By Mike Allen
January 10, 2019 (Santee) -- It’s become the latest trend sweeping across California by cities and counties: establishing alternative energy- providing entities that allow customers to choose a greener source for their power needs.
So far, 19 agencies, mostly in Northern California but including Los Angeles County, are operating as community choice aggregators, or CCAs. The concept gives local agencies more control of their energy purchases, allowing them to buy more power generated by natural sources such as solar and wind.
Now Santee is taking a look at joining the trend.
At its Jan. 9 meeting, the City Council listened to an extensive presentation on the benefits and potential pitfalls of CCAs, and what a small city like Santee could do to reduce its energy spending while increasing the level of power derived from natural sources.
After discussing the pros and cons, and hearing from local speakers, the Council directed its staff to get more information and see if it could join other smaller cities in San Diego County to reduce the costs for a feasibility study for a CCA.
At least one Councilman, Stephen Houlahan, was already convinced that establishing a CCA was the right way to go.
Elected in 2016 as a strong environmentalist and slow growth candidate, Houlahan urged his colleagues to conduct a feasibility study with similar sized cities also considering creating a CCA. The estimated cost for such a study was between $16,000 to $100,000.
Houlahan said current energy provider San Diego Gas & Electric has been consistently raising rates, and that CCAs would provide average cost savings of 2-3 percent, according to the presentation and data from existing CCAs.
“You can poo-poo that away but that’s obviously real money for some people,” he said. “For SDG&E and most independent operated utilities, their business model is in a death spiral.”
He also noted that as more cities adopt CCAs, including the city of San Diego which appears on the precipice of doing so, there will be fewer customers for SDG&E, resulting in even higher electric rates. “We’ll be holding the hot potato at the end,” Houlahan said.
Mayor John Minto questioned the attorney doing the presentation about the source of the power, and the many unanswered questions concerning CCAs. He pointed out the severe financial risks a small city like Santee could incur if the CCA failed. “It’s nice to hear all the positive stuff but no one is presenting the negative stuff, and I know there’s negative stuff.”
Councilman Ronn Hall said, “It’s a good idea but it doesn’t look like it’s going to save anybody a dime.”
Five of six speakers supported the CCA, with most extolling the savings, local control over power purchasing, and recycling the money into local projects such as more solar panels and electric cars.
Van Collinsworth, founder of Preserve Wild Santee, said the Council should understand the larger implications of climate change, and what CCAs could do.“The bigger picture in all of this isn’t about saving 2 to 3 percent. It’s about saving the planet.”
Sofie Wolfram, representing Climate Action Campaign, said once Santee completed a feasibility study it could join the joint powers authority that is being set up by the city of San Diego.That didn’t sit well with several Councilmembers including newly-elected Laura Koval, who said Santee’s interests could easily be subverted within that type of arrangement because of San Diego’s size.
A discussion about the increased exit fees that CCAs would have to pay SDG&E for every customer that joins the new entity also concerned several Councilmembers. SDG&E would continue to own and maintain the transmission lines, also continuing to handle all the billing. The CCAs would purchase the power and obtain the profits from those arrangements, rather than those profits going to shareholders.
“That’s the part that scares me, those entities that own the grid,” said Councilman Rob McNelis. “We’ll eventually be paying more for using that grid.”
Ryan Baron, the attorney giving the presentation, said so many cities are forming a CCA that if Santee went ahead and began forming one, the earliest it could begin operating would be 2021. If the city did set one up, all residents and business customers would be automatically enrolled, although they could opt out of the CCA within 60 days.
Baron said a city the size of Santee, with about 60,000 residents, could expect to spend between $300,000 to $500,000 for up-front costs and also would have to secure a $10 million line of credit for power purchasing.
Getting that type of financing won’t be easy, especially in light of recent decisions by the state’s Public Utilities Commission, and the hoops cities must jump through to get such a rating, Baron said. “It took Marin (the first CCA in the state) eight years to get its credit rating,” he said.
In other business, the Council took two votes to advance studies necessary for the city to process a pending application by developer HomeFed Corp., which is seeking to build Fanita Ranch, a development in the city’s northwest section made up of nearly 3,000 houses.
The council voted unanimously on authorizing another $24,960 to complete a climate action plan being done by LSA Associates.
It also voted 5-0 to amend its contract with consultant ICF Jones & Stokes Inc., which has been working on a required environmental report necessary before the Fanita Ranch plan is submitted to the Council.
The report is for an area encompassing the entire city, but HomeFed Corp. is paying for nearly the entire cost. Including the most recent revisions, the cost for the report is up to $800,000, of which HomeFed has paid about $600,000. The remainder is coming from federal and state grants.
Several speakers on the issue charged the funding arrangement essentially means the report will be biased in favor of HomeFed’s desired outcome to develop the property. Yet City Manager Marlene Best and other staffers said the report is not being influenced by HomeFed, and the home builder cannot control what is put in it.
“It’s not for Fanita Ranch,” said City Manager Marlene Best. “It’s for the city as a whole.”