By Leanna Sweha
City staff briefed the Council at its last meeting on the timeline for the Joint Davis and Yolo County Community Choice Energy (CCE) program.
The CCE will be set up as a joint powers agency, which will purchase electricity on the wholesale market and sell it at retail rates to residents and businesses in Davis and in unincorporated Yolo County.
According to staff, a joint powers agreement will be ready in the fall, and the program will be ready to go live in May or June of 2017.
When the Council approved the CCE back in March, it relied heavily on technical consultant TEA’s draft final technical study. TEA found that a Davis-Yolo CCE will be able to provide cleaner electricity at lower rates than PG&E.
So just how much cleaner and cheaper electricity can we expect?
First, some basics on the program:
– All Davis residents and businesses will be enrolled in the CCE but can opt out and revert to buying electricity from PG&E.
– PG&E will continue to provide electric transmission and distribution, as well as maintenance, meter reading and billing. PG&E also remains the natural gas supplier to the area.
– The monthly bill will show a CCE electric generation charge as a separate line item along with PG&E line items for natural gas, transmission, distribution, and energy efficiency programs.
– Customers also will pay a Power Cost Indifference Adjustment charge. This is a state-approved exit fee to help PG&E recoup costs from its older power contracts.
The intent is for the CCE to offer different electric supply portfolios, each with its own rates. The TEA report compared forecasted PG&E rates to forecasted rates for four hypothetical CCE supply portfolios:
- Least cost portfolio: System power (natural gas power plants) with bundled renewable energy credits to meet the state’s minimum 50% renewable energy (“RPS”) requirement.
- Resource specific portfolio: Solar contracts to achieve the 50% RPS and system power for the balance of the portfolio needs.
- Increasing Renewable Supply Portfolio: Grows the amount of renewable energy procured from 50% in 2017 to 75% by 2021 by adding additional solar and wind.
- Marin Clean Energy-like Portfolio: Mimics the portfolio of the Marin Clean Energy CCE, which by 2026 will draw solely from utility-scale solar, local solar, wind, geothermal and large hydro.
According to TEA, all four CCE supply portfolios had 10-year average rates at least 7% lower than PG&E, while allowing the CCE to accumulate reserves of $15 million. This is good, because achieving lower rates while building financial reserves were prerequisites for going forward with a CCE.
All four CCE supply portfolios include 50% renewables in 2017, with two of the four increasing to 75% renewables in 2026. PG&E is expected to source from 27% renewables in 2017, increasing to 43% renewable by 2026. Here, the CCE starts out strong, but if renewables stay at 50%, PG&E starts to catch up in 10 years.
The greenhouse gas emissions numbers are closer to PG&E’s. Three of the assumed CCE portfolios achieve emissions reductions only 5-6% greater than PG&E. Only the Marin Clean Energy-like portfolio achieves significantly lower carbon content by 2026.
So, what does all this mean? Well, it means that if beating PG&E in greenhouse gas reductions and renewables in the short term is an important goal, then the Davis-Yolo CCE should offer a supply portfolio that exceeds the state’s 2030 50% renewable standard.
The TEA study found that the CCE can offer a Marin Clean Energy-like portfolio with 2017 rates 5% below PG&E. Whether this option will actually be offered remains to be seen, but there is a bigger question. Will customers be willing to pay the premium rates that come with such a portfolio?
Gerald Braun, a veteran of the energy industry and a member of the Community Choice Energy Advisory Committee, noted that there is a distinct short term versus long term view for a new CCE program.
According to Braun, no revenue forecast can be completely accurate, but TEA’s analysis did not foresee a scenario where the range of possible rate differences pointed to a ‘no-go’ decision. “The bottom line, however, is that for the CCE to be viable over the long term, CCE rates need to stay below those of PG&E,” he said.
Braun noted that if rates are set too low, it will be difficult to build up reserves that enable investments in local resources, like community solar. “The trick is to find a sweet spot where customers will stay with the CCE for competitive rates, while allowing for accumulation of reserves,” he added.
We will revisit this issue as the CCE comes out with resource portfolio options and related rates at the end of 2016.