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Cities exploring options as electric power brokers

LOS ANGELES — The 1960s civil rights slogan of “Power to the People” is taking on a new meaning as area communities consider becoming brokers of electric power.

Permitted under state legislation in 2002 and 2011, the plan allows cities or groups of cities to purchase electricity wholesale from the private grid market and sell it to residents at a lower rate than their current utility, such as Southern California Edison or the Los Angeles Department of Water and Power.

The Bellflower City Council Jan. 8 heard from representatives of the Los Angeles County Community Choice Energy Authority, (LACCCEA), a 24-member Joint Powers Authority (JPA), established with a $10 million grant from Los Angeles County in 2015 after a two-year study; and the California Choice Energy Authority, (CCEA), a four-member group started in 2015 by the city of Lancaster and consisting of that city, San Jacinto, Rancho Mirage and Pico Rivera, which joined in 2017.

“Joining a JPA is the single most effective action a city can take to lower [electric] rates [to residents],” said Gary Gero, a Los Angeles County employee temporarily assigned to establishing the county group.

He gave a similar presentation to the Whittier City Council Jan. 9.

Area cities which are members of the group include Alhambra, Culver City, Carson, Downey, Hawaiian Gardens, Paramount and West Hollywood. Los Angeles County also is a member.

Gero said the LACCCEA program will start Feb. 1 in member cities, with commercial and industrial operations and in the last quarter of 2018, residential. If Bellflower or Whittier decide to join, their programs would start in 2019.

Under the program, customers have a choice to participate or opt out. Conservation-minded customers may choose to have 33, 50 or 100 percent of their power supply from renewable energy such as that created by solar or wind. The rates vary and would increase with the higher percentage of renewable power, Gero said.

Under the Community Choice Aggregation program authorized by the state Legislature, utility companies such as Edison would continue to provide the power, maintain electric lines, monitor and bill all users, whether in a JPA plan or not, he added.

A major risk in the program is that users may opt out at any time or if a shortage of electricity occurs, Gero said. Also, lower-costing electricity would affect utility taxes of each city.

Asked about specific rates and costs, Gero said those would be determined by a board of directors composed of one member from each entity.

He noted that county employees such as himself will eventually be replaced by a JPA staff of 10 to 12 people. That’s pending the hiring of an executive director whose salary could run into several hundred thousand dollars a year, Gero said under questioning by Bellflower councilmen.

Barbara Boswell, a Lancaster city employee for 14 years, said employees of that city are overseeing the CCEA operation with no administrative costs to the member cities.

Asked the difference between her group and the county-backed program, Boswell said in the county group revenue goes to the JPA, whose board members set the rates. In her group, revenues from each city go to that community, which would set user rates.

Bellflower Mayor Ron Schnablegger was not enthusiastic about either program, saying it might confuse residents who could accuse the city of a money-making plot.

But Mayor Pro Tem Ray Dunton and Councilman Sonny Santa Ines said the council has a responsibility to look into the matter to see if it would benefit residents.

“The purpose of the state law was to allow cities to work independently or band together to purchase electrical power directly from suppliers, such as Direct Energy or the Constellation Energy Group, and bypass the regulated utility that traditionally provides that service,” Bellflower City Manager Jeff Stewart said in a report to his city council. “The CCA energy option is creative and allows many different options to communities.”

 

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