Farmers may see electricity service from new entities


Issue Date: January 17, 2018
By Christine Souza

When it comes to procuring power for electric service, significant changes occurring in local communities throughout the state may affect agricultural customers in California.

The changes stem from a program known as Community Choice Aggregation, which allows cities and counties to buy power on behalf of their residents from non-utility suppliers, although existing utilities would continue to deliver the power to customers.

Karen Norene Mills, California Farm Bureau Federation associate counsel and director of public utilities, said local Community Choice Aggregators, or CCAs, frequently take the form of a public agency controlled by representatives of the local community. The CCAs are managed locally, but the power used is most often produced outside of the local community, Mills said.

Currently, at least eight CCAs operate in locations including Humboldt, Mendocino, Sonoma and Napa counties, with more in various stages of formation across the state.

Proponents of the CCA model describe the program as a way for local governments to leverage their demand to achieve lower electricity prices and to control the type of electricity purchased, such as a greater percentage of renewable energy than offered by the incumbent utility.

A key issue, Mills said, is how customers who stay with the incumbent utility are affected—an issue that continues to be debated. CCAs provide service on an opt-out basis, meaning that if a customer does not want to be served by the CCA, the customer must affirmatively make that choice.

Whether agricultural ratepayers stand to benefit from automatic enrollment into a local CCA must be determined on a case-by-case basis, Mills said. The CCAs typically provide a general estimate of potential cost savings to customers based on the price paid for the generation portion of the bill, but generation represents only one part of electricity service, along with distribution and transmission services.

"Because different rate schedules and usage patterns affect how much the generation piece factors into overall costs, it can be a tricky determination," Mills said, "especially for many agricultural customers whose usage varies from year to year. Agricultural customers who have multiple accounts may face an additional challenge in assessing the impact of a different generation cost."

Rather than purchase power, under this new model, investor-owned utilities such as Pacific Gas & Electric Co., San Diego Gas and Electric Co. and Southern California Edison would deliver power for the CCAs—but would also provide meter-reading, billing, maintenance and outage-response services.

Agricultural business owner and Salinas city councilman Steve McShane said he supports the CCA model.

"This is a new concept, a new way of doing business," McShane said. "Some of it is environmentally based, but my orientation as a businessman and a producer in California is it's got to make sense and if it doesn't, you are not going to have everybody jumping on board."

McShane serves on the policy board for Monterey Bay Community Power, a CCA for Monterey, San Benito and Santa Cruz counties, which anticipates serving electricity to customers this spring.

Though the idea of cheaper electricity rates and green energy is appealing, Monterey County Farm Bureau Executive Director Norm Groot said he's concerned about a potential downside.

"There is strong fear that the pressure for new alternative-energy facilities will put pressure on farmland conversion in the Salinas Valley, as there will not be enough renewable energy available to satisfy the mandate," Groot said.

Mendocino County Farm Bureau Executive Director Devon Jones said Mendocino County agreed to use a CCA called Sonoma Clean Power as its energy provider for residents in unincorporated areas of the county, and for the cities of Willits, Fort Bragg and Point Arena.

Though the time period to opt out of the CCA closed last year, "most of the members that I have spoken with are concerned about overall costs to their operations and opted to stay with PG&E," Jones said, adding that farmers' questions focused on time-of-use rates, net metering aggregation, solar buyback and standby charges.

Mills encouraged agricultural ratepayers to pay attention to any materials they receive about potential CCA creation, because customers will be automatically enrolled in the CCA unless they opt out.

Those wanting to opt out of the CCA program must submit an opt-out request directly to the CCA. Customers who choose to opt out in the 60 days before or after the start of service may return at any time. If a customer misses the opt-out enrollment period, the customer must pay a termination fee per account if they want to be served by the incumbent utility. That fee is typically $25 per account (meter) for agricultural customers.

The California Public Utilities Commission continues to monitor adoption of CCAs, with two proceedings on the program now underway.

The CPUC may act on a draft resolution this month that would implement a registration process for CCAs and implement a review process to ensure accuracy of energy forecasts by CCAs.

In addition, the commission has opened a proceeding to examine allocation of long-term energy costs to customers, which include examination of how to calculate a formula called the Power Charge Indifference Adjustment. The charge intends to ensure the customers who remain with the incumbent utility, rather than joining a CCA, don't ultimately assume long-term financial obligations the utility incurs on behalf of now-departed customers. The charge for 2018 ranges between approximately 1 cent and 2.5 cents per kilowatt-hour for agricultural customers.

The California Community Choice Association maintains a website at cal-cca.org/.

For information on community choice aggregation please see these webpages from PG&E and Southern California Edison.

(Christine Souza is an assistance editor of Ag Alert. She may be contacted at csouza@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.