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HomeMy WebLinkAbout2021-03-25; Clean Energy Alliance JPA; ; Clean Energy Alliance Operational, Administrative and Regulatory Affairs Update4111110- CLEAN ENERGY ALLIANCE Staff Report DATE: March 25, 2021 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 2: Clean Energy Alliance Operational, Administrative and Regulatory Affairs Update RECOMMENDATION 1)Receive and File Operational and Administrative Update Report from Interim CEO. 2)Receive Community Choice Aggregation Regulatory Affairs Report from Special Counsel. BACKGROUND AND DISCUSSION This report provides an update to the Clean Energy Alliance (CEA) Board regarding the status of the operational, administrative and regulatory affairs activities. OPERATIONAL UPDATE CEA is meeting its milestones for the implementation of its community choice aggregation (CCA) program and is on track to begin serving customers in May 2021/June 2021. (Attachment A - Clean Energy Alliance Timeline of Implementation Action Items). CEA Launch Update CEA is on schedule to begin mass enrollment of customers beginning May 1,2021, and will continue through June 30, 2021. The first CEA pre-enrollment notices were sent out to Carlsbad & Del Mar customers the week of March 15; the call center began operations on March 16, 2021, and customers can reach the call center by calling CEA's toll-free number: (833) 232-3110. CEA's website has been updated to provide the capabilities for customers to self-serve elections to opt-up, opt-down or opt-out. The 2" pre-enrollment notices will go out the beginning of April to Carlsbad & Del Mar customers and a notice will also be sent out to existing Solana Energy Alliance customers providing information regarding their transition to CEA. Customers that do not opt-out of CEA will be automatically enrolled in CEA at the end of their billing period in the month of enrollment. San Diego Gas & Electric (SDG&E) has been working over the past several years on their Customer Information System replacement program, known as Envision. They had committed to, and were on track, for a January 4, 2021 go live, despite the challenges of working remote in the COVID-19 March 25, 2021 Admin & Regulatory Update Page 2 of 5 environment. With a January 2021 go live, SDG&E committed to supporting the CEA launch of May 2021. On Friday July 10, CEA staff, its regulatory attorney Ty Tosdal, and data manager Calpine Energy Solutions participated in a call with San Diego Community Power and SDG&E regarding the recently approved California Public Utilities Commission (CPUC) Decision D. 20-06-003, which requires the Investor Owned Utilities (IOU) to adopt rules and policy changes designed to reduce the number of residential disconnections, provide assistance with debt forgiveness, and offer extended payment plans. The program, known as Arrearage Management Payment program, is required to be implemented by April 2021. This timing has presented a challenge to SDG&E to keep its go live date of Jan uary 4, 2021, while also meeting the requirements of the decision. SDG&E submitted a letter to the CPUC requesting an extension to September 30, 2021, for implementing the new procedures and policies required by the decision. This request was denied by the CPUC, resulting in SDG&E postponing implementation of its Envision project to April 2021. The postponement of the Envision go live date impacts CEA's implementation. CEA and its consultants have worked diligently with SDG&E to develop a launch schedule that minimized impact to CEA while also minimizing the risk of incorrect bills being sent to customers. SDG&E and CEA have agreed to a two-phased schedule with accounts transitioning to CEA in May and June 2021, and the Board authorized the Interim Chief Executive Officer to enter into a letter agreement with SDG&E memorializing the phased approach. The May 2021 Phase 1 would include the transition of Solana Energy Alliance customers to CEA as well as customers in Carlsbad and Del Mar who do not have complex billing plans. Those customers who have been identified with complex billing plans would transition in June 2021. Staff continues to work with Calpine and SDG&E to fine tune the customer list for each phase. CEA Communications and Marketing Update The CEA communications team at Tripepi Smith have completed the CEA Toolkit (Attachment B), which includes the Brand Statement, Talking Points, Pocket Guide and PCIA Fact Sheet. CEA has begun making presentations to community groups, including the Carlsbad Chamber of Commerce Government Affairs Committee and Torrey Pines Democratic Club (March 25). Coinciding with the 1st pre-enrollment notice mailing, social media blasts will be posted that highlight CEA benefits, addresses common FAQs, and respond to questions and misinformation that come to the attention of CEA staff. Community Advisory Committee The Community Advisory Committee (CAC) held a special meeting on March 11, 2021. The focus of the meeting was CEA's adopted rates and power supply product offerings and a review of the CEA Communications Toolkit. The CAC will assist with monitoring social media for comments, questions, or concerns, so that CEA can respond timely. The CAC is also assisting with identifying community groups to reach out to for presentation March 25, 2021 Admin & Regulatory Update Page 3 of 5 Risk Oversight Committee Consistent with the Energy Risk Management Policy Delegation of Authority, the CEA Board Chair and Interim Chief Executive Officer authorized the initial convention energy hedge transactions for CEA power supply needs. Expansion of Clean Energy Alliance In support of CEA's interest in attracting additional member agencies, letters will be going out to prospective agencies during the week of April 5, 2021, offering to meet with leadership to discuss the benefits and opportunities related to joining CEA. Discussions with Key Potential CEA Customers Staff continues its discussions with San Diego County Water Agency (SDCWA), Encina Wastewater Authority, and Carlsbad Municipal Water District regarding Clean Energy Alliance and implications related to enrollment in CEA. SDCWA presented a CCA overview to its Board at its February 25, 2021, Board of Directors meeting. Resource Adequacy Compliance As a load serving entity serving customers in 2021, CEA has an obligation to procure Resource Adequacy (RA), based on quantities allocated by CPUC and California Independent System Operator (CAISO). RA procurements do not supply any energy to CEA or its customers, rather it commits the seller to be available to supply energy to the grid if called upon by the CAISO and reduce the possibility of outages. This process is key to ensuring grid reliability. CEA successfully procured all its RA requirements and is fully compliant with its RA obligation. Long-Term Renewable Procurement As a load serving entity, CEA will be required to procure 65% of its minimum state required renewable portfolio standards in contracts of ten-years or longer. To ensure compliance with this requirement, CEA's initial renewable energy solicitation is underway. The solicitation process, from beginning through final execution can be lengthy, particularly in light of the impacts of COVID-19 on the renewable development industry. The solicitation opened on July 1, 2020, with proposals due July 27, 2020. CEA's - consultant, Pacific Energy Advisors, has identified a short list of projects and negotiations are proceeding. Final power purchase agreements will be brought to the CEA Board for consideration of approval. Staff has also begun discussions with SDG&E regarding entering into bilateral agreements for the procurement of renewable energy. These discussions are on-going and any proposed agreement will be brought to the CEA Board for approval. AMOUNT VENDOR DESCRIPTION None March 25, 2021 Admin & Regulatory Update Page 4 of 5 Contracts $50,000 - $100,000 entered into by interim Chief Executive Officer REGULATORY UPDATE CEA's regulatory attorney, Ty Tosdal, will provide an update to the Board on current regulatory activities (Attachment C). FISCAL IMPACT There is no fiscal impact by this action. ATTACHMENTS Attachment A - Clean Energy Alliance Timeline of Implementation Action Item Attachment B — Clean Energy Alliahce Communications Toolkit Attachment C— Tosdal APC Regulatory Update Report March 25, 2021 Admin & Regulatory Update Page 5 of 5 Attachment A Clean Energy itliance Amine of Action Items tfAPrcgium Related Timing Description Status 3rd Cttr '20 4th Or 20 1st Qtr 71 Apr-21 May-21 Jun-21 Jul-21 9/1/20 Marlceting/Customer Outreach Plan Development & IGdaif 9/17/20 Bid Evaluation and Criteria Scoring System Complete 9/17/20 Award Scheduling Coordinator Services Complete 11/19/20 Introduce/Adopt Energy Risk Management Policy Complete 10/15 & 11/19 10/15/20 Records Retention Policy Complete System Testing with SDG&E Complete Set up Call Center/Scripting/IVR Recordings Complete 1/21/21 Credit Solution Complete 2/18/21 CEA Default Products/programs/renewable energy policies Complete 2/1/21 Create Customer Pre- and Post-Enrollment Notices In progress 1/21/21 Social Media Policy Complete 1/21/21 Debt Management Policy Complete 2/18/21 Investment Policy Complete 3/1/21 Rate Setting Complete Energy Supply Procurement In progress 3/1/21 Customer Noticing In progress 5/1/21 Launch - 2 phases May &June 2021 I Key: Board Actions/Activity Staff/Consultant Activity Marketing/Customer Outreach CCA Launch CLEAN ENERGY ALLIANCE For more information, please visit: TheCleanEnergyAlliance.org (833)232-3110 We are available to assist Monday — Friday from 8 AM to 5 PM. Item 2 - Attachment B 411111110- CLEAN ENERGY ALLIANCE GREEN. CLEAN. The CEA Brand Statement Clean Energy Alliance (CEA) is a Joint Powers Authority formed by the cities of Carlsbad, Del Mar and Solana Beach to operate a Community Choice Energy program within their communities. Like the people who live and work in its North San Diego County service territory, CEA is environmentally conscious, civically minded and intellectually curious. CEA's progressive perspective on achieving its participating municipalities' Climate Action Plan goals is rooted in local control. Elected officials from the cities of Carlsbad, Del Mar and Solana Beach—all directly accountable to the residents who chose them—govern CEA and oversee financial and programmatic decisions. Each member city has equal voting power and an equal voice. Board meetings are open to the public, assuring community engagement, candid dialogue and transparent action. CEA is a powerful new asset for hastening the move from dirty fossil fuels to clean renewable energy. Maximizing the procurement of carbon-free energy is its focus. By accelerating investment in renewable energy infrastructure and energy efficiency programs, CEA •will generate regional jobs and cultivate resilient communities. CEA's service territory includes not only a robust residential customer base but also a thriving commercial and industrial sector with high- tech, life science, sport and technology hubs that will greatly benefit from the program. Its financial model is feasible. Discretionary net proceeds from CEA will fund programs and projects—including enhanced green programs and projects in CEA's participating municipalities. CEA pursues innovation with diligence and integrity. CEA's power supply will come 50% from a minimum 50% renewable sources, increasing annually to 100% renewable sources by 2035. For more information, please visit: TheCleanEnergyAlUance.org (833)232-3110 We are available to assist Monday — Friday from 8 AM to 5 PM. CLEAN ENERGY ALLIANCE 1110w- CLEAN ENERGY ALLIANCE KEY TALKING POINTS Because CEA is a locally managed, not-for-profit entity, any excess revenue generated by CEA will • be reinvested in the community through innovative energy projects, programs and other incentives. CEA provides a choice where I*• there wasn't one before—customers can choose to stay with CEA or opt-out and remain with SDG&E. CEA will now purchase energy on your behalf instead of San Diego Gas & Electric (SDG&E); however, SDG&E low I 2n1 will continue to deliver energy to your home, maintain power lines and process your electricity bill. SDG&E has indicated that they may want to stop investing in generation and only provide transmission and distribution services. The generation side of customers' electricity bill is approximately 25%, which is all CEA controls. GREEN. CLEAN. ge 3 Green. Clean. Connected. Clean Energy Alliance (CEA) is a Joint Powers Authority formed by the cities of Carlsbad, Del Mar and Solana Beach to operate a Community Choice Energy program. t! CLEAN ENERGY. MORE CHOICES. LOCALLY CONTROLLED. 41111110-- CLEAN ENERGY ALLIANCE Learn more at thecteanenergyalliance.org Elected officials from Carlsbad, Del Mar and Solana Beach govern CEA. Each member city has equal voting power and an equal voice. Board meetings are open to the public. By accelerating investment in renewable energy infrastructure and energy efficiency programs, CEA will generate regional jobs and cultivate resilient communities. Discretionary net proceeds will fund green programs and projects. CLEAN ENERGY ENERGY ALLIANCE Questions? Contact us: askcea@thecteanenergyalliance.org (833) 232-3110 We are availaixe to assist Monday-Friday from 8 AM to 5 PM. POWERFUL BENEFITS Clean Energy Achieve Climate Action Plan Goals Reduce GHG Emissions Local Control Community Investment Increase Transparency Choice Quality Service HOW IT WORKS ; •kNERLY ...... 30 0 O CEA purchases power directly from power providers and/or builds energy generation sources. SDG&E delivers energy, handles billing and serves customers. Customers receive energy at competitive rates. Your Energy Plan Choices EAN-:4-4 Minimum 50% CL IMPACT renewable energy content IMPACT 1:2 PERSONAL IMPACT 100% renewable energy content CEAs Net Energy Metering Program (for customers who generate their own power) Customers are automatically enrolled in our Green Impact energy plan and may opt up or opt out. Economically Feasible A feasibility study shows that CEA's model is financially sound. Net revenues may be invested in local programs! programs such as local distributed energy generation, enhanced enerx • Eisgrams, additional support for low-income c stomers, energy storage, electric vehicle charging and other relevant projects at the discretion of the CEA Board of Directors. -• Future • • • oi Past • PCIA based on vintage (month/year of exit) CEA Customers Understanding the PCIA Fee Power Charge Indifference Adjustment CLEAN ENERGY ALLIANCE Customers choosing PCIA calculation is based Utility contracts for future another electricity provider. on relevant contracts in effect at electricity based on like Clean Energy Alliance (CEA). customer's exit date (vintage), and current customers. are subject to the PCIA exit fee. ending when last contract closes. Current statute requires that remaining utility customers not experience cost increase as a result of the implementation of a Community Choice Aggregation program, like CEA. —o 00 • Vintage The methodology for calculating the PCIA is complex, intended to ensure that both utility and CEA customers pay their fair share for energy resources that the utility procured on their behalf. PCIA rates use the concept of "vintaging" to assign different sets of costs to different customers depending on the month and year they left the utility. In theory, the PCIA should reduce over time as energy contracts for that vintage close. However, some variables in the PCIA calculation can drive it up. •• •0 , CEA Customers Page 6 Attachment B CEA CEA's member agencies are able to pool their communities' energy demands and increase their purchasing power for higher renewable energy content. Revenue from the program will be reinvested in local energy infrastructure and energy efficiency programs for customers. 4111110.-- CEA is locally controlled and supported by ratepayers, with no taxpayer subsidies. By law, as a joint powers authority (JPA). CEA is a separate legal entity from its member agencies. Its budget is separate from the member cities' general funds. In addition. CEA is funded by program revenues and reserves. Current members are: •City of Carlsbad •City of Del Mar •City of Solana Beach Understanding the PCIA Fee OW- FrequentIli Asked Questions CLEAN ENERGY ALLIANCE What is the PCIA? The PCIA is an exit fee charged by SDG&E to customers that choose another provider of electricity generation service through direct access or community choice aggregation (CCA) like Clean Energy Alliance (CEA). The fee is designed to cover the difference in the market value of energy resources that were already contracted on a customer's behalf by SDG&E and the cost of those resources. Why does SDG&E charge the PCIA? The intent of the PCIA is to ensure that SDG&E's remaining customers are not burdened with costs associated with energy resources that were procured on behalf of departing CCA customers. Current statute requires that remaining utility customers not experience any cost increase as a result of the implementation of a CCA program. How is the PCIA calculated? Currently. the methodology is complex and includes calculating the difference between the actual costs paid by SDG&E and the current market value of those energy resources. or above market costs. In addition to conventional power, the PCIA includes benchmarks for resource adequacy, renewable energy, and other energy attributes that impact the value of the utility's energy portfolio. The calculation methodology is intended to ensure that both utility and CCA customers pay their fair share for energy resources that the utility procured on their behalf. Do all departing customers pay the same amount? No. PCIA rates use the concept of "vintaging" to assign different sets of costs to different customers. Each CCA is assigned a vintage based on the month and year the CCA's customers left utility service. PCIA rates are different between the vintages. Does the PCIA ever go away? The PCIA continues until the last energy contract in that vintage expires. Will the PCIA go down every year? In theory, there should be less contracted energy in the customer's vintage, however other variables affect the PCIA, such as the market value of energy. In recent years. the market value of conventional energy, which is heavily influenced by natural gas prices, has declined. Additionally, renewable energy prices have declined. Both of these factors cause the PCIA to increase even though the contracted volume of the energy resource may be less than the previous year. Why is the PCIA of concern to CCAs? The PCIA directly affects a CCA's ability to set rates competitive to the incumbent utility. The PCIA was initially conceived to prevent cost shifts between utility customers and direct access customers in zoot The issues with the PCIA are many: •Non-transparency •Lack of auditing of utility costs to determine accuracy •Does not incentivize the utility to minimize or mitigate costs •Leads to rate volatility •Does not prevent cost shifts as required by statute Attachment B Page 7 Clean Energy Alliance Board Update March 18, 2021 T SDAL Ty Tosdal Tosdal APC ENERGY & ENVIRONMENTAL LAW Item 2 Attachment C Overview •Emergency Reliability (R. 20- 11-003) •SDG&E Elimination of Seasonal Rates (A.19-09-014) •SDG&E's CRC Phase 11 (A.19-03-002) •Utility Costs and Rate Affordability Report Emergency Reliability •Proposed Decision issued, ordering IOUs to procure additional resources. Minimum targets — •PG&E — 450 MW •SCE — 450 MW •SDG&E — 100 MW •Maximum undefined — IOUs encouraged to exceed targets, potentially resulting in 1,500 MW of incremental procurement (PRM of 19%). •Increase PRM to 17.5% beginning summer 2021. •IOUs to hold workshops on non-IOU Critical Peak Pricing (CPP) programs by April 7, 2021. •SDG&E ordered to make modifications to its CPP program by summer 2022 to accommodate billing system freeze. •Final Decision issued adjusting High Usage Chare (HUC) and modifying SDG&E's Opt-In Residential U Rates. SDG&E Elimination of Seasonal Rates •Decision adopts uncontested settlement to modify seasonal price TOU-DR2, DR-SES, DR-TOU,TOU-DR,TOU-DR-P, EV-TOU2 and EV-TOU-5 •Average summer bills would decrease 4-5% and average winter bills would increase 4-5%. •Eliminates HUC at the completion of each IOU's migration of residential customers to TOU. SDG&E as soon as possible. differentials in SDG&E's opt-in residential TOU rates — SDG&E's General Rate Case Phase II •Relates to development of SDG&E sales forecast used in ERRA Forecast proceedings to set rates. •Settling Parties Motion for Admission of Addendum to the Settlement Agreement — •SDG&E will not use outdated forecast to set commodity rates. •SDG&E will use the same 2022 sales forecast in its upcoming standalone application and its 2022 ERRA Forecast application. Utility Cost and Affordability Report •Annual Study with new long-term approach. •Major findings — •Rate base is steadily increasing 5-8% annually across IOUs, despite flat load growth •Wildfire hardening and transmission are significant drivers of increasing costs. •Transportation electrification costs are expected to grow in the future. Utility Cost and Affordability Report, Continued •SDG&E rates and costs — •SDG&E has increased rates 48% since 2013 (37% for PG&E, 6% for SCE). •Since 2016, rate base has been increasing on average by about 7% per year for SDG&E despite relatively flat load growth. •SDG&E's bundled rates are projected to rise from $0.302 to $0.443, or about an annual average increase of 4.7% over 2020-2030. Utility Cost and Affordability Report, Continued Figure ES-3: SEGSzE Forecasted Bundled Residential Rates (S nominal/kWh), Wildfire Rate Relative to AU-Other (Non-Wildfire) Rate lit I