Agenda Report
Fullerton City Council
MEETING DATE: FEBRUARY 1, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: JEFFREY W. COLLIER, ACTING CITY MANAGER
PREPARED BY: ANISSA LIVAS, ACTING SENIOR ADMINISTRATIVE ANALYST SUBJECT: DEFAULT RATE TIER FOR ORANGE COUNTY POWER AUTHORITY RESIDENTIAL AND COMMERCIAL CUSTOMERS
SUMMARY
As a member of the Orange County Power Authority (OCPA), the City of Fullerton must select a default rate option for electricity generated from renewable resources prior to the launch of commercial and residential service expected as early as April 2022. OCPA’s energy product offerings include the Basic Choice product which will include 38.5% renewable energy content in 2022 that increases over time, the Smart Choice product which will include 69.2% renewable energy content in 2022 that increases over time and the 100% Renewable Choice product which will maintain a 100% renewable energy content. The “default rate” is the power choice that will go into effect unless the consumer makes a different choice. All customers will have the option to upgrade, downgrade or opt-out and return to service with Southern California Edison (SCE) at any time.
Staff seeks City Council direction on the most appropriate selection for all customers in the City.
RECOMMENDATION
Select Basic Choice, Smart Choice or 100% Renewable Choice as the default energy product offering for residential and commercial customers in Fullerton and consider the same or a different energy product offering (and corresponding rate and environmental benefits) for the City’s municipal energy accounts.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statements:
City Infrastructure and City Assets
Fiscal and Organizational Stability.
FISCAL IMPACT
The OCPA Board-approved rate design set 2022 rates for Basic Choice at parity to SCE, assuming all OCPA member agencies select Smart Choice as the default service offering. This approved rate design allows for a smaller premium for Smart Choice (estimated at SCE rate plus a penny per kWh or 3.7% above SCE for average residential customer) and 100% Renewable Choice (estimated at SCE rate plus 1.5 cents per kWh or 5.6% above SCE for average residential customer).
The OCPA Board also approved the Net Energy Metering (NEM) enhancements from the SCE NEM program, as follows:
Set Net Surplus Compensation (NSC) rate at 10% above the incumbent IOU NSC rate Provide monthly billing to NEM customers
Set all customers annual true-up period to April.
OCPA Board Approved Rate Design Bill Impacts
The following table estimates the bill impacts for a typical residential customer for the three OCPA product offerings:
Estimated Typical Residential Bill Comparison
Basic Choice, 425 KWh Per Month
Charge Type
OCPA
SCE
Difference
Generation
$41.51
$49.96
($8.45)
SCE Surcharges
$8.45
$0.00
$8.45
SCE Delivery
$64.44
$64.44
$0.00
Total
$114.40
$114.40
$0.00
0.0%
Estimated Typical Residential Bill Comparison
Smart Choice, 425 KWh Per Month
Charge Type
OCPA
SCE
Difference
Generation
$45.76
$49.96
($4.20)
SCE Surcharges
$8.45
$0.00
$8.45
SCE Delivery
$64.44
$64.44
$0.00
Total
$118.65
$114.40
$4.25
3.7%
Estimated Typical Residential Bill Comparison
100% Renewable Energy Choice, 425 KWh Per Month
Charge Type
OCPA
SCE
Difference
Generation
$47.89
$49.96
($2.07)
SCE Surcharges
$8.45
$0.00
$8.45
SCE Delivery
$64.44
$64.44
$0.00
Total
$120.78
$114.40
$6.38
5.6%
BACKGROUND
The Orange County Power Authority is a community choice energy (CCE) program, established as a Joint Powers Authority (JPA) consisting of four cities in Orange County (Buena Park, Fullerton, Huntington Beach and Irvine) and recently added unincorporated areas of Orange County, who work together to bring clean energy choices to each community. As a CCE, OCPA purchases power energy and sells it to customers, while SCE delivers, bills and resolves any customer service or electricity service issues. The City of Fullerton was one of the first cities to join the OCPA on November 2, 2020 and is a Founding Member. City Council appointed Mayor Jung as its primary Board Member and Council Member Zahra as its alternate Board Member to serve on the OCPA Executive Board on behalf of the City.
As a member of the Orange County Power Authority (OCPA), the City of Fullerton has the authority to set the default renewable energy tier to offer to residents and businesses within their jurisdiction. The method by which each member makes this determination is entirely within their own purview as there are no legal requirements to select a particular tier.
The OCPA asks members to make their final selection as soon as possible. Having this information will allow OCPA staff to begin procuring energy resources so the Board can set rates to launch service in April 2022. OCPA expects to launch service to municipal and commercial customers in unincorporated Orange County and the cities of Buena Park, Fullerton, Huntington Beach and Irvine in April 2022. In October 2022, OCPA will phase-in all residential customers in its service territory. At full launch, OCPA will serve more than 820,000 businesses and residents, making it the sixth-largest community choice energy provider in the State of California.
DISCUSSION
On January 11, 2022, the OCPA Board adopted its energy rate structure in advance of the 2022 program launch with three rate tiers of renewable content for customers. OCPA asks each member city to select one of three renewable energy tiers.
Customers will receive the default rate if they do not make any opt-out, opt-up or opt-down selections. The three products are:
Orange County Power Authority Rate Structure
Basic Choice
38.5% Renewable Energy
Smart Choice
69.2% Renewable Energy
100% Renewable Choice
100% Renewable Energy
Once OCPA service launches in April 2022, OCPA will automatically enroll all customers in OCPA and customers will begin receiving power from OCPA by paying a line item indicated on their SCE bill. Customers will have the option to elect to remain with SCE for their energy generation charges and opt-out of OCPA service without penalty. In addition, customers may choose their own renewable tier by opting up or down, relative to the default rate selected by City Council.
For example, if a city or county selects 38.5% renewable as its default tier, then the customer would automatically be enrolled in the 38.5% renewable product unless the customer opts-up to either the 69.2% renewable or 100% renewable products or the customer opts-out to stay with SCE.
Similarly, if an agency sets the default product to 69.2% renewable, the customer would automatically be enrolled in the 69.2% renewable product unless the customer opts-up to the 100% renewable products, opts-down to the 38.5% renewable product or the customer opts-out to stay with SCE.
If the agency sets the default product to 100% renewable, the customer would automatically be enrolled in the 100% renewable product unless the customer opts-down to either the 38.5% renewable or the 69.2% renewable products or the customer opts-out to stay with SCE.
OCPA Status Report - Default Energy Product Offerings
· Buena Park: Selected Smart Choice product (69.2% renewables) as a default energy product offering for their residential and commercial customers on January 25, 2022. The City has not yet made a determination concerning the default energy product offering for City facilities. · Irvine - Selected Smart Choice product (69.2% renewable) as a default energy product offering for their residential and commercial customers and expects to take final vote on February 8, 2022. The Irvine City Council also decided that all City facilities will default into the 100% Renewable Choice product. · Huntington Beach – Will choose a default Energy Product on February 1, 2022.
Low-income qualified customers (customers currently enrolled in the California Alternate Rates for Energy (CARE) and the Family Electric Rate Assistance (FERA) discount programs) will continue to receive all benefits and discounts as an OCPA customer.
Mayor Jung has served as the City’s representative OCPA Board since its inception. Mayor Jung may wish to supplement this report with comments of his own and may offer a recommendation for action this evening.
Orange County Power Authority Default Rate Tier
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