STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of March 14, 2023
TO: Mayor Walker-Griffin and Members of the City Council VIA: Dante Hall, City Manager
SUBMITTED BY: Timothy Rood, AICP, Community Development Director SUBJECT: Direction to staff regarding Community Choice Energy and MCE RECOMMENDED ACTION:
Receive a presentation from City and MCE staff;
Ask any questions;
Take public comment; and
Provide direction to staff on whether to pursue joining MCE in 2023.
EXECUTIVE SUMMARY:
At a Jan. 17, 2023 “shirtsleeves” study session on potential sustainability initiatives, the City Council requested more information regarding MCE and any other Community Choice Energy providers that might be interested in serving Hercules. Staff contacted representatives of MCE as well as the two other CCAs closest to Hercules: East Bay Community Energy (EBCE), which serves 15 communities in Alameda and San Joaquin Counties, and Sonoma Clean Power, which serves 13 communities in Sonoma and Mendocino Counties. EBCE and Sonoma Clean Power staff both indicated that their expansion efforts focused on jurisdictions within the counties they already serve, in order to avoid consumer confusion and provide a venue for regional collaboration on energy projects and programs.
MCE is the only CCA serving Contra Costa County jurisdictions. Staff is therefore requesting the Council provide direction on whether to pursue joining MCE in 2023.
MCE staff will provide a presentation and answer questions from the Council.
BACKGROUND:
Community Choice Energy
Authorized by the Legislature under AB 117 in 2002, Community Choice Energy (CCE), formerly known as Community Choice Aggregation (CCA), is a program by which local, not-for-profit public agencies provide electricity and often other energy-related programs to residents and businesses in their service area. Through Community Choice, communities join together to pool (or aggregate) their electricity load in order to purchase clean energy and develop local projects and programs on behalf of their residents and businesses. Community Choice providers work in partnership with the region’s existing Investor-Owned Utility (IOU), which continues to deliver power and maintain the power grid.
Since the launch of Marin Clean Energy (now known as MCE) in 2010, many new CCAs have formed in communities across the service territories of California’s three largest IOUs: Pacific Gas & Electric (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E). According to Cal-CCA, the trade association representing CCAs in California, as of summer 2022, there are 24 operational CCA entities serving over 15 million people in more than 200 California cities and about half the counties in the state. According to CalCCA, CCAs in California have contracted for over 10,000 megawatts (10 gigawatts) of new renewable energy capacity and over 2,600 megawatt-hours of new energy storage, avoided about 940,000 metric tons of GHG emissions per year, and supported thousands of jobs.
Enrollment Process
Once a city or county implements or joins a CCA program, state law requires that residential customers within a CCA member's jurisdictions be enrolled in CCA service unless they choose to opt out. The noticing process is conducted by the CCA and includes a website and telephone call center for questions. The default power product at enrollment is selected by either the CCA or the member agency’s governing body, and once enrolled, customers have the option to “opt up” or “opt down” to a different power product, or to “opt out” of the CCA entirely at no charge and continue to purchase their electricity from PG&E. Customers will receive at least two notices during a 60-day period prior to CCA service commencement and at least two additional notices during a 60-day period after CCA service commencement. These notices will inform the customer how to opt out of the program if he or she chooses to do so.
ANALYSIS:
At a Jan. 17, 2023 “shirtsleeves” study session on potential sustainability initiatives, the City Council requested more information regarding MCE and other Community Choice Energy providers that might be interested in serving Hercules.
Staff contacted representatives of MCE as well as the two other CCAs closest to Hercules: East Bay Community Energy (EBCE), which serves 15 communities in Alameda and San Joaquin Counties, and Sonoma Clean Power, which serves 13 communities in Sonoma and Mendocino Counties. EBCE and Sonoma Clean Power staff both indicated that their expansion efforts focused on jurisdictions within the counties they already serve, in order to avoid consumer confusion and provide a venue for regional collaboration on energy programs. MCE is the only CCA serving Contra Costa County jurisdictions. Staff is therefore requesting the Council provide direction on whether to pursue joining MCE in 2023.
MCE
In Contra Costa County, the unincorporated County and the cities of Concord, Danville, El Cerrito, Lafayette, Martinez, Moraga, Oakley, Pinole, Pittsburg, Pleasant Hill, Richmond, San Pablo, San Ramon and Walnut Creek are members of MCE, which now serves 37 communities in Marin, Napa, Solano and Contra Costa Counties. MCE is a Joint Powers Authority that provides renewable energy services to over 331,000 customers throughout Contra County. Over 88% of all electric customers in MCE’s Contra Costa member communities receive their electric generation from MCE Like most CCAs, MCE is a Joint Powers Authority (JPA), with a board made up of elected officials representing its member agencies. PG&E continues to deliver the electricity through its transmission and distribution system and provide meter reading, billing, and maintenance services for MCE and other CCA customers in its territory, as well as to provide natural gas service. The MCE charges appear as a line item on the PG&E bill. MCE’s standard service, Light Green, has contained 60% renewable energy or more since 2017, meeting state goals 13 years ahead of schedule. Light Green is projected to be 95% GHG-free by 2023 and will increase to 85% renewable by 2029.
MCE Default Service Option
MCE is currently piloting Deep Green as its default customer service option. If the pilot is successful and the default service in 2025 is still Deep Green, new communities enrolling in MCE would also default into Deep Green service, but customers would have the choice to opt down to MCE’s 60% renewable Light Green service, or to opt out of MCE entirely and return to PG&E at any time.
Enrollment Process and Timeline
Should the City of Hercules decide to join MCE as a new member community, Hercules community members would be eligible for a spring 2025 enrollment date in MCE services.
The steps to enter into MCE's Joint Powers Agreement are outlined below:
City staff complete two required PG&E forms (forms 79–1030 and 79–1031). The two forms allow MCE to access Hercules customer's electric load data from PG&E. The forms are a nonbinding agreement, and do not constitute a commitment from the City of Hercules to join MCE - they simply allow MCE to access PG&E customer data.
Before June 30, 2023: City Council should adopt resolution, ordinance, and memorandum of understanding to join MCE; Mayor signs signature page of MCE’s joint powers authority (JPA) agreement; MCE conducts technical analysis;
MCE Board of Directors holds a vote to include prospective new communities by the end of 2023; Enrollment of new communities begins in 2025, pending certification by the California Public Utilities Commission (CPUC).
Questions
During the Jan. 17, 2023 study session, members of the Council inquired about public outreach; CPUC governance of CCAs; expectations for member agency staff attendance at CCA board meetings and technical advisory committees; use of Renewable Energy Credits (RECs); renewable energy generation projects sponsored by CCAs; power contracts; and MCE’s rates, power mix, weighted voting structure, and treatment of residential solar customers.
The most recent joint comparison of PG&E and MCE’s rates as of June 1, 2022 is attached (Attachment 1), along with MCE’s current rates as of January 1, 2023 (Attachment 2). MCE’s Joint Powers Authority agreement (Attachment 3) and Voting Shares (Attachment 4) are also attached to this report.
Several of the questions raised by the Council are discussed on MCE’s Frequently Asked Questions (FAQ) page, https://www.mcecleanenergy.org/faq/. Relevant FAQ responses, in some cases updated in consultation with MCE staff, are listed below. MCE staff will be present to respond to other questions.
Where does MCE get its electricity from?
Our energy is mostly produced from non-polluting, renewable sources such as solar, wind, geothermal, hydroelectric, and bioenergy. The projects that produce our electricity are located in California, the Pacific Northwest, and Colorado. The exact proportion of each varies with time, based on demand and availability. For example, MCE may use a higher proportion of hydroelectric energy during the spring and summer months when winter run-off generates more power at affordable prices. Learn more about MCE’s power sources.
How does MCE procure power?
We have short and long-term contracts with a variety of power suppliers to meet the energy needs of our customers. Each year, we host an “open season” process where developers or owners of renewable energy projects can propose contracts. We also operate a Feed-In Tariff program, through which local developers can create and sell small renewable energy projects directly to us at a set price, provided that they are located in our service area.
How do I know that MCE is actually procuring 60% or 100% renewable energy on my behalf? We are required to report to the California Public Utilities Commission and California Energy Commission on an annual basis to verify the amount of renewable energy procured for our customers. This is the same standard used by other California utilities, such as PG&E, for verification purposes. Learn more about MCE’s verified renewable energy procurement from our most recent Power Content Label.
Is the renewable energy in my MCE service transmitted directly to my home or business? No. MCE buys and builds cleaner electricity sources. This electricity is fed onto the statewide shared electric grid and then moves down the path of least resistance to customers. This is why accounting is important. Clean energy is accounted through contracts and renewable energy certificates that confer the “renewable attributes” of that energy. It needs to work this way because individual electrons can’t be routed from a wind turbine to a particular house that just signed up for green power without building a new transmission line directly from the source to the home. MCE, just like PG&E, reports power purchases to the California Energy Commission and the California Public Utilities Commission so you can be sure that we are putting cleaner electricity onto the grid on behalf of our customers.
How do MCE’s rates compare to PG&E’s?
MCE’s 60% renewable electricity service is cost competitive with – and often lower than – PG&E’s 49% renewable electricity service for typical customers. As of January 2023, MCE’s standard Light Green 60% renewable service is currently 1% less expensive than PG&E on average. MCE’s Deep Green 100% renewable energy service is currently 2.2% more expensive than PG&E’s basic service.
Part of MCE’s mission is to provide stable and competitive rates. MCE's rate-setting typically occurs on an annual basis. MCE's Board of Directors sets electric generation rates for its customers, typically on an annual basis, and MCE rates are developed, discussed, evaluated, and approved at public meetings where customers are able to comment. For more information, sample cost comparisons, and cost calculators, please visit Rates.
Does MCE offer a Net Energy Metering (NEM) program for customers who have solar? Yes. Any MCE customer who meets PG&E’s NEM program requirements is eligible for MCE’s NEM program. Generally, this includes customers with renewable electric generation systems (such as solar, wind, biogas, and fuel cell installations) that are less than 1,000 kW. The average residential installation is 5 kW and the average commercial installation is 100-200 kW.
How does MCE set its rates?
The MCE Board of Directors sets electric generation rates for our customers. We value public participation and transparency, which is why our rates are developed, discussed, evaluated, and approved at public meetings where customers are able to comment. We invite you to attend and give us your feedback. Rate-setting typically occurs on an annual basis, and new rates are typically approved in April.
FISCAL IMPACT:
There is no fiscal impact associated with this action.
ATTACHMENTS:
PG&E-MCE Joint Rate Comparisons (current as of June 1, 2022) MCE Rate Sheet (effective January 1, 2023)
MCE Joint Powers Authority agreement
MCE Voting Shares (updated July 2021)
MCE Presentation