CCEs are locally controlled energy providers that take the place of existing energy providers such as Southern California Edison and San Diego Gas and Electric.
The CCE would still use existing infrastructure for the transmission and distribution of energy to residential homes. CCEs only regulate the purchasing of energy, whether it be renewable or fossil fuels.
Installing solar panels on homes is “very costly for people,” Mayor Pro Tem Sue Kempf said during the July 13 council meeting.
“A lot of people don’t have the money for it. … With CCE, we can hit up almost everybody in our community and get them on a renewable source,” she said.
“In looking at reduction of greenhouse gases, and working against some of our environmental challenges, this is one of the best ways to get at it, among other things.”
The city’s decision to create a CCE came just over a month after a CCE in Riverside County filed for bankruptcy.
Western Community Energy (WCE), a CCE consisting of seven cities, was formed in April 2020. Due to unprecedented levels of heat, electricity supplies were exhausted, costing the joint power authority (JPA) an additional $12 million in energy expenses.
Meanwhile, some residents haven’t been paying their utility bills during the pandemic, since no customers could be disconnected from their utilities under a state mandate.
“Over the last year, delinquencies averaged 10-times higher than pre-pandemic industry standards and have cost WCE millions of dollars in added cost burden,” WCE said in a statement.
Laguna Beach Councilman George Weiss said that although WCE filed for bankruptcy, it was the only JPA to do so. He said all other CCEs created over the last 10 years are “still going strong.”
“The biggest CCE is Los Angeles; and in over two years, they’ve managed to sequester $60 million in surplus money,” Weiss told the council during the July 13 meeting.
Over the next few months, the city will look into various JPAs.
There are multiple JPAs the city could join, including the Orange County Power Authority, Cal Choice Energy Authority, Clean Power Alliance, and San Diego Community Power. Each has a different governance structure.
“We need to see how these different CCEs can match up,” Kempf said.
Jeremy Frimond, city senior administrative analyst, said there are currently 23 operational CCEs in the state.
If approved, residents opting into the CCE will be presented with a tier of options to select a proportion of their energy that comes from renewable sources.
“Renewable options are currently more expensive than a traditional mix,” Frimond told the council.
Residents will be automatically opted into the CCE. If residents choose to stay with their current provider, they must opt out of the CCE prior to a deadline, or otherwise pay an exit fee.
There would be a risk of bankruptcy if too many residents from any cities within the JPA opt out.
“If there is significant opt out, this could leave an excess of supply over demand,” Frimond said.
There are also financial risks in startup costs and long-term financing, he said.
The CCE wouldn’t act as a general revenue stream for the city, rather it would be a “powerful tool to be able to achieve” the city’s goals in reducing greenhouse gas emissions because CCEs can purchase more renewable energy than SoCal Edison offers, Frimond said.
He said that if 100 percent of the city’s residents use only renewable energy within the CCE, then greenhouse gas emissions could be reduced by up to 20 percent within two to three years.
Frimond said a CCE allows for public participation, since a board is composed of local elected officials who hold public meetings where the public can weigh in on the rates, programs, energy sources, and so on.
“The financial piece is marginal, and it’s really the renewable piece that would seem to be most beneficial,” Mayor Bob Whalen said during the meeting.
Whalen said it wouldn’t be feasible for the city to start a CCE without joining a JPA because of the size of the community.
He said the council needs to have a say on the JPA it joins, in order to maximize its decision-making influence.
“I don’t want to be a tail of a dog that goes in a different direction and we don’t have any ability to weigh into it,” he said.
The council will meet in November to discuss which JPA is most suitable for the city.