CCA Update: San Joaquin Valley Power Authority Files Implementation Plan with CPUC

Implementation Plan

At the first board meeting of the newly formed San Joaquin Valley Power Authority (SJVPA) held on January 25, Authority Directors approved a Community Choice Aggregation Implementation Plan for submittal to the California Public Utilities Commission (CPUC). This was the first such Plan in the State to be submitted to the CPUC. “Approving this plan brings us one step closer to providing local businesses and residents more stable and reliable energy,” stated Tom Haglund, Hanford’s Deputy City Manager and the SJVPA’s newly selected chair.

“This is clearly a significant accomplishment and milestone for these agencies,” said David Orth, Kings River Conservation District (KRCD) General Manager and the SJVPA’s program manager. KRCD has worked with the SJVPA’s partners the past several years to establish Community Choice. “We have built a good solid record and a sense of commitment to where we are going. Community Choice is one giant step closer.”

The Implementation Plan, which is a culmination of several years of effort by the SJVPA’s 13 member agencies and KRCD, addresses all CPUC requirements and those of Assembly Bill 117, the law enacting Community Choice Aggregation. The Plan’s content includes discussions on organizational structure, program implementation, resources utilization, rate setting and participant rights.

“The Implementation Plan is no different than a business plan. It spells out how the Authority’s Community Choice Program will be managed from finances to operations,” Haglund said. Once the plan is certified by the CPUC, the governing bodies of the 13 member agencies will have one more opportunity to decline participation in the Community Choice program before implementation, now scheduled to start as early as November 2007.

“We are paving new ground,” Orth said in reporting that dialogue has been initiated with the CPUC staff, and Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (SCE) officials to discuss the framework of implementing Community Choice.

“This is truly a local effort with representation from a cross section of our region’s city and county governments,” stated Orth, “Community Choice will give residents better access to rate setting hearings and the governing body responsible for setting those rates.”

SJVPA Community Choice Aggregation Implementation Plan
(http://www.communitychoice.info/_pdf/Implementation_Plan.pdf)

Electricity Supplier

The Kings River Conservation District (KRCD) selected Citigroup to supply energy to the SJPA’s Community Choice program. “Citigroup brings to the table a highly qualified team backed by the largest financial services firm in the world,” said Orth. “KRCD is pleased that Citigroup has become our partner in making Community Choice a success.” As a pre-eminent fortune 500 financial services company, Citigroup maintains the highest ratings of any domestic bank with extensive experience in managing significant energy portfolios.

KRCD is negotiating a term sheet with Citigroup to supply energy to future Community Choice customers and to meet the program’s objectives. “Citigroup has demonstrated their commitment to the objectives of Community Choice of providing a reliable, affordable energy supply,” stated Orth.

KRCD’s selection of Citigroup resulted from a competitive bid process that started in September 2006 when KRCD issued a Request for Bid. The final bids were evaluated on five criteria set forth in the bid including: pricing, financial viability, operational experience, reliability and environmental attributes of proposed power supply, and an understanding of program requirements.

Citigroup was selected based primarily on price advantage, demonstrated understanding of the program, and expressed commitment to the success of the program. “They were able to commit to a pricing structure that would ensure costs were predictable and stable which is critical to the success of Community Choice,” stated Orth.

Citigroup will provide initial power to the program through a contract with KRCD. Once KRCD’s Community Power Plant begins operations at the end of 2010, it will be integrated into the program’s energy portfolio. KRCD is proposing to develop, construct and operate a 500-megawatt, base-load, natural gas-fired power plant. KRCD is currently conducting pre-permitting activities for the Community Power Plant. The plant is being sited south of the Parlier Wastewater Treatment Plant on Bethel Avenue between Manning and Dinuba Avenues.

Program Phasing

There will be four phases to Community Choice implementation. During Phase 1, the program will serve the participating municipalities’ own electrical loads. Phase 2 will incorporate large commercial and industrial customers. Phase 3 will add medium commercial accounts, and Phase 4 will include all remaining accounts including residents and small businesses. It is anticipated that all customers will be phased into the program by late 2008.

The SJPA will provide policy direction in implementation and management of the Community Choice program, including the setting of electrical generation rates for customers. Transmission and distribution rates will still be set by the investor-owned utilities, PG&E and SCE. The Authority’s rates have been conservatively projected to result in a 5 percent savings on generation costs. The region’s cumulative savings over a 20-year period are estimated at over $780 million.

SJPA Members

The SJPA consists of:

• City of Clovis
• City of Corcoran
• City of Dinuba
• City of Fresno
• City of Hanford
• City of Kerman
• City of Kingsburg
• City of Lemoore
• City of Parlier
• City of Reedley
• City of Sanger
• City of Selma
• County of Kings

Each local government has adopted an ordinance that allows it to join this joint power agency (JPA) with the other communities for the purpose of forming a CCA.

CCA at the CPUC

Concurrently the CPUC has been working to develop a CCA Procedural Timeline that lays out the steps that a potential CCA must take to file an implementation plan, register with the CPUC and commence serving customers. In February, this procedural document was still undergoing review and comments. If you are interested in seeing the latest version of the timeline, contact Pat Stoner at pstoner@lgc.org.

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