Fremont City Council Meeting: 03/15/22 07:00 PM
3300 Capitol Avenue Div/Dept: Community Development
Fremont, CA 94538 Category: Fees & Rates
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4545) DOC ID: 4545
Updated: 3/8/2022 9:29 AM by Alberto Quintanilla Page 1 ELECTRIC UTILITY RATE PLAN - Council Direction Regarding Utility Rate Plan for City Operations
Contact Persons:
Name: Rachel DiFranco Dan Schoenholz
Title: Sustainability Manager Community Development Director Div/Dept: Community Development Community Development
Phone: 510-494-4451 510-494-4438
E-Mail: [email protected] [email protected]
Executive Summary: East Bay Community Energy (EBCE), a Joint Powers Authority (JPA) that has included the City of Fremont since the JPA’s formation in 2016, is Fremont’s default local electricity provider. In 2021, EBCE revised the rate plans offered to municipal customers, requiring the City to select a new rate plan. In February 2021, staff sought Council direction regarding the desired plan for City operations. The two choices were the Renewable 100 product (100% renewable power) at a 10% cost premium above PG&E rates or the Bright Choice product (86% carbon-free) at a 1% discount to PG&E. Due to budget uncertainty related to the COVID pandemic, Council voted at that time to select Bright Choice, recognizing that this decision would result in an increase in annual carbon emissions related to City electricity usage of 527 metric tons. However, given Council’s adopted goals related to climate action, Council also requested that this decision be revisited at a time of greater budget stability.
As noted in the budget update provided to Council on March 8, 2022, the City’s financial situation has stabilized and a transition to the Renewable 100 rate plan can now be accommodated. Utilizing 100% renewable electricity is a cost-effective step to achieving environmental goals adopted by Council and supports the growth of local renewable energy generation. Staff therefore recommends that Council authorize the transition to Renewable 100 for City operations.
BACKGROUND: When EBCE launched, it offered three product options to its customers, as follows:
Product Power Mix* Carbon-Free
Content
Cost
Renewable 100
100% Renewable 100% Approx. 10% premium
Brilliant 100
100% Carbon-free 100% Same as PG&E
Bright Choice
86% Carbon-Free 86% 1% discount
*Carbon-free content includes solar, wind, and large hydropower.
Renewable content in Renewable 100 includes California-produced wind and solar power.
When East Bay Community Energy (EBCE) launched service in 2018, Fremont City Council chose Brilliant 100 as the product for all municipal accounts. In November Staff Report (ID # 4545) Meeting of March 15, 2022
Updated: 3/8/2022 9:29 AM by Alberto Quintanilla Page 2 2020, however, the EBCE Board voted to phase out Brilliant 100 because it was not generating enough revenue. Accordingly, the City of Fremont had the decision to either opt-up to Renewable 100 or default down to Bright Choice.
At its January 21, 2021 meeting, the Environmental Sustainability Commission (ESC) voted 7-0 to recommend that Council select the Renewable 100 product for City operations.
The Commission also recommended that if Council instead selected Bright Choice, that the switch to 100% carbon-free electricity is the first item restored when the City’s budget situation improves.
At the February 16, 2021 City Council meeting, Council voted 6-1 to default to Bright Choice due to budget uncertainty. Recognizing the negative environmental impact of this decision, Council also requested that staff return to Council later to revisit the question when the budget became more stable.
Currently, staff is in the process of developing the proposed FY 2022/23 operating budget. Because the decision of which electricity plan to use for municipal accounts will have budget impacts in FY 2022/23, staff is seeking a Council determination on whether to opt up to Renewable 100 at this time.
DISCUSSION/ANALYSIS: In 2021, net electricity consumption for municipal operations was about 9.1 million kilowatt-hours. This represents a reduction of about 41% since 2015 (consumption that year was 15.4 million kilowatt-hours) thanks to significant energy efficiency upgrades including replacement of all streetlights with LEDs and installation of more than 1.6 MW of solar across seven facilities that generate approximately 2.3 million kilowatt-hours of clean electricity annually.
When the City enrolled in EBCE’s Brilliant 100 in 2018, greenhouse gas (GHG) emissions associated with the remaining electrical load from municipal operations were eliminated. Council’s decision last February to default down its electricity product to Bright Choice has resulted in adding 527 metric tons back to the City’s annual carbon footprint.
If the City were to select Renewable 100 as its new electricity product, municipal operations would return to producing no net carbon emissions. Carbon free electricity is consistent with the Council’s adopted goal of net carbon neutrality for the entire community by 2045. Renewable 100 enrollment would also serve to grow the market for locally produced renewable power, as well as signaling continued City leadership in clean power procurement.
FISCAL IMPACT: Under the current Bright Choice rate plan, the City spends approximately $525,000 per year in generation charges to EBCE. If the City’s accounts are changed to Renewable 100, annual costs would increase by approximately $100,000 to $625,000. These estimates are based on historical 2021 usage and do not include PG&E delivery charges, Franchise Fee, or Power Charge Indifference Adjustment (PCIA), which account for an additional $1,640,000 in total utility costs. Annual costs in future years may vary depending on changes in City energy consumption and increases or decreases to EBCE and PG&E rates.
Staff Report (ID # 4545) Meeting of March 15, 2022
Updated: 3/8/2022 9:29 AM by Alberto Quintanilla Page 3
ENVIRONMENTAL REVIEW: Enrollment in the proposed electric utility rate plan is exempt from the requirements of the California Environmental Quality Act (CEQA), pursuant to, without limitation, (1) CEQA Guidelines Section 15378(b)(3), (4) &/or (5), as it is a fiscal or administrative activity that will not result in any direct physical impacts to the environment; (2) Section 15273(a)(2), as CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies which the public agency for the purpose of purchasing or leasing supplies, equipment, or materials, and/or (3) 15061(b)(3), in that the proposed action would not have the potential to cause a significant effect on the environment, and is not subject to CEQA review. Each of the foregoing provides a separate and independent basis for CEQA exemption.
ATTACHMENTS: None.
RECOMMENDATION: Direct staff to enroll all City electricity accounts in EBCE’s Renewable 100 rate plan, and reflect this change in the City’s proposed FY 2022/23 budget and find the action exempt from CEQA, as detailed in staff report.
Approximate Annual Costs
Current spending on City accounts enrolled in Bright Choice $524,497 If City’s accounts are opted up to Renewable 100 $624,682 Increase in annual budget for new rate plan $100,185