SLO and Morro Bay push forward on Community Choice Energy, despite others' reluctance 

Wind turbines spin off Morro Bay's coast, creating energy that's sold to local residents by a local agency and distributed via the grid infrastructure that once serviced the shuttered Morro Bay and Diablo Canyon power plants.

It's an exciting snapshot of the future to San Luis Obispo and Morro Bay city leaders, who are interested in seizing an opportunity to localize future power decisions by launching a municipal utility—called a Community Choice Energy (CCE) agency—to sell cleaner electricity directly to their residents.

At an April 24 meeting, the Morro Bay City Council voted unanimously to join SLO in studying the prospect of a new CCE agency that would serve the communities' combined 32,000 customers.

"[There's] a compelling point about controlling your destiny and being in a position to forge forward with new opportunities for economic development," said Morro Bay City Councilmember John Headding. "Six, seven years out when we have a viable wind farm miles off our shore, and we have a switch yard here and the potential for great clean energy sources, I want the city to be in command of making a choice of obtaining [that power]."

Enabled by state law, CCE allows local cities and counties to coalesce into utilities and compete with private utilities like PG&E. A CCE agency, governed by a board of local elected officials, can decide where to buy power, what percentage of that power should be renewably sourced, what rates to charge, and how to reinvest profits. Power is still distributed through the existing grid infrastructure—owned by PG&E in SLO County. Customers get the choice to enroll in CCE or stay with PG&E, although the default choice is the CCE provider.

"CCE is a mission-driven local government organization," said Chris Read, SLO's sustainability manager and a coordinator of the effort. "We need to be fiscally healthy and we need to be rate competitive, but we don't have the profit requirements that a private company might have."

What began as a regional tri-county effort to establish a CCE on the Central Coast has narrowed to a much more local proposal.

A 2017 study analyzing a CCE agency covering SLO, Santa Barbara, and Ventura counties (and the cities within) concluded that it likely wouldn't pencil out, due to overlap between PG&E and Southern California Edison territories. The SLO County Board of Supervisors, in response, voted in January to abandon further exploration of a CCE program.

But the study results didn't deter SLO—a city striving for net-zero carbon emissions status. The SLO City Council decided to push forward on exploring its own CCE agency around the same time the county dropped the effort.

SLO Mayor Heidi Harmon wrote to local cities in January in pursuit of partners. Only Morro Bay responded with immediate interest to commit, according to Read. But part of the cities' plan is to structure a joint powers agreement that makes it easy for other municipalities to join the CCE down the road.

"There's a lot going on in our county right now with cannabis, [pensions], and all these things," Read said. "This is a complicated topic that requires a lot of attention to do well."

SLO and Morro Bay will have to move quickly to get a CCE agency up and running by 2020. A recent California Public Utilities Commission (CPUC) decision requires new CCE programs to wait at least one calendar year after gaining state approval to serve their customers. That means a fully baked proposal must be submitted and approved by the CPUC before Jan. 1, 2019 to launch a year later.

The cities are currently looking for a consultant to work on it, and the finished technical studies are expected in September. At that point, either city can decide to submit a proposal to the CPUC or drop the effort.

Read said the mandated one-year delay is, in part, a result of CCE's growing share of the electricity market. Eight new CCE programs are expected to launch this year, while only nine had formed between 2002 and 2017. The wait allows more prep time for budding CCE agencies and the state to ensure the health of the overall grid, he said.

The rapid growth of CCE is also putting economic pressure on PG&E, SoCal Edison, and San Diego Gas & Electric—the state's investor-owned utilities. The trio recently filed a petition with the CPUC that asks for permission to talk to local government officials and the media about CCE. Communicating with CCE agencies (or hopeful agencies) on the subject is considered lobbying under the state's code of conduct and is prohibited.

Opponents of CCE argue against increasing government's presence in the energy economy, and some critique CCEs' investment choices. Mike Brown, spokesman for the SLO County Coalition of Labor, Agricultural, and Business (COLAB), who lobbied against CCE to the SLO County supervisors, called it "sort of an energy Ponzi scheme." Brown noted that Monterey Bay Community Power, a new CCE serving Monterey, Santa Cruz, and San Benito counties, buys a majority of its power from out-of-state hydroelectric power plants—when hydro isn't classified as a "renewable" source in California.

Speaking generally, Read said energy investment choices are all within a CCE agency's authority and discretion.

"If you don't do it mindfully, I think the criticism is right," Read said. "Our board can make a policy decision about what kind of energy it's comfortable with." Δ

Staff Writer Peter Johnson can be reached at [email protected]