June 1 looks to be the date Solana Beach will flip the switch on its city-run energy entity and become the first city in San Diego to break away from SDG&E’s century-old monopoly.
Solana Beach’s city council, in a trio of resolutions approved last week, set several key details in its long-planned energy venture, including the entity’s name—Solana Energy Alliance (SEA)—and giving the go-ahead for the city’s energy consultant to start procuring energy.
Through the Community Choice Aggregation (CCA) program, also known as Community Choice Energy, Solana Beach will buy electricity on the wholesale market and sell it to the city’s 7,800 energy customers at whatever rate and with as much renewable energy as it wants—without needing approval from state utilities regulators or being beholden to shareholders, as SDG&E is.
Solana Beach teamed up last year with a pair of consultants — The Energy Authority (TEA) and Calpine Energy Solutions — to organize and operate its CCA. Calpine focuses on data management; TEA handles energy acquisition and advises the city on strategic decisions.
The exact energy rates will be set at the council’s March 14 meeting, but officials last week said SEA will aim for 50 percent renewable energy as its default customer plan, compared to the 43 percent offered by SDG&E.
Even after accounting for administrative costs, nearly $3 million in state-mandated “exit fees” and the slightly higher percentage of renewable energy, city officials expect SEA customers to save roughly 3 percent on their energy bill while the city amasses roughly $2.7 million by the end of 2019 into a special fund that can only be used to advance the energy venture. The city council will decide how to use that money—be it to protect against market fluctuations, expand customer savings, pay for a higher percentage of renewable energy, or invest in clean-energy infrastructure such as electric vehicle charging stations.
SEA customers will be able to choose a higher percentage of renewable energy at their own expense, similar to the EcoChoice program SDG&E quietly rolled out last year as Solana Beach became the region’s first jurisdiction to take concrete steps toward creating a CCA. At 100 percent renewable, SEA customers should save roughly 3 percent compared to EcoChoice, officials say. For solar-equipped homes that generate more power than they use, SEA’s rate is expected to be equal to or better than SDGE’s rate.
City officials have been meeting with SDG&E for months to hash out the logistics of the transition. While SEA itself comes online on June 1, customers will not switch to the city’s service until their first meter-reading in June. Customers who want to keep their SDG&E service will be able to opt out at no cost beginning in April. By state law, every ratepayer who does not opt out is automatically enrolled in SEA. Most CCA’s see around a 5 percent opt-out rate.
CCA advocates say half of the California’s residents will by 2020 live in an area served by a CCA. The tally surpassed 100 cities after Los Angeles County created a CCA last year that Ventura County joined soon after.
Solana Beach’s CCA will be by far the smallest. But with jurisdictions as small as Goldendale, Wash.—population 3,400—among TEA’s clientele, officials are confident Solana Beach will be able to achieve economies of scale.
“We’ve already got the credit and contractual relationships in place,” Jeff Fuller, a TEA consultant, told the city council Feb. 28. “…. Even though you’re small, we’re able to leverage our assets across our larger client base.”
The council’s 3-1 decision allows TEA to make Solana Beach’s first energy purchase later this month, which will cover all of the city’s energy needs through the end of the year.
Taking control of energy acquisition will enable the city council to push Solana Beach toward 100 percent renewable energy—a centerpiece of the city’s Climate Action Plan enacted last year—without being hamstrung by SDG&E’s shareholder obligations or the dictums of utilities regulators.
And as state climate-change mandates loom a decade and two away, the Climate Action Campaign lauded Solana Beach for showing the way to a “brighter, bolder, more innovative energy future.”
“With this step, it gives hope to all of us that we can change everything in order to slow down the greatest crisis of our time,” said Sebastian Sarria, CAC’s clean-energy fellow.
Solana Beach’s CCA contract leaves open the possibility for other North County cities to join. Del Mar, Encinitas and Carlsbad banded together last year to share the expense of a $100,000 feasibility study.
At every incremental action last year as Solana Beach pushed aggressively through exploratory phases, Mayor Ginger Marshall cast the council’s sole “no” votes, worried by the multitude of risks and unknowns.
“I hope it works out,” she said Feb. 28. “I would prefer to join forces with some of the other larger cities in the area who are studying their own CCAs. I just think that would be a more prudent way to go about it. … I’m definitely not an energy expert, and this is all very technical and complicated. I just hate to see any of the city’s funds being put to risk at the expense of saying that we are the first ones in San Diego to launch a CCA.”
Learn more about Solana Beach’s energy venture at www.ci.solana-beach.ca.us/cca.