City council approves energy utility program by 3-2 vote
The Claremont city council narrowly approved entry into an energy utility alternative program set up by Los Angeles County.
The council voted 3-2 to join the Los Angeles Community Choice Energy (LACCE), a county-led community choice aggregation program (CCA) that allows residents to choose greener energy as an alternative to Southern California Edison (SCE).
Councilmembers Corey Calaycay, Sam Pedroza and Joe Lyons voted in favor of joining, and Mayor Larry Schroeder and Mayor Pro Tem Opanyi Nasiali voted no.
This was a second reading of the ordinance. At the October 24 meeting, the city council voted in favor of joining the CCA, while Mr. Pedroza was tasked with gathering more information. Mr. Schroeder was skeptical during that meeting, peppering LACCE interim Executive Director Bill Carnahan with questions about the program.
Mr. Pedroza did not present his findings at the council meeting, but councilmembers were given a complicated assessment of the program from Diana Mahmud, a South Pasadena city councilmember, in the agenda packet provided prior to the meeting.
“I understand one of your councilmembers was concerned joining a CCA would result in the same sort of chaos that occurred during our energy crisis,” Ms. Mahmud wrote. “This has nothing to do with deregulation. That chaos was caused due to a severely flawed market design that left the IOUs unhedged re: power procurement.”
Ms. Mahmud’s written statement also addressed “stranded SCE costs, or orphan contracts.”
“IOU’s ‘stranded costs’ resulting from departing load that is being served by CCAs, there is proceeding as the CPUC that will address the IOUs’ contention that they are not recovering from such costs. I have asked around and everyone I have spoken to believe any change in the PCIA will only take prospective effect. If the PCIA increases, it shouldn’t cause CCA rates to increase above SCE’s rates…Because we don’t know the outcome of the PCIA proceeding at the CPUC, I think the major advantage to LACEE participation is local control.”
Mr. Pedroza provided comment on the assessment in the agenda report.
“I agree with her sentiments in that Claremont does not have the staff capability or budget to manage such a program,” Mr. Pedroza wrote. “However, she did inform me that the LACCE will likely hire employees at some point and cities do not want to be exposed to additional PERS liability. By having cities join sooner than later, they would have a seat at the table and participate in the policy decisions, including employment options.”
The LACCE currently has a three-tiered model based on percentage of renewable energy. Mr. Carnahan estimates that residents using 28 percent renewable will save 5.4 percent from the basic SCE rate, 50 percent renewable saves a household 4.1 percent, while 100 percent renewable costs a household 6.2 percent over SCE rates.
Claremont will choose the minimum subscription level for the community, the city said. Once the city joins, all residents will be signed on unless they request to be removed.
The deadline to join is December 27, six months after the LACCE was first created, Community Services Director Roger Bradley said. Residents will see the switch to the CCA by June 2018.
Mr. Bradley explained there is a 120-day period to opt out at no cost, but he had seen in other CCAs a $5 charge for residents and $20 charge for commercial customers to opt out after the 120-day grace period.
“So there would potentially be a fee after the initial opt-out phase,” Mr. Bradley said.
Fifteen people spoke during public comment, nine in favor of the CCA and six against it.
Many of those against the program were from a group called the Foothill Tax Payers Association, who claimed in a release this past April they successfully dissuaded the San Bernardino Council of Governments (SBCOG) to not adopt a CCA program.
Linnie Drolet, a member of the group, took issue with the idea of a countywide entity making decisions for Claremont. Not only would the county initiate competition with Edison, she said, it would have to hire more employees that could create more pensions.
“You’re setting up a whole new bureaucracy and a government quasi-entity to do this. It absolutely makes no sense,” she said.
Those in favor, including Freeman Allen and Sustainable Claremont member Devin Hartman, championed the program as an alternative to SCE and the best opportunity to use renewable energy.
Mr. Calaycay, in response to critics of the CCA, presented a multi-decade timeline of bipartisan support in California for deregulation of public utilities and the promotion of renewable energy in California, including statements from former LA County Supervisor Mike Antonovich and current Supervisor Kathryn Barger.
“The point being, sadly, we have a lot of gridlock in this country. You have extremes that are fighting,” he said. “What always impresses me is when I see far extremes coming together to come to some sort of agreement to get something done. And that’s what I was extremely impressed with looking at the genesis of how this whole issue came to be.”
Mr. Calaycay also said that not all JPAs are beholden to pension issues, because some, like Foothill Transit, are not involved with PERS and noted the LACCE doesn’t need that kind of compensation.
Mr. Lyons and Mr. Pedroza were also in favor, with Mr. Lyons calling LACCE “an opportunity to test our will at moving the needle forward of going to 100 percent [renewable] sooner rather than later.”
But Mr. Nasiali and Mr. Schroeder were not impressed. Mr. Nasiali understood the need for more renewable energy, but felt it wasn’t feasible to get to 100 percent renewable so soon, citing a statewide mandate for 100 percent renewable energy by 2045.
Mr. Schroeder said he wondered about how much local control Claremont would have in a body of 16 municipalities, took issue with the opt-out fees, lamented the lack of a feasibility study for Claremont’s entry into the CCA, and questioned how much Claremonters would be saving.
“My last month’s electric bill was $85. Of that, there’s a $32 charge of generation of energy—5.4 percent of $32 is $1.73 I’ll be saving. Big deal,” he said.
The council voted 3-2 in favor of the program. When Mr. Schroeder cast his no vote, he added, “I hope I’m wrong.”