CCAs Continu to Face Penalties Based on 20-year-old CPUC Rule

June 2024

The California Public Utilities Commission is imposing large penalties on Community Choice Aggregators when the CCAs cannot satisfy strict requirements demonstrating they have enough power reserves, known as resource adequacy to serve their customers. The fines go back two years. Meanwhile, a wide range of factors are preventing CCAs from building the resources they need to satisfy the requirement in a constrained RA market.

Of the 25 operating CCAs, seven are believed to have already paid fines ranging from $124,000 to over $1,000,000. The fines date to 2022. Based on a 2023 CPUC decision, (see D.23-06-029) CCAs are not allowed to expand their service territories if they have not satisfied the penalties. But Ava Community Services, formally East Bay Community Energy, was allowed to expand its service territory to Stockton once it paid its fine.

 The California Community Choice Association (CalCCA) is charging the CPUC with overreaching its authority among other charges. CalCCA was created in 2016 to represent the interests of operational CCA providers of renewable energy to their local jurisdictions at the California Legislature and regulatory agencies.

Does the CPUC Have Jurisdiction over the CCAs?

CCAs were created in 2002 – the first rolled out in 2010 – and are an entity of the local jurisdictions in which they were formed, usually through a joint powers authority mechanism.

In its application for rehearing of the 2023 CPUC decision CalCCA argued that the CPUC has no jurisdiction over the actions of local government bodies such as the CCAs (R.21-10-002). The CPUC countered in its decision denying the rehearing saying “the legislature deferred to our expertise in resource adequacy and granted us considerable discretion to determine what actions are necessary to accomplish the stated goals” among other arguments (D.23-12-038).

CalCCA filed a petition for Writ of Mandate with California’s First Appellate District Court of Appeal in in October 2023 and refiled it again in January 2024. Greg Klatt, a California energy attorney, said “It’s already an uphill battle to get courts to overturn CPUC decisions – they are very deferential to the CPUC … the key here is to charge that the CCAs are entities of local governments,” not the CPUC. “If the court does rule in favor of CCAs, it will be based on their being a local government agency,” Klatt added.

CalCCA did not respond to several phone calls and emails seeking comment on this issue and on the constrained RA market. However, it produced an analysis of the constrained RA market, entitled “Ratepayers Left Standing in a Game of Musical Chairs” and can be found on its website, www.cal-cca.org.

Reserves are Constrained

While the state’s three major utilities have plenty of reserves to satisfy the rule, CCAs are new entities and have to develop new power resources. At the same time a wide range of factors like extreme weather events, declining hydro resources, delays in permitting, interconnection and supply chain challenges are holding back power contracts CCAs have signed which would help satisfy the resource adequacy requirement.

Other factors delaying project development, according to CalCCA, include constraints on importing resources from other regions into California, and the CPUC revising capacity values leading to reduced reliance on wind and solar resources meeting RA requirements. All have contributed to resource instability, which CalCCA explained in its website paper referred to above.

AVA was forced to delay adding the City of Stockton to its service territory, under CPUC rules, until it paid $879,000 in penalties dating from 2022. Now that the penalties are paid, the CPUC has approved the addition which will happen in April 2025, according to Karen Lee, power resources manager for Ava. 

Procurement Strategies Impacted

Lee agreed with CalCCA and said there are additional factors that impact Ava’s procurement strategy which can delay its ability to develop the resources to satisfy its RA requirements. She pointed to California’s renewable procurement goals under SB 350, Integrated Resource Planning and associated procurement orders, plus Ava’s customers demanding renewable energy.

For example, Lee said a city in Ava’s service territory may elect to increase renewable energy supplies to its customers to 100%. This will “likely impact the volume of renewable energy we seek in the next request for offers or solicitation” and possibly affect “an Integrated Resource Plan procurement order focused on long lead time resources [which have] catalyzed Ava’s procurement” of those resouces. This will affect costs either positive or negative, Lee said in an email.

Klatt, the energy attorney, agrees. “The State and the PUC have enacted policies that created the problems CCAs energy service companies and utilities (LSEs) are having in accessing resources to satisfy the RA requirement, he said.

The Clean Energy Alliance, a CCA headquartered in Carlsbad serving seven San Diego County cities, is experiencing similar problems. It has paid $616,627 in penalties in 2023, according to CPUC records.  Andy Stern CEA’s chief financial officer told the Board of Directors at an April 25 Board of Directors meeting, RA prices have skyrocketed in summer months to $70 to $80 from $20.00 a few years ago. “Very onerous prices are out of control,” he said.

Continuing, Stern said at the Board meeting, supply chain disruptions following the COVID epidemic have not yet picked up, contributing to the capacity shortage.  Furthermore, renewable projects are not accounted fully as resources, as fossil fuel plants are, as pointed out by CalCCA above.

Resource Adequacy an Anachronism?

Resource adequacy, created in 2004, requires all utilities, CCAs and energy service companies to procure capacity to be made available to the California Independent System Operator when it is needed, for example, in a heat wave or other environmental catastrophes when power demand is stressed.

The CPUC is updating the rule, a draft of which became available May 17 for comment (R.23.10.11).  The Commission could have voted on it on as early as June 20 but did not.  It proposes a slice-of-day methodology in which an LSE’s RA is calculated hourly rather than monthly or yearly as it is today to become effective in 2025. Stern explained, in CEA’s Board meeting, the reason for the change was to come up with a more accurate alignment of resources with resource needs. He cited energy storage as an example.  The CPUC draft suggests if it is counted in an LSE’s resource adequacy it would need to show excess energy.

The draft decision said the CPUC’s Energy Division will host office hours and trainings prior to the 2025 year-ahead filing deadline to assist CCAs and other LSEs with using the slice-of-day template.  Several stakeholders familiar with it have commented the draft slice-of-day method is extremely complex.

Two CCAs Sign Long Term Contracts with SunZia Wind Farm

Clean Power Alliance will be buying 575 MW from Pattern Energy’s 3,500MW SunZia wind farm located in three counties in central New Mexico starting in 2026 when the project is projected to be completed. It approved the 15-year contract at its November 3 Board of Directors meeting.

And San Diego Community Power will be buying 150 MW of SunZia Wind in the same time frame. The 15-year, fixed price contract was approved at the October 26 2023 Board of Directors meeting. SunZia’s proposal was selected following SDCP’s request for proposals in October 2022 SDCP serves nearly one million customers in six cities and unincorporated San Diego County.

CPA selected SunZia’s proposal from 128 bids responding to a June 9 solicitation. The purchased power will provide resource diversity and resource adequacy, said Lindsay Saxby, vice president, power supply at the Board meeting.  She added that the contract will mean CPA will be a key participant in the largest renewable project in U.S. history. The CPA serves more than three million customers in the Los Angeles basin and Ventura County.

SunZia Wind and Transmission Project slated to be largest Renewable Resource in U.S.

Pattern Energy’s SunZia wind farm is part of its SunZia transmission line which is expected to begin construction in the fourth quarter 2023, assuming the Bureau of Land Management and other permitting is completed by then.  Pattern Energy acquired one of two SunZia lines from Southwestern Power Group which has been working to develop the lines since 2008. 

The SunZia transmission line, which will originate in central New Mexico, will allow the wind farm to connect to its California customers through the PaloVerde Intertie in Arizona and the California Independent System Operator. Both Community Choice Aggregators noted that SunZia wind power is considered to be complementary to their solar photovoltaic generation, which both have in their arsenal on a daily and seasonal timeframe, thus providing needed diversity.

At its Board of Directors meeting, SDCP also approved a 60-MW/480 MWh stand-alone storage project to be built by Next Era in Palm Springs where its Desert Sands energy complex is located as well. The storage project is slated to become operational in 2027.

Clean Power Alliance will be buying 575 MW from Pattern Energy’s 3,500-MW SunZia wind farm located in three counties in central New Mexico starting in 2026 when the project is projected to be completed. It approved the 15-year contract at its November 3 Board of Directors meeting.

And San Diego Community Power will be buying 150 MW of SunZia Wind in the same time frame. The 15-year, fixed price contract was approved at the October 26 2023 Board of Directors meeting. SunZia’s proposal was selected following SDCP’s request for proposals in October 2022 SDCP serves nearly one million customers in six cities and unincorporated San Diego County.

CPA selected SunZia’s proposal from 128 bids responding to a June 9 solicitation. The purchased power will provide resource diversity and resource adequacy, said Lindsay Saxby, vice president, power supply at the Board meeting.  She added that the contract will mean CPA will be a key participant in the largest renewable project in U.S. history. The CPA serves more than three million customers in the Los Angeles basin and Ventura County.

Community Solar Green Tariffs for Disadvantaged Citizens Attracts CCAs

November 2023

At least four Community Choice Aggregators and utilities are now implementing the California Public Utilities Commission program to encourage communities to build solar projects that disadvantaged ratepayers can sign up for with a guaranteed 20% reduction in monthly bills.

This program is part of a larger decision (D18-06-027) described below. The CPUC designed the “Community Solar Green Tariff” for disadvantaged homeowners who cannot afford to install solar systems on their roofs and or want to sign up for community solar. The CPUC handed six CCAs opportunities to build solar programs for their low income communities.  Most of them, along with California’s three investor owned utilities, are now designing those programs.

The CPUC named the two programs the Disadvantaged Communities Green Tariff program and the Community Solar Green Tariff program. They both provide 20% rate discounts from their regular tariff to qualified customers. In addition, the Community Solar Green Tariff must have a city sponsor and the community solar system must be located within five miles of a designated disadvantaged community. For the most part, the CCAs have chosen to name their programs differently.

Program costs are being paid for through the Greenhouse Gas Auction Proceeds and Public Purpose Program funds.

Where these programs originated

Former California State Assembly member Henry T Perea (D) Fresno, wrote two bills to bring affordable energy to disadvantaged communities in California’s San Joaquin Valley (AB 2672, 2014), and all residential customers in disadvantaged communities not limited to the San Juaquin Valley (AB 327, 2013). (Perea resigned his seat in 2014 to take a job in the private sector.)

AB 2672 was designed to install either natural gas or electric appliances such as stoves, heaters and coolers to replace wood and propane burners to approximately 1,900 customers in a pilot program. Customer rates would be reduced by 20%.  However, a maximum of 40% of the 1,900 customers received equipment by 2023, nine years after the program was signed into law. The giveaway ends in December 2023, with analysis of the program being conducted in 2024.

The program has a complex design and created a small organization to operate the program. It began contacting customers at the beginning of the 2020 pandemic, which set back the program.  (See a full review of this program in “Other Stories”)

On the other hand, AB 327, the Green Tariff and the Community Solar Green Tariff programs were designed to be administered by the three investor owned utilities, Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison, and the six CCAs. The latter program requires that the community solar project be located within five miles of the community zoned “disadvantaged.” Furthermore, in order to qualify for either program customers must first qualify for the California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) program.

What CCAs are doing

 Marin Clean Energy is one of the six CCAs chosen by the CPUC to implement the Community Solar Green Tariff.  MCE launched its Green Access Program in 2021 and 3,200 customers are being supplied with power from the Cottonwood solar project located in Kern and Kings Counties.

MCE said in a July 2023 press release it is offering 20% discounts to eligible customers under its Community Solar Connection program for disadvantaged homeowners. It said it is seeking qualified suppliers who will build solar projects to be located within the five-mile requirement. MCE did not return phone calls to provide further details.

Peninsula Clean Energy is another CCA which is developing a solar project in its Green Access Program to qualified disadvantaged residents for a community solar project in its service territory in San Mateo County or the City of Los Banos. The residents must live within a designated eligible census tract that suffers from multiple sources of pollution. The media spokesman said Peninsula has about 1,400 residential customers enrolled as of September 2023.

East Bay Community Center (recently renamed AVA) released a request for offers in September 2021 for a solar project to provide 5.726 MW in the green tariff program and 1.525 MW for its community solar green tariff program.  However, it did not get any responses. It tried again in December 2022 and is now evaluating proposals. Eleanor Smith, connected communities manager at AVA, expects a contract to be awarded by the end of 2023.

Smith said the future solar project will serve about 800 customers who have not yet been enrolled.  About 2,700 customers are enrolled in the green tariff program and are getting power from a resource outside AVA’s service territory. They will be transferred to the new solar project in 2025 when it comes online.  The 800 projected community solar enrollees cannot use that resource since it is outside the service territory. Smith said her team is also working on a contract with another client, not associated with the RFO.

San Diego Community Power released a request for proposals to build solar projects for both the Green Tariff and the Community Solar Green Tariff on August 25, 2023. It will remain open until February 24, 2024. It is generating interest in the proposed project or projects by working with solar developers and local community-based organizations to generate interest in the RFO, said Jill Monroe in an email.

Renamed the Solar Discount and the Community Solar projects, SDCP has not enrolled customers yet but will do so when the projects are expected to be operational in 2025. These programs are part of SDCP’s “Solar for Our Communities.”

The Clean Power Alliance and CleanPowerSF, the two remaining CCAs designated by the CPUC to develop Green Tariff programs, did not respond to queries asking for information about their plans.

Utilities are enrolling customers as well.

Southern California Edison has 94 community solar customers waitlisted for its 3-MW solar project scheduled come online in December 2024. No other information describing the program was available.

Pacific Gas & Electric has no customers waitlisted for their community solar green tariff programs. However, it does have 9,133 customers in its Green Tariff program to install solar systems on their roofs.  PG&E also has 12 MW of solar projects to serve the disadvantaged Green Tariff customers. This information was found in the latest quarterly reports the utilities are required to file with the CPUC.

San Diego Gas and Electric launched a request seeking power purchase agreements in March of 2021 for the Solar Green Tariff Shared Renewable Program. The winning bidder was accepted in May 2021. It filed an advice letter describing the PPAs with the CPUC and anticipated approval in the fourth quarter of 2021. No further program information came forth from SDG&E or the CPUC.

 

CPUC Revises Community Solar Program

June 2024

In spite of finding many problems with its design of two solar programs for disadvantaged communities, the California Public Utilities Commission decided the concept was valuable enough they should be improved and combined into one program (D-24-05-065).

In a May 30 vote, the program opens up to customers of all income levels and expands the geographic boundaries of a disadvantaged community that will encourage more solar projects to serve low-income customer.  The CPUC predicts an increase of roughly 45,000 additional customers up from 23,000 currently enrolled, and 45 additional solar projects to be built up from 23 signed solar contracts. It gave no timeline for this growth.

The two programs, called the Disadvantaged Communities Green Tariff program and the Community Solar Green Tariff program, were designed to allow low-income customers who could not install roof-top solar systems due to roof orientation or other reasons like affordability. The design of the programs and their requirements were described in the fall issue of California Energy News (see “Community Solar Green Tariff Attracts CCAs” in Other Stories on the left).

 While the programs operated by Pacific Gas & Electric was fully subscribed, SCE and SDG&E programs were not due to a lack of solar capacity. PG&E suspended its program because it had customer waiting lists due to a lack of solar project developments that met program requirements to serve them. PG&E also reported project costs exceeded benefits. The few Community Choice Aggregators invited to participate maintained their programs.

SDG&E reported the program was successful until 2018 when most of the customers moved to CCAs service. “This caused rates to spike for its few remaining participating customers leading to customer attrition, SDG&E said. It subsequently suspended its two programs in 2022.

Seven of the eight CCAs administering their programs enrolled customers in the Disadvantaged Green Tariff program but they did not have solar projects to serve them, instead using Renewable Portfolio Standard resources. Five had procured new capacity by October 2023, however.

Disadvantaged Customers Signed up But Solar Did Not

 Both programs provide qualified customers 20% rate discounts from their regular tariffs. In addition, the Community Solar Green Tariff must have a city sponsor and the community solar system must be located within five miles of a designated disadvantaged community. Both CCAs and the utilities are required to procure solar projects dedicated to these customers.

Customers enrolled rapidly and exceeded the required solar resources stemming from favorable Green Tariff rates that became lower than the default rate.  It has been unsuccessful in contracting new resources which would have allowed the utility to enroll new customers.

SCE reported at its peak its Green Tariff program served 1,128 residential and 1,982 non-residential enrolled customers totaling 50 MW of capacity. It is now fully subscribed and suspended to new enrollment.  There were no customers enrolled in SCE’s Communities Green Tariff program at the reporting time in 2022 because there are no solar projects online to serve customers. However, a project was anticipated to come online in August 2023 to deliver power to new customers. Until new capacity develops SCE is maintaining its waitlist. 

PG&E reports its program benefits did not match its costs. It notes in 2021 it spent about $1 million more on solar resource costs than it did to deliver discounts to customers.  Overall program costs were $11.4 million and only 43% of program costs provided bill savings benefits.  The utility reported that the largest portion of costs were for above-market contract payments to solar resources at 55% of the program costs.

Green Access Program Streamlined

The Commission decided that the two programs should be combined, given that the Green Tariff program is more cost effective and easier to implement.  The Communities Green Tariff program had a higher cost per customer and lower enrollment and procurement rates largely due to eligibility requirements, rate volatility, duplication and market confusion, the CPUC said. Therefore, the customers are to be moved to the Green Tariff program, including those wait-listed.   Also, site requirements were expanded.

The decision determined a central marketing website should be created to solve the problems listed above. Applicants will be able to read about each program and learn how to apply. Procurement opportunities will be listed along with statewide enrollment. A consultant will be hired to develop the website to overcome barriers in customer and project developer awareness of the Commission’s renewable energy programs.   Energy storage will be allowed in solicitations.

Reporting Mechanisms Simplified

The decision also eliminates the requirement to report on several renewable statewide renewable accounts in order to reduce time, effort and cost.  Producers will also not have to retire renewable energy credits in connection with that reserve account. Instead, Green Tariff program administrators will conduct the validation and tracking.

The Commission also ordered PG&E and the CCAs to develop an automated billing solution for CCA program participants since they are eligible to remain enrolled for up to 20 years. Apparently, PG&E was using manual data transfers.

Upon recommendations by some of the utilities and CCAs, the Commission agreed to hold solicitations once a year instead of biannually. This will make the schedule more predictable and allow time for developers to prepare and submit offers.

Furthermore, upon recommendations of the interested parties, the Commission ruled that once the new Green Tariff program reaches 500 kW or less, or if “There has been no participation by developers in two consecutive solicitations the utilities may suspend their programs.”  At that time, the Green Tariff program will sunset once all programs are suspended.

The Commission further removed the requirement that customer enrollment be tied to solar power procurement since this restriction may have contributed to the program’s limited performance.

The Commission also increased the customer subscription limit from 2 MW to 40 MW

 

 

Improving Energy Usage for Disadvantaged Residents Very Difficult

October 2023

Former California State Assembly member Henry T Perea (D) wanted to bring affordable energy to disadvantaged communities in his district in California’s San Joaquin Valley. The State Legislature passed Perea’s bill in 2014 with a budget of $56.4 million. But work had not yet been completed in mid-2023.

Acknowledged to be one of the poorest areas in the state, the San Joaquin Valley is considered to be one of the major food producing centers of the country. The population, which works in the valley’s agricultural fields, is largely Hispanic.

The bill required the California Public Utilities Commission to identify and analyze economically feasible options to increase access to cost-effective and affordable energy in 11 San Joaquin Valley communities.  It approved a pilot program in December 2018 (D18-12-015). Work was finally launched in January 2020.

The CPUC designed pilot project offered free electrical appliances to 1,914 households in the chosen communities who were currently burning wood or propane. The state’s investor-owned utilities ran the pilots along with an independent firm, Richard Heath and Associates, and offered the free electrical appliances such as stoves and water heaters to replace those which burned natural gas, propane or wood. Alternatively, new gas hookups were offered to those residences to allow new gas appliances to replace wood or propane burning appliances.

The eventual goal is to determine if the program could be extended to all disadvantaged residents in the central valley. A full analysis will be conducted in 2024, a full 10 years after the law was passed.

In a rare dissent of the 2018 decision, then CPUC President Michael Vickers wrote, “In a well-meaning desire to help people, the commission … has created an overly complicated program that is likely to disappoint both its sponsors and intended beneficiaries.” More on his criticism later.

Results of the Pilot

By May 2023, out of the 1,914 participants chosen for the pilot, 34% or 612 homes received new energy efficient appliances or natural gas service. Program administrators foresee more homes will receive new appliances by the time the pilot ends on December 31, 2023. However, another one-third – a full 36% of households contacted (636), did not move forward to submit applications.

Many problems led to the low success rate, the least of which was the pandemic which slowed down or postponed resident interviews and evaluations of homes where the new appliances would be installed. Reasons why residents chose not to participate in the pilot ranged from the conviction that in the end the appliances would not be free to fears of increased electric bills. Also, many of those contacted were in the process of moving or had already moved. Many were not interested and gave no reason.  A few preferred their propane appliances.

Southern California Edison and Pacific Gas and Electric ran their programs through designated program managers.  Richard Heath and Associates (RHA) was hired to conduct an independent pilot in five communities located in PG&E territory.

Another pilot operated by Southern California Gas offered new gas equipment to replace wood and propane-burning appliances and, when needed, to extend connections to gas lines. Further, two community solar projects are in the process of being designed with about 90 residents already signed up.

The Work Force Struggled

Synergy, which had already been operating related energy savings programs in the disadvantaged communities, was tasked with hiring experienced electrical, HVAC, plumbing and efficiency workers.  Most of the 20 employees came from Synergy’s programs and six were new hires. Richard Heath reported that 70% of its staff lived in disadvantaged communities, but not necessarily those included in the pilot projects. Problems over the three years of the pilot ranged from staff and participant exposure to COVID-19, to staffing inefficiencies, and to shortages of new appliances.

Furthermore, some of the experienced electricians and other tradespeople were lured away by higher salaries in the competitive construction industry which was not impacted by COVID-19 work stoppages according to Richard Heath’s reporting in its annual review. It reported this led to difficulty maintaining a full workforce.

Challenges that led to Diminished Results

Soon after staff began contacting the selected households in January 2020, COID-19 hit not only households but the crews contacting homes and managed the installations. The result led to cancelled appointments and a six-month slowdown in the work schedule.

Other delays occurred due to the management system which often led to participants receiving calls from staffers who did not make the initial contact to schedule home visits or installations. Participants often did not respond because they did not recognize phone numbers

Homeowners also held back submitting an application requesting an assessment for new appliances until they could see work completed in their community. Richard Heath found this to be a real challenge given the “scatter-shot” nature of the program design.  They were required to work in all communities at one time instead of serving each of the five communities they were assigned before moving on to the next.  This “created significant inefficiencies and delayed implementation of the pilot,” the company said in its 2022 Annual Report.

Former President Picker Predicted Diminished Success

Former CPUC president, Michael Picker foresaw many of the difficulties the program experienced, particularly with its design.  In his dissenting opinion at the time it was approved in 2014. He wrote, “It raises community expectations for outcomes that the Commission is poorly situated to measure or achieve.” He alleged that the Commission has allowed individual, financially interested organizations to shape program designs.    

For example, Picker pointed out that one of the options the Legislature asked the CPUC to analyze it failed to seriously evaluate ”increasing subsidies such as direct payments or bill credits for electricity for residential customers in disadvantaged communities. [It] would seem to be the most straightforward, rapid, and transparent approach to increase access to affordable energy,” wrote Picker. He suggested that “the approved program funding could be used to equalize the cost of propane and natural gas for customers without access to gas for over thirty years.”

This story is based on CPUC’s decision, “D.18-12-015 plus a series of quarterly progress reports released through May 2023 by the utilities who were tasked to carry out the program plus an October 2022 report by Evergreen Economics. A final report is expected to be released after the program ends in December 2023. Former Commission President Michael Picker’s dissenting opinion can be found accompanying the same decision in Rulemaking 15-03-010.

 

 

 

 

 

 

Former California State Assembly member Henry T Perea (D) wanted to bring affordable energy to disadvantaged communities in his district in California’s San Joaquin Valley. The State Legislature passed Perea’s bill in 2014 with a budget of $56.4 million. But work had not yet been completed in mid-2023.

 

Acknowledged to be one of the poorest areas in the state, the San Joaquin Valley is considered to be one of the major food producing centers of the country. The population, which works in the valley’s agricultural fields, is largely Hispanic.

 

The bill required the California Public Utilities Commission to identify and analyze economically feasible options to increase access to cost-effective and affordable energy in 11 San Joaquin Valley communities.  It approved a pilot program in December 2018 (D18-12-015). Work was finally launched in January 2020.

 

The CPUC designed pilot project offered free electrical appliances to 1,914 households in the chosen communities who were currently burning wood or propane. The state’s investor-owned utilities ran the pilots along with an independent firm, Richard Heath and Associates, and offered the free electrical appliances such as stoves and water heaters to replace those which burned natural gas, propane or wood. Alternatively, new gas hookups were offered to those residences to allow new gas appliances to replace wood or propane burning appliances.

 

The eventual goal is to determine if the program could be extended to all disadvantaged residents in the central valley. A full analysis will be conducted in 2024, a full 10 years after the law was passed.

 

In a rare dissent of the 2018 decision, then CPUC President Michael Vickers wrote, “In a well-meaning desire to help people, the commission … has created an overly complicated program that is likely to disappoint both its sponsors and intended beneficiaries.” More on his criticism later.

 

Results of the Pilot

 

By May 2023, out of the 1,914 participants chosen for the pilot, 34% or 612 homes received new energy efficient appliances or natural gas service. Program administrators foresee more homes will receive new appliances by the time the pilot ends on December 31, 2023. However, another one-third – a full 36% of households contacted (636), did not move forward to submit applications.

 

Many problems led to the low success rate, the least of which was the pandemic which slowed down or postponed resident interviews and evaluations of homes where the new appliances would be installed. Reasons why residents chose not to participate in the pilot ranged from the conviction that in the end the appliances would not be free to fears of increased electric bills. Also, many of those contacted were in the process of moving or had already moved. Many were not interested and gave no reason.  A few preferred their propane appliances.

 

Southern California Edison and Pacific Gas and Electric ran their programs through designated program managers.  Richard Heath and Associates (RHA) was hired to conduct an independent pilot in five communities located in PG&E territory.

 

Another pilot operated by Southern California Gas offered new gas equipment to replace wood and propane-burning appliances and, when needed, to extend connections to gas lines. Further, two community solar projects are in the process of being designed with about 90 residents already signed up.

 

The Work Force Struggled

 

Synergy, which had already been operating related energy savings programs in the disadvantaged communities, was tasked with hiring experienced electrical, HVAC, plumbing and efficiency workers.  Most of the 20 employees came from Synergy’s programs and six were new hires. Richard Heath reported that 70% of its staff lived in disadvantaged communities, but not necessarily those included in the pilot projects. Problems over the three years of the pilot ranged from staff and participant exposure to COVID-19, to staffing inefficiencies, and to shortages of new appliances.

 

Furthermore, some of the experienced electricians and other tradespeople were lured away by higher salaries in the competitive construction industry which was not impacted by COVID-19 work stoppages according to Richard Heath’s reporting in its annual review. It reported this led to difficulty maintaining a full workforce.

 

Challenges that led to Diminished Results

 

Soon after staff began contacting the selected households in January 2020, COID-19 hit not only households but the crews contacting homes and managed the installations. The result led to cancelled appointments and a six-month slowdown in the work schedule.

 

Other delays occurred due to the management system which often led to participants receiving calls from staffers who did not make the initial contact to schedule home visits or installations. Participants often did not respond because they did not recognize phone numbers

 

Homeowners also held back submitting an application requesting an assessment for new appliances until they could see work completed in their community. Richard Heath found this to be a real challenge given the “scatter-shot” nature of the program design.  They were required to work in all communities at one time instead of serving each of the five communities they were assigned before moving on to the next.  This “created significant inefficiencies and delayed implementation of the pilot,” the company said in its 2022 Annual Report.

 

Former President Picker Predicted Diminished Success

 

Former CPUC president, Michael Picker foresaw many of the difficulties the program experienced, particularly with its design.  In his dissenting opinion at the time it was approved in 2014. He wrote, “It raises community expectations for outcomes that the Commission is poorly situated to measure or achieve.” He alleged that the Commission has allowed individual, financially interested organizations to shape program designs.    

 

For example, Picker pointed out that one of the options the Legislature asked the CPUC to analyze it failed to seriously evaluate ”increasing subsidies such as direct payments or bill credits for electricity for residential customers in disadvantaged communities. [It] would seem to be the most straightforward, rapid, and transparent approach to increase access to affordable energy,” wrote Picker. He suggested that “the approved program funding could be used to equalize the cost of propane and natural gas for customers without access to gas for over thirty years.”

 

This story is based on CPUC’s decision, “D.18-12-015 plus a series of quarterly progress reports released through May 2023 by the utilities who were tasked to carry out the program plus an October 2022 report by Evergreen Economics. A final report is expected to be released after the program ends in December 2023. Former Commission President Michael Picker’s dissenting opinion can be found accompanying the same decision in Rulemaking 15-03-010.

 

 

 

 

 

 

Former California State Assembly member Henry T Perea (D) wanted to bring affordable energy to disadvantaged communities in his district in California’s San Joaquin Valley. The State Legislature passed Perea’s bill in 2014 with a budget of $56.4 million. But work had not yet been completed in mid-2023.

 

Acknowledged to be one of the poorest areas in the state, the San Joaquin Valley is considered to be one of the major food producing centers of the country. The population, which works in the valley’s agricultural fields, is largely Hispanic.

 

The bill required the California Public Utilities Commission to identify and analyze economically feasible options to increase access to cost-effective and affordable energy in 11 San Joaquin Valley communities.  It approved a pilot program in December 2018 (D18-12-015). Work was finally launched in January 2020.

 

The CPUC designed pilot project offered free electrical appliances to 1,914 households in the chosen communities who were currently burning wood or propane. The state’s investor-owned utilities ran the pilots along with an independent firm, Richard Heath and Associates, and offered the free electrical appliances such as stoves and water heaters to replace those which burned natural gas, propane or wood. Alternatively, new gas hookups were offered to those residences to allow new gas appliances to replace wood or propane burning appliances.

 

The eventual goal is to determine if the program could be extended to all disadvantaged residents in the central valley. A full analysis will be conducted in 2024, a full 10 years after the law was passed.

 

In a rare dissent of the 2018 decision, then CPUC President Michael Vickers wrote, “In a well-meaning desire to help people, the commission … has created an overly complicated program that is likely to disappoint both its sponsors and intended beneficiaries.” More on his criticism later.

 

Results of the Pilot

 

By May 2023, out of the 1,914 participants chosen for the pilot, 34% or 612 homes received new energy efficient appliances or natural gas service. Program administrators foresee more homes will receive new appliances by the time the pilot ends on December 31, 2023. However, another one-third – a full 36% of households contacted (636), did not move forward to submit applications.

 

Many problems led to the low success rate, the least of which was the pandemic which slowed down or postponed resident interviews and evaluations of homes where the new appliances would be installed. Reasons why residents chose not to participate in the pilot ranged from the conviction that in the end the appliances would not be free to fears of increased electric bills. Also, many of those contacted were in the process of moving or had already moved. Many were not interested and gave no reason.  A few preferred their propane appliances.

 

Southern California Edison and Pacific Gas and Electric ran their programs through designated program managers.  Richard Heath and Associates (RHA) was hired to conduct an independent pilot in five communities located in PG&E territory.

 

Another pilot operated by Southern California Gas offered new gas equipment to replace wood and propane-burning appliances and, when needed, to extend connections to gas lines. Further, two community solar projects are in the process of being designed with about 90 residents already signed up.

 

The Work Force Struggled

 

Synergy, which had already been operating related energy savings programs in the disadvantaged communities, was tasked with hiring experienced electrical, HVAC, plumbing and efficiency workers.  Most of the 20 employees came from Synergy’s programs and six were new hires. Richard Heath reported that 70% of its staff lived in disadvantaged communities, but not necessarily those included in the pilot projects. Problems over the three years of the pilot ranged from staff and participant exposure to COVID-19, to staffing inefficiencies, and to shortages of new appliances.

 

Furthermore, some of the experienced electricians and other tradespeople were lured away by higher salaries in the competitive construction industry which was not impacted by COVID-19 work stoppages according to Richard Heath’s reporting in its annual review. It reported this led to difficulty maintaining a full workforce.

 

Challenges that led to Diminished Results

 

Soon after staff began contacting the selected households in January 2020, COID-19 hit not only households but the crews contacting homes and managed the installations. The result led to cancelled appointments and a six-month slowdown in the work schedule.

 

Other delays occurred due to the management system which often led to participants receiving calls from staffers who did not make the initial contact to schedule home visits or installations. Participants often did not respond because they did not recognize phone numbers

 

Homeowners also held back submitting an application requesting an assessment for new appliances until they could see work completed in their community. Richard Heath found this to be a real challenge given the “scatter-shot” nature of the program design.  They were required to work in all communities at one time instead of serving each of the five communities they were assigned before moving on to the next.  This “created significant inefficiencies and delayed implementation of the pilot,” the company said in its 2022 Annual Report.

 

Former President Picker Predicted Diminished Success

 

Former CPUC president, Michael Picker foresaw many of the difficulties the program experienced, particularly with its design.  In his dissenting opinion at the time it was approved in 2014. He wrote, “It raises community expectations for outcomes that the Commission is poorly situated to measure or achieve.” He alleged that the Commission has allowed individual, financially interested organizations to shape program designs.    

 

For example, Picker pointed out that one of the options the Legislature asked the CPUC to analyze it failed to seriously evaluate ”increasing subsidies such as direct payments or bill credits for electricity for residential customers in disadvantaged communities. [It] would seem to be the most straightforward, rapid, and transparent approach to increase access to affordable energy,” wrote Picker. He suggested that “the approved program funding could be used to equalize the cost of propane and natural gas for customers without access to gas for over thirty years.”

 

This story is based on CPUC’s decision, “D.18-12-015 plus a series of quarterly progress reports released through May 2023 by the utilities who were tasked to carry out the program plus an October 2022 report by Evergreen Economics. A final report is expected to be released after the program ends in December 2023. Former Commission President Michael Picker’s dissenting opinion can be found accompanying the same decision in Rulemaking 15-03-010.

 

 

 

 

 

 

 

Peninsula Taps Inflation Reduction Act to Help Fund Solar/Storage in San Matao County

April 2023

Peninsula Clean Energy is embarking on an ambitious program to install solar and storage throughout its service territory, made possible by taking advantage of the direct pay benefits in the Inflation Reduction Act Congress passed last year. It will initially pay for the installations through self-financing.

Peninsula, a community Choice Aggregator, has executed 20-year power purchase agreements with the San Mateo County Human Services Agency Center in Redwood City plus nine cities (listed below). The project was approved by Peninsula’s Board of Directors in January, 2023, at a cost not to exceed $10 million.

Peninsula has contracted with Intermountain Electric Company, selected through a competitive process, to install and maintain 1.7 MW of solar power on 12 public buildings in the cities and county under an engineering, procurement and construction contract. These systems, to be completed by the first quarter 2024, are expected to deliver $17 million in lifetime energy savings to them.

The design and engineering firm, McCalmont Engineering is completing the initial solar and storage designs on the 12 public buildings already selected. Battery storage will be added at several sites that do not have existing backup generators, according to Darren Goode, Peninsula’s media manager.

Later, additional storage units will be deployed when and if they can be grandfathered into Net Energy Metering 2.0, the tariff which current customers use. NEM 3.0, which apply to new solar installations, would reduce the economic value of the solar systems being installed here.

Peninsula is paying for the construction of the project itself directly from its cash reserves. It will take advantage of direct pay benefits included in the federal Inflation Reduction Act. The investment tax credit contained in the IRA is currently at 30% of cost. Peninsula expects to recover 30% of the money spent via the tax credit.

Darren Goode said the remainder of the construction costs will be paid back through the power purchase payments from the cities and county over the 20-year lifetime of the PPAs.

The advantage for Peninsula and its customers is the arrangement lowers power purchase prices and increased energy savings for the cities’ and county facilities with the installed projects.

Peninsula Clean Energy CEO Jan Pepper was quoted in the April 18 press release saying “We want to do everything we can to bring more renewable power online. With this innovative program, we take the burden of solar and storage project development off of city and county staff and achieve cost reductions through scale,”

The cities which have signed power purchase agreements with Peninsula are Atherton Town Hall; Brisbane Mission Blue Center; Colma Community Center; Hillsborough Public Works Yard; Los Banos Community Center; and Wastewater Plant; Millbrae Town Center complex and Recreation Center; Pacifica Community Center; San Bruno Aquatics Center; and the San Carlos Youth Center.

Peninsula said a second round is already underway in which it has completed designs and interconnection applications for an additional 40 sites across its territory.  Approximately 15 MW of solar and potential battery storage systems will benefit additional customers.

Peninsula said it is on track to deliver 100% renewables by 2025.