December 3, 2024
TO: City Council
REQUESTED BY: Tom Prill, Deputy City Manager
APPROVED BY: Robert A. Johnson, City Manager
SUBJECT: Expansion of the Power Choice Solar and Battery Program RECOMMENDATION:
Staff recommends that the City Council:
Grant the City Manager or his designees the authority to negotiate and execute all agreements, including non-substantive changes, related to the expansion of San Jacinto’s Power Choice Program through a partnership with Participate.Energy, LLC (P.E.) in a form approved by the City Attorney.
BACKGROUND:
On November 17, 2016, City Council adopted Ordinance No. 16-12, establishing the San Jacinto Community Choice Aggregation (CCA) program, San Jacinto Power (SJP). SJP has been successfully serving customers since April 2018. In addition to providing renewable energy at competitive prices to our customers, SJP intends to offer customer programs to not only support the renewable energy goals of the state by leveraging innovation and cutting-edge technologies but also to enhance grid stability and create new meaningful benefits for our residents. The actions before the City Council are in support of this effort.
On March 21, 2023, CalChoice and Participate.Energy (P.E.) introduced to the City Council the SJP Power Choice Program, a collaborative initiative with Tesla designed to offer San Jacinto’s SJP customers a residential solar and battery storage solution. The City Council formally adopted this program through a series of agreements, establishing an accessible path for the community to acquire solar panels and battery storage without upfront costs or credit checks.
The SJP Power Choice Program empowers residents with the benefits of solar energy, including lower energy costs, backup power, and the opportunity to participate in grid services, making clean energy more equitable and accessible for all. The program officially launched to all residential customers on October 1, 2023.
The Power Choice Program advances solar market democratization by removing consumer credit checks, requiring no upfront costs, and offering low energy rates. Historically, such programs have been limited to individuals with high credit scores, restricting solar benefits to those able to afford these systems. While initially available only to residential customers, there is now a proposal to extend the program to all commercial and industrial customers. Given its considerable benefits, staff recommends expanding marketing efforts to ensure that all San Jacinto residents and businesses are informed and able to take advantage of this valuable opportunity through SJP, thus enhancing community access to energy savings and resilience.
SJP Power Choice for Commercial and Industrial Customers Due to the successful implementation of the residential program, City staff are seeking the City Council's approval to develop a similar model that will remove the financial barriers to deploying solar for commercial and industrial customers, giving the business community an additional tool to obtain and harness the benefits of solar and battery storage. The commercial and industrial components of the SJP Power Choice program will be designed similarly to the residential program and offer no upfront costs and 100% financed commercial systems for a term of 25 years. Each system will be engineered and designed to optimize energy and cost savings for the local business.
SJP Power Choice Marketing Efforts Expansion
Since the launch of the SJP Power Choice Program, staff have undertaken several marketing activities to increase participation, including a targeted social media campaign across the City’s platforms to raise awareness of the SJP Power Choice Program, City and SJP newsletters, and attending City public events to promote the program and encourage participation by SJP customers.
Expanding the Power Choice program to include Channel Partners provides an opportunity to enhance its impact through expanded marketing efforts, including a dedicated sales force to promote the program more strategically. Staff and Participate.Energy propose engaging Channel Partners to increase program awareness, offer customers more choices, and boost participation by fostering competition among installers. Through this approach, San Jacinto residents and businesses will be able to select from various local and regional installers, each providing consistent solar and battery specifications. With all Channel Partners operating under the same Power Choice program policies and pricing structure, customers can compare offers and select the proposal that best meets their needs.
The existing SJP Power Choice program will remain in effect and available to any customer wishing to participate directly with Tesla through the SJP or Tesla website. Introducing Channel Partners to the program will increase marketing and outreach efforts while providing additional customer choice for the City’s residents.
The Power Choice Program entails several agreements between the program partners (i.e., the City and Participate.Energy) and the program participants (i.e., SJP customers). The program is structured through several agreements that stipulate the roles and responsibilities, associated costs, and operation and maintenance, including the following:
Program Management Agreement (PMA)
The PMA includes a scope of services generally provided by the City. These services include marketing and outreach to customers in the SJP service territory to promote the program and encourage program participation. The PMA Amendment modifies the existing scope of services to add services to be performed by Participate.Energy (P.E.), that strengthens and augments the marketing and outreach services provided by City staff. These additional services will be performed under the guidance and direction of City staff.
Per the Amendment, compensation for these services will be based on a minimal “per watt” installed for each system that has reached operational status. This fee will be subtracted from the current PMA fee per watt installed that reached completion and operation status. The average fee for a residential system is $380 per home.
The Framework Agreement
The Framework Agreement, which also includes the Channel Partner Agreements, provides details on the structure of the agreement between the City and P.E.; it describes the responsibilities of each partner.
Under the proposed program, the different partners would hold the following responsibilities:
• P.E. is the financier responsible for funding, procuring, and managing the Power Choice Program, including ongoing operations.
• The City, through SJP, will lend its creditworthiness to pursue an equitable process by ensuring that program participation is not subject to individual credit approvals.
Additionally, SJP will purchase the energy generated from solar and battery equipment, and sell said energy to the program participant at a competitive rate. Finally, SJP will support the program partners by marketing the Power Choice Program to San Jacinto residents.
FISCAL IMPACT:
There is no fiscal impact to the General Fund associated with this action. The current program design calls for the City to collect a fee of $0.40 per watt during the construction phase in connection with the required development services. However, with P.E.’s added efforts to boost participation through the Channel Partners program, this fee will be adjusted to $0.35 per watt.
Additionally, the City will continue to receive the agreed revenue streams, including a service fee of $0.02 per kilowatt-hour (kWh) generated and a monthly fee of $15.00 for each installed Powerwall sustained throughout the program’s duration.
ATTACHMENTS:
Program Management Agreement Amendment No. 1
Exhibit A
Program Management Agreement
ATTACHMENTS:
PE Amend 1_(SJP)_draft 2024_12_03 (002)
PE Amend 1 Exhibit A_(SJP)_final draft_2024_12_03
San Jacinto - Program Management Agreement_(fully executed) 2023 0907