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What is Valley Clean Energy Alliance (VCEA)?
State law allows cities and counties to pool the electricity demand of their residents and businesses for the purpose of buying electricity on behalf of those customers. These programs are called Community Choice Aggregation programs.
VCEA, a joint powers authority formed in 2016, is a locally controlled, not for profit public agency covering the unincorporated areas of Yolo County and the Cities of Woodland and Davis. It provides residents and businesses in those communities with an option to have more of their electricity supplied from clean, renewable sources—such as solar and wind—at competitive rates. When customers choose VCEA, they help empower local control of electricity procurement decisions, reduce the carbon footprint associated with their electricity service, and help support growth of local renewables. Rather than paying profits to shareholders, VCEA’s net revenue (after buying power and administrative expenses), can be used to help stabilize electricity prices, provide larger incentives for more solar installations, support energy efficiency programs, develop more local renewable energy sources in and near Yolo County, and invest in innovative clean technologies and energy-related job training — all while keeping electricity rates competitive with investor-owned utilities.
What is Community Choice Aggregation (CCA)?
In 2002, Assembly Bill 117 was passed to establish Community Choice Aggregation. It allows a local jurisdiction to become the default electric supplier in its jurisdiction, and offers an opportunity for Californians to locally influence the sources of their electricity. Marin Clean Energy was California’s first Community Choice Aggregation program, followed by Sonoma Clean Power and Lancaster Choice Energy. VCEA is Yolo County’s Community Choice Aggregation program.
How does it work?
Pacific Gas & Electric Company’s (PG&E) electricity is approximately 30% renewable. The rest of PG&E’s energy comes from nuclear, natural gas, hydroelectric power and other unspecified energy sources. VCEA will purchase more of your electricity from cleaner sources such as solar and wind. In partnership with PG&E, that cleaner electricity is delivered to your home or business through PG&E’s existing power lines. Other than receiving cleaner electricity at competitive prices, all other aspects of your electricity service remain the same. PG&E continues to send you a monthly bill, operate and maintain the electrical grid, and respond to outages. A portion of the payments you make on your bill to PG&E pays for VCEA’s continued purchase and development of cleaner energy supplies on your behalf. By law, VCEA is an opt-out program. If you do not want to participate in VCEA, you may opt-out to stay with Pacific Gas and Electric Company (PG&E).
Does VCEA fully replace PG&E?
No. VCEA partners with PG&E. VCEA supplies its cleaner electricity supply to customers and PG&E continues to deliver that energy to your home or business. PG&E also continues to do the billing, turn on and off power when you move, maintain the power lines, and resolve outages. Those who prefer to have PG&E continue to buy their electricity can choose that option.
Isn’t renewable power more expensive than electricity from traditional sources?
Not anymore. During the past 30 years the costs of fossil fuels have been rising, although natural gas and oil prices have come down recently. During the same time, the cost of renewable sources has dropped dramatically. In fact, in California, renewable energy is often cheaper than fossil fuel because after the initial construction costs; the fuels—wind and sun—are free. And new resources like tidal energy are now being developed to deliver energy at competitive rates.
Where will VCEA be buying the renewable electricity?
The power portfolio will be developed once the program is formed, but its intent will be to purchase as much electricity as possible from sources located in California at prices that remain competitive with PG&E.
Are other Counties considering this?
Most Bay Area counties are moving forward with similar programs. In addition to those that have already launched their CCA program, 16 other California counties plus the City of San José are also exploring starting their own programs.
How would the program be regulated?
Before starting service, VCEA will submit an Implementation Plan to the California Public Utilities Commission (CPUC), the state entity that regulates all California energy providers. The plan will discuss rate design, how we will buy electricity, and how we will carry out all the functions the CPUC requires. Before launch, VCEA will negotiate the price of electricity on the open market and adhere to all CPUC rules and tariffs.
What type of local reinvestment has been done in other programs?
In the Bay Area, MCE Clean Energy has already invested over $500 million in in-state and local renewable energy projects that have created over 2,400 construction and vendor jobs, with more coming soon. Sonoma Clean Power has found that developing local renewable energy projects within Sonoma County will result in lower rates by 2020, compared with buying electricity elsewhere.
I have solar panels on my house (or commercial property). Will I still receive the benefit of Net Energy Metering (NEM)? Will VCEA offer something better?
Like similar existing Community Choice programs, VCEA will look at ways to increase the value of local solar to the owners of PV systems. For example, both MCE Clean Energy and Sonoma Clean Power have successfully developed programs that offer greater incentives than PG&E provides in order to encourage residents and businesses to install solar. VCEA will examine the development of similar offerings.
What happens if I’m a Net Metering 1.0 customer and switch back to PG&E?
According to PG&E, changing service providers has no effect on rate schedules or NEM interconnection. This includes both opt-in and opt-out. Customers don’t reapply for interconnection when they change service providers, so they’re still under the same (1.0) interconnection agreement regardless of their electricity service provider.
How can VCEA offer competitive rates?
What makes Community Choice programs so powerful is that they support clean energy market competition by buying electricity through a competitive process that encourages private energy companies to compete to provide clean, renewable power at lower costs. This competition leads to lower costs that help Commuity Choice programs compete. This competition in the electricity marketplace also leads investor owned utilities like PG&E to improve their offerings, both in terms of cost and level of renewables. As a privately-held regulated monopoly, PG&E doesn’t have as much incentive to provide cleaner energy or lower rates. Because there are no shareholder investors expecting dividends, Community Choice programs like VCEA can reinvest net revenue and keep rates competitive. Simply put, VCEA’s mission is customer and community centered.
How will VCEA set its rates?
VCEA electricity rates will be set through a transparent public process similar to how water and sewer rates are currently set. Members of the public will be encouraged to participate in publicly noticed hearings for each step of the process.
Will I still receive my CARE, FERA, or Medical Baseline discounts with VCEA?
If you receive a low-income discount on your electricity bill through PG&E’s CARE, FERA or Medical Baseline Allowance programs, that discount will continue to apply as a VCEA customer.
Do I get billed separately by VCEA?
No, you will continue to receive one monthly bill from PG&E. The general look, appearance and set-up of your bill will not change, although VCEA electricity supply charges will replace PG&E electricity supply charges. There are three main components to your electricity service: generation, transmission and distribution. Currently, PG&E rolls all three components of your service into one line item called “Current Electric Charges” under the “Account Summary” on the first page of your bill. VCEA will assume responsibility for the generation portion of your service. As a VCEA customer, you will see separate lines under the “Account Summary” on your PG&E bill for VCEA generation charges and PG&E’s electric delivery charges. You will also see a new page in each bill detailing your VCEA electric generation charges.
What is the PCIA?
That’s the Power Charge Indifference Adjustment or PCIA, sometimes called an “exit fee.” It will appear on your bill as a separate line item. PG&E has various long-term contracts for buying electricity for its customers. It bought power based on the number of customers it serves. The price is locked in, which is good when the cost of generating electricity is rising as one might expect over a long time period. Recently, however, the cost of natural gas, which is most of PG&E’s non-renewable portfolio, has been going down. When customers switch to VCEA, PG&E needs to provide less electricity but still has to pay for the amount of power in its long-term contracts. So PG&E sells the excess power on the open market. Right now, contracted electricity generated by natural gas is selling for less than what PG&E paid for it. That difference is charged to VCEA customers under the guidance of the CPUC. If the price of natural gas rises again, the PCIA could go down. What’s most important to know is that VCEA’s rates—even with the PCIA charge included—will still be competitive with PG&E’s rates.
Can PG&E raise delivery fees on VCEA customers above those of non-VCEA customers?
No. PG&E must provide the same transmission and distribution rates for all customers in their service area whether or not they receive electricity from PG&E or a CCA such as VCEA.
When and where is VCEA service available?
VCEA will be available to all PG&E customers in Woodland, Davis, and unincorporated Yolo County in mid- 2018 (targeted service date).
How do I enroll in VCEA?
VCEA will replace PG&E as the default electricity provider in Woodland, Davis, and the unincorporated areas of Yolo County. Anyone with a PG&E electric account in these areas will automatically be enrolled in VCEA. By law, VCEA is an opt-out program. This means that unless you opt out, you will automatically be enrolled in the program when service begins. You will receive a minimum of four notices to help you customize your service and provide directions on opting out, if you so choose.
Will PG&E lose jobs as result of VCEA and other similar programs?
The vast majority of PG&E employees provide transmission and distribution system maintenance and upgrades for electricity lines, billing and customer service—all of which PG&E will continue to provide. There have not been any noticeable job losses in communities that have a second electricity provider—in fact new jobs have been created constructing and operating local energy generation facilities.
Is there a downside to Community Choice?
The primary risks to VCEA are customer opt-outs, energy price fluctuations and changing state regulations. A successful Community Choice program requires that a significant majority of residential and commercial customers obtain their electricity from the program. This is one reason why Community Choice programs strive to maintain competitive pricing, while lowering greenhouse gas emissions and providing higher renewable content than what you can get from the local utility.
California’s energy markets have been stable for several years and prices for electricity from both renewable and conventional energy sources (natural gas) are relatively low. Markets could become more volatile. VCEA would hedge risks by developing a diverse portfolio that includes a mix of long-term and short-term contracts and direct investments in power projects. VCEA would use these same risk management practices that are employed across the energy industry.
The regulatory risk is difficult to predict. A 2002 State law allows cities and counties to develop programs like this—the State is supportive. Existing CCA programs such as MCE Clean Energy, Sonoma Clean Power, and Lancaster Choice Energy have been very active in the California Public Utilities Commission’s regulatory proceedings and have established a strong network. A statewide association of CCA programs has been formed to represent the interests of CCA program providers and their customers. It has been estimated that 50% of the electricity in California will be provided through Community Choice programs within the next decade. As more local programs are developed, they will have an even stronger presence—it will be essential to actively participate in ongoing regulatory proceedings.
What did the VCEA Board decide regarding CCA program launch and operation service providers?
At its August 31, 2017 meeting, the VCEA Board voted unanimously to contract with the Sacramento Municipal Utility District (SMUD), to provide technical and energy services, data management/call center services, wholesale energy services, credit support services, and up to five years of CCA business operations support. This business relationship between VCEA and SMUD puts VCEA on track to launch customer service in summer of 2018.
Why did VCEA select SMUD to provide these services?
After an extensive due diligence process, VCEA found that SMUD provides the greatest overall value to VCEA through close Mission alignment, cost competitiveness, and by providing the opportunity for VCEA to build internal capacity over time, retain full program control/autonomy, and maintain operational flexibility while taking advantage of SMUD’s extensive energy sector experience. Importantly, the SMUD bundled service option also allows VCEA to mitigate start-up and operational risk by taking advantage of SMUD’s energy sector experience, organizational capacity, and adapting its established risk management policies and procedures to serve VCEA’s needs.
Why does SMUD want to work with VCEA?
SMUD chose to offers its services to VCEA because SMUD is interested in supporting a neighboring organization that has closely aligned values, including local decision making, product choice, affordable rates, greenhouse gas reduction, energy efficiency and a not-for-profit, public power business model. SMUD has been doing the kind of work VCEA requires for over 70 years, and SMUD has the operational and technical expertise to offer VCEA flexible, efficient solutions that will help it hit the ground running and be successful over the long term.
Is this an annexation of VCEA into SMUD?
No, this is a business relationship with VCEA contracting for services that SMUD will provide.
What is SMUD?
SMUD is the sixth-largest community-owned electric service provider in the nation. SMUD serves approximately 624,000 customers and a population of about 1.5 million people with a 2,000-plus strong workforce and an annual budget of about $1.6 billion.
How is SMUD managed?
SMUD is governed by a 7-member, publicly elected Board of Directors.
Where is SMUD’s service territory?
SMUD’s service territory is approximately 900 square miles and includes all of Sacramento County, as well as small adjoining portions of Placer and Yolo Counties.
What makes SMUD different than other utility providers?
SMUD is a recognized industry leader and award winner for its innovative energy efficiency programs, renewable power technologies, and for its sustainable solutions for healthier communities. In J.D. Power surveys SMUD has been ranked number one in overall residential customer satisfaction in California for 15 consecutive years and number one in overall commercial customer satisfaction in California for 11 of the last 12 years.
What percentage of SMUD electricity is sourced from renewable?
SMUD was the first large utility in California to have 20 percent of its power supply come from resources classified as renewable by the state. That figure is now approaching 30 percent and SMUD expect’s to be at about 41 percent by 2020, exceeding the 33 percent target. SMUD’s current power supply portfolio is more than 50 percent carbon free.