CITY OF POMONA
COUNCIL REPORT
August 7, 2023
To: Honorable Mayor and Members of the City Council
From: James W. Makshanoff, City Manager
Submitted By: Chris Diggs, Water Resources Director
SUBJECT: POMONA CHOICE ENERGY RATE INCREASE
RECOMMENDATION:
It is recommended that the City Council receive and file this report.
EXECUTIVE SUMMARY:
Given the rising cost of power, it is necessary to increase the rate for power. Pursuant to Resolution No. 2022-06, the City Manager has authorized staff to implement a Pomona Choice Energy (PCE) rate adjustment (Attachment No. 1) that is five percent under the June 2023 Southern California Edison (SCE) rate.
FISCAL IMPACT:
It is important to note that PCE customers continue to enjoy a rate that is five percent less than the rates charged by SCE. It is also essential that PCE fund reserve balance increase each year and come close to the desired goal of 25 percent of operating costs by the year 2030. Thereafter, revenues can then be used to benefit PCE customers with energy saving programs.
PREVIOUS RELATED ACTION:
On January 10, 2022, City Council authorized a PCE rate at three percent under the then current SCE rate. Additionally, City Council authorized the City Manager to adjust PCE rates to no greater than three percent above the then current SCE rate. On March 6, 2023, City Council authorized Resolution No. 2022-06, a rate adjustment that is five percent under the January 2023 Southern California Edison (SCE) rate.
DISCUSSION:
To shield itself from price spikes, PCE pre-purchases nearly 90 percent of its estimated energy needs. This “hedging” allows PCE to practically guarantee the cost it will pay for much of the power it purchases. However, there are limits to this guarantee. When demands increase above what is expected, PCE, like all power providers, must purchase power on the spot market, which can be very expensive and often costing several times more than the PCE rate.
As our understanding of our customer usage patterns grow over time, so too does our ability to plan and hedge for their anticipated energy demands. This being the case, we have started hedging to nearly 100 percent of projected demands in some months. Business decisions like these have allowed PCE customers to enjoy a reduced rate as compared to SCE.
Given that prices for power have risen in the past couple years, SCE continues its efforts to collect the necessary revenues to cover its expenses. To do so, effective June 1, 2023, SCE raised its rates. High-energy costs are not something only SCE is dealing with as PCE has also increased its rates in August 1, 2023. However, being a nonprofit, PCE continues to provide its customers with a rate that is five percent below SCE.
The City provided outreach to PCE customers prior to the August 1st rate increase through advertisements on social media, the City Manager’s email distribution list, and on the home page of the Pomona Choice Energy website located at www.pomonachoiceenergy.org in various languages.
Prepared by:
Julie Carver, Environmental Compliance Supervisor
ATTACHMENT:
Attachment No. 1 - Pomona-SCE Joint Rate Comparison
Pomona Choice Energy Rate Increase