Solana Beach to enter three-year energy purchase deal

Seeking to reduce the risk from fluctuations in the energy market, the city of Solana Beach will enter into a three-year purchase agreement for hydroelectric power, under the city’s program that allows residents to purchase electricity as an alternative to San Diego Gas & Electric.

The city launched its program, called the Solana Energy Alliance, last summer. Among the goals of the city’s program are to offer cleaner energy to the city’s residents, provide more local control regarding energy sources, and work toward the city’s target of having 100 percent renewable energy by 2035, said Dan King, assistant city manager. The city also agreed to set electricity rates at 3 percent below those charged by SDG&E.

Under the program established by the council, the city has contracts with two entities, said King. One organization, called the Energy Authority, is a consortium of eight or nine public energy alliances similar to the one formed in Solana Beach. The authority purchases power on the open market for its member agencies.

The city also contracts with a second consultant that handles such tasks as operating a call center, customer billing and data management.

At its meeting on Wednesday, Jan. 9, the Solana Beach City Council voted unanimously to authorize the Energy Authority to enter into a three-year contract to purchase hydroelectric power, to meet the needs of Solana Beach residents who are participating in the city’s alternative energy program. This would be the first long-term energy contract for the city program, but the city will explore other long-term options in the future, King said.

A city staff report said that in a worst-case scenario, the city’s energy costs could go up by $5,699 over the three-year life of the deal, while under the best case, the city could save $25,609 over the three years. The difference, said King, depends on the amount of rainfall during the contract period, which affects the cost of hydroelectric power, and if additional agencies join in the purchase agreement through the Energy Authority.

“If things work out well, it’s a much better deal,” said King.

Under questioning by council member Jewel Edson, King said residents’ electric rates would not go up even if the city’s energy costs rise marginally during the three-year energy purchase agreement.

According to King, Solana Beach residents are automatically enrolled in the city’s energy program unless they opt out. Currently, he said, there are about 7,000 households in the program. About 8 percent of the city’s households have opted out of the city’s program and have continued to purchase their electricity from SDG&E, leaving the city with a 92 percent participation rate in its fledgling energy program,.

The Solana Energy Alliance offers two packages of electricity rates: SEA Choice, which promises electricity from 50 percent renewable sources, and 75 percent from sources free of greenhouse gas emissions; and SEA Green, which offers electricity generated from 100 percent renewable sources.

Currently, residents who use an average of 445 kilowatt hours per month are billed $119.35 for SEA Choice, and $120.69 for SEA Green. SDG&E’s charge for standard electrical service is $122.69, and it also offers a 100 percent renewable option for $121.65. A side-by-side comparison of SEA and SDG&E rates can be found on the city’s website at https://solanaenergyalliance.org/wp-content/uploads/2018/10/JRC-Online-July-1-2018.pdf.

Those in the program continue to pay SDG&E for use of its power grid and transmission lines.

Solana Beach was the first city in San Diego County to launch a community choice energy program. According to the CalCCA, an advocacy group, there are 19 community choice programs serving some 8 million California residents.

King said funding for Solana Beach’s community choice program is kept separate from the city’s general fund. The city did contribute $107,000 in startup costs for the Solana Energy Alliance, which will be paid back over time. The program also covers approximately $122,000 annually in city staff costs for work done on behalf of the energy program.

If the community choice program accumulates funds above those needed to operate the program, the city could designate the money toward projects that further the goals in its Climate Action Plan, King said. Other California communities with energy choice programs have used money generated from energy sales to pay for such things as electric vehicle rebates and electric buses.