DEL MAR – Del Mar is moving forward with a Community Choice Energy (CCE) partnership, though with a more skeptical eye than its northerly neighbors.
At an Oct. 8 City Council meeting, council members voted 4-1 to pursue a CCE through a Joint Powers Agreement (JPA) with Carlsbad, Solana Beach and the county. Recently labelled the Clean Energy Alliance (CEA), the new CCE is slated to launch in 2021.
The affirmative vote will put Del Mar and its partner jurisdictions at the forefront of Community Choice in San Diego. CCEs allow cities to take over their own energy procurement on behalf of residents, often allowing local governments to choose a product with higher renewable and greenhouse gas free energy content.
Solana Beach – which is already operating the first CCE in the county – and Carlsbad have also voted to join the JPA. Santee had expressed an interest but voted against joining at a recent meeting. The JPA is now awaiting the county’s vote in mid-October.
The JPA governing structure will allow the cities to benefit from economies of scale, while still maintaining the “choice” component of a CCE.
Del Mar Councilwoman Terry Gaasterland voted against the motion, after community members and the city’s finance committee voiced concerns over the risks of joining the CCE so early in the game, particularly as a small city.
“We’re not there yet,” said Gaasterland.
Some Del Mar residents urged the city to move forward, citing the environmental costs of delay.
“I think (delaying the action) would be a huge mistake,” said resident and Climate Action Plan Facilitator Don Mosier. “Climate change is the existential challenge of this generation. If we don’t take quick action it’s going to be irreversible.”
Del Mar and its partners are shooting for a 50% or more renewable product, with at least a 2% rate discount below San Diego Gas & Electric, the area’s current energy provider. According to staff, the final details of the CCE will be hashed out over the next few months by the JPA’s board.
CCE has been on the table for several years in Del Mar, particularly after the formation of the city’s Climate Action Plan and the pursuit of a North County CCE feasibility study last year. The idea has quickly gained traction ever since, although consultants reported that Del Mar could likely not pursue a CCE on its own.
So, the city opted to join a predominantly North County CCE partnership – one that would allow each participating city an equal vote on the JPA board, regardless of size.
Del Mar veered away from joining a JPA with the city of San Diego – regardless of the city’s offer to cover start-up costs – largely due to the desire to maintain local control through the equal vote.
Now, the cities face a tight timeline – in order to launch by 2021, the JPA must submit its implementation plan to the California Public Utilities Commission by the end of 2019.
But at the recent meeting in Del Mar, the majority of public speakers urged the city to take a step back and avoid assuming the risk of a complicated and relatively novel venture.
“We can join at any time once we have understood and mitigated all risks … we should wait just like many other cities in the San Diego region are doing, to see how things play out,” said resident Jas Grewal.
Some residents protested that Del Mar will be splitting the start-up costs equally with the JPA’s other member cities, despite it contributing a rather meager number of the total meters.
Depending on how many partners opt to vote in to the JPA before the implementation deadline in late December, Del Mar’s start-up cost could range from $250,000 to $416,000. The costs would be paid back through JPA revenues.
Tom McGreal, chair of the city’s finance committee, said the committee has a “healthy skepticism over the proposed JPA’s ability to meet financial projections.”
McGreal and others called the city consultant’s revenue projections “rosy.” The consultants have estimated revenues between $54.4 and $204.4 million by 2022 – the latter number assumes the county will opt in.
“This is a huge amount of cash throw off from a brand-new enterprise that hasn’t yet been proven,” said McGreal. “It appears to us that the projections are a best-case scenario without showing the full impacts and the potential downsides of risks in the energy purchase market, and potential higher costs of operations.”
With many factors still up in the air, council members supported the idea of an advisory board to the JPA, and continued community involvement throughout the process. Council members voted to appoint Councilwoman Ellie Haviland to Del Mar’s JPA board seat, with Councilman Dwight Worden as an alternate.
Haviland said joining the JPA as a founding member will help Del Mar craft the organization – an option that may not be available if Del Mar waits to join down the road.
“There is a price to pay up front for having that opportunity, but for me it’s well worth paying that price,” she said.
Mayor Dave Druker pointed out that joining a CCE might be a matter of when rather than if, particularly as San Diego Gas & Electric announced that it intends to take a step back from energy procurement in the next few years, and instead focus on energy delivery.