CEA to reevaluate financing options in December
The Clean Energy Alliance Board of Directors will be presented next month with financing options to carry the agency into the spring, when it will start delivering power to residential and business customers.
Over the summer, the CEA board considered two potential loans, one from JP Morgan and one from River City Bank, that each would have provided $4.5 million. The board favored the River City option, which would have required the three member cities of Del Mar, Solana Beach and Carlsbad to provide a $2.5 million security. The terms of the JP Morgan option likely would have prevented the CEA from offering a promised 2% rate discount to customers switching from San Diego Gas & Electric, based on a comparison of similar packages.
Del Mar council members authorized the city to provide a $75,000 guarantee for the security to River City, and the Solana Beach council approved a $175,000 guarantee. Both totals were commensurate to the load-based shares the cities would receive from the CEA.
But the Carlsbad City Council instead decided to consider an alternative option of having the city provide a loan to the CEA for the full amount of the startup costs. That option fell through, and the council never signed off on providing a guarantee for the River City option.
During its online meeting in August, the CEA board accepted a $400,000 loan from Calpine Energy Solutions to finance operating costs through February 2021.
River City Bank has since indicated that it would be willing to provide the loan without requiring a guarantee from the member cities, according to a CEA staff report. JP Morgan has since offered a longer repayment period and is open to discussing a rate subsidy program.
“It looks like we have two good options,” said Solana Beach City Councilwoman Kristi Becker, who serves on the CEA board.
Del Mar Mayor Ellie Haviland, who also serves on the CEA board, credited CEA staff with taking the two original loan offers and “making them better” over the past several months. Haviland, who did not seek reelection in Del Mar, served her last meeting as a CEA board member.
Most of the funding from the loan would go toward approximately $3 million in energy supply costs and $540,000 in administrative costs.
The CEA, which is one of the newest Community Choice Energy programs in the state, will begin generating revenue in May 2021, when it begins delivering energy to residential and business customers in Del Mar, Solana Beach and Carlsbad.
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