CARLSBAD — Community Choice Energy in Carlsbad is one step closer to a reality.
The City Council approved a joint powers authority formation and governance analysis report during its Aug. 20 meeting. As a condition, the council also approved a peer review of the feasibility study.
The city subcommittee of Mayor Matt Hall and Councilwoman Cori Schumacher also recommended to include the cities of Encinitas and Del Mar. Encinitas discussed its position in the JPA during its Aug. 21 City Council meeting, while Del Mar will not take up the matter until the first week of September, according to Jason Haber, Carlsbad’s assistant to the city manager.
“One of the key shifts was from SDG&E, the utility is focusing on delivery energy and removing itself from supplying energy,” he said of San Diego Gas & Electric’s public position of being a power supply and the growth of CCEs.
Also known as Community Choice Aggregate, the governance analysis laid out for the new JPA includes provision to ensure local control, a one-city, one-vote structure and beginning the first steps of an implementation plan to submit to the California Public Utilities Commission.
In addition, Solana Beach Mayor Dave Zito and City Manager and Solana Energy Alliance (SEA) Executive Director Greg Wade said they champion Carlsbad’s decision and would like to join the new JPA.
Zito said size matters to a degree as SEA is looking for opportunities to join a larger organization. He said the preference is to stay with North County coastal cities rather than a larger entity such as San Diego.
“If you get to a certain size, you get ponderous,” Zito added. “Ninety-nine percent of innovation is driven by being small and nimble. And we are introducing the benefits of competition.”
A JPA with San Diego was a concern for Schumacher and Hall, who was absent on Aug. 20, as San Diego held firm on a weighted vote. Councilwoman Barbara Hamilton said she didn’t see risk with the weighted vote, but the consultants said it’s an opportunity for San Diego and another large city, such as Chula Vista, to veto action by smaller cities.
Schumacher said she and Hall were firm on the one-city, one-vote structure. Additionally, she said it is less likely the reinvestment opportunities were to be built in Carlsbad, even though Carlsbad would receive a larger slice of the revenue. Revenues, though, are not added to a city’s General Fund, but stay within the JPA.
Also, San Diego was willing to waive the initial startup costs, but would require reimbursement plus interest, according to the staff report.
“The $5 million reinvestment is initial and the potential for partnerships moving forward is looking really good,” Schumacher said. “Reinvestment with San Diego has had no conversation about revenue going back to other partners. The subcommittee sent a letter to San Diego, but the cap at 49% for San Diego’s vote effectively handed over control of energy to one agency.”
Gary Saleba, of EES Consulting, which conducted the studies, said CCEs represent 20% of ratepayers statewide and in five years is expected to reach 80%. He said the city’s initial startup costs is expected to be $50,000 this year and $1.25 million next year.
The cities in the JPA, though, would agree to a cost-sharing formula, according to Haber. The cities would recoup those costs after the first year and it’s estimated Carlsbad would receive about $5 million per year for reinvestment energy projects.
Saleba said the ideal JPA would include Encinitas, Del Mar, SEA and possibly one or two more other cities. The reason, he said, is because the operation would remain small enough, with between 100,000 to 200,000 customers, to remain flexible and innovative.
“Rate discounts about the same, San Diego is maybe 0.5% more, but not a deal maker,” Saleba said. “SEA brings a lot to the party. They’ve been running for it one year and have contractors on board. The only minus is the existing balance sheet liabilities and contracts.”