanLLuiis Office, located Ca�• fornia, Or you may call (805) 781-7100 for I certify (or declare) under the penalty of perjury that the more information. foregoing IS true and correct. NOTICE IS HEREBY FURTHER GIVEN Mm, that the City Council of the City of San Luis Obispo will consider adopting the aforemenlioned Ordlnance.al its Regular (S1i ure of Principal Clerk) Meeting of November 27, 2018 at 6:00 p,m., which will be held in the Council DATE: NOVEMBER 21, 2018 Chamber, located at 990 Palm Street, San Luis Obispo, California. AD COST: $167.04 Teresa Purringlon City Cleric Plavem nr 21, 2018 3959277