San Diego County pauses on partnering with cities on community choice energy

The San Diego County Board of Supervisors Tuesday, Oct. 15, approved creating a community choice aggregation energy program but at the same time voted to wait and see what kind of governing authority to adopt in order to implement it.

“Our board decided to go forward with community choice energy (CCA), which is a huge, positive step,” said Supervisor Nathan Fletcher after the 3-2 vote. “We’re moving forward with (a CCA) but we want to let the market settle and then we can decide which (joint powers agreement) one to go with.”

The county had an offer on the table — to join Carlsbad, Solana Beach and Del Mar and form a joint powers agreement, or JPA, that plans to open for business in 2021.

But some supervisors worried about making a commitment right away, especially since the county can possibly join forces with other jurisdictions, such as the city of Santee, and reach agreement on a different JPA.

Supervisor Dianne Jacob said she had concerns about the Calsbad/Solana Beach/Del Mar partnership not requiring a unanimous vote among its members to make changes to the JPA — especially since the County of San Diego would account for 187,000 accounts in an agreement, the largest number of any of the other jurisdictions.

“It’s critical we get this right and that we get it right the first time and not be in a hurry to do that,” Jacob said. “A JPA agreement is like, in my opinion, a constitution. It’s a founding document with a unique set of agreed upon principles that should not be easy to change.”

Carlsbad Mayor Matt Hall said after the vote his city still plans to proceed with Del Mar and Solana Beach and form a CCA that they will call the Clean Energy Alliance.

“For us, we’re not going to take a pause,” Hall said. “We’re moving forward.” Hall said the cities will also proceed with filing the needed regulatory paperwork with the California Public Utilities Commission in order to have the Clean Energy Alliance operational by 2021.

“We’ll continue to work with not only the county but others here around the region,” Hall said, although he admitted the Clean Power Alliance would be a more robust entity if it were comprised of more than just three cities (Carlsbad, Solana Beach and Del Mar).

In addition to Santee, the cities of Oceanside, Vista, San Marcos and Escondido have also discussed joining a community choice enegy JPA, Hall said.

The Clean Energy Alliance is designed to replace the already existing, standalone CCA the city of Solana Beach has running for more than a year.

As for the county, it can still become a member of the Clean Energy Alliance but if it waits until April of next year to approve a JPA with any potential partners, it will have to launch one year later — in 2022.

“I generally want to move expeditiously on everything,” Fletcher said, “but I think this is an appropriate time” to pause. “We can wait a few months.”

Energy consultants have predicted the cities and the county taking part in a CCA can save customers about 2 percent on their monthly bills compared to San Diego Gas & Electric and save ratepayers $12 million annually during the first decade.

Fletcher, Cox and Jacob voted yes on the ordinance but supervisors Kristin Gaspar and Jim Desmond voted no.

“I’m not convinced a 2 percent reduction in rates is a good enough reason to put the county at risk,” said Gaspar, “or begin a business that is not a core county function.”

Under the CCA model sweeping across California, local governments assume the job of buying the source of power in a given jurisdiction — a responsibility that has long been the sole domain of investor-owned utilities such as SDG&E. The traditional power companies do not go away upon the establishment of a CCA because utilities still perform the rest of their duties, such as transmission and distribution of energy, as well as customer billing and services.

Technically, CCAs can purchase virtually any source of power (natural gas, solar, wind, etc.) but California CCAs promote their ability to provide customers energy from more renewable sources at rates equal to or lower than traditional utilities.

By taking over the purchasing of power, CCAs can generate revenue that can build up financial reserves to ensure their rates stay equal to or lower than utilities. They can also use the money to establish clean energy programs (such as building electric vehicle charging stations) and investing in renewable energy projects.

In the nine years since the first CCA launched in Marin County in 2010, 19 are now up and running and six more are expected to roll out by the end of next year.

The proposed Clean Energy Alliance is a completely different CCA than the one created last month headed by the city of San Diego. That still-to-be-named CCA includes Chula Vista, La Mesa, Encinitas and Imperial Beach and plans to begin operations in 2021.

The city of San Diego pitched the county on joining but in September, Jacob and other supervisors objected to an option that allowed for a weighted vote under certain circumstances. The city of San Diego accounts for the largest amount of load in its CCA and while the city pledged to cap its weighted vote at 49 percent, Jacob felt a strict, one-member, one-vote rule should be followed.

The formation of a second — or, possibly, a third — CCA would have a major impact on SDG&E’s service territory. Customers are automatically enrolled into a CCA once it is formed. Customers can opt out and go back to SDG&E if they choose to but thus far, CCAs in California have reported opt-out rates hovering around 5 to 10 percent.

If the cities already in the San Diego-led CCA are joined by all the jurisdictions currently in the discussion, SDG&E officials estimated the municipalities would account for about 70 percent of SDG&E’s current energy load.

-- Rob Nikolewski is a reporter for The San Diego Union-Tribune