County to submit electricity buying plan to state

A divided Riverside County Board of Supervisors voted to take the next step toward establishing a “Community Choice Aggregation” program that would enable Riverside County to buy electricity on the open market, with the goal of delivering power to residents in unincorporated communities at lower rates.

In a 3-2 vote – with Supervisors Kevin Jeffries and Chuck Washington opposed – the board approved sending the county’s proposed CCA Implementation Plan to the California Public Utilities Commission for review, which is expected to take about three months.

“This is just to file the plan with the PUC. We’re not entering into any contracts,” county Legislative Affairs Director Brian Nestande said.

The plan would turn the county executive office into a quasi public utility, seeking optimal terms on which to purchase megawatts that would be distributed using existing Southern California Edison transmission lines.

In order for the CCA to function, current SCE customers would have to leave the utility and migrate to the county system, which would come at a cost.

According to Nestande, SCE would be entitled to what’s called a “power charge indifference adjustment” because of the losses the utility would incur from losing customers for whom it had already bought electricity through futures contracts.

The PCIA, better known as an “exit fee,” would be absorbed by the county and passed on to CCA users in their utility bills. County officials said the additional costs would amount to a few extra cents on customers’ bills for a set period of time.

Jeffries disliked the idea of the county being saddled with exit fees that would add to the $1.7 million in startup costs for the CCA to operate.

The supervisor said he was even less enthused upon learning the CPUC will hold a hearing on the matter seven to eight months from now and could allow exit fees to be raised.

“It’s risky to take taxpayer funds knowing there is still a decision (to be made),” he said. “We could be throwing away money.”

Washington said he was unconvinced the touted savings from a CCA would materialize. He also believes there isn’t a large enough potential customer base – 375,000 residents – to justify the program, which wouldn’t be accessible to residents of cities throughout the county.

Supervisor Marion Ashley last month acknowledged that he, too, was worried about committing revenue without knowing all the details and future risks, but he said he felt it was important to “keep going through the process” and laying the groundwork for a CCA as an option.

According to Nestande, there are six CCAs in operation statewide, and both the Coachella Valley Association of Governments and the Western Riverside Council of Governments are on track with proposals of their own. The county was initially working in concert with the two entities, but their CCA proposals splintered last summer.

A summary report on the downside risks to starting a CCA indicated that CCA opt-outs could be costly.

Under the CCA structure, residents and business owners in unincorporated areas would be notified that they would be part of the county electricity distribution program unless they opted out. If enough people stay in, the program would be cost-neutral to the county. However, if people begin flocking back to SCE after the county has sealed contracts to procure power, the program could run into the red, according to the report.

The county would additionally have to employ people to operate the CCA, increasing outlays for salaries and benefits, running upward of $370,000 a year.

New York City-based Good Energy and Oakland-based Keyes, Fox & Wiedman created the implementation plan, alongside county attorneys, detailing how the prospective CCA would work.

Nestande introduced the CCA idea in January 2016, which culminated in the hiring of Good Energy.

The company’s research suggested that by converting to a publicly run energy program, residents could net a total $7.75 million in annual savings on electricity costs – or about 7 to 13 percent off each resident’s power bill in the unincorporated communities. The study also indicated that commercial customers could shave up to 10 percent off their bills, though figures tended to fluctuate depending on the nature of the enterprise.

According to the study, the county would have the opportunity to tap a variety of energy sources for delivery to customers, making block purchases at preferred rates.

In addition to California, CCAs have sprouted in parts of Illinois, Massachusetts, New York and Ohio.

Ratepayers currently served by municipalities with their own utilities, like the city of Riverside, would not be able to participate in the CCA.

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