"We kind of expected it because we've had third parties look at our implementation plan and all of our documents," said Joe Mosca, an Encinitas City Council member and the chair for San Diego Community Power, known as SDCP for short. "Even though it was expected, we certainly feel good about this first step and I think it bodes well for all the other steps that we have coming up."
Under the community choice aggregation, or CCA, model, local governments can form entities that assume an important function that had always been reserved for investor-owned utilities — what sources of power to buy. SDCP anticipates offering a default program consisting of 50 to 60 percent renewable energy sources at rates 2 percent to 4 percent cheaper than San Diego Gas & Electric.
SDCP's customer base in the five cities is expected to come to 920,000, which would make it the second-largest CCA in the state.
Last month, SDCP's board members — made up of one city council member from each of the five cities — unanimously voted to approve a three-year, $1.15 million contract with Pacific Energy Advisors, a Folsom-based consulting group, to advise the board on wholesale power services that include energy planning, purchasing, risk management and rate design.
Pacific Energy Advisors "is really well-respected" among California CCAs, Mosca said. The firm's website counts at least nine community choice energy programs as clients, including Marin Clean Energy that launched in 2010 as the first CCA in the Golden State.
SDCP is also moving forward to recruit a CEO. Mosca said he expects the names of three or four candidates will be submitted to the board by the latter part of May or early June. He did not disclose the salary range. "We will offer competitive salary and benefits and so we're expecting a really positive response," Mosca said.
While CCAs purchase power for a given community, that does not mean they replace utilities. The power companies still perform all their other responsibilities, such as transmission and distribution of energy, as well as customer billing and services.
The revenue generated by a CCA can be used to build up financial reserves to ensure the program can offer rates that are lower than or the same as the incumbent utility. The money can also be used to invest in renewable energy programs and establish clean energy projects, such as building electric vehicle charging stations in a CCA's territory.
As per state rules, electricity customers are automatically enrolled in a newly created CCA. If customers want to remain with their traditional utility, they can opt out by going through the CCA.
Critics have questioned the long-term financial prospects of CCAs and point to financial mishaps on the municipal government level, such as the San Diego pension crisis of the early 2000s, as warning signs. Proponents of community energy say none of the 19 CCAs in the state have gone broke and say the joint powers agreements the cities have put in place will protect their respective general funds should the program go south.
SDCP plans to start phasing in its commercial customers in March 2021 and hopes to migrate all of its residential customers by November 2021.
The city of Solana Beach unveiled the first CCA in the county last year — the Solana Energy Alliance, a stand-alone entity with about 4,300 customers. The CAA there offers a default program made up of energy sources that are 50 percent renewable and 75 percent carbon-free while charging a rate 3 percent cheaper than SDG&E.
But Solana Beach is considering reducing the discount to as low as zero after a combination of regulatory changes and higher costs reduced the CCA's expected cash reserves.
Does that give Mosca pause?
"For me personally, the promise of (CCAs) is a lot more than just a discount from the local utility," he said, referring to local control of power purchases and the prospect of investing revenue on clean energy projects. "But I understand that's an important aspect for many, many ratepayers and many of my fellow board members.
"Going forward, we're going to be working with our energy purchasers and we're looking at what we can purchase and how fast we can purchase — all of that has to be balanced," Mosca said. "But I see the goal of a 2 to 4 percent discount as a very important goal and one that the board intends on keeping."
SDCP's next board meeting will be March 26 at the City of San Diego's Council Chambers on the 12th floor at 202 C Street.
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