Fremont City Council Meeting: 06/18/24 07:00 PM
3300 Capitol Avenue Div/Dept: Environmental Services
Fremont, CA 94538 Category: Fees & Rates
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5085) DOC ID: 5085
Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 1
RENEWABLE 100 DEFAULT ELECTRICITY RATE CHANGE - Referral from the Environmental Sustainability Commission: Resolution Requesting Ava Community Energy to Enroll All Residential, Commercial, and Industrial Accounts in Renewable 100 (100% California-Based Wind and Solar) Electricity Service, with the Exception of Those Participating in Medical Baseline, California Alternative Rates for Energy (CARE), Family Electric Rate Assistance (FERA), Direct Access Electric Service Programs, or Those Who Have Previously Opted to a Specific Ava Service Level or Opted Out of Ava Service; Determine that Action is Exempt from CEQA.
Contact Persons:
Name: Allyn McAuley Dan Schoenholz
Title: Environmental Specialist II Community Development Director Div/Dept: Environmental Services Community Development
Phone: 510-494-4576 510-494-4438
E-Mail: [email protected] [email protected]
Executive Summary: The Fremont City Council unanimously adopted Fremont’s updated Climate Action Plan (CAP) on October 10, 2023. The CAP’s “Game Plan” designates priority actions to implement within the first three years. The Game Plan action of adopting Ava Community Energy’s (Ava) “Renewable 100” as the default electric service plan throughout Fremont is the primary driver to achieve the transition to clean electricity, which accounts for 18% of the total 2030 greenhouse gas (GHG) reductions quantified. This action involves enrolling existing customers in Renewable 100, with exceptions as stated in this report.
Changing the default service plan does not change the plans available to Fremont customers. Customers have the same choice of rate plans regardless of which plan is set as the default service. Ava estimates that if Renewable 100 becomes the default service for all Fremont customers in 2025, electric bills for those remaining on the plan will increase by
3.1%-4.3%. Data from other Alameda County communities has shown that 90 -95% of customers have remained on the Renewable 100 rate plan after its adoption as the default.
That high retention rate is the basis for the substantial GHG reductions projected for this action in the CAP.
Consistent with the Climate Action Plan, and due to the considerable GHG reduction benefit anticipated while still retaining customer choice, staff recommends that the Fremont City Council adopt a resolution choosing Ava’s Renewable 100 service level as the default for all Fremont electric energy accounts, with the exceptions stated in this report, beginning in March 2025.
BACKGROUND:
Implementing Climate Ready Fremont
On October 10, 2023, the Fremont City Council adopted the City’s updated CAP, titled Climate Ready Fremont. The plan establishes a goal of reducing community-wide GHG Council Staff Report (ID # 5085) Meeting of June 18, 2024 Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 2
emissions by 30% below 2018 levels (or 55% below 2005 levels) by the year 2030. In order to quickly transition from the planning stage to implementation, Climate Ready Fremont identified key objectives in the Game Plan, to be accomplished within the first three years, that could help the City make significant progress towards achieving the CAP’s ultimate goals. The transition to clean electricity is projected to reduce community-wide GHG emissions by 51,370 metric tons of carbon dioxide equivalent (MTCO2e), or 18% of the total 2030 reductions identified, and adopting Ava’s Renewable 100 as the default electric service plan throughout Fremont is the highest priority action to help achieve that goal .
Ava Community Energy
Ava (formerly East Bay Community Energy) is a Community Choice Energy entity that began providing cleaner electric service to Fremont customers in 2018. Ava's 2030 Clean Energy Goal is to provide all of its customers with 100% carbon-free energy by 2030. Ava partners with Pacific Gas & Electric (PG&E), which delivers electricity and natural gas, maintains the power lines, responds to outages, and provides billing and customer service.
Ava purchases electricity from clean, renewable sources such as solar and wind on behalf of customers.
When the program began in 2018, the default electric service plan for all Fremont residents and businesses was “Bright Choice,” which cost less than PG&E while emitting less GHGs.
Customers have always had the option to opt out of Ava service and remain solely with PG&E. To date, 3.9% of Fremont customers have opted out.
Ava Service Plan Options
Ava offers two electric service plan options: Bright Choice and Renewable 100. These two service plans have the following attributes:
Service Plan Renewable Energy
Content*
GHG Emissions* Cost (in relation to
PG&E)
Bright Choice 49.4% 496 lbs CO2e/MWh 5% less
Renewable 100 100% 0 lbs CO2e/MWh 1.6% more
*According to the 2022 Power Content Label filed with the CA Energy Commission
Renewable 100’s energy is sourced entirely from California wind and solar. All of Fremont’s municipal accounts are now enrolled in Renewable 100 service, as directed by the Fremont City Council on March 15, 2022.
Many other Ava member agencies have taken action to establish Renewable 100 as the default service level for their residents, businesses, or both:
City/County Residential* Commercial Date of Renewable 100 Default Service Selection
Albany Renewable 100 Renewable 100 June 7, 2021
Berkeley Renewable 100 Renewable 100 June 29, 2021
Dublin Renewable 100 Renewable 100 January 12, 2021
Emeryville Renewable 100 Renewable 100 March 15, 2022
Hayward Renewable 100 Renewable 100 July 6, 2021
Piedmont Renewable 100 Bright Choice May 21, 2018
Council Staff Report (ID # 5085) Meeting of June 18, 2024 Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 3
City/County Residential* Commercial Date of Renewable 100 Default Service Selection
Pleasanton Renewable 100 Renewable 100 July 20, 2021
San Leandro Renewable 100 Renewable 100 September 7, 2021 * Excludes customers on CARE, FERA, and/or Medical Baseline, who were defaulted to Bright Choice
DISCUSSION/ANALYSIS:
Ava Default Product Change Policy
In March, Ava adopted a policy which states that after a city or cities request that Ava make a default product change, Ava considers the proposal(s) for approval only once per year.
Proposals are considered annually at Ava’s May Board meeting, for implementation ten months later, in March of the following year. However, Ava and the City have been working on this default product change item since before this policy change, so Ava staff will recommend to the Ava Board that they consider Fremont’s default product change outside of the normal schedule. Therefore, Fremont’s proposed schedule is as follows:
City Council Approval Ava Board Approval Customer Enrollment By June 18, 2024 July 17, 2024 March 31, 2025
Community Outreach and Education
If approved by the Fremont City Council and then the Ava Board, this would be the City of Fremont’s first default product change, so Ava would cover the cost of the required customer notices and Ava’s operational adjustments associated with the transition of customer accounts.
Ava will work closely with the City to develop a comprehensive outreach campaign that best meets the needs of the Fremont community. Due to Ava’s extensive experience publicizing default product changes in other communities, they have developed the following outreach methods:
• Customer Notices: Multiple mail and email notices, co-branded with the city, sent to all customers before and during implementation to alert them of the change and explain their choices. This mass customer outreach begins 1-2 months before the implementation month.
• Events/Webinars: Community events and informational webinars to connect with the community and educate customers on their choices, including specialized outreach to large commercial/industrial customers.
• Advertising: Digital ads in relevant, local media outlets before and during default transitions to let the community know about the upcoming change. • Social Media/Website: Digital resources including a city-specific webpage and a social media and newsletter toolkit.
In addition, the City will utilize a variety of communication channels to inform the community about the upcoming change, including the City website, newsletters, local news publications, social media, email and text notifications, and community events.
Council Staff Report (ID # 5085) Meeting of June 18, 2024 Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 4
The following provides a timeline for implementation, as currently proposed by Ava staff:
• June 18: City Council decision
• July 17: Ava Board decision. If the Ava Board does not consider the item at their July meeting, they can consider it at their September meeting after their recess and still have enough time for March 2025 implementation.
• August: Monthly meetings begin between City staff and Ava's marketing/outreach team to develop the outreach campaign
• December 2024-March 2025: Community outreach and events • January/Early February 2025: First round of email/print notices sent to customers letting them know the deadline to take action • Late February 2025: Last opportunity for customers to take action (e.g., choose Bright Choice or opt out to PG&E) before being enrolled in Renewable 100 (Note:
they can still take action after being enrolled in Renewable 100, but related charges may appear on their bill)
• March 2025: Second round of email/print notices sent to customers alerting them of the change and how they can still take action. Accounts will be transitioned to Renewable 100 on a rolling basis throughout March, based on each customer’s meter-read date.
• March 31, 2025: Implementation period concludes
• April 2025: Renewable 100 charges begin appearing on customer bills • June 2025: Ava adopts new rates through their annual rate review process • July 2025: New rates begin appearing on customer bills
Customer Choice
Changing the default plan will both enroll existing customers in Renewable 100, with the exceptions stated in this report, and set the default to Renewable 100 for new customers.
During the implementation period or afterwards, Fremont customers defaulted to Renewable 100 can instead elect Bright Choice or opt out of Ava service to PG&E. There is no fee for electing Bright Choice, but customers who opt out to PG&E are assessed a nominal fee ($5 for residential or $25 for commercial).
Projected Cost Premium for Renewable 100
The following table provides estimated monthly price premiums by account type for Renewable 100 over Bright Choice for the future service period starting in July 2025. These estimates include two scenarios: one in which all Fremont accounts default to Renewable 100 in March 2025; and a second scenario in which residential accounts are switched in 2025 and commercial accounts are switched in 2026. In both scenarios, Ava expects the premium for Renewable 100 to increase due to the cost of procuring additional renewable energy to serve Fremont customers.
Council Staff Report (ID # 5085) Meeting of June 18, 2024 Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 5
Estimated Monthly Renewable 100 Premium Versus Bright Choice Starting July 2025
Category kWh Usage %* Avg. Cost Bright Choice 2025 Renewable 100 Premium (April 2024) No Action
Transition All
in 2025
Residential 2025
Commercial 2026
Residential 26.8% $160.31 $3.98 (2.5%) $5.06 (3.2%) $4.30 (2.7%) Small
Business 12.7% $617.70 $15.16 (2.5%) $19.32 (3.1%) $16.41 (2.7%) Medium
Business 15.9% $6,543 $195 (3%) $246 (3.8%) $210 (3.2%) Large
Business 44.5% $71,363 $2,373 (3.3%) $3,042 (4.3%) $2,574 (3.6%) *does not include municipal accounts
Customers will pay the 2024-25 rates for March to June 2025, then will begin paying the new rates. The estimated cost premiums apply to all customers in Ava’s service territory, not just Fremont customers.
If the City Council takes no action, it is anticipated that Renewable 100 customers will pay a premium of 2.5%-3.3% over Bright Choice customers. Under this scenario, Fremont would not realize the GHG reductions quantified for this action in the CAP.
If the City Council elects to default residential and commercial customers to Renewable 100 in March 2025 and the Ava Board approves, it is anticipated that Renewable 100 customers will pay a premium of 3.1%-4.3% over Bright Choice customers. Under this scenario, Fremont would benefit from the full GHG reductions quantified for this action in the CAP.
If the City Council elects to default residential customers to Renewable 100 in March 2025 and commercial customers to Renewable 100 in March 2026, and the Ava Board approves, it is anticipated that Renewable 100 customers will pay a premium of 2.7%-3.6% over Bright Choice customers. Under this scenario, it would take longer for Fremont to realize the GHG reductions quantified for this action in the CAP.
Staff is recommending that all accounts be defaulted to Renewable 100 in March 2025 due to the significant GHG reduction benefits compared to the phased approach; to the relatively small cost impacts of defaulting all accounts in 2025; and to the fact that all customers will have the choice to revert to the less expensive Bright Choice product.
It should be noted that the Ava Board has final decision-making authority regarding changes in default service, and that it is possible they will choose to phase implementation of the Fremont default service change over two years (2025 and 2026). Because of that possibility, staff is recommending that the resolution adopted by Council state that a phased implementation, while not the preferred option, is acceptable to the City if selected by the Ava Board.
Council Staff Report (ID # 5085) Meeting of June 18, 2024 Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 6
Recommendation from the Environmental Sustainability Commission On June 13, 2024, the Environmental Sustainability Commission recommended that the Fremont City Council adopt a resolution choosing Ava’s Renewable 100 service level as the default for all Fremont electric energy accounts beginning in March 2025, with exceptions for CARE, FERA, Medical Baseline, and Direct Access customers, as well as those who have already opted out of Ava service or elected a specific Ava service. The Commission also recommended that Council authorize phased implementation if that option is selected by the Ava Board.
Exemptions
Staff and the Commission recommend that, consistent with the approach taken by all other cities that have adopted Renewable 100 as the default service, that the change not apply to the following customers:
• Discounted service programs: Any customer participating in the CARE, FERA, or Medical Baseline program (14% of Fremont residential accounts). • Direct Access Service: Any customer that contracts directly with an Electric Service Provider, typically large industrial users.
• Prior customer enrollment/opt-out actions: Any customer that has already affirmatively taken action to change its rate product or opt out of Ava service.
FISCAL IMPACT: For Fremont residents and businesses who remain on the Renewable 100 rate plan after the default switch, electric rates are estimated to increase as described in the body of the report.
All municipal accounts are currently enrolled in Renewable 100, so the City’s projected expenditures for electricity in FY 2024/25 will not be impacted by the proposed change .
However, as previously discussed, Ava expects that the premium for Renewable 100 will increase due to the cost of procuring additional renewable energy to serve Fremont customers, and staff estimates City electric bills will increase in FY 2025/26 as a result of this action by about 1%, or $30,000.
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 for the purpose of purchasing or leasing supplies, equipment, or materials, (3) 15183, as the project is consistent with the previously-circulated Fremont General Plan EIR (SCH#2010082060) and the 2023 EIR Addendum prepared for the Climate Ready Fremont (qualified Climate Action Plan), under which the proposed project was a recommended community-level strategy action item in the plan, and/or (4) 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:
• Draft Resolution Ava Renewable 100 Plan
Council Staff Report (ID # 5085) Meeting of June 18, 2024 Updated: 6/14/2024 7:38 AM by Susan Gauthier Page 7
RECOMMENDATIONS:
1. Adopt a resolution choosing Ava’s Renewable 100 service level as the default for all Fremont electric energy accounts effective March 2025, except for the following categories:
• Medical Baseline Service;
• California Alternate Rates for Energy (CARE);
• Family Electric Rate Assistance (FERA);
• Direct Access Electric Service; and
• Those who have already opted out of Ava service or elected a specific Ava service.
Include an acknowledgement in the resolution that the Ava Board of Directors has final decision-making authority regarding changes to default service and affirm that a phased implementation over two years (2025 and 2026), while not the preferred option, is acceptable to the City if selected by the Ava Board.
2. Find the proposed action exempt from CEQA under guidelines 15378(b)(3), (4) &/or (5); 15273(a)(2); 15183; and/or 15061(b)(3); as detailed in the staff report.