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What is Community Choice Energy (CCE)?

Community Choice Energy enables a County and/or its cities to create a new public agency responsible for buying and/or developing power on for its consumers. The electricity continues to be distributed and delivered over the existing electricity lines by the incumbent utility, be it Southern California Edison (SCE) in southern Santa Barbara County or Pacific Gas and Electric (PG&E) in northern Santa Barbara County.

How does CCE work?

The CCE operates as a non-profit public agency with a publicly accountable board of directors. Based on the values of participating communities, the CCE can choose what type of electricity to purchase and where the electricity originates (or is produced) geographically. This means that the CCE program can buy renewable, low carbon emission energy and support the State and local economy by purchasing energy produced in the State of California, regionally and locally. It can also offer locally tailored energy programs and attractive financial tools that support energy efficiency programs, ownership of rooftop solar and other renewable technologies and strategies.

Is CCE a market-based approach?

Yes, CCE is a market-based approach enabled through Public-Private Partnerships. Unlike other services such as phone, cable, and internet, owners of homes and businesses do not currently have a choice of electricity supplier. As regulated monopolies, PG&E and SCE do not have any competitors forcing them to provide lower rates, cleaner energy, or innovative services. What makes CCE so powerful is that it supports several levels of market competition: first by providing a choice to consumers and second by sourcing its power through a competitive process whereby private energy companies and project developers compete to provide clean power at the lowest price.

Are CCE programs successful?

Community Choice Energy programs are currently available in six states including California, Illinois, Massachusetts, Ohio, New Jersey, and Rhode Island. CCE is a flexible tool that is successful in both small rural counties and in large urban cities such as Cincinnati. In California, Marin Clean Energy was the first CCE program in the state. It started with 14,000 customers three years ago and now has over 100,000 customers. Sonoma County also successfully launched a CCE program in 2014, and the City of Lancaster just launched its own program in May 2015.

What other California Counties/Communities are exploring CCE?

Communities throughout California are exploring CCE, including the cities of San Francisco and San Diego, San Mateo County, Alameda County, Los Angeles County, Santa Clara County, Monterey County, San Luis Obispo County, Santa Cruz County, San Benito County, Santa Barbara County, Yolo County, and several cities in Silicon Valley.

If I installed solar panels on my home or business, would I need a Power Purchase Agreement to sell our excess energy to a CCE?

No. The CCE would be able to offer property owners fair market rates for their excess energy production without a Purchase Power Agreement—even if that solar installation took place before the CCE launched. Homeowners are able to sell their excess energy onto the grid through “net metering” programs; CCEs have been able to offer better net metering rates than utilities. Customers who generate surplus electricity would be automatically enrolled into a CCE’s net metering program, unless they choose to opt-out and remain with the utility. Larger solar projects that are “in front of the meter” can also be facilitated under a CCE’s feed-in-tariff program which uses a standard power contract with set prices to buy all the power generated from that facility on behalf of CCE customers.

What about natural gas? Isn’t it cheap right now?

Yes, compared to historical levels, natural gas is inexpensive right now. Future natural gas prices are uncertain, however, and many experts expect prices to rise in the near future as US exports increase to meet growing demand in developing markets, such as China and India. A CCE would strive to achieve the best balance between cost and environmental benefits, which may include some natural gas- sourced electricity.Some CCE programs, however, have made policy decisions to not procure coal or nuclear resources to supply their local power needs.

How would a CCE’s rates compare to current rates?

Studied observation of both forming and operating CCEs in California indicates that rates will be competitive with PG&E and SCE, and are likely to remain so for the foreseeable future. Though there is no guarantee, Community Choice Energy programs in California and other states have frequently offered lower rates than their investor-owned utility competitors.

How will customers be impacted if a CCE is created in Santa Barbara County?

Day-to-day, most customers will not notice any change other than line item on their utility bill that for PG&E or SCE electric generation charges will be replaced with a line item for CCE’s electric generation charges. Electricity customers will also have several first time options – first options in energy providers and also options for cleaner electricity with fewer associated greenhouse gas emissions. In addition, customers will probably notice that their electric generation rates are lower and remain more stable, and that they have access to new energy efficiency and other clean energy programs helping to make their home or business more comfortable and cost effective. They may also notice more clean energy projects going on in their community (e.g., new solar installations on schools or municipal buildings).

What about PG&E and SCE? Where do they fit in?

PG&E and SCE would remain important partners in any Santa Barbara County CCE program. Under a CCE, PG&E and SCE would continue to deliver reliable power, maintain the power lines, respond to service outages, and handle customer billing. PG&E and SCE are investor-owned utilities, operating as regulated monopolies by the State of California. Under an agreement with the State, PG&E and SCE are guaranteed annual shareholder returns to reliably deliver power and to build and maintain power lines. Per statute and codified in the CCE/Utility Service Agreement, PG&E and SCE must fully cooperate with any community that wishes to form a CCE program.

How would a Santa Barbara County CCE be funded?

Like any worthwhile investment, CCE formation requires an initial start-up investment and an attractive return. This small investment establishes a much larger publicly held joint powers agency focused on clean energy and investment of electricity revenues here at home. After operation begins, the CCE is self-funded through ratepayer revenues and the start-up investment provided by the County will be paid back.

Would customers have to participate in a CCE if they are in the service area?

No. Although the CCE would become the default service provider of electricity for the County and any participating cities, customers always have the choice to purchase their energy from the existing utility company. Prior to the beginning of a CCE’s operation, all power customers will receive at least four “opt-out” notices during a sixty-day period at which time anyone can opt-out of the program at no cost. There is an additional sixty-day period after the start of the program during which any customers can opt out at no cost. After that, customers may still opt-out for a nominal fee. After opting-out, the customer is prohibited from returning to the CCE for a period of one year.

Will taxes increase?

A CCE program does not have the ability to tax and has no impact on taxes. A CCE program is completely revenue funded, requiring zero tax dollars from customers or participating communities.

Would County or City General Funds be at risk?

Within the joint powers agency structure, there is no risk to local government general funds. A CCE’s budget is completely separate from the general funds of participating local governments, protecting both local governments and the CCE. Additionally, pressure on general funds may be alleviated due to an increase in financial and human resources focused on energy and climate goals throughout the region.

How would a County / Regional CCE be structured?

A CCE operates as a non-profit public agency with a publicly accountable board of directors made up of elected officials from participating communities. A CCE uses a very common legal structure for municipal public entities called a Joint Powers Authority (JPA). The JPA creates a legal structure that separates participating local governments and the CCE from any transfer of financial risk. Since a CCE operates as a public business, it would strategically maintain a lean staff; operation and administration expenses in both Marin and Sonoma account for only 5-6% of their CCE’s overall operating budget.

How is a CCE program set up?

Local governments must pass an ordinance to join a CCE program, and the CCE agency must draft an Implementation Plan that is approved by the California Public Utilities Commission (CPUC). This is typically done after an initial technical study to determine the amount of electricity that will be required, and to examine a CCE’s ability to be cost competitive with PG&E and SCE. The Implementation Plan outlines how the CCE will function, how it will set rates, how it will procure electricity, and how it will carry out all other functions required under CPUC regulations.

Isn’t renewable power more expensive than regular electricity? Wouldn’t a CCE’s rates be higher?

The dominant trend over the past thirty years for the classic fossil-fueled source of electricity has been towards increased costs. The dominant trend over that same time period for renewable energy has been towards decreased costs, and this trend continues to accelerate. Once the initial investment is made, the fuel for most renewable technologies, like wind and solar, is free. At many places in the United States, including California, renewable energy is competitive or cheaper than fossil fuels. California has abundant solar, geothermal, wind and (potentially) tidal energy resources that have yet to be tapped. To date, existing CCE’s in California have been able to offer 25-30% cleaner energy at lower costs to the customer than PG&E.

Do the electrons purchased or generated by the CCE actually go to my house?

No, when we say that the CCE supplies power to customers, we mean that the CCE puts the same amount of electricity onto the grid that its customers use. When the individual electrons from all power resources go onto the grid no one can determine which electrons go where. Think of it as depositing $100 in one ATM and taking out $100 in another. It’s not the same $100 bill, but it’s still your money. One can think of electricity in the same way. If you consume 500 kilowatt-hours in a month, the CCE must supply 500 kWh to the grid on your behalf. The advantage of a CCE is that what’s supplied to the grid on your behalf can be both cleaner and less expensive than what the incumbent utility is putting on the grid.

Are all cities in the County required to participate?

A CCE program does not have the authority to compel any city to participate, and any city can choose to remain with the original utility. A City may also decide to join at some point after CCE program establishment

Are there other websites/resources I can check out?

For general information about CCE, visit leanenergyus.org.

For information about Marin’s CCE program, visit mcecleanenergy.com.
For information Sonoma’s CCE program, visit sonomacleanpower.org.
For information about Lancaster’s CCE, visit lancasterchoiceenergy.com.

 

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