FAQ: COMMUNITY CHOICE ENERGY AND ORANGE COUNTY POWER AUTHORITY
1. What is Community Choice Energy (CCE)?
In 2002, Assembly Bill 117 opened the door for Community Choice Energy (CCE), also known as Community Choice Aggregation, which permits California cities and counties to purchase electricity on behalf of their communities. For many decades, Southern California Edison has been the sole entity that has acquired power for Buena Park. However, the CCE’s purchasing power introduces competition into the energy market, providing customers with a choice, where none currently exists. It is important to note that the CCE’s role is limited to the purchasing of power, not its delivery. Southern California Edison remains in control of the remaining steps in the energy cycle: transmission, distribution, metering, and billing.
2. Why is Buena Park considering a CCE?
The City Council is considering a plan that provides Buena Park residents and businesses with a choice of higher renewable energy content (i.e. solar and wind) at competitive rates. Customers will have a choice of energy supply options (i.e. power), such as Lean Power, Clean Power, and Green Power for example. Or remain with SCE for power service. The best part is: the choice is yours.
- LEAN POWER
- Provides approximately 35% renewable and GHG-free content at the lowest possible cost—with the added benefit of local management and control.
- CLEAN POWER
- Provides more renewable content than the minimum tier and the opportunity to support building a cleaner future.
- GREEN POWER
- Provides 100% renewable content and gives you the opportunity to be an environmental champion—leading the way to a greener future.
No matter what power option you choose, our community will enjoy the shared benefits from a CCE including:
- Local Management and Control
- Higher Renewable Content
- Competitive Rates
3. Which default energy supply option did Buena Park choose?
The City Council will choose one of three tiers (mentioned above) to automatically enroll residents and businesses. That decision has not been made yet. Customers could see their power bills slightly decrease, remain about the same, or increase, depending on their selected tier. Customers can upgrade, downgrade, or opt-out and return to service with SCE at any time.
4. What are the risks and benefits of CCEs?
CCEs may be an attractive option for communities that want greater local control over how their power is generated. Historically, CCEs have been established with environmental goals in mind and often purchase power from renewable energy sources (i.e. wind, solar, water) to enable a more rapid shift away from sources that emit greenhouse gases. According to the Luskin Center for Innovation at UCLA, California CCEs offer an average of 52 percent of their electricity from renewable sources. In addition, CCEs are able to negotiate competitive rates and have been shown to provide customers with a choice of options that potentially offer cost savings (around 1-2%) over the current rates of SCE.
It is important to note that energy rates are contingent upon market forces and regulatory decisions by the California Public Utilities Commission. Any changes may have an impact on the CCE’s ability to offer competitive rates.
In addition, after current loans are paid off, revenues may become available to build funds to directly impact energy programs in member cities. Therefore, revenues from ratepayers go back to our community rather than to stockholders.
Furthermore, OCPA is likely to be the 4th largest power authority in the State of California, which may give it the ability to purchase renewable energy at even greater reduced rates.
5. What do I need to do to enroll in a CCE?
Nothing. By law, all customers in a CCE’s jurisdiction are automatically enrolled into the program. However, customers who prefer to stay with SCE may opt out for free, during the first few billing cycles. After that, a one-time fee may be charged to cover costs associated with account processing (typically this cost is minimal (i.e. $5-$10)). During the transition to OCPA, customers should not experience disruptions to their service, since transmission and delivery would still be overseen by SCE.
6. What is the Orange County Power Authority (OCPA)?
The City of Irvine has been spearheading an effort to create a regional CCE known as OCPA and has invited all Orange County cities to join. While Irvine may be able to operate the OCPA on its own, adding member cities increases OCPA's overall energy demand, which helps it negotiate more competitive rates for residents and businesses. This also brings in additional revenue that can be used to support energy projects to benefit OCPA customers. On December 15, 2020, the Buena Park City Council voted to join OCPA as a founding member, contingent upon a risk assessment and discussion of the findings at the February 9, 2021, City Council meeting. Per the terms of the membership agreement with OCPA, the City may withdraw before April 1, 2021, without penalty.
7. What are the main goals that Buena Park wishes to accomplish? Goals of a CCE program?
- Offer a choice of electricity with higher percentages of renewable energy (i.e. solar, water, and wind)
- Offer electricity at a competitive rate compared to SCE
- Maintain local control and generate more local resources
8. What is Buena Park’s fiscal impact to join OCPA?
There is no direct fiscal impact to join OCPA, founding member agencies are not required to make any financial contributions. In lieu, the City of Irvine has agreed to finance all initial start-up costs which include:
- OCPA agency start-up costs of ~$2.5 M.
- Additional cash guarantees as needed depending on the participation level in the initial JPA agency.
- Initial working capital cash, which is estimated to be $8 - $17 M, depending on the participation level in the initial JPA agency.
- During the first 5-7 years of operation, OCPA will repay Irvine’s investments and build up proper financial reserves.
9. What is the financial outlook of OCPA?
Given the uncertain nature of which agencies are looking to join the JPA, it is difficult to model precise fiscal data for the proposed OCPA entity. However, Irvine has commissioned a detailed fiscal analysis to assess various possible scenarios through a 10-year pro forma document, a copy of which is available here. Per that assessment, the proposed OCPA was identified as being financially viable, with the following key summary findings:
OCPA would be able to repay the City of Irvine’s start-up and working capital loans, and build up proper financial reserves, during the first 5-7 years of operation. After initial debt service costs are repaid, it is estimated that a significant amount of net income will be available to OCPA for use towards customer programs or additional electrical rate discounts.
10. How does OCPA operate and how will it be administered?
OCPA will hire two staff members in 2021, ramping up to five staff members in 2022. At build out in 2023, OCPA is expected to have 10 employees. Highly qualified employees and energy contractors will provide the expertise to successfully operate OCPA, purchase power, and follow all regulations per Assembly Bill 117. Personnel and staff costs will be paid by OCPA, using revenue from rates charged to its customers.
The governing body of OCPA will be a Board of Directors consisting of one director from each member agency, with the exception of Irvine which shall appoint two directors until its capital loan is repaid in full. The Board will also appoint a Chief Executive Officer and set policy and energy rates following careful discussion, evaluation, and approvals made during public meetings.
There is a benefit for the City of Buena Park to join as a founding member and receive a place in the Board of Directors, where major policy decisions about the OCPA are made.
11. Who was selected to represent Buena Park on the OCPA Board?
One December 15, 2021, the City Council selected Council Member Sonne to serve on the OCPA governing board. The City Council also selected Mayor Traut to serve as an alternate Board Member.
12. Will OCPA displace Southern California Edison in Buena Park?
Establishing a CCE does not sever the community’s ties with Southern California Edison (SCE), given that they still own and manage the transmission and distribution lines that are necessary and serve as conduits of OCPA’s power to customers. Further, OCPA customers will continue to receive the same delivery and maintenance services from SCE, with a single utility bill that reflects the change in supplier. The only changes for customers are the sources and rates of electricity generation.
13. Will OCPA simply create another bureaucracy?
OCPA will be funded by program revenues, not taxpayer dollars. Start-up costs will be paid for by the City of Irvine. However, these costs will be repaid with revenues from the sale of power. Surplus funds generated by OCPA may be reinvested back into the community in the form of lower rates or new energy projects and programs. Funds may not be diverted for other purposes. OCPA employees are not employees of the founding member agencies and will not add to their CalPERS pension costs.
14. How does a CCE purchase electricity?
The CCE must submit a plan to the California Public Utilities Commission that specifies how it will purchase 115% of the estimated electricity demand in its jurisdiction for a one-year period.
Then the CCE purchases power, just like Southern California Edison. The CCE determines the amount of energy it will need to service its customers. Using those projections, the CCE will go through a bidding process on the market and select suppliers that meet the requirements set by the CCE. These will be a mixture of short, mid-, and long-term contracts.
15. Will low-income support programs be available through OCPA?
Yes. The OCPA intends to use revenues from the sale of power towards programs to support low-income customers, in addition to other energy-related projects and programs that benefit all customers.
If you are currently enrolled in the California Alternative Rates for Energy (CARE) program, the Family Electric Rate Assistance (FERA) program, Medical Baseline, or Level Pay, you will continue to receive all benefits and discounts as an OCPA customer.
16. Which jurisdictions in California already have CCE?
There are 23 CCE programs serving more than 10 million customers in California. Dozens of communities are either engaged in or currently considering a CCE. In addition, other states such as Illinois, Ohio, Massachusetts, New Jersey, Rhode Island, and New York have developed their own community choice programs.
17. What has been the impact on customers’ rates for California CCEs that have been operating for several years?
In general, CCEs have reduced their residents’ utility bills or offered rates approximately equal to those offered by their existing utility. However, in many of these cases, the CCE’s power sources are significantly greener than the power offered by the existing utility.
18. How can CCEs offer lower rates than the existing utilities?
There are many factors that contribute to a CCE’s ability to offer cheaper rates than existing utilities. CCEs have less overhead and can acquire low-cost government debt financing. Also, because OCPA is a local government agency (technically a joint powers authority) it does not need to make profits for shareholders.
19. Can I join OCPA and switch back to SCE at any time?
Yes. You may choose the level of renewable energy you want and may go back to SCE at any time; however, you will then have to wait a year to choose OCPA again. This allows for OCPA or SCE to accurately determine power expectations and purchase renewable energy at the best rates.
20. Could Buena Park withdraw from the OCPA now and rejoin later after we better understand the potential success?
Yes, however, as a founding member that joined prior to January 1, 2021, we are guaranteed a seat on the Executive Board, the ultimate decision-making body of the OCPA, and the ability to service customers in 2022. As a smaller city, joining at a later date may give us less of a voice in the major decisions that will impact our community. Also, joining later would push out our ability to service customers until 2023 or later.
21. What are the next steps for Buena Park and the OCPA?
The City has conducted a detailed analysis of joining the OCPA and presented the findings at the February 9, 2021, City Council meeting. Following discussion, the City Council directed Staff to host a “virtual” Town Hall meeting and invite the public’s participation in the discussion. At the March 9, 2021, Council meeting, the City Council may choose to confirm or withdraw membership from the OCPA, or provide different direction. If withdrawal is recommended, the City must do so before April 1, 2021, without incurring any penalties.
22. To learn more, who should I contact?
For more information, please contact the City of Buena Park at email@example.com