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Home My WebLink About1/24/2018 - STAFF REPORTS - 00 (2) �O QALAI iy � a V N <,Folat CITY COUNCIL STAFF REPORT DATE: January 24, 2018 CONSENT CALENDAR SUBJECT: LETTER OF OPPOSITION TO CALIFORNIA PUBLIC UTILITIES COMMISSION DRAFT RESOLUTION E-4097 RELATING TO COMMUNITY CHOICE AGGREGATION (CCA) PROGRAMS FROM: David H. Ready, City Manager BY: Marcus L. Fuller, Assistant City Manager SUMMARY This item is being requested by the Council to be added to the January 24, 2018, agenda, after the posting of the agenda, pursuant to the Brown Act, in that this item was provided to the City after the posting of the agenda on January 18, 2018. This item will allow the Council to consider authorizing the Mayor, or designee, to sign a letter opposing the California Public Utilities Commission (CPUC) draft Resolution E- 4097, relating to Community Choice Aggregation (CCA) Programs. RECOMMENDATION: Authorize the Mayor, or designee, to sign a letter opposing the California Public Utilities Commission (CPUC) draft Resolution E-4097, relating to Community Choice Aggregation (CCA) Programs. BACKGROUND: On June 21, 2017, the City Council considered participating in a Community Choice Aggregation (CCA) Program being established by the Coachella Valley Association of Governments (CVAG); a copy of the related staff report is included as Attachment 1. At that time, Council approved finalization of a Joint Powers Agreement (JPA) for, and formation of the Coachella Valley Community Energy Authority, now officially named the Desert Community Energy (DCE). CVAG has continued its efforts to formally establish the CCA, and on December 4, 2017, the DCE Board approved the Implementation Plan for the CCA to be submitted to the California Public Utilities Commission (CPUC), which was submitted to the CPUC on December 11, 2017. A)W t -f � 1/;y19 City Council Staff Report January 24, 2018-- Page 2 CPUC Draft Resolution E-4097 Opposition Letter STAFF ANALYSIS: On December 8, 2017, the CPUC issued its draft Resolution E-4097 that affects CCAs in process, and future CCAs that might be proposed. The comment period scheduled by the CPUC closed on December 29, 2017, and the CPUC initially scheduled a vote on draft Resolution E-4097 for its January 11, 2018, meeting which has since been postponed to its February 8, 2018, meeting. According to CVAG: • CPUC draft Resolution E-4097 would result in a minimum 6-month delay for DCE to begin serving customers. Under the draft Resolution E-4097, CCAs that file their Implementation Plan after December 8, 2017, but by January 1, 2018, would begin providing service in 2019. • Since this announcement, CVAG staff and DCE Chair Kaplan have had conference calls with the CPUC Executive Director, Director of the Energy Division, and staff representing CPUC Commissioners to express CVAG's concerns about the surprise nature of this announcement and the process used to bring this proposal forward, with no consultation or input from the CCA community. • The situation of having the DCE Implementation Plan approved by the DCE Board on December 4 and being within days of submitting it when we learned of the December 8 deadline has met with some sympathy in these conversations. Apparently, there are four other CCAs in similar circumstances, including LA County. CVAG was advised by CPUC staff to continue with the DCE implementation schedule, and was told to continue to process the DCE Implementation Plan, pending a decision by the CPUC on February 8. • CVAG was also advised by CPUC staff to reach out to Southern California Edison executives to discuss options to address the Resource Adequacy issue. CVAG attended a meeting LA County held with SCE to discuss concerns and potential solutions, and those conversations with SCE are continuing. CVAG has provided members of the DCE JPA a letter of opposition to CPUC draft Resolution E-4097, included as Attachment 2. FISCAL IMPACT: According to CVAG, a 6-month delay to launching the DCE would result in the loss of almost $4 million in net revenue that would be committed to building DCE reserves, and a $1.8 million loss to DCE ratepayers of forgone rate savings. These losses cannot be recovered. City Council Staff Report January 24, 2018-- Page 3 CPUC Draft Resolution E-4097 Opposition Letter SUBMITTED: Marcus Fuller, MPA, P.E., P.L.S. David H. Ready, Esq., . Assistant City Manager City Manager Attachments: 1. Opposition Letter January 22, 2018 President Michael Picker Commissioner Martha Guzman Aceves Commissioner Carla Peterman Commissioner Liane Randolph Commissioner Clifford Rechtschaffen California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102-3298 Re: Draft Resolution E-4907 regarding Community Choice Aggregation Dear President Picker and Honorable Commissioners, Over the last several years, the City of has been evaluating options to implement a community choice energy program to benefit our residents and businesses, as well as meet our climate action goals. Our City recently joined the Desert Community Energy (DCE) program and has been working with our DCE colleagues to implement community choice so we can offer ratepayers a choice in their utility service. Our communities are excited about the opportunities CCA offers, particularly for our residents and businesses who struggle with high electrical bills due to the extreme summer temperatures in the desert. DCE is planning for a July 1, 2018 launch. Inexplicably, and without due process, on December 8 the CPUC released Draft Resolution E- 4907 proposing new rules for how and when community choice power providers could launch and applying a retroactive deadline for Implementation Plan submittal. This was a complete surprise to DCE; our board approved the Implementation Plan for submittal on December 4, 2017. A courtesy copy of the plan was provided to SCE for informal review with the intent that it be submitted to the CPUC a few days later. The DCE Implementation Plan was submitted to CPUC staff on December 11, 2017. The Draft Resolution presents an eleventh-hour curveball to CCAs such as ours that were working to launch in 2018. It will have a detrimental impact on our region's own plans by delaying the launch date for Desert Community Energy. Such a delay would have serious financial implications to DCE and the City of . For example, a 6-month delay would result in the loss of almost $4 million in net revenue that would be committed to building DCE reserves, and a $1.8 million loss to DCE ratepayers of forgone rate savings. These losses cannot be recouped. DCE member cities are pursuing a CCA to bring some relief to our ratepayers as well as offer green energy benefits. While often viewed as affluent communities, Palm Springs and other Coachella Valley cities have high percentages of residents who depend on low income programs such as free school lunches to meet their families' needs. Many of these residents depend on the CARE program to pay their electric bills. With our July launch date, we plan to offer these low-income residents cost savings relief during the high bill period of our desert summers. The July 2018 DCE launch date was developed in close consultation with Southern California Edison (SCE) and discussed during our city council consideration of joining DCE. At our council meeting, members of our community encouraged us to move forward with CCA. As elected officials representing our constituents, we also are accountable. Draft Resolution E-4907, its retroactive deadline, and resulting delays puts us in a position where we would be unable to deliver on our promised launch date. As a member of Desert Community Energy, our city appreciates the need to resolve the Resource Adequacy issue. We encourage the Commission to consider alternatives to the Draft Resolution including allowing capacity to be procured from the IOUs in the first year a CCA provides new service. Resource adequacy issues are already part of an existing CPUC proceeding and should be addressed in that venue so that all information on which a decision is made is vetted in a public and transparent manner. We ask that you as CPUC Commissioners recognize the challenges that Draft Resolution E- 4907, and its due process failures, would impose on our communities. We urge you to oppose this Draft Resolution and the imposition of the arbitrary December 8 deadline. Finally, the City of respectfully requests that the CPUC provide DCE the opportunity to have our Implementation Plan reviewed under the existing protocol. Thank you for your consideration of these comments. Sincerely, Mayor, City of cc: Tim Sullivan, Executive Director, CPUC Ed Randolph, Director, CPUC Energy Division Suzanne Casazza, CPUC Energy Division Councilmember Shelley Kaplan, Cathedral City Assemblymember Eduardo Garcia (561h District) Assemblymember Chad Mayes (42nd District)