Community Choice Energy
Silicon Valley communities have given the green light to a greener grid. As of March 2016, twelve communities have agreed to join Silicon Valley Clean Energy (SVCE), a new nonprofit public agency which will offer a Community Choice Energy (CCE) program for Santa Clara County. The CCE will pool the electricity demand of residents and businesses and buy cleaner power at competitive prices, helping to green our grid and achieve our community’s climate and environmental goals. Additional steps are underway to bring this new energy choice to market in the Spring of 2017. To learn more about SVCE, its process to date and next steps to launch, visit www.svcleanenergy.org.
On February 9, 2016, Los Altos City Council passed Resolution No. 2016-06 approving the Joint Powers Authority establishing and authorizing participation in the Silicon Valley Clean Energy Authority (SVCEA); introduced Ordinance No. 2016-419 authorizing the implementation of a Community Choice Aggregation (CCA) program; and appropriated $150,000 from the General Fund for the initial costs of the Authority. Subsequently, Council appointed Mayor Bruins as a regular Director to the SVCEA Board of Directors and Councilmember Mordo as an alternate.
To view the City Council report regarding this topic, click here.
What is Community Choice Energy (CCE)?
California state policy allows city and county governments to form a local non-profit 'Community Choice Energy' agency to pool electricity demand within and across their communities. The new CCE agency then competitively purchases energy on behalf of participating residents and businesses within these communities. Under Community Choice, the local investor-owned utility (PG&E in our case) continues to maintain responsibility for transmission and distribution of power, and for customer service and billing functions. Energy bills continue to come from PG&E, but list the CCE as the provider of electricity generation.
Where is CCE operating and what are the potential benefits?
In California, CCE agencies in Marin County, Sonoma County, and the City of Lancaster are now providing hundreds of thousands of customers with cleaner, greener energy - at rates less than the commercial utility. They have increased the amount of electricity procured from renewable sources, such as solar, wind and geothermal. In addition, they are actively developing local sources of renewable energy in their communities and offering specialized energy efficiency and solar feed-in tariff programs relevant to their customers.
At least seven other regions in the State of California are considering the formation of local CCE agencies, including all remaining counties in the San Francisco Bay Area. In addition, six other states have also adopted CCE enabling legislation.
Progress of Silicon Valley Communities and CCE
The cities of Sunnyvale, Cupertino, and Mountain View, and the County of Santa Clara (unincorporated areas) have formed the Silicon Valley Community Choice Energy Partnership to study the formation of a local CCE agency. An initial assessment report, completed in May 2015, assessed high-level risks and benefits of forming a local CCE, and determined that eight additional communities were also interested in participating: Campbell, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill and Saratoga. Seven of the eight communities are now moving forward with membership in SVCEA.
In November 2015, a detailed Technical Feasibility Study was completed which analyzed the energy needs of the service area (defined by the jurisdictions involved) and potential rate impacts. The 100-page study considers three energy sourcing scenarios and concludes that a local Community Choice agency has the potential to offer significant economic and environmental benefits to the area.
What are the environmental advantages of CCE?
Electricity generated from fossil fuel sources such as coal or natural gas is a major source of greenhouse gas (GHG) emissions and is generally considered a leading cause of climate change. CCEs in California are choosing to purchase and/or develop electricity from sources that are more heavily weighted towards renewable energy. Renewable energy can provide electricity with little or no GHG emissions.
How does this relate to the Los Altos Climate Action Plan?
The Los Altos Climate Action Plan has set a GHG emissions reduction target for the year 2020 and outlines a wide variety of measures that the City must take to meet this target. CCEs have helped communities reduce GHG emissions and meet local climate goals in a cost-effective fashion - with the potential to deliver ratepayer savings and encourage local investment in renewable energy. The cities of Sunnyvale and Cupertino estimate that the single action of participating in a CCE would achieve at least 25-50% of their 2020 GHG reduction targets. Similar results would be anticipated for Los Altos.
What are the costs?
CCEs are established as a Joint Powers Authority (JPA) agency. Operational CCEs are completely funded through program (ratepayer) revenues and are not subsidized by taxpayer dollars. Start-up costs are shared by participating jurisdictions and subsequently reimbursed from program revenues. The CCE is staffed with full-time personnel responsible for the ongoing operation. The time required from participating agencies is limited primarily to periodic Board of Directors meetings. While there is no guarantee that CCE rates will always be lower than PG&E rates, CCEs have cost advantages in that they are typically small and agile non-profit agencies with low overhead and no shareholder dividends or income taxes.
What are the risks?
The risk to individual customers is low, as there is always the option to buy energy from PG&E instead of the CCE. Also, PG&E continues to maintain the distribution grid and provide the same delivery services regardless of whether a home or business is a CCE customer. CCEs are exposed to the energy market, regulatory and operational risks, which must be managed by CCE staff. Participating jurisdictions are separated by the JPA structure from risks associated with the financial operation of the CCE.
For more information on the Silicon Valley Community Choice Energy Partnership, and to sign up for email updates, visit www.SVCleanEnergy.org.
