HomeMy WebLinkAboutC36400 - Ord 1327 - Community Choice Aggregation Pgrm Ordinance No. 1327
Contract No. C36400
CITY OF PALM DESERT
DEPARTMENT OF COMMUNITY DEVELOPMENT
STAFF REPORT
REQUEST: ADOPTION OF ORDINANCE NO. 1327 AUTHORIZING THE
IMPLEMENTATION OF A COMMUNITY CHOICE AGGREGATION
PROGRAM AND APPROVING THE DESERT CITIES ENERGY
CHOICE JOINT POWERS AGREEMENT(C 36400 )
SUBMITTED BY: Ryan Stendell, Director of Community Development
OTHER PARTY: Ms. Katie Barrows
Coachella Valley Association of Governments
73-710 Fred Waring Drive
Palm Desert, CA 92260, Suite 200
DATE: August 24, 2017
CONTENTS: 1. Draft Ordinance No. 1327
2. Draft Joint Powers Agreement
3. Correspondence from California Joint Powers Insurance Authority
4. Correspondence from Coachella Valley Association of Governments
5. Various Community Choice Aggregation Related Documents
Recommendation
1. Waive further reading and pass Ordinance No. 1327 authorizing the
implementation of a Community Choice Aggregation (CCA) program and
approving the Desert Cities Energy Choice Joint Powers Agreement, to
second meeting; and
2. Authorize the City Attorney, if necessary, to make non-substantive
modifications to the Joint Powers Agreement(JPA) prior to its execution.
Strategic Plan Objective
Energy and Sustainability Priority 2: Promote greater usage of more sustainable
materials.
One of the most advantageous goals of existing CCAs is the purchase of bulk power
from more sustainable power providers, which meets the intent of the above-
mentioned strategic plan goal.
Staff Report Ordinance No. 1327
Community Choice Aggregation Contract No. C36400
Page 2 of 2
August 24, 2017
Background
At its meeting of June 8, 2017, the City Council discussed the concept of joining efforts with
the Coachella Valley Association of Governments (CVAG) and several of its member
agencies in the formation of a CCA program. CCAs allow cities and counties to pool (or
aggregate) their buying power to purchase electricity on a region-wide basis with the goal of
offering competitive rates and options to buy power from more sustainable sources. The
Council directed staff to investigate all of the risks involved and report back at the regularly
scheduled City Council meeting of July 13, 2017.
At its meeting of July 13 and at the request of staff, the City Council continued this item until
the August 24 City Council meeting in order to allow a more in depth risk review by the
City's representatives with the Joint Powers Insurance Authority (JPIA) and our legal
counsel, Best Best and Krieger (BB&K).
Risk Review:
Both the JPIA and BB&K have completed their review of the CCA/JPA documents, and are
comfortable with the levels of risk associated with this program. The JPIA has submitted a
letter outlining their review (copy attached), which indicates their willingness to continue
working with CVAG and the City on this endeavor. The JPIA has also provided several
helpful documents outlining the potential risks involved with CCAs, which have been
attached to this report.
Analysis
The critical decision at this juncture is whether or not the City wishes to continue exploring
the concept of the CCA. Approval of staff's recommendation would join the JPA, which is
being set up to manage the CCA. However, per the JPA agreement the City can withdraw
at any time prior to December 2017. After December 2017, the CCA would begin to
negotiate and enter into agreements for purchasing power, and the CCA operations would
begin in the spring or summer of 2018.
The next step in the process is to work with CVAG and their third party consultant who will
begin the process of setting rate structures and base expectations for the CCA.
Fiscal Analysis
There is no cost to the City to participate in the Community Choice Aggregation program
aside from some limited staff time.
Submitted By:
Ryan Stendell, Director of C y Development
Lauri Aylaian, City Manager
ORDINANCE NO. 1327
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, AUTHORIZING IMPLEMENTATION OF A
COMMUNITY CHOICE AGGREGATION PROGRAM, AND APPROVING
THE DESERT CITIES ENERGY CHOICE JOINT POWERS AGREEMENT
The City Council of the City of Palm Desert, California, does hereby ordain as
follows:
SECTION 1. The City of Palm Desert has been actively investigating options to
provide electric services to constituents within its jurisdiction with the intent of achieving
greater local involvement over the provision of electric services and promoting competitive
and renewable energy.
SECTION 2. On September 24, 2002, the Governor signed into law Assembly Bill
117 (Stat. 2002, Ch. 838; see California Public Utilities Code section 366.2; hereinafter
referred to as the "Act"), which authorizes any California city or county, whose governing
body so elects, to combine the electricity load of its residents and businesses in a
community-wide electricity aggregation program known as Community Choice Aggregation
("CCA").
SECTION 3. The Act expressly authorizes participation in a CCA program through a
joint powers agency, and to this end the City has been participating since 2016 in the
evaluation of a proposal for the formation of a joint powers agency to implement and
administer a CCA program for the Coachella Valley region.
SECTION 4. As described in the Joint Powers Agreement attached as Exhibit A, a
CCA program implemented and administered by and through Desert Cities Energy Choice
("DCEC") provides an opportunity to accomplish the following:
A. Reduce greenhouse gas emissions related to the use of power throughout the
jurisdictions of the participating cities and neighboring regions.
B. Provide electric power and other forms of energy to customers at a competitive
cost.
C. Carry out programs to reduce energy consumption.
D. Stimulate and sustain the local economy by developing local jobs in renewable
and conventional energy.
E. Promote long-term electric rate stability, energy security and reliability for
residents through local control of electric generation resources.
SECTION 5. Through Docket No. R.03-10-003, the California Public Utilities
Commission has issued various decisions and rulings addressing the implementation of
Community Choice Aggregation programs, including the recent issuance of a procedure by
which the California Public Utilities Commission will review "Implementation Plans," which
are required for submittal under the Act as the means of describing the Community Choice
Aggregation program and assuring compliance with various elements contained in the Act.
ORDINANCE NO. 1327
SECTION 6. A final Implementation Plan for the CCA program will be submitted to
the California Public Utilities Commission by DCEC as soon after the formation of the joint
powers agency as reasonably practicable, confirming that DCEC's CCA program is in
compliance with all requirements of the Act.
SECTION 7. The Act requires each jurisdiction participating in the CCA program to
individually adopt an ordinance ("CCA ordinance") electing to implement a Community
Choice Aggregation program within its jurisdiction by and through its participation in Desert
Cities Energy Choice.
SECTION 8. Based upon all of the above, the City Council approves the Joint
Powers Agreement attached hereto as Exhibit A and elects to implement a Community
Choice Aggregation program within the City's jurisdiction by and through the City's
participation in Desert Cities Energy Choice, subject to the City's right to forego the actual
implementation of a Community Choice Aggregation program pursuant to specified
withdrawal rights described in the Joint Powers Agreement. The Mayor is hereby authorized
to execute the Joint Powers Agreement and any other related documents for the program
implementation.
SECTION 9. If any section, subsection, sentence, clause, phrase or word of this
Ordinance is for any reason held to be invalid by a court of competent jurisdiction, such
decision shall not affect the validity of the remaining portions of this Ordinance. The City
Council hereby declares it would have passed and adopted this Ordinance and each and all
provisions hereof irrespective of the fact that any one or more of said provisions be declared
invalid.
SECTION 10. This Ordinance shall take effect and be in force thirty (30) days from
the date of its adoption.
PASSED, APPROVED, and ADOPTED by the City Council of the City of Palm
Desert, California, at its regular meeting held on the 24th day of August 2017, by the
following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAN C. HARNIK, MAYOR
ATTEST:
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
2
ORDINANCE NO. 1327 Contract No. C36400
ATTACHMENT 1:
DESERT CITIES ENERGY CHOICE
(placeholder, JPA name to be determined)
JOINT POWERS AGREEMENT
This Joint Powers Agreement ("Agreement"), effective as of , 2017 is made and
entered into pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500
et seq.) of the California Government Code relating to the joint exercise of powers among the
parties set forth in Exhibit B (individually"Party" or"Member", collectively "Parties"or
"Members"). The term "Parties" or"Members" shall also include an incorporated municipality or
county added to this Agreement in accordance with Section 2.4.
RECITALS
A. The Parties share various powers under California law, including but not limited
to the power to purchase, supply, and aggregate electricity for themselves and
customers within their jurisdictions.
B. In 2006, the State Legislature adopted AB 32, the Global Warming Solutions Act,
which mandates a reduction in greenhouse gas emissions in 2020 to 1990 levels.
In 2016, the Legislature passed SB 32, which codifies a 2030 greenhouse gas
emissions reduction target of 40 percent below 1990 levels.
C. The purposes for entering into this Agreement include:
a. Reducing greenhouse gas emissions related to the use of power
throughout the jurisdictions of the Parties and neighboring regions;
b. Providing electric power and other forms of energy to customers at a
competitive cost;
c. Carrying out programs to reduce energy consumption;
d. Stimulating and sustaining the local economy by developing local jobs in
renewable and conventional energy; and
e. Promoting long-term electric rate stability, energy security and reliability
for residents through local control of electric generation resources.
D. It is the mission and purpose of this Agreement to build a Community Choice
Aggregation program that is locally controlled and delivers cost-competitive clean
electricity, product choice, price stability, energy efficiency and greenhouse gas
emission reductions.
E. It is the intent of this Agreement to promote the development and use of a wide
range of renewable and efficient energy sources and energy efficiency programs,
including but not limited to solar, wind, and biomass energy production. The
purchase of renewable power and greenhouse gas-free energy sources will be
Desert Cities Energy Choice 1
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
the desired approach to decrease regional greenhouse gas emissions and
accelerate the State's transition to clean power resources to the extent feasible.
The DCEC will also add increasing levels of locally generated renewable
resources as these projects are developed and customer energy needs expand.
F. The Parties desire to establish a separate public agency, known as the Desert
Cities Energy Choice, or DCEC, under the provisions of the Joint Exercise of
Powers Act of the State of California (Government Code Section 6500 et seq.)
("Act") in order to collectively study, promote, develop, conduct, operate, and
manage energy programs.
G. The Parties anticipate adopting an ordinance electing to implement through the
DCEC a common Community Choice Aggregation (CCA) program, an electric
service enterprise available to cities and counties pursuant to California Public
Utilities Code Sections 331.1(b) and 366.2. The first priority of the DCEC will be
the consideration of those actions necessary to implement the CCA Program.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions
hereinafter set forth, it is agreed by and among the Parties as follows:
ARTICLE 1: DEFINITIONS AND EXHIBITS
1.1 Definitions. Capitalized terms used in the Agreement shall have the meanings
specified in Exhibit A, unless the context requires otherwise.
1.2 Documents Included. This Agreement consists of this document and the
following exhibits, all of which are hereby incorporated into this Agreement.
Exhibit A: Definitions
Exhibit B: List of the Parties
Exhibit C: Annual Energy Use
Exhibit D: Voting Shares
Exhibit E: Signatures
ARTICLE 2: FORMATION OF DESERT CITIES ENERGY CHOICE
2.1 Effective Date and Term. This Agreement shall become effective and DCEC
shall exist as a separate public agency on , 2017 or when the
Parties execute this Agreement, whichever occurs later. The DCEC shall provide
notice to the Parties of the Effective Date. DCEC shall continue to exist, and this
Agreement shall be effective, until this Agreement is terminated in accordance
with Section 6.4, subject to the rights of the Parties to withdraw from DCEC.
2.2 Formation. There is formed as of the Effective Date a public agency named
Desert Cities Energy Choice. Pursuant to Sections 6506 and 6507 of the Act,
DCEC is a public agency separate from the Parties. Pursuant to Sections 6508.1
Desert Cities Energy Choice 2
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
of the Act, the debts, liabilities or obligations of DCEC shall not be debts,
liabilities or obligations of the individual Parties unless the governing board of a
Party agrees in writing to assume any of the debts, liabilities or obligations of
DCEC. A Party who has not agreed to assume an Authority debt, liability or
obligation shall not be responsible in any way for such debt, liability or obligation
even if a majority of the Parties agree to assume the debt, liability or obligation of
DCEC. Notwithstanding Section 7.4 of this Agreement, this Section 2.2 may not
be amended unless such amendment is approved by the governing board of
each Party.
2.2.1 Name. DCEC may change its name at any time through adoption of a
resolution of the Board of Directors.
2.3 Purpose. The purpose of this Agreement is to establish an independent public
agency in order to exercise powers common to each Party to build a Community
Choice Aggregation program that achieves significant, long-term GHG emission
reductions by offering clean, cost effective and price stable electricity to
residents, businesses, and agricultural producers while carrying out innovative
programs to reduce customer energy use, and to promote local renewable and
efficient energy production technologies. To that end, DCEC will study, promote,
develop, conduct, operate, and manage energy, energy efficiency and
conservation, and other energy-related programs, and to exercise all other
powers necessary and incidental to accomplishing this purpose. Without limiting
the generality of the foregoing, the Parties intend for this Agreement to be used
as a contractual mechanism by which the Parties are authorized to participate in
the CCA Program, as further described in Section 4.1. The Parties intend that
other agreements shall define the terms and conditions associated with the
implementation of the CCA Program and any other energy programs approved
by DCEC.
2.4 Membership in DCEC.
2.4.1 The initial Members of DCEC are the Cities of Blythe, Cathedral City,
Desert Hot Springs, Indian Wells, Palm Desert, and Palm Springs.
2.4.2 Any city or county may request to become a member of DCEC by
submitting a resolution adopted by its City Council or Board of
Supervisors to the Board of DCEC. The Board shall review the request
and shall vote to approve or disapprove the request. The Board may
establish conditions, including but not limited to financial conditions,
under which the city or county may become a member of DCEC. The
Board shall notify the then members of DCEC of this request and the date
that the request will be on the Board's meeting agenda for action. The
date set for Board action shall be at least forty-five (45)days from the
date the notice is mailed to the members. If the request is approved by
the Board, the city or county shall become a member of DCEC under
the terms and conditions set forth by the Board and upon approval and
execution of this Agreement by the requesting city or county.
Desert Cities Energy Choice 3
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
2.5 Powers. DCEC shall have all powers common to the Parties and such additional
powers accorded to it by law. DCEC is authorized, in its own name, to exercise
all powers and do all acts necessary and proper to carry out the provisions of this
Agreement and fulfill its purposes, including, but not limited to, each of the
following powers, subject to the voting requirements set forth in Section 3.17:
2.5.1 to make and enter into contracts;
2.5.2 to employ agents and employees, including but not limited to an
Executive Officer;
2.5.3 to acquire, contract, manage, maintain, and operate any buildings,
infrastructure, works, or improvements;
2.5.4 to acquire property by eminent domain, or otherwise, except as limited
under Section 6508 of the Act, and to hold or dispose of any property;
however, DCEC shall not exercise the power of eminent domain within
the jurisdiction of a Party over its objection without first meeting and
conferring in good faith;
2.5.5 to lease any property;
2.5.6 to sue and be sued in its own name;
2.5.7 to incur debts, liabilities, and obligations, including but not limited to loans
from private lending sources pursuant to its temporary borrowing powers
such as Government Code Sections 53850 et seq. and authority under
the Act;
2.5.8 to form subsidiary or independent corporations or entities if necessary, to
carry out energy supply and energy conservation programs at the lowest
possible cost or to take advantage of legislative or regulatory changes;
2.5.9 to issue revenue bonds and other forms of indebtedness;
2.5.10 to apply for, accept, and receive all licenses, permits, grants, loans or
other aids from any federal, state, or local public agency;
2.5.11 to submit documentation and notices, register, and comply with orders,
tariffs and agreements for the establishment and implementation of the
CCA Program and other energy programs;
2.5.12 to adopt Operating Rules and Regulations;
2.5.13 to make and enter into service agreements relating to the provision of
services necessary to plan, implement, operate and administer the CCA
Program and other energy programs, including the acquisition of electric
power supply and the provision of retail and regulatory support services;
and
Desert Cities Energy Choice 4
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
2.5.14 to permit additional Parties to enter into this Agreement after the Effective
Date and to permit another entity authorized to be a community choice
aggregator to designate DCEC to act as the community choice energy
aggregator on its behalf.
2.6 Limitation on Powers. As required by Government Code Section 6509, the
power of DCEC is subject to the restrictions upon the manner of exercising
power possessed by the City of(insert name of one participating city).
ARTICLE 3: GOVERNANCE AND INTERNAL ORGANIZATION
3.1 Governing Body. DCEC shall be governed by a legislative body known as the
Board of Directors ("Board"). The initial Board shall consist of one (1) director
appointed by each of the initial members. Each Director shall serve at the
pleasure of the governing board of the Party appointing such Director, and may
be removed as Director by such governing board at any time. If at any time a
vacancy occurs on the Board, a replacement shall be appointed to fill the position
of the previous Director within 60 days of the date that such position becomes
vacant. Directors shall be elected officials or senior staff of the appointing Party
that is the signatory to this Agreement. Each Party may appoint an alternate to
serve in the absence of its Director. Alternates may be either elected officials or
senior staff of the appointing Party that is the signatory to this Agreement. The
Board shall exercise all powers and conduct all business of DCEC, either directly
or by delegation to other bodies or persons pursuant to this Agreement.
If additional cities or counties join DCEC, as set forth in section 2.4, each city or
county that becomes a member of DCEC shall be entitled to one (1) director and
one (1)alternate appointed as set forth above.
Ex Officio Directors. The Board may appoint ex officio members of the Board.
Ex officio directors shall receive all meeting notices, shall have the right to
participate in Board discussions and the right to place items on the agenda but
shall not be counted towards a quorum and shall have no vote.
3.2 Regular Board Meetings. The Board shall hold at least one regular annual
meeting and shall provide for such other regular meetings as it deems
necessary. Meetings of the Board shall be held at such locations within one of
the member jurisdictions, and at such times as may be designated from time to
time by the Board. Directors may participate in meetings telephonically, with full
voting rights, only to the extent permitted by law. All meetings shall be
conducted in accordance with the provisions of the Ralph M. Brown Act
(California Government Code Sections 54950 et seq.).
3.3 Special Meetings of the Board. Subject to all noticing requirements of the Ralph
M. Brown Act, special meetings of the Board may be called in accordance with
the provisions of California Government Code Sections 54956 and 54956.5, to
be held at such times and places within one of the member jurisdictions as may
be ordered by the Chair. A majority of the Board may also call a special meeting
for any purpose.
Desert Cities Energy Choice 5
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
3.4 Chair and Vice-Chair. The Directors shall select, from among themselves, a
Chair, who shall be the presiding officer of all Board meetings, and a Vice Chair,
who shall serve in the absence of the Chair. The Chair and Vice Chair shall
serve at the pleasure of the Board. There shall be no limit on the number of
terms held by either the Chair or Vice Chair.
3.5 Conduct of Meetings. The Chair or, in the absence of the Chair, the Vice-Chair,
shall preside at all meetings of the Board.
3.6 Resignation of a Director. Any Director may resign effective on giving written
notice to the Board and the other Members, unless the notice specifies a later
time for the effectiveness of such resignation. A successor shall be appointed by
the affected Member as provided for in this Agreement.
3.7 Quorum. Except as otherwise provided in this Agreement, every act or decision
by the Board shall be made by a majority vote of the Directors present at a
meeting duly held at which a quorum is present. No action may be taken by the
Directors if a quorum of the Board is not present. In the absence of a quorum,
any meeting of the Board may be adjourned from time to time by a vote of the
majority present, but no other business may be transacted except as provided for
in this Section.
A quorum shall exist if a majority of the Directors then designated by and serving
on behalf of the Members are present at any duly called meeting of the Board.
Ex officio, non-voting directors shall not be included when calculating the number
of Directors necessary to constitute a quorum or the number of votes necessary
to approve an action. In the event that a Member has failed to designate a
Director, or a Member's designated Director has died, resigned, left office, been
terminated or is otherwise unwilling or unable to act as the designating Member's
representative, and a replacement Director has not yet been designated, and
there is no designated alternate, such that a Member has no duly acting
representative on the Board, then that Member's vacant Board position shall not
be included when calculating the number of Directors necessary to constitute a
quorum or the number of votes necessary to approve an action.
3.8 Other Officers. The Executive Officer of DCEC shall be the secretary of DCEC,
or as otherwise determined by the Board. Any officer, employee or agent of any
Member of DCEC may also be an officer, employee, or agent of any of the
Members. DCEC shall have the power to appoint such additional officers and to
employ such employees and assistants as may be appropriate. Each and all of
said officers, employees and assistants shall serve at the pleasure of DCEC and
shall perform such duties and shall have such powers as DCEC may, from time
to time, determine. Any officer may resign at any time by giving written notice to
the secretary. Any such resignation shall be effective upon receipt of such notice
or at any later time specified in the notice. Officers shall assume the duties of
their offices immediately after their appointment and shall hold office until their
successors are appointed, except in the case of their removal or resignation.
Vacancies of officers shall be filled by appointment of the Board and such
appointee shall hold office until the appointment of his or her successor.
Desert Cities Energy Choice 6
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
3.9 Minutes. The secretary of DCEC shall cause to be kept minutes of regular,
adjourned regular and special meetings of the Board. The secretary shall cause
a copy of all minutes, along with copies of all ordinances and resolutions, to be
forwarded to each of the Parties hereto.
3.10 Rules. A majority of Directors may adopt rules governing meetings if not
inconsistent or in conflict with this Agreement. In the absence of rules adopted
by the Directors, Roberts' Rules of Order, as they may be amended from time to
time, shall govern the meetings of the Board in so far as they are not inconsistent
or in conflict with this Agreement or any DCEC bylaws.
3.11 Powers and Functions of the Board. The Board shall exercise general
governance and oversight over the business and activities of DCEC, consistent
with this Agreement and applicable law. The Board shall provide general policy
guidance to the CCA Program. Board approval shall be required for any of the
following actions:
3.11.1 The issuance of bonds or any other financing even if program
revenues are expected to pay for such financing.
3.11.2 The appointment or termination of the Executive Officer and General
Counsel.
3.11.3 The appointment or removal of officers described in Section 3.17,
subject to Section 3.17.1.
3.11.4 Any decision to provide retirement or post-retirement benefits that
are defined benefit programs, subject to the requirements of section
5.3.4, below.
3.11.5 The adoption of the Annual Budget.
3.11.6 The adoption of an ordinance.
3.11.7 The approval of agreements, except as provided by Section 3.12.
3.11.8 The initiation or resolution of claims and litigation where DCEC will be
the defendant, plaintiff, petitioner, respondent, cross complainant or
cross petitioner, or intervenor; provided, however, that the Executive
Officer or General Counsel, on behalf of DCEC, may intervene in,
become a party to, or file comments with respect to any proceeding
pending at the California Public Utilities Commission, the Federal
Energy Regulatory Commission, or any other administrative agency,
without approval of the Board as long as such action is consistent with
any adopted Board policies.
3.11.9 The setting of rates for power sold by DCEC and the setting of
charges for any other category of service provided by DCEC.
3.11.10 Termination of the CCA Program.
Desert Cities Energy Choice 7
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
3.12 CVAG's Participation. CVAG shall provide, under contract with DCEC,
administrative services required by DCEC during the first five (5) years of the
implementation of the DCEC; and thereafter as the administrative services
contract may be renewed from time to time by DCEC, and shall exercise such
other powers and duties as the Board deems necessary to achieve the purpose
of this Agreement. During any such term, CVAG's Executive Director may serve
as the secretary of DCEC.
3.13 Executive Officer. Except as may be provided pursuant to any administrative
services agreement referenced in Section 3.12, the Board of Directors shall have
the authority to appoint an Executive Officer for DCEC, who shall be responsible
for the day-to-day operation and management of DCEC and the CCA Program.
The Executive Officer may be retained under contract with DCEC, be an
employee of DCEC, be an employee of CVAG, or be an employee of one of the
Parties. The Executive Officer shall report directly to the Board and serve as
staff to DCEC. Except as otherwise set forth in this Agreement, the Executive
Officer may exercise all powers of DCEC, including the power to hire, discipline
and terminate employees as well as the power to approve any agreement if the
total amount payable under the agreement is less than $100,000 in any fiscal
year, or such higher amount as may be established by the Board from time to
time, by resolution of the Board, except the powers specifically set forth in
Section 3.11 or those powers which by law must be exercised by the Board of
Directors. The Executive Officer shall serve at the pleasure of the Board.
3.14 DCEC Staff. Except as may be provided pursuant to any administrative services
agreement referenced in Section 3.12, DCEC may contract with CVAG for staff
services, retain its own staff, or contract with another entity for services. Unless
other employment is approved by the Commission, the DCEC Executive Officer
may utilize CVAG staff as may be necessary to accomplish the purposes of
DCEC. CVAG staff time, as well as office expenses, direct and indirect
overhead, shall be charged to DCEC utilizing direct billing and other accounting
practices that provide for a clear separation of funds.
3.15 Commissions, Boards, and Committees
3.15.1 The Board may establish commissions, boards or committees, including
but not limited to a standing executive committee of the Board, as the
Board deems appropriate, to assist the Board in carrying out its authority
and functions under this Agreement and may delegate authority to such
commissions, boards or committees as set forth in a Board resolution.
Such delegation may be modified, amended or revoked at any time the
Board may deem appropriate. Any decision delegated pursuant to this
subsection may be appealed to the Board, as the Board so determines.
3.15.2 The Board may also establish any advisory commissions, boards, and
committees as the Board deems appropriate to assist the Board in
carrying out its functions and implementing the CCA Program, other
energy programs and the provisions of this Agreement.
3.15.3 Any board, commission or committee formed under this section shall
comply with the requirements of the Ralph M. Brown Act. The Board
Desert Cities Energy Choice 8
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
may establish rules, regulations, policies, bylaws or procedures to govern
any such commissions, boards, or committees, and shall determine
whether members shall be compensated or entitled to reimbursement for
expenses.
3.16 Director Compensation. Directors shall serve without compensation from DCEC.
However, Directors may be compensated by their respective appointing
authorities. The Board, however, may adopt by resolution a policy relating to the
reimbursement by DCEC of expenses or other costs incurred by Directors.
3.17 Voting. As described in Section 3.7 and in Section 3.17.3, action by DCEC
Board will be taken solely by a majority vote of the total number of Directors
present except as provided in Section 3.17.5 below. In addition, as described in
Section 3.17.4, upon request of two (2) Directors, a weighted vote by shares will
also be conducted. When such a request is made, an action must be approved
by both a majority vote of Directors present and a majority of the Weighted
Voting Shares present. No action may be approved solely by a majority vote by
shares. The voting shares of Directors and approval requirements for actions of
the Board shall be as follows:
3.17.1 Weighted Voting Shares
Each member agency shall have a Voting Share as determined by the
following formulas:
(a) Pro Rata Voting Share. Each Member shall have an equal voting
share determined by the following formula: ( [1 /total number of
Members] multiplied by IA ), expressed as a percentage to two
decimal places; and
(b) Annual Energy Voting Share. Each Member shall have an
additional voting share determined by the following formula:
([Total Annual Energy Use (expressed in MWh) in the Member's
jurisdiction / combined Total Annual Energy Use in all Members'
jurisdictions] multiplied by expressed as a percentage to two
decimal places. Annual Energy Use values are to be based on
total CCA-related retail energy sales of all electric customer
accounts as of December 31 of the most recent year for which
such data is available. In the absence of actual data, the Board
may approve the use of reasonably estimated Annual Energy Use
values.
(c) Weighted Voting Share. Each Member's Weighted Voting Share
shall be the respective sum of the values computed in (a) and (b)
above, expressed as a percentage to two decimal places. The
combined total Weighted Voting Shares of all Members is 100.00
percent.
Desert Cities Energy Choice 9
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
3.17.2 Exhibit Showinq Weighted Voting Shares. The initial Weighted Voting
Shares are set forth in Exhibit D based on data available as of the
Effective Date of this Agreement. Exhibit D shall be revised no less than
annually as necessary to account for changes in the number of Members
and or changes in the Members' annual MWh retail energy usage.
Adjustments to Exhibit D shall be approved by the Board.
3.17.3 Action Approval Requirements. Except as provided in Sections 3.17 and
3.17.4 and 3.17.5, the Board shall act solely upon the affirmative vote of a
majority of Directors present at the meeting.
3.17.4 Option for Approval by Voting Shares. Notwithstanding Section 3.17.3,
any two (2) Directors present at a meeting may demand that approval of
any matter related to the CCA Program be determined on the basis of
both Weighted Voting Shares and by the affirmative vote of a majority of
Directors present at the meeting. If two Directors make such a demand
with respect to approval of any such matter, then approval of such matter
shall require the affirmative vote of a majority of Directors present at the
meeting and the affirmative vote of Directors having a majority of
Weighted Voting Shares present, as determined by Section 3.17.1 except
as provided in Section 3.17.5.
3.17.5 Special Voting Requirements for Certain Matters.
(a) Two-Thirds and Weighted Voting Approval Requirements Relating
to Sections 6.2 and 7.4. Notwithstanding any other provision of
this Agreement, action of the Board on the matters set forth in
Section 6.2 (involuntary termination of a Member), or Section 7.4
(amendment of this Agreement) shall require the affirmative vote
of at least two-thirds of Directors present; provided, however, that:
(i) notwithstanding the foregoing, any two (2) Directors present at
a meeting may demand that the vote be determined on the basis
of both Weighted Voting Shares and by the affirmative vote of
Directors present, and if any two (2) Directors make such a
demand, then approval shall require the affirmative vote of both at
least two-thirds of Directors present and the affirmative vote of
Directors having at least two-thirds of the Weighted Voting Shares
present, as determined by Section 3.17.1; and (ii)for votes to
involuntarily terminate a Member under Section 6.2, the Director
for the Member subject to involuntary termination may not vote,
and the number of Directors constituting two-thirds of all Directors,
and the Weighted Voting Share of each Member shall be
recalculated as if the Member subject to possible termination were
not a Member.
(b) Seventy-Five Percent Special Voting Requirements for Eminent
Domain and Contributions or Pledge of Assets.
(i) A decision to exercise the power of eminent domain on
behalf of DCEC to acquire any property interest other than
an easement, right-of-way, or temporary construction
Desert Cities Energy Choice 10
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
easement shall require a vote of at least 75% of all
Directors.
(ii) The imposition on any Member of any obligation to make
contributions or pledge assets as a condition of continued
participation in the CCA Program shall require a vote of at
least 75% of all Directors and the approval of the
governing boards of the Members which are being asked
to make such contribution or pledge.
(iii) Notwithstanding the foregoing, any two (2) Directors
present at the meeting may demand that a vote under
subsections (i) or(ii) be determined on the basis of
Weighted Voting Shares and by the affirmative vote of
Directors, and if any two (2) Directors make such a
demand, then approval shall require both the affirmative
vote of at least 75% of all Directors and the affirmative vote
of Directors having at least 75% of all Weighted Voting
Shares, as determined by Section 3.17.1. For purposes of
this section, "imposition on any Member of any obligation
to make contributions or pledge assets as a condition of
continued participation in the CCA Program" does not
include any obligations of a withdrawing or terminated
Member imposed under Section 6.3.
3.18 Treasurer and Auditor. The Treasurer shall function as the combined offices of
Treasurer and Auditor pursuant to Government code section 6505.6 and shall
strictly comply with the statutes related to the duties and responsibilities specified
in Section 65.5 of the Act. The Treasurer for DCEC shall be the depository and
have custody of all money of DCEC from whatever source and shall draw all
warrants and pay demands against DCEC as approved by the Board. The
Treasurer shall cause an independent audit(s) of the finances of DCEC to be
made by a certified public accountant, or public accountant, in compliance with
Section 6505 of the Act. The Treasurer shall report directly to the Board and
shall comply with the requirements of treasurers of incorporated municipalities.
The Board may transfer the responsibilities of Treasurer to any person or entity
as the law may provide at the time. The duties and obligations of the Treasurer
are further specified in Article 5. The Treasurer shall serve at the pleasure of the
Board.
3.19 Administrative Services Provider. The Board may appoint one or more
administrative services providers to serve as DCEC's agent for planning,
implementing, operating and administering the CCA Program, and any other
program approved by the Board. The appointed administrative services provider
may be one of the Members, or CVAG as provided in Section 3.12. A separate
services agreement shall set forth the terms and conditions by which the
appointed administrative services provider(s) shall perform or cause to be
performed tasks necessary for planning, implementing, operating and
administering the CCA Program and other approved programs. Any such
services agreement shall set forth the terms and the circumstances under which
the services agreement may be terminated by DCEC. This section shall not in
Desert Cities Energy Choice 11
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
any way be construed to limit the discretion of DCEC to hire its own employees
to administer all or any portion of the CCA Program or any other program.
ARTICLE 4: IMPLEMENTATION ACTION AND AUTHORITY DOCUMENTS
4.1 Preliminary Implementation of the CCA Program.
4.1.1 Enabling Ordinance. To be eligible to participate in the CCA Program,
each Party must adopt an ordinance in accordance with Public Utilities
Code Section 366.2(c)(12) for the purpose of specifying that the Party
intends to implement a CCA Program by and through its participation in
DCEC.
4.1.2 Implementation Plan. DCEC shall cause to be prepared an
Implementation Plan meeting the requirements of Public Utilities Code
Section 366.2 and any applicable Public Utilities Commission regulations
as soon after the Effective Date as reasonably practicable. The
Implementation Plan shall not be filed with the Public Utilities Commission
until it is approved by the Board in the manner provided by Section 3.17.
4.1.3 Termination of CCA Program. Nothing contained in this Article or this
Agreement shall be construed to limit the discretion of DCEC to terminate
the implementation or operation of the CCA Program at any time in
accordance with any applicable requirements of state law.
4.2 Authority Documents. The Parties acknowledge and agree that the affairs of
DCEC will be implemented through various documents duly adopted by the
Board through Board resolution. The Parties agree to abide by and comply with
the terms and conditions of all such documents that may be adopted by the
Board, subject to the Parties' right to withdraw from DCEC as described in
Article 6.
ARTICLE 5: FINANCIAL PROVISIONS
5.1 Fiscal Year. DCEC's fiscal year shall be 12 months commencing July 1 and
ending June 30. The fiscal year may be changed by Board resolution.
5.2 Depository.
5.2.1 All funds of DCEC shall be held in separate accounts in the name of
DCEC and not commingled with funds of any Party or any other person or
entity.
5.2.2 All funds of DCEC shall be strictly and separately accounted for, and
regular reports shall be rendered of all receipts and disbursements, at
least quarterly during the fiscal year. The books and records of DCEC
shall be open to inspection by the Parties at all reasonable times. The
Board shall contract with a certified public accountant or public
accountant to make an annual audit of the accounts and records of
Desert Cities Energy Choice 12
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
DCEC, which shall be conducted in accordance with the requirements of
Section 6505 of the Act.
5.2.3 All expenditures shall be made in accordance with the approved budget
and upon the approval of any officer so authorized by the Board in
accordance with its Operating Rules and Regulations. The Treasurer
shall draw checks or warrants or make payments by other means for
claims or disbursements not within an applicable budget only upon the
prior approval of the Board.
5.3 Budget and Recovery of Costs.
5.3.1 Budget. The initial budget shall be approved by the Board. The Board
may revise the budget from time to time as may be reasonably necessary
to address contingencies and unexpected expenses. All subsequent
budgets of DCEC shall be approved by the Board in accordance with the
Operating Rules and Regulations.
5.3.2 Funding of Initial Costs. The Parties acknowledge that implementing the
CCA Program will require some form of funding either provided by all or
some of the Parties or attained in some other manner. If the CCA
Program becomes operational, these Initial Costs paid by such Parties or
attained from other sources shall be included in the customer charges for
electric services as provided by Section 5.3.3 to the extent permitted by
law, and respective Parties or other sources shall be reimbursed from the
payment of such charges by customers of DCEC. CVAG shall also be
entitled to reimbursement for Initial Costs. DCEC may establish a
reasonable time period over which such costs are recovered and repaid
to respective Parties or other sources. In the event that the CCA
Program does not become operational, respective Parties shall not be
entitled to any reimbursement of the funded Initial Costs from DCEC or
any Party. If any of the initial member agencies or other sources assists
in funding initial costs, they shall also be entitled to reimbursement
pursuant to this section. The Board shall approve the manner of funding
and repayment of initial CCA program costs which may include
reasonable interest charges.
5.3.3 CCA Program Costs. The Parties desire that all costs incurred by DCEC
that are directly or indirectly attributable to the provision of electric,
conservation, efficiency, incentives, financing, or other services provided
under the CCA Program, including but not limited to the establishment
and maintenance of various reserves and performance funds and
administrative, accounting, legal, consulting, and other similar costs, shall
be recovered through charges to CCA customers receiving such electric
services, or from revenues from grants or other third-party sources, to the
extent permitted by law.
5.3.4 Employee Retirement and Post-retirement Benefits. Should the Board
determine to provide a defined benefits retirement benefit to DCEC
employees (such as PERS) or other post-retirement benefits that would
Desert Cities Energy Choice 13
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
be within an Other Post-Retirement Benefits (OPEB) obligation to DCEC
employees, prior to providing such benefit(s)to any employee, the Board
shall (1)obtain a third party independent actuarial report on the long term
costs of the benefit or benefits, (2)adopt a funding plan for the payment
of both current and long-term costs that provides for the payment of all
such costs on a current, pay-as-you-go, basis and eliminates any known
or reasonably anticipated unfunded liability associated with the benefit(s)
and (3) notice all Member agencies of the pending consideration of the
benefit(s)together with the actuarial report and funding plan, for at least
sixty (60)days and obtain the consent, by resolution of not less than 75
percent of the then current Member agency boards or councils
ARTICLE 6: WITHDRAWAL AND TERMINATION
6.1 Withdrawal.
6.1.1 Right to Withdraw. A Party may withdraw its participation in the CCA
Program, effective as of the beginning of DCEC's next fiscal year, by
giving no less than 6 months advance written notice of its election to do
so, which notice shall be given to DCEC and each Party. Withdrawal of a
Party shall require an affirmative vote of the Party's governing board.
6.1.2 Right to Withdraw After Amendment. Notwithstanding Section 6.1.1, a
Party may withdraw its membership in DCEC following an amendment to
this Agreement adopted by the Board which the Party's Director voted
against, provided such notice is given in writing within thirty (30)days
following the date of the vote. Withdrawal of a Party shall require an
affirmative vote of the Party's governing board and shall not be subject to
the six month advance notice provided in Section 6.1.1. In the event of
such withdrawal, the Party shall be subject to the provisions of Section
6.3.
6.1.3 The Right to Withdraw Prior to Program Launch. After receiving bids from
power suppliers, DCEC shall provide to the Parties the report from the
electrical utility consultant(s) retained by DCEC that compares the total
estimated electrical rates that DCEC will be charging to customers as well
as the estimated greenhouse gas emissions rate and the amount of
estimated renewable energy used with that of the incumbent utility (SCE).
If the report provides that DCEC is unable to provide total electrical rates,
as part of its baseline offering, to customers that are equal to or lower
than the incumbent utility or to provide power in a manner that has a
lower greenhouse gas emissions rate or uses more renewable energy
than the incumbent utility, a Party may immediately withdraw its
membership in DCEC without any further financial obligation, as long as
the Party provides written notice of its intent to withdraw to DCEC Board
no more than fifteen (15) days after receiving the report. A Party may also
withdraw its membership in DCEC prior to December 31, 2017 for any
reason. Any withdrawing Party shall not be entitled to any return of funds
it may have provided to DCEC, provided, however, that if, after the
program is launched there are unobligated and unused funds, the
Desert Cities Energy Choice 14
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
withdrawing member shall be refunded its pro rata share of the
unobligated and unused funds.
6.1.4 Continuing Financial Obligation; Further Assurances. Except as provided
by Section 6.1.3, a Party that withdraws its participation in the CCA
Program may be subject to certain continuing financial obligations, as
described in Section 6.3. Each withdrawing Party and DCEC shall
execute and deliver all further instruments and documents, and take any
further action that may be reasonably necessary, as determined by the
Board, to effectuate the orderly withdrawal of such Party from
participation in the CCA Program.
6.2 Involuntary Termination of a Party. Participation of a Party in the CCA program
may be terminated for material non-compliance with provisions of this Agreement
or any other agreement relating to the Party's participation in the CCA Program
upon a vote of Board members as provided in Section 3.17.5. Prior to any vote
to terminate participation with respect to a Party, written notice of the proposed
termination and the reason(s)for such termination shall be delivered to the Party
whose termination is proposed at least thirty (30) days prior to the regular Board
meeting at which such matter shall first be discussed as an agenda item. The
written notice of proposed termination shall specify the particular provisions of
this Agreement or other agreement that the Party has allegedly violated. The
Party subject to possible termination shall have the opportunity at the next
regular Board meeting to respond to any reasons and allegations that may be
cited as a basis for termination prior to a vote regarding termination. A Party that
has had its participation in the CCA Program terminated may be subject to
certain continuing liabilities, as described in Section 6.3.
6.3 Continuing Financial Obligations; Refund. Except as provided by Section 6.1.3,
upon a withdrawal or involuntary termination of a Party, the Party shall remain
responsible for any claims, demands, damages, or other financial obligations
arising from such Party's membership or participation in the CCA Program
through the effective date of its withdrawal or involuntary termination, it being
agreed that the Party shall not be responsible for any new financial obligations
arising after the date of the Party's withdrawal or involuntary termination. Claims,
demands, damages, or other financial obligations for which a withdrawing or
terminated Party may remain liable include, but are not limited to, losses from the
resale of power contracted for by DCEC to serve the Party's load and any
unfunded liabilities such as unfunded retirement contributions or costs and any
unfunded post-retirement benefits. With respect to such financial obligations,
upon notice by a Party that it wishes to withdraw from the CCA Program, DCEC
shall notify the Party of the minimum waiting period under which the Party would
have no costs for withdrawal if the Party agrees to stay in the CCA Program for
such period. The waiting period will be set to the minimum duration such that
there are no costs transferred to remaining ratepayers. If the Party elects to
withdraw before the end of the minimum waiting period, the charge for exiting
shall be set at a dollar amount that would offset actual costs to the remaining
ratepayers, and may not include punitive charges that exceed actual costs. In
addition, such Party shall also be responsible for any costs or obligations
associated with the Party's participation in any program in accordance with the
provisions of any agreements relating to such program provided such costs or
Desert Cities Energy Choice 15
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
obligations were incurred prior to the withdrawal of the Party. DCEC may
withhold funds otherwise owing to the Party or may require the Party to deposit
sufficient funds with DCEC, as reasonably determined by DCEC and approved
by a vote of the Board, to cover the Party's financial obligations for the costs
described above. Any amount of the Party's funds held on deposit with DCEC
above that which is required to pay any existing or ongoing financial obligations
shall be returned to the Party. If there is a disagreement related to the charge(s)
for exiting, the Parties shall attempt to settle the amount through mediation or
other dispute resolution process as authorized by section 7.1. If the dispute is
not resolved, the Parties may agree to proceed to arbitration, or any party may
seek judicial review. The liability of any Party under this section 6.3 is subject and
subordinate to the provisions of Section 2.2, and nothing in this section 6.3 shall
reduce, impair, or eliminate any immunity from liability provided by Section 2.2.
6.4 Mutual Termination. This Agreement may be terminated by mutual agreement of
all the Parties; provided, however, the foregoing shall not be construed as limiting
the rights of a Party to withdraw its participation in the CCA Program, as
described in Section 6.1.
6.5 Disposition of Property upon Termination of Authority. Upon termination of this
Agreement, any surplus money or assets in possession of DCEC for use under
this Agreement, after payment of all liabilities, costs, expenses, and charges
incurred under this Agreement and under any program documents, shall be
returned to the then-existing Parties in proportion to the contributions made by
each.
ARTICLE 7: MISCELLANEOUS PROVISIONS
7.1 Dispute Resolution. The Parties and DCEC shall make reasonable efforts to
informally settle all disputes arising out of or in connection with this Agreement.
Should such informal efforts to settle a dispute, after reasonable efforts, fail, the
dispute shall be mediated in accordance with policies and procedures
established by the Board.
7.2 Liability of Directors, Officers, and Employees. The Directors, officers, and
employees of DCEC shall use ordinary care and reasonable diligence in the
exercise of their powers and in the performance of their duties pursuant to this
Agreement. No current or former Director, officer, or employee will be
responsible for any act or omission by another Director, officer, or employee.
DCEC shall defend, indemnify and hold harmless the individual current and
former Directors, officers, and employees for any acts or omissions in the scope
of their employment or duties in the manner provided by Government Code
Sections 995 et seq. Nothing in this section shall be construed to limit the
defenses available under the law, to the Parties, DCEC, or its Directors, officers,
or employees
7.3 Indemnification of Parties. DCEC shall acquire such insurance coverage as is
necessary to protect the interests of DCEC, the Parties, and the public. Subject
to the provisions of Section 7.4 and provided that a Party has acted in good faith
and in accordance with this Agreement, DCEC shall defend with counsel
acceptable to said Party, indemnify and hold such Party free and harmless from
Desert Cities Energy Choice 16
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
any loss, liability or damage incurred or suffered by such Party by reason of
litigation arising from or as a result of any of the following: the Party's
participation in the JPA; action taken to approve and/or implement the CCA; or
any other act performed or to be performed by the Party pursuant to this
Agreement; provided, however that such indemnification or agreement to hold
harmless pursuant to this section shall be recoverable only out of DCEC assets
and not from other Parties. To the extent DCEC's assets are insufficient to satisfy
its obligations under this Section, any member Agency forced to expend its own
funds to satisfy what would otherwise be DCEC's obligations shall be entitled to
reimbursement from DCEC.
7.4 Limitations on Liability. The Parties acknowledge that Section 895.2 of the
California Government Code provides that a Member is jointly and severally
liable for the torts of the joint powers agency, but that Sections 895.4 and 895.6
of that Code allow the members of a joint powers agency to contractually agree
to indemnity and contribution provisions that allow such liability to be apportioned
among the members based on their respective degree of fault giving rise to the
liability. The Parties further acknowledge that they have agreed at Section 7.3
above to indemnify and defend those Member agencies against loss, liability or
damage suffered by a Member Agency individually as a result of that Agency's
good faith acts taken pursuant to this Agreement. Now, therefore, in
contemplation of such authority, the Parties agree that, as among themselves,
each shall assume that portion of the liability imposed upon DCEC or any of its
Members, officers, agents or employees by law for injury caused by any
negligent or wrongful act or omission occurring during the performance of this
Agreement that is not covered by insurance, that is determined by the DCEC to
be that Member's proportionate share accruing during the Member's period of
participation in DCEC. Said determination shall be by three-fourths vote of the
Member Agencies, meaning an affirmative vote of three-fourths of the total
number of Member Agencies. The Members acknowledge that, given the
possible variables, determination of a proper apportionment may be difficult.
Therefore, subject only to arbitration rights set out at Section 6.3, the Members
agree that the Board's good faith determination of a fair apportionment shall be
final, binding and enforceable as a term of this Agreement. Each Member shall to
the extent provided herein indemnify and hold harmless the other Members for
any loss, costs or expenses that may be imposed on such other Members solely
by virtue of Section 895.2.
7.5 Amendment of this Agreement. This Agreement may not be amended except by
a written amendment approved by a vote of Board members as provided in
Section 3.17.5. DCEC shall provide written notice to all Parties of amendments
to this Agreement, including the effective date of such amendments, at least 30
days prior to the date upon which the Board votes on such amendments.
Exhibits A through E of this Agreement may be revised from time to time by
Board vote and copies of such revised exhibits shall be distributed to all Parties.
7.6 Assignment. Except as otherwise expressly provided in this Agreement, the
rights and duties of the Parties may not be assigned or delegated without the
advance written consent of all of the other Parties, and any attempt to assign or
delegate such rights or duties in contravention of this Section 7.5 shall be null
and void. This Agreement shall inure to the benefit of, and be binding upon, the
Desert Cities Energy Choice 17
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
successors and assigns of the Parties. This Section 7.5 does not prohibit a Party
from entering into an independent agreement with another agency, person, or
entity regarding the financing of that Party's contributions to DCEC, or the
disposition of proceeds which that Party receives under this Agreement, so long
as such independent agreement does not affect, or purport to affect, the rights
and duties of DCEC or the Parties under this Agreement.
7.7 Severability. If one or more clauses, sentences, paragraphs or provisions of this
Agreement shall be held to be unlawful, invalid or unenforceable, it is hereby
agreed by the Parties, that the remainder of the Agreement shall not be affected
thereby. Such clauses, sentences, paragraphs or provision shall be deemed
reformed so as to be lawful, valid and enforced to the maximum extent possible.
7.8 Further Assurances. Each Party agrees to execute and deliver all further
instruments and documents, and take any further action that may be reasonably
necessary, to effectuate the purposes and intent of this Agreement.
7.9 Execution by Counterparts. This Agreement may be executed in any number of
counterparts, and upon execution by all Parties, each executed counterpart shall
have the same force and effect as an original instrument and as if all Parties had
signed the same instrument. Any signature page of this Agreement may be
detached from any counterpart of this Agreement without impairing the legal
effect of any signatures thereon, and may be attached to another counterpart of
this Agreement identical in form hereto but having attached to it one or more
signature pages.
7.10 Parties to be Served Notice. Any notice authorized or required to be given
pursuant to this Agreement shall be validly given if served in writing either
personally, by deposit in the United States mail, first class postage prepaid with
return receipt requested, or by a recognized courier service. Notices given (a)
personally or by courier service shall be conclusively deemed received at the
time of delivery and receipt and (b) by mail shall be conclusively deemed given
48 hours after the deposit thereof(excluding Saturdays, Sundays and holidays) if
the sender receives the return receipt. All notices shall be addressed to the
office of the clerk or secretary of DCEC or Party, as the case may be, or such
other person designated in writing by DCEC or Party. Notices given to one Party
shall be copied to all other Parties. Notices given to DCEC shall be copied to all
Parties.
7.11 No Third Party Beneficiaries. This Agreement shall reflect the Parties' rights and
obligations as by and among themselves. Nothing herein shall create any right in
any third party to enforce any right or obligation set out in this Agreement as
against any Party hereto.
Desert Cities Energy Choice 18
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
EXHIBIT A
DEFINITIONS
1. "Act" means the Joint Exercise of Powers Act of the State of California (Government
Code Section 6500 et seq.)
2. "Administrative Services Agreement" means an agreement or agreements entered into
after the Effective Date by DCEC with one or more entity that will perform tasks
necessary for planning, implementing, operating and/or administering the CCA Program,
or any portion of the CCA Program or any other energy programs adopted by DCEC.
3. "Agreement" means this Joint Powers Agreement.
4. "Annual Energy Use" has the meaning given in Section 3.17.1(b).
5. "Authority" means the DCEC.
6. "Authority Document(s)" means document(s) duly adopted by the Board by resolution or
motion implementing the powers, functions, and activities of DCEC, including but not
limited to the Operating Rules and Regulations, the annual budget, and plans and
policies.
7. "Board" means the Board of Directors of DCEC.
8. "CCA" or"Community Choice Aggregation" means an electric service option available to
cities and counties pursuant to Public Utilities Code Section 366.2.
9. "CCA Program" means DCEC's program relating to CCA that is principally described in
Article 2 of this Agreement.
10. "CVAG" shall mean the Coachella Valley Association of Governments.
11. "Director" means a member of the Board of Directors appointed by and representing a
Party.
12. "Effective Date" means , 2017 or when initial members of DCEC
execute this Agreement, whichever occurs later, as further described in Section 2.1.
13. "Implementation Plan" means the plan generally described in Section 4.1.2 of this
Agreement that is required under Public Utilities Code Section 366.2 to be filed with the
California Public Utilities Commission for the purpose of describing a proposed CCA
Program.
14. "Initial Costs" means all costs incurred by the DCEC and or any Parties relating to the
establishment and initial operation of DCEC, such as the hiring of an Executive Officer
and any administrative staff, and any required accounting, administrative, technical, or
legal services in support of DCEC's initial activities or in support of the negotiation,
preparation, and approval of one or more Administrative Services Agreements.
Desert Cities Energy Choice 19
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
15. "Operating Rules and Regulations" means one or more sets of rules, regulations,
policies, bylaws and procedures governing the operation of DCEC.
16. "Parties" or"Members" means, collectively, the signatories to this Agreement.
17."Party", "Member" or"Member Agency" means a signatory to this Agreement.
18. "Total Annual Energy Use" has the meaning given in Section 3.17.1(b).
Desert Cities Energy Choice 20
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
EXHIBIT B
LIST OF PARTIES
Parties: City of Blythe
City of Cathedral City
City of Desert Hot Springs
City of Indian Wells
City of Palm Desert
City of Palm Springs
Desert Cities Energy Choice 21
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
EXHIBIT C
PRO FORMA
ANNUAL ENERGY USE
Member Number of Customers Annual Energy Use
(MW h)
Blythe 5,898 117,000
Cathedral City 24,137 329,000
Desert Hot Springs 11,421 140,000
Indian Wells 5,230 158,000
Palm Desert 39,459 699,000
Palm Springs 37,826 640,000
Total 123,971 2,083,000
Desert Cities Energy Choice 22
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
EXHIBIT D
PRO FORMA
VOTING SHARES
CVCEA CCA Program Participation and Weighted Voting Shares
Participants Annual Energy Percent Annual Annual Energy Use Pro Rata Voting Weighted Use(MWh) Energy Use Voting Share % Share % Voting Share °/°
Blythe 117,000 5.62% 2.81% 8.33% 11.14%
Cathedral City 329,000 15.79% 7.90% 8.33% 16.23%
Desert Hot Springs 140,000 6.72% 3.36% 8.33% 11.69%
Indian Wells 158,000 7.59% 3.79% 8.33% 12.13%
Palm Desert 699,000 33.56°l° 16.78% 8.33% 25.11%
Palm Springs 640,000 30.72% 15.36% 8.33% 23.70%
r
TOTALS 2,083,000 100.00% 50.00% 50.00% 100.00%
1.
FORMULAS USED:
1. Annual Energy Use Voting Share: Total Annual Energy Use(expressed in MWh)in the Member's
jurisdiction /combined Total Annual Energy Use all Members'jurisdictions] multiplied by
expressed as a percentage to two decimal places. See section 3.17.1 (b)
2. Pro-rata Voting Share: [1 /total number of members] multiplied by'h), expressed as a percentage to
two decimal places. See section 3.17.1 (a)
3. Weighted Voting Share: [the respective sum of the values computed in(1)and (2)above, expressed
as a percentage to two decimal places. See section 3.17.1 (c)
Desert Cities Energy Choice 23
JPA Agreement,June 28, 2017
ORDINANCE NO. 1327
EXHIBIT E
SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have executed this Joint Powers Agreement
establishing the Desert Cities Energy Choice, Community Choice Aggregation program.
By:
Name:
Title:
Date:
Party:
(One signature page for each Member)
Desert Cities Energy Choice 24
JPA Agreement,June 28, 2017
sr r�
�C =ern
G? 70
rn�o�
cn _
rn
August 17,2017 = ioor^
ca h
Ryan StendellCO
Community Development Director {"
City of Palm Desert
73510 Fred Waring Drive
Palm Desert, CA 92260
Dear Mr.Stendell:
At the request of City of Palm Desert,the California Joint Powers Insurance Authority("California JPIA")
reviewed the Community Choice Aggregation("CCA")Risk Assessment Summary Memorandum from
the Coachella Valley Association of Governments("CVAG"),dated June 30, 2017.Also reviewed were a
number of other publicly available risk assessments of CCA programs, including an assessment
conducted by the Local Government Commission for the California Energy Commission, Public Interest
Energy Research Program.
Both of these assessments appear to effectively identify the various risks associated with a CCA
program,and present suggestions for mitigation of those risks.
Since City of Palm Desert and other municipalities in the Coachella Valley are considering forming a Joint
Powers Authority("JPA")to manage the CCA program, it is important to understand the legal and risk
management implications of such an endeavor.While formation of a JPA places a legal firewall between
the JPA and its member agencies,the constituent member agencies are ultimately responsible for any
obligations incurred by the JPA.As such,it is critical that an equitable process be developed to allocate
costs amongst JPA members, including allocation of outstanding obligations in the event the JPA is
deemed to no longer be viable.
Further,the JPA should develop and implement a formal risk management program.This program
should include loss control activities intended to mitigate the various identified risks. Some of this risk
can be effectively transferred by procuring liability and workers'compensation coverage to protect
against costs associated with claims filed by third parties,and injuries to JPA employees.
It is also important to note that, should the JPA decide to generate its own energy by purchasing energy
infrastructure(e.g. solar panels),this will greatly increase the associated liability,workers'
compensation,and property risk exposures. It is recommended that a separate risk assessment be
performed prior to the purchase of any energy generation assets.
If you have any questions, please do not hesitate to contact me directly.
Yours Sincerely,
1,44
Alex Mellor,ARM
Risk Manager
California JPIA
(562)631-0814
amellor@cjpia.org
CC: Gary Leong, Deputy Executive Director,Coachella Valley Association of Governments
Kevin McCarthy, Finance Director,City of Indian Wells
Terry Deeringer, Director of HR&Risk Management,City of Indio
Susan Maysels,City Clerk,City of La Quinta
Coacneiia Vaiiey Association of Governments
CVAG
Community Choice Energy: Frequently Asked Questions
Q: What is Community Choice Aggregation?
A: Community Choice Aggregation (CCA) is a program that enables local governments to pool (or aggregate)the
electricity demand of their communities for the purpose of supplying electricity. Often called Community Choice Energy,
a CCA buys and/or develops power resources on behalf of the electricity end users in its jurisdiction. Southern California
Edison would continue to provide all transmission and distribution of electricity, as well as system maintenance and
customer service. Areas served by an existing publicly owned utility, such as Imperial Irrigation District, are not eligible
for CCA programs.
Q: How is a CCA financed?
A: Once launched, a CCA is financed by the revenues received from customers based on electricity sales. A CCA is a self-
funded, not-for-profit public agency which ensures that any financial benefits directly serve the community. CCAs are
not subsidized by tax dollars. Start-up costs may be financed by member agencies, banks, or other lenders; these costs
are paid back once revenues from the sale of electricity accumulate. Surplus funds generated by the CCA may be
reinvested back into the community in the form of lower rates, or new energy projects and programs that serve the
entire customer base.
Q: Who governs and administers the CCA?
A: There are options for governance. CVAG's Ad Hoc CCA working group has recommended formation of a separate
joint powers authority(WA) to be governed by a Board of Directors made up of elected representatives from each of the
participating jurisdictions. The Board will conduct its business in regular meetings that will be open to the public,
ensuring transparency and community involvement.
Q: Why are so many local governments considering CCA?
A: CCAs give electricity consumers a power supply choice where none currently exists, providing communities with
local control over their energy supply. CCAs introduce competition into the energy market,which helps drive costs
down, diversify power choices, and stimulate new investments in renewable energy. Consumers can increase the
amount of electricity from non-polluting renewable sources including wind, solar and geothermal energy. In the
Coachella Valley, a CCA offers a way to advance local renewable energy resources. Existing CCAs offer a "default" option
that is both cleaner and cheaper than the incumbent utility, as well as a voluntary, 100% renewable energy option
offered at a rate premium. Under a CCA, Coachella Valley ratepayers can determine how our electricity is generated—
from clean and renewable resources rather than more polluting and finite fossil fuels. And simultaneously achieve
modest savings over current SCE rates.
Q: How will the CCA set its rotes?
A: The CCA Board of Directors will have the authority to set electric generation rates for our customers, after they are
carefully developed, discussed, evaluated, and approved at public meetings. To date, existing CCAs in California offer
competitive electricity rates, currently ranging from 3%-10% lower than investor-owned utility(IOU) rates, depending on
the customer class and particular CCA option each customer chooses. While utility rates change several times a year,
CCA rates generally adjust once per year, offering a greater measure of rate stability. While there is no guarantee that
CCA generation rates will always be lower than SCE rates, publicly managed CCAs do have the advantage of being non-
profit agencies that pay no shareholder dividends, investor returns, high corporate salaries, or income taxes like
commercial services or investor-owned utilities, which helps keep costs down. Initial studies estimate that a CCA
program could save ratepayers millions of dollars over the next twenty years.
Q: What financial or other obligation does a city or county incur by establishing a CCA?
A: Formation of a CCA through a Joint Powers Authority would not require contributions from participating member
agencies. By establishing a CCA, the JPA, acting on behalf of its members, assumes various powers and responsibilities
such as assuming ratemaking authority for retail customers and the responsibility to procure power for customers in its
jurisdiction.The authority and responsibilities of the Joint Powers Authority(JPA) will be determined by the participating
cities.
Q: Will creating a CCA require setting up a new bureaucracy?Isn't the private sector better at managing the complexity
of today's electricity markets than the public sector?
A: Setting up a CCA program does not require hiring a large staff to manage the tasks of running the CCA. CCA tasks and
functions can be handled through contracts with existing private and public sector organizations with significant CCA
expertise and experience.The proposed CCA would be a public-private partnership that takes advantage of the
opportunities offered by both the private and public sectors. The private sector will be employed to carry out many of
the functions associated with a CCA program. A CCA is more a matter of public control over critical resources required to
sustain our communities and a way to take advantage of unique and cost-effective financial opportunities available only
to the public sector based on local input. In fact, public utilities have a long track record of providing power supply
services at less cost than their private-sector counterparts.
Q: Can cities and counties be legally shielded from the actions of the CCA?
A: Regardless of administrative structure,the assets and liabilities of the CCA program remain separate from those of
the participating agencies'general funds. Financial liability is mitigated by specific JPA ordinance and vendor contract
language that protects municipal assets.
Q: What are the options for customers to opt-out and, if they change their minds, opt-in to a CCA at a later date?
A: A new CCA is required to send a total of four notices to customers, two notices prior to commencement of CCA
service, and two notices during the 60-day period following commencement of CCA service. Customers who opt out
before or within the first 60 days of CCA service may return at any time. Customers who opt out after the first 60 days of
service with a CCA will be prohibited by Southern California Edison from returning for one year.
Q: Is the CCA subject to the same energy price fluctuations that undermined the IOU's financial stability in 2000?
A: Due to the restructuring law passed in 1996,the CPUC prevented utilities from entering into long-term purchase
contracts because it was assumed that market competition would lower prices. At the time of California's energy crises,
IOU's were caught in a unique situation of having to purchase power from the spot market as prices skyrocketed due to
market manipulation, escalating natural gas prices, and other factors. Since the energy crisis of 2000-2001,the CPUC
has changed power purchase rules that reduce many of the risks exposed by California's experimentation with market
restructuring. One way an incipient CCA can reduce such risk is by"forward procurement," thereby reducing its reliance
on more volatile spot market purchases, which is an accepted industry practice for meeting variable peak demands and
simultaneously limiting exposure to the volatility of day-to-day price swings.
Q: Why is CVAG moving so quickly to form a CCA?
A: Timing is crucial in starting up a CCA. Currently, power and renewable resource rates are at historic lows. With so
many CCA's on the verge of formation, each one will be aggressively pursuing procurement contracts for their own
customers. If we wait too long to form a CCA, it may be more difficult to secure energy contracts for the CCA and/or
market prices may shift. Also SCE is in the process of proposing changes to the current calculation of the 'exit fee'
charged to customers when they shift to a CCA. If their proposed changes are approved by the California Public Utilities
Commission (CPUC), it could significantly affect the rates of the CCA, possibly making it much less viable to operate.
For additional questions, please contact Katie Barrows(kbarrows@cvag.org)or Benjamin Druyon (bdruyon@cvag.org)at
CVAG(760)346-1127.
6/15/2017
2011 AUG 21
RECEIVED
CITY CLERK'S OFFICE
PAL
DESERT,
Px 1+3P
MEMORANDUM K�
TO: Ad Hoc Working Group, City Staff
FROM: CVAG Staff and Don Dame, Consultant to Coachella Valley Association of
Governments
SUBJECT: Community Choice Aggregation (CCA) Questions and Answers
DATE: June 23, 2017
During presentations to member jurisdictions interested in Community Choice Aggregation,
several questions have been consistently asked by city council members and/or staff from
interested cities. The following summary addresses these questions with responses drawing
from the experience and best practices of currently operating CCAs in California.
Risk Assessment and Risk Management:
What are the risks? What is the worst -case scenario, and what are the implications to the City?
1. What is the likelihood of that scenario?
2. Can we mitigate risks and worst -case scenario?
Risk is a ubiquitous factor in the start-up and ongoing operation of a business, and a CCA
program is no exception. Taking prudent and reasonable actions to anticipate and plan for
unforeseen and unpreventable events that could impact CCA viability is an essential role of CCA
decision makers. Awareness of risks and adoption of well thought out risk management
policies and practices will ensure the possible impacts are manageable. Probably the most
effective "risk absorbers" over time are management preparedness and the availability of
sufficient reserve funds which may be used to mitigate business uncertainty events.
The feasibility study/business plan completed for CVAG and WRCOG identified risks associated
with CCAs. A sensitivity analysis was completed which described that CCA rates could be higher
than SCE rates if: 1) the "exit fee" charged by SCE (the PCIA charge) becomes much larger; 2)
CCA Toads are much less than forecast; and 3) wholesale market prices are much higher than
current experience. The feasibility study judged most risks to be manageable and noted that
formation of a CCA for CVAG is financially feasible and would result in beneficial local economic
and environmental impacts.
1
As described in the feasibility study, most business risk for CCAs falls within three general
categories: 1) financial; 2) operational; and 3) regulatory and political. The following is a brief
summary of the categories of risk and assumptions about how those risks would be managed,
based on the feasibility study and input from existing CCAs:
I. Financial
A. Market prices - With respect to the risk of wholesale market prices being much higher
than current experience:
1. Wholesale prices for natural gas/electricity at near historic lows. However, natural
gas prices are subject to variety of local, national and international forces that could
alter the market place. (On a year -over -year basis, natural gas prices are up about
10% since June 2016)
2. If natural gas prices increase, it is highly likely that electric wholesale market prices
would also increase.
3. All signs continue to suggest decreases in solar equipment costs on a $/watt basis; it
seems very unlikely that solar costs will increase over the next 10 to 20 years. It is
more likely that costs for solar will continue to decline.
4. Increases in market prices for electricity will affect SCE as well as a CCA, such that a
CCA should be able to maintain competitive rates
II. Operational -
A. Load forecasts and customer growth. CCAs have risk associated with customers who
opt -out; must notice customers 2 times prior to commencement of service and 2 times
during the 60-days immediately following commencement of service.
B. Customers opting out result in reduced revenue stream, reduction in amount or
wholesale power procurement needed (possibly need to liquidate any excess power
supply already committed to purchase).
1. The feasibility study included conservative estimate of customer opt -out rates of
25%/35% for residential/non-residential customers. California's active CCA programs
have residential customer op -out rates in the 5 to 10% range.
2. Risk of over procurement mitigated by reducing electricity procurement amounts
accordingly, at least during initial commencement of CCA service until customer
base has stabilized and becomes more predictable.
3. Very unlikely loads will not meet or exceed those assumed in feasibility study.
4. All else equal, as SCE rates increase or decrease relative to CCA rates, there will be
an inverse impact on the CCA's opt -out rate. CCA opt -out rates will also be affected
by SCE retail rates. Historically, SCE rates have increased overall in the 4-6% range
annually for total of cost of service components.
C. Consultants who are being considered to assist with a CCA have expertise and
experience in assessing risk, developing risk policies and procedures and managing risk
to ensure the success of the CCA program.
2
III. Regulatory and Political
A. Factors that could impact SCE's rates in addition to market price impacts described
above include regulatory changes, plant or technology retirements or additions, and the
long-term impact of the Aliso Canyon leak.
1. Existing CCAs have thus far managed to address potentially detrimental regulatory
/legislative changes thru effective lobbying. CCAs will need to continually monitor
and advocate at the federal, state and local levels to ensure fair and equitable
treatment for CCAs. This will likely be achieved in concert with other active CCAs.
2. CVAG is currently involved with other existing and proposed CCAs to monitor and
comment on relevant regulatory/legislative issues.
3. Efforts to ensure strong customer relationships will enhance customer loyalty and
help stabilize revenues.
4. Longer -term predictability and durability of the CCA's customer base will help assure
access to credit markets to meet working capital, efficiency programs, new resource
investments, debt repayment, and other CCA financial needs
The financial risks associated with Community Choice Aggregation vary depending on the phase
of CCA establishment, and the different financial commitments and activities. These phases
include:
1. Evaluation, preparation of feasibility study;
2. Vote to establish CCA but prior to serving customers
3. Begin customer service but prior to receiving revenues
4. Customers being served, and regular, routine service/revenue cycle in place
Up until the point a CCA program actually "goes live" (say, June 2018 in CVAG's case) staff and
consultants will continue to monitor power market prices and other factors that influence CCA
viability. If conditions do not appear to remain conducive to CCA viability, staff and consultants
will advise decision makers accordingly. If warranted, the CCA Board and decision makers could
decide to halt further CCA implementation activities. If no CCA is created, the cities risk no
additional public funds and likely concludes the expenditure of such investigatory funds was
justified and warranted to allow for informed decision making. If a feasibility study or other
further analysis of CCA is decided upon, the cities may expend addition public monies for such
purposes, say, another $50,000 to $250,000, for associated consulting activities. No funds
beyond those amounts authorized by the cities for such activities are at risk, and the activities
may cease any time at cities direction. At this point, monies either loaned or conveyed to the
new JPA to fund start-up efforts would likely be unrecoverable. The total amount expended
and lost might be in the $300,000 +/- range subject to elapsed time and total staff effort
expended prior to making a "cease effort" determination.
Once a CCA program has been formally established and retail power sales commence, the
"worst case" would likely involve some type of significantly volatile upward movement of
power prices (similar to back in 2000) and/or unfavorable CPUC/legislative intrusion which
reduces or eliminates CCA viability, causing CCA retail customers to withdraw from CCA service
and return to full SCE retail service. These events would be somewhat mitigated in that SCE
would also be impacted by such power price spikes. CVAG CCA program staff and consultants
3
should be prepared and plan for such possibilities and establish contingencies within a Board
interactive risk management program. Nonetheless, there is no mechanism to thwart
customers from returning to SCE if they so choose. If sufficient customers depart CCA power
service, revenues will be more unlikely to cover costs, and the CCA may need to cease service
altogether, sending all remaining customers back to SCE. However, a CCA would have the right
to charge an exit fee to these departing customers, allowing for cost recovery.
The CCA can mitigate impacts to CCA city participants by prudent construction of its JPA
agreement to specifically shield participating cities from the debts and financial liabilities of the
JPA. The JPA also has the ability to impose an exit charge on customers returning to SCE to
recover any outstanding amounts owed or otherwise unrecoverable. The JPA would likely
conduct an orderly liquidation of remaining/unused power supply contracts, and/or generation
facilities and other assets to determine the net residual obligation to be assessed to departing
power customers.
Again, careful planning and monitoring of CCA operations should help identify possibly
calamitous issues prior to entering any type of crisis stage. But if such an event occurs, the JPA
should contractually insulate participating cities, and CCA retail customers will have an ongoing
obligation to fund net residual liabilities after their return to SCE. Even after all prudent steps
have been taken however, there remains no absolute guarantee that participating cities might
not somehow be involved if sufficiently broad and hostile related litigation were to arise.
What is the likelihood of that scenario?
Staff contemplates the likelihood of a worst -case scenario event to be relatively low based on
the successes of existing CCAs, the potential to employ experienced vendors and technical
consultants, and the active and ongoing involvement of staff, the JPA Board and technical
services vendors. Formal and careful technical planning, analysis and monitoring (by the Board,
staff and consultants) should identify any potentially negative events and/or outcomes in
sufficient time to adjust business operations to avoid most if not all severely negative impacts.
Can we mitigate that scenario/liability?
As suggested above, active Board involvement coupled with careful and formal planning,
analysis, and reporting by staff and consultants should provide ample warning of potentially
injurious business conditions and allow for the development of corresponding strategies to
reduce or eliminate negative consequences. Ultimately, CCA viability and degree of success will
be a function of Board involvement, community support, hiring experienced staff and vendors,
in concert with establishing a responsive power supply portfolio ---- all activities that will
eliminate or substantially reduce risk of CCA business failure.
Table 1 summarizes the risks associated with a Community Choice Aggregation program.
4
Schedule for CVAG's CCA implementation process
California's CCA legislation was initially enacted in 2002 (15 years ago) and in 2010 Marin Clean
Energy (MCE) was the first CCA established. Since 2010, over a half dozen additional CCAs have
been established with many more in various stages of investigation/implementation. All
existing CCAs are offering competitive rates and higher renewable resource content than the
respective investor -owned utility (SCE or PG&E). In large measure this is due to relatively
favorable power market conditions which have existed since 2010 but which show some signs
of upward price movement, especially based on natural gas prices which have increased about
$0.35 / MMBtu over the last year.
A key component of success will be to provide rates equal to or below those offered by SCE.
This outcome is directly tied to power market prices, and this likelihood may diminish over time
if power prices escalate. Procedurally, all CCAs must follow a parallel path to establish a CCA, a
path which is reasonably well defined at this point. Thus, participating CVAG cities are able to
select from experienced vendors and power service providers to establish a CCA program.
Therefore, given the success of existing CCAs, the clear CCA program template to follow, and
the currently hospitable power market, it is recommended that acting before these conditions
significantly change will enhance program success and consequential flow through benefits to
community members.
Opportunity to Thoroughly Investigate Community Choice Aggregation:
CVAG committees and staff have been reviewing CCA feasibility for over a year, beginning with
Executive Committee authorization to fund a feasibility study in April 2016. In December 2016,
a feasibility study and business plan was completed by EES Consultants which outlined the
mechanics and described the feasibility of a CCA program for "Inland Empire" communities,
including CVAG, Western Riverside Council of Governments (WRCOG) and San Bernardino
Council of Governments (SBCOG). In May 2017, CVAG and WRCOG staff spent the day with the
two longest running CCA programs -- Marin Clean Energy and Sonoma Clean Power -- getting an
in-depth introduction to the workings and experience of these two successful programs.
Further, CVAG and WRCOG issued an RFP requesting information and proposals from vendors
and power services providers regarding attaining requisite services to establish a CCA program.
Interviews were conducted for 6 of 9 entities responding to the RFP, some of which bid
"complete" services approaches. Several of the bidders have been successful consultants to
other local governments establishing similar California CCA programs. Staff believes the RFP
responses and subsequent interviews convey an accurate picture of entities capable and
experienced in performing such services in a manner conducive to establishing a successful CCA
program for interested CVAG cities.
Attaining wholesale power supply and then selling at retail to community customers is a very
complex business undertaking and it is important for decision makers to be well informed and
continue with additional investigation. Staff believes that central to program success is the
selection of experienced and competent vendors, with experience working with and
understanding the complexities of CCA power procurement and sales.
5
Table 1: CCA Risks and Risk Level
Risk Description
Supply Imbalance, over or
under -procurement
Customer Opt -Out
Current Power Market
Future Power Market
Financial
Attracting Staff
Regulatory & Legislative
Renewables availability
Cities Exposure
CCA "Failure"
Likely Risk Level Comments
Low
Low
Low
Moderate
Low
Low
Moderate
Low
Very Low
Low
Can be mitigated with prudent hedging
and forward procurement activities
Opt -out risk is most substantial during
program commencement and can be
mitigated with careful procurement
planning allowing for initial supply
flexibility. Also customer support and
local benefits will increase CCA loyalty
Current market prices are below
historic averages
Many factors influence such as overall
economy, continuation of fracking,
natural gas prices, etc.
Prudent planning and operation,
current market prices, coupled with
existing CCA track records help to
ameliorate financial risks
Market salaries should attract available
and needed staff and consultants
An area to be carefully monitored and
likely participate with other CCA to
influence and preserve a viable CCA
alternative
Declining pricing and increased
availability, Coachella Valley well
situated for solar, wind, geothermal
JPA provides protection for cities and
assumes liabilities. No upfront costs to
cities.
Established working model, careful
planning and oversight will mitigate
6
LxltZ1830sd
►+ r Ov
ru r
Cr) V'1 .. W N
a r O n
0 pa0
Cu 3 ❑
at m c 3
O ra 7 =
7 a rr
C
Coa
= _ 3
`,,3 ���
r.
„I -. of V
C 47
Qo o
rs
t...^ CA �1 p a > > '^ Y3 u+ ra p n 15 v, p U f ° ro 3
� al �_ _a ryr O (0 "' C rL 1] C if N rp 'a N 7 fop o
3 C 3
n vs
MI
111 O.
C n 2
m L7
c
0 v M, mr.3v'13
nn ro roQ 3 Qro
m rroa rt Q- n o Q ro (p a fl a N o IT * ap m '� 3. �^
m 3 6 Cl. ❑ 3 n r. 3 °iv. ro rt ro v a m
"t3 �. v�i ° 7 6] 3 3 `• (0 E al cm
(p rD N N N C
r* = 0 m �* of C v z n n
n
pas 0_
Z.
0) tA
0. al it Q- N ^C 3 4,,...Cr 0 `D Q Cr Q '* ro ❑ ro va p
r► °
C ❑ n r. D4 0 W n p 0 o v oa
0❑ ,-. n •C v, . p ro m ❑ n ❑_ n �; A rp m
n 73 alcn CD Q v, ° v in ._ rp ❑ St `^ L.Cr s
3
-0 Q 3. „nC O D co 3 Q. fli 7 r�'+ N S n 7
., n C CIJ m a n n( = rp (0 a) rr O tp y G Tci_ n
(p �y N Q. O [p C 0 C ,9 ❑ 6 < d 7 Co 7 3 ra m —I
Q0'V 5 0) °- C N (p -D n N co (to 7 0 cn on a
.. ''+ chi ❑3
CD
Q N a �_ p CT _. n o
V J vroi 0rD
rD ful
nG ro
fp Q 7 OD m !p C01- D N
�, O. nl m
co
DJ DJ
l Q nrp
3 CO n w^ 0 p 6 v
ryV' a* aroi DJ _< u, 0 s; n T 2 a
Iniv 0-
a.
(p
0 OD
n vs
OD H w rip 0_ r�r D
Lib rD
rD
Fir n
so
• 3 0- = ro = �, r -, o v
N • rt
= ro R.
' r 0 73 OD13 0 Q n m �. °) o ro
co
rD
cu
R.
cs m—
cu
", no
mi
Do
_ozi
rt Q.ha
p m o o
O
lfl
co
co CD
0
CD
al
0
2
Da
Ev
"r Q rF (0 "'. {�1 [h
N rt
VI o_
XI C y CD
of tD -. D
O
CL
C 0 °° ° a ❑ 0 Y3 0 al 3
3. rrsu
C ui 3 0 2 r. rt [T n C
rp ❑ rp �+ ❑ ❑ ~ 0 o vq
( m ( o n n ro �° = y 0 Cr 0 0° o m L.
❑ N dq 0 v, rn ,C C n Q
(IT Er
Fs C Da °i r3o ' n m v73 3 d a3i �. CA v
H n C a rp n v7 C n 0_ 7 ro ('1
G) rn 0 (0 (p Os 0 -s 7' rr OQ
.. r'1 ill Oh rp n T 0 m 3 3 m * ra rp
n rp rt v' (G � Z Q G1 X N co ODD
c O „' (p (p ro 0 rt ns ra = n - rt
h 0 n Q w = Q GI ry a c: 3
0 C 3 rp m 3 v CD L.
N ..
w rr n C p, 0. Cn 3 -a co
o . 0 m n m13 N 3
.O -i fo z 0 h 0 .- v, to is 10 cm
rp 0`
Crra co LA ,. C 7 m -< 0-
(➢ co ut �• 0 co
suoi;eaad0 v33
Joea;eyf3!doj
Coachella Valley Association of Governments - Possible CCA Program Goals