DEL MAR – The city once again reaffirmed its commitment to the Clean Energy Alliance at an April 16 special meeting, after the COVID-19 crisis cast some doubt over Del Mar’s involvement.
In early April, city staff revealed that Del Mar’s general fund reserves would be spent in a matter of months due to the economic downturn. This stark reality prompted the council to take another look at its participation in a Community Choice Aggregation (CCA) program in these uncertain times.
The city opted to join the Clean Energy Alliance (CEA) in late 2019, adding its name to a CCA Joint Powers Authority formed with Solana Beach and Carlsbad. Like CCA’s throughout the state, the program is meant to help the cities bring in more renewable energy, more local control, and revenue for sustainability-related projects.
At this point, the program stands to kick off in May of 2021.
April 20 was the city’s last day to get out of the program without having to give one-year notice, or having to opt in to any future financial obligations, according to the CEA agreement. It was the day the CCA was due to file its first year-ahead resource adequacy forecast to the California Public Utilities Commission – which helps determine the CCA’s energy procurement needs.
Staff quickly put together an impromptu meeting on April 16, giving the council a chance to address this milestone.
Like many issues in Del Mar, this one has proved to be divisive. City Councilmembers Dave Druker and Terry Gaasterland both supported a delay of the program.
Gaasterland cited recent reductions in energy demand and worried about whether renewable energy suppliers would be quick to enter into contracts at this point.
“I think pushing for greenhouse gas-free energy is the right thing to do,” Gaasterland said. “However, in today’s financial climate, I’m not yet convinced that it’s the financially prudent thing for Del Mar to do this way, right now.
The council ultimately voted 4-1 in favor of remaining in CEA, with Gaasterland voting against.
City Councilwoman Ellie Haviland, who is Del Mar’s chair on the CEA Board of Directors, has stood firmly in favor of the program. She asserted that the CCA is still viable and an “extremely valuable” program for Del Mar.
“Pursuit of a CCA program is the single most important strategy for achieving the greenhouse gas reduction targets in our city’s climate action plan,” she said. “All start-up costs are subject to reimbursement…if we leave the CCA now, then those initial costs will have no chance of being reimbursed. We are walking away from many opportunities, but reimbursement from our start-up expenses is one of them.”
The city has so far pitched in $150,000 to the program, along with the two other cities.
According to CEA’s interim CEO Barbara Boswell, the CEA Board directed staff to look at options for repaying that advancement as soon as possible, given the financial concerns of all of the participating cities.
Kirby Dusel, vice president of Pacific Energy Advisors, said the CEA has time working in its favor and anticipates that the current financial implications for CCA’s will likely be resolved before the program’s launch.
“I do feel like much of the issues that we’ve been observing so far are likely to stabilize between now and the 2021 launch,” Dusel said.
Based on a pro-forma put together by Pacific Energy Advisors, CEA’s technical consultant, city staff assessed that the program is financially viable in current market conditions.
In submitted red dots, residents offered mixed responses. Some encouraged the city to stick with the program and others worried about related financial obligations down the road.
Former City Councilman Terry Sinnott urged the city to take a step back.
“This is not the time to be spending resources on projects that are not basic to city functions,” he said. “I warned that in the best of times, having Del Mar in the energy business is risky. Now that we are forced into this economic recession…use your common sense and delay Del Mar’s involvement until our financials improve.”
City Councilman Dave Druker said he supported delaying the start of CEA until January 2022. At the city’s April 20 city council meeting, both Druker and Gaasterland urged Haviland to take up the topic of delay with the CEA Board at their next meeting.
Because the topic was not itemized, the council agreed to discuss it further at the next city council meeting on May 4.