City staff and consultants presented updated, and more positive numbers to the Solana Beach City Council a Feb. 13 meeting. Whereas the city was previously anticipating negative annual net revenues in Fiscal Year 2019/2020 and 2020/2021, there are now positive annual net revenues through 2022. Photo by Lexy Brodt.
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Solana Beach drives talks on North County energy proposals

SOLANA BEACH — The wave of Community Choice Aggregation (CCA) that has swept over much of California is now making its way to San Diego.

CCAs are a means by which cities can provide energy for their residents while reaping the benefits of local control. Currently Solana Beach is the only city in the county with a CCA — called Solana Energy Alliance.

The city launched its program in June 2018, bringing 50 percent renewable and 75 percent greenhouse gas free energy to its residents, 92 percent of which are participating. The city opted to maintain rates 3 percent below those of the region’s investor-owned utility, San Diego Gas & Electric.

And Solana Beach may soon be joined by others in North County and beyond. San Diego’s City Council approved a resolution on Feb. 25 to start a CCA, with the intention of establishing a Joint Powers Authority in the region. This would involve cities in the county banding together in pursuit of a jointly governed CCA, in order to achieve economy of scale.

Del Mar, Encinitas, Carlsbad and Oceanside just came out with a study affirming the feasibility of a CCA program among the four cities.

Solana Beach is playing an active role in the now countywide dialogue, as its City Council has long expressed an interest in exploring various potential governance structures.

“Those discussions have really started to heat up recently,” Assistant City Manager Dan King said.

When it comes to considering a Joint Powers Authority, Solana Beach Mayor Dave Zito said “it’s a matter of finding a structure that’s able to balance all the competing interests.”

Zito said a key element of the city’s CCA program is local control. Residents can “just come down to city hall” when faced with bill issues or concerns, and constituents have a stake in molding Solana Energy Alliance’s future priorities.

A regional Joint Powers Authority would ideally aim to maintain local control while still providing the benefits of larger scale, Zito told The Coast News. He pointed to Los Angeles’ Clean Power Alliance as an example of “small steps in that direction”: about a third of the CCE program’s member cities have opted to set their own renewal rates — in this case, at 100 percent.

Solana Beach has also been in contact with Chula Vista and La Mesa, which will be pursuing a technical study concerning CCA feasibility, according to King.

The earliest another CCA could take off in the region is 2021.

After a controversial California Public Utilities Commission decision to increase “exit fees” and an increase in the cost of energy set back SEA’s revenue projections in November, consultants brought back more positive numbers at a Feb. 13 City Council meeting.

The exit fee, or Power Charge Indifference Adjustment, is a fee charged to CCA customers by the investor-owned utility (IOU). The fee is meant to compensate IOUs for energy already procured on behalf of now former customers, and to make sure the IOUs existing customers aren’t left with the burden of increased costs. The fee was raised in September after the California Public Utilities Commission opted to change the methodology used to calculate it, to the benefit of IOUs.

As a result, there was a jump in the fee from about 2 cents per kilowatt hour to over 3 cents per kilowatt hour in January. However, exit fees are taking slightly less of a toll than staff and consultants had estimated in November.

In November, consultants were anticipating negative annual net revenues in Fiscal Year 2019/2020 and 2020/2021. Those numbers have since climbed, with January projections anticipating positive net revenues for the next few years, with the city expected to accumulate $1.5 million in revenues by June of 2022.

Staff also reported that as SDG&E’s generation rates have decreased as of late, the city has also decreased its rates to maintain a 3 percent discount. The city approved an updated rate schedule at the meeting that will be retroactive for the month of January. Winter rates for most residential users went from about 4.2 cents per kilowatt hour to about 3.2 cents per kilowatt hour, and summer rates decreased from just under 14 cents per kilowatt hour to about 12.4 cents per kilowatt hour.

Staff estimated that current and projected rates over the next five years will yield $1 million in savings for SEA customers.

According to City Manager Greg Wade, Solana Energy Alliance is “well ahead of the game in our projected goals.”

Although regional discussions are taking off, the city’s current direction for Solana Energy Alliance involves maintaining and building a strong reserve to ensure that it “can withstand any potential upcoming headwinds,” said Zito. “You never know, the energy market is a little bit fickle.”

Zito said the city is focusing on the issues that are “key to our constituents”: offering lower rates than SDG&E and meeting the goals of the city’s climate action plan, to achieve 100 percent renewable energy by 2035.

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