PREPARED BY: MATT RODRIGUEZ DATE OF MEETING: 09/17/18
SUBJECT:
TITLE
CITY COUNCIL AUTHORIZATION TO RATIFY LETTERS FROM MAYOR CALLOWAY DATED SEPTEMBER 6, 2018 TRANSMITTED TO CALIFORNIA PUBLIC UTILITIES COMMISSION
Label
CITY MANAGER RECOMMENDATION
Recommendation
Approve by Minute Order
Body
Compliance statements
Public Safety is an adopted policy contained in the FY 2018-21 City Council Priority Workplan, effective November 1, 2017.
CEQA Compliance Statement
This is not a project as defined by CEQA.
BACKGROUND
City staff have been working with the California Public Utility Commission (CPUC), PG&E and East Bay Energy Watch regarding changes to the energy rates and programs offered in San Pablo. Staff recommended that the City of San Pablo send letters to the CPUC regarding two specific items that have been under review:
1) PG&E cuts to Local Government Partnership Budgets; and
2) A potential increase in the rates due to an increase in Power Charge Indifference Adjustment (PCIA) fees.
Staff provided letters regarding these issues to the Mayor on September 5, 2018 for signature, and it is recommended that the City Council ratify by Minute Order the letters sent under the Mayor’s signature.
Local Government Partnership Budget Cuts
The CPUC currently allocates approximately $1 billion a year through a public goods charge for investor-owned utilities (IOUs) to implement and administer energy efficiency programs throughout the state. Pacific Gas and Electric (PG&E) receives approximately $600 million for this purpose.
In 2006, PG&E established Local Government Partnerships (LGPs), or “Energy Watch” programs to implement energy efficiency programs in coordination with local governments throughout the PG&E service territory. Other IOUs throughout the state also created partnership programs. East Bay Energy Watch (EBEW) was one of the first Energy Watch programs established in the State consisting of city and county staff members of both Alameda and Contra Costa Counties. The EBEW jurisdictions work together to support energy efficiency programs that meet the needs of local customers and communities. EBEW is a collaboration between PG&E, local governments, non-profit, and for-profit service providers in the East Bay. EBEW is now one of twenty-two (22) Energy Watch LGPs administered by PG&E and funded by California utility ratepayers under the auspices of the CPUC.
The City has been receiving funding to support EBEW activities since 2015 ranging from $10,000 to $35,000 a year to support marketing and outreach efforts through City stipends and funding for the CivicSpark program.
Recently, PG&E advised EBEW that its LGP budget would be reduced by 29%. Other LGPs throughout the PG&E territory are seeing cuts as large as 65%, with some being eliminated altogether. Many of these budget reductions are predicated on a recent CPUC Decision that increased the cost-effectiveness metric threshold to a level that is unattainable without the IOUs substantially reducing their energy efficiency portfolio budgets. The City and other local governments rely on this funding to implement their energy efficiency programs to meet their climate action goals. Due to the proposed reductions in funding to LGPs, City staff recommended that the Mayor send a letter to the CPUC opposing this action by the IOUs to eliminate local government energy efficiency partnership funding.
Increase in Power Charge Indifference Adjustment (PCIA)
In August 2018, the CPUC released a Proposed Decision (PD) to change how the Power Charge Indifference Adjustment (PCIA) is to be calculated in the future. The PCIA covers the costs of energy contracts bought by IOUs for customers prior to their departure for another electricity provider, such as a Community Choice Aggregator (CCA). In 2014, the City Council voted to join MCE, a CCA, in order to provide all electricity consumers with competitively priced renewable energy options. MCE has been able to provide competitive and stable energy prices to San Pablo residents, despite a sometimes-volatile PCIA cost.
The Proposed Decision on August 1, 2018, has been generally well received by CCAs (and MCE) since it did not approve the Investor Owned Utility (i.e. PG&E) proposal, it set a cap for PCIA at 2.2c/kWh, and it authorized CCAs to pre-pay the PCIA.
However, on August 14, 2018, CPUC Commissioner Peterman issued an Alternate Proposed Decision (APD) that included dramatic, unfavorable changes to the PD. The APD would result in a higher PCIA by including more legacy contracts (utility owned generation - UOG), terminating the current 10-year recovery period limit for post-2002 UOG and certain storage costs, and removing the static cent/kWh cap (i.e., 2.2 c/kWh) favoring instead up to a 25% annual fluctuation. Generally, this alternate decision would lead to a ~30% increase in MCE's 2019 PCIA. The Commission is expected to decide between the PD and the APD on September 13, 2018. Staff recommended sending a letter to the CPUC in favor of the original PD and opposing the APD.
The letters that were sent are attached to this report, and it is recommended that the City Council ratify by Minute Order the letters sent under the Mayor’s signature.
FISCAL IMPACT
None associated with this report, although if the Alternative Decision is approved by the CPUC, energy costs would rise for both the City as an organization as well as community members who have chosen MCE as their energy provider.