HomeMy WebLinkAboutMembership with Orange County Power Authority (OCPA), a Comm 17—,e A
City of Huntington Beach (pE7v,o,4.RZ-wo)
File #: 21-085 MEETING DATE: 2/1/2021
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Oliver Chi, City Manager
PREPARED BY: Travis K. Hopkins, Assistant City Manager
Subject:
Consider Maintaining Membership with the Orange County Power Authority (OCPA), a
Community Choice Energy (CCE) Joint Power Authority (JPA)
Statement of Issue:
On December 10, 2020, the City approved the required Ordinance, Resolution, and JPA agreement
necessary for Huntington Beach to join the Orange County Power Authority (OCPA), a Community
Choices Energy (CCE) Joint Power Authority (JPA). The decision was made to join the CCE at that
time for a variety of reasons, including the following:
• The potential for ongoing electrical power cost savings when compared against rates charged
by SCE.
• By joining in December 2020, the City would be considered a Founding Party member, which
places Huntington Beach onto the JPA Executive Board Committee.
• The agreements expressly allowed for any participating agency to withdraw from the JPA for
any reason and without any liability or cost by March 1 , 2021 (subsequently, the withdrawal
deadline was extended to April 1 , 2021).
Given those factors, as part of the determination to join the OCPA, the City Council also directed that
staff complete a full assessment of the proposed JPAs feasibility plan, and bring those findings back
for review at the City's February 1 , 2021 meeting. At that time, the City Council would make a final
determination on whether or not to participate in the CCE.
Subsequently, staff coordinated with MRW & Associates (MRW), an independent firm that was hired
to assess the OCPAs implementation plan. A summary of MRWs findings (see attached report
assessing OCPA) is as follows:
• The OCPA CCE is expected to be financially feasible.
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• The MRW analysis confirmed that OCPA is projected to be able to provide power at rates
lower than Southern California Edison.
• The MRW assessment identified that the financial margins when comparing projected OCPA
rates against SCE rates are the smallest during the first 2-3 years of operation, and that the
margins increase over substantially over time.
• The financial analysis found that OCPA's Implementation Plan is generally sound, developed
utilizing reasonable and conservative assumptions. MRW did identify that the projections for
the amount of initial working capital that OCPA would need could be slightly understated.
o Of note, given that the City of Irvine is assuming all of the initial risk / start-up costs, this
does not seem to of particular concern regarding the viability of OCPA.
• The OCPA agreement helps minimizes potential financial risk for Huntington Beach by
specifically stating that the agencies are not required to make any financial contributions or
payments to OCPA, and that OCPA has no right to require a contribution or payment.
• A benefit of remaining a member of OCPA is that the City of Irvine has agreed to provide up-
front funding for implementation, start-up costs, as well as collateral funds in order to secure
all of the needed initial financing.
At this time, the City Council has the option to maintain membership with the OCPA JPA, or withdraw
from the CCE organization with no cost or liability impacts.
Financial Impact:
There is no direct fiscal impact from joining the OCPA JPA. Per the JPA agreement, participating
agencies are not required to make any financial contribution. Rather, the City of Irvine has agreed
through the JPA agreement to cover all initial start-up costs associated with establishing the new
OCPA entity. Those costs that Irvine has agreed to cover include the following:
• OCPA agency start-up costs, which are estimated at $2.5M.
• Initial working capital cash collateral of up to $51VI for costs associated with procuring a
working capital loan.
Under the OCPA JPA agreement, Founding Party members have no financial obligation to the CCE
entity being formed, which provides financial protections for Huntington Beach. The OCPA JPA
agreement specifically states that the debts of the OCPA cannot be transferred to its member cities,
nor can the OCPA compel a member city to financially contribute to the OCPA. Therefore, the City's
General Fund should not be impacted by maintaining membership, nor will membership impact the
City's credit rating.
Recommended Action:
The City Council has the following options:
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A) Maintain membership in the Orange County Power Authority Community Choice Energy Joint
Power Authority,
OR
B) Withdraw from the Orange County Power Authority, and direct staff to complete all requisite
documents necessary to terminate our participation in the CCE JPA.
Alternative Action(s):
Do not select either of the options and direct staff accordingly.
Analysis:
In 2018, the City of Irvine initiated a feasibility study to assess the possibility of implementing a CCE
program for their community. Those efforts evolved over the past two years, and in 2020, Irvine
extended an invitation to all Orange County municipalities, asking interested parties to consider
joining them in forming a CCE JPA, which has since been named the Orange County Power Authority
(OCPA).
A total of five (5) agencies are currently part of the JPA, including the cities of Fullerton, Buena Park,
Lake Forest, Huntington Beach, and Irvine. These five jurisdictions are considered the Founding
Party member agencies in the JPA and will be placed on the JPAs Executive Board Committee. Also
of note, per OCPA staff, there are currently up to 10 other cities reviewing participation in OCPA.
CCE Background
CCEs are a mechanism authorized in California in 2002 by Assembly Bill 117, whereby local
electrical service customers are provided with options when it comes to determining from where they
purchase their power. Under the CCE set-up, customers can continue to procure their electrical
power through their current utility provider (in the case of Huntington Beach, that would be Southern
California Edison), or they can opt to have a local municipal government (or a coalition of local
governments) procure electrical power on their behalf.
Typically, CCEs are established with larger environmental or social goals in mind, such as increasing
the share of power procured from renewable sources. In addition, CCEs have been shown to
provide slight cost savings (around 1-2% decrease) over traditional investor-owned utility operations.
Of note, establishing a CCE does not mean completely severing ties with the investor-owned utility,
given that the utility agency still owns and manages the distribution lines that transmit electrical
power to homes and businesses. Further, the utility company still meters each customer's power
usage, and continues to send customers their electrical bill. Under the CCE model, what changes is
the entity which purchases electricity on behalf of the customer; rather than the utility company
performing that role, the responsibility is transferred to the newly-formed local entity.
The Orange County Power Authority
The City of Irvine led an effort that in December 2020 to create a regional CCE Joint Power Authority
named the Orange County Power Authority (OCPA). Currently, the OCPA consists of five (5)
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founding member agencies; Buena Park, Fullerton, Irvine, Lake Forest, and Huntington Beach.
Additionally, currently there are up to 10 other Orange County cities that are considering joining the
OCPA. Of note, the original five members of OCPA, which includes Huntington Beach, are Founding
Party Members and automatically placed on the JPA's Executive Committee. Any other agency that
joins will be considered Additional Party member.
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 scenario through a 10-year pro forma document, a copy of which
is included as an attachment to this report. 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 the OCPA for use towards customer program or additional electrical rate
discounts.
OCPA Financial and Operational Analysis
The City Council directed staff to provide a financial analysis of the OCPA and present to the City
Council prior to the JPA no-risk opt out deadline. At the City's request, MRW & Associates (MRW)
completed an independent analysis of OCPA's financial viability, reviewed the OCPA Implementation
Plan, and provide an analysis of risks and benefits if of remaining in the OCPA. MRW's report found
that OCPA provides a financially viable option for the City to participate in a CCE with lower risk than
establishing a stand-alone CCE with the following key findings:
Financial Analysis
The MRW independent analysis performed found the OCPA program is financially feasible,
confirming that the OCPA's projected margin between the OCPA operating costs to provide power
is projected lower than the SCE energy generation rate. This means OCPA will be able to provide
energy wither at a lower rate or competitive with SCE. The tightest margins will occur during the
first few years of operation and will increase over time. The MRW model projects the margin
between OCPA power costs and SCE power costs will start near 1 cent/Kwh, and will increase to
over 3.0 cents/kwh over the next 10 years.
MRW states that a CCE is feasible, but is not risk-free. OCPA will be participating in a competitive
power market and subject to evolving state requirements and regulations. While an OCPA rate
discount in the long run should be achievable, market prices and SCE rate volatility could
combine to, in some isolated years, occasionally prevent the CCA from offering lower rates than
SCE.
Implementation Plan
MRW found that the OCPA Implementation plan uses assumptions that are generally sound,
confirming that the underlying customer phase-in, assumed power prices, operating costs, and
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CCA revenues are all reasonable or conservative. MRW stated that they feel the amount of
collateral provided by Irvine is lower than what may be required when OCPA secures the
financing.
Opt-Out Risk
Customers may choose to opt-out of a CCA service before, during, or even after a CCE is formed.
Most recent CCEs launched have only experienced very modest opt-out rates of around 2-3%.
MRW modeled a high opt-out rate of 30%, and even at that level, the CCE remained financially
viable.
Governance Model Options
The MRW evaluation found that joining the a JPA such as the OCPA would provide benefits from
increased negotiation and buying power for power purchases, access to better financing terms for
borrowing, and operation efficiencies gained by combining management and operating functions
such as billing and accounting. The tradeoff to the benefits of joining a JPA are that decision
making will be allocated amongst the participating parties as opposed to a single agency entity.
A benefit to the OCPA JPA, participating agencies are not required to make any financial
contribution. Rather, the City of Irvine has agreed through the JPA agreement to cover all initial
start-up costs associate with establishing the new OCPA entity as well as cash collateral up to $5
million for power purchase financing. If the City chose to form a stand-alone CCE enterprise they
would be required to fund the start-up capital and financial guarantee. By participating with OCPA,
these financial burdens are being met by Irvine and not required of Huntington Beach.
Greenhouse Gas (GHG)
In order for OCPA to achieve GHG saving, the CCE will be required to acquire energy above the
state renewable requirements. This would include purchasing energy from hydroelectric facilities
(which is carbon-free but do not qualify as "renewable" under state law) or increase the renewable
content of its electricity supply above that required by the state.
The MRW independent analysis confirms the OCPA studies and implementation plan is generally
sound and that maintaining membership is viable option for the City of Huntington Beach should the
Council choose to participate in a CCE. Additionally, maintaining membership in OCPA, will provide
the additional benefits of no implementation costs, reduced financial risk and reduced administrative
and ongoing management costs.
Environmental Status:
Not applicable.
Strategic Plan Goal:
Enhance and maintain high quality City services
Attachment(s):
1. Community Choice Energy for the City of Huntington Beach and Review of Orange County
Power Authority
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2. OCPA Implementation Plan
3. Orange County Power Authority Joint Powers Agreement
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Community Choice Energy for the City of
Huntington. Beach and Review of Orange
County Power Authority
Prepared by:
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MRW&Associates, LLC
1736 Franklin Street, Ste 700
Oakland, CA 94612
January 27, 2021
666
This report was prepared by MRW & Associates. MRW has been working on Community
Choice Aggregation (CCA) issues since they were authorized by the California State
Legislature in 2002. MRW has prepared and critiqued numerous CCA feasibility plans and is
providing rate forecasting and other ongoing support to CCAs throughout the state.
This Study is based on the best information available at the time of its preparation, using
publicly available sources for all assumptions to provide an objective assessment regarding the
prospects of CCA operation in the City. It is important to keep in mind that the findings and
recommendations reflected herein are substantially influenced by current market conditions
within the electric utility industry and state regulations, both of which are subject to sudden and
significant changes.
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CCA Review for Huntington Beach
Table of Contents
ExecutiveSummary................................................................................................................ i
MainFindings................................................................................................................................ i
CCABackground ............................................................................................................................ii
Huntington Beach and OCPA's Electric Loads.................................................................................iii
FinancialResults...........................................................................................................................iv
Analysis Underlying the OCPA Implementation Plan ......................................................................v
Risks and Risk Management..........................................................................................................vi
Chapter1. Introduction......................................................................................................... 1
Whatis a CCA? ............................................................................................................................. 1
PossibleOCPA Objectives ............................................................................................................. 1
Rate Competitiveness and Financial Stability....................................................................................1
Contribute to Greenhouse Gas Reduction Program Objectives........................................................2
AdditionalObjectives ........................................................................................................................2
ReachingCCA Objectives............................................................................................................... 4
Financial ............................................................................................................................................4
ClimateChange Mitigation................................................................................................................4
Renewables—What Does It Mean to be 100%Green?.....................................................................5
How are CCAs financially competitive with the utilities?..................................................................5
Statusof CCAs in California........................................................................................................... 6
CCAEvolution....................................................................................................................................9
Chapter 2. MRW Financial Study Methodology and Key Inputs........................................... 12
OCPA and Huntington Beach Loads and CCA Load Forecasts.........................................................12
Forecasting......................................................................................................................................15
CCAPower Supplies.....................................................................................................................15
Regulatory Procurement Requirements..........................................................................................15
Power Supply Portfolio and Cost Assumptions ...............................................................................18
Pro Forma Elements and CCA Costs of Service..............................................................................21
ProForma Elements........................................................................................................................22
StartupCosts...................................................................................................................................22
Reserves..........................................................................................................................................24
Administrative and General Cost Inputs..........................................................................................24
SCE Rate and PCIA Forecasts........................................................................................................25
SCEGeneration Rates......................................................................................................................25
PCIA.................................................................................................................................................26
Chapter 3. Financial Analysis Results................................................................................... 28
Sensitivityto Key Inputs ..............................................................................................................31
Rate Savings Currently Offered by CCAs.......................................................................................32
Chapter 4: Review of Implementation Plan ......................................................................... 34
ImplementationPlan Approach ...................................................................................................34
Implementation Plan Assumptions ..............................................................................................34
Opt-Out...........................................................................................................................................35
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PowerCosts.....................................................................................................................................36
Other Power Procurement Related Costs .......................................................................................37
CCAOperating Costs........................................................................................................................38
CCAFinancing..................................................................................................................................38
SCERates.........................................................................................................................................39
PCIA.................................................................................................................................................40
Conclusions.................................................................................................................................41
Chapter 5: Risks & Mitigating Strategies.............................................................................. 42
FinancialRisk to City....................................................................................................................42
Opt-Out Risk................................................................................................................................42
Rateand PCIA Uncertainty...........................................................................................................43
CPUC"Financial Security Requirement" Risk................................................................................44
Direct Access and Competitive Retail Services..............................................................................44
EnergyRisk Management ............................................................................................................45
Legislative and Regulatory Risks...................................................................................................45
Chapter 6. Governance Model Options................................................................................47
Forminga Single City Agency .......................................................................................................47
Forming or Joining a Joint Powers Agency....................................................................................48
Chapter7. Conclusions........................................................................................................ 50
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List of Acronyms
AB Assembly Bill
BNI Binding Notice of Intent
C&I Commercial and Industrial
CAISO California Independent System Operator
Cal-CCA California Community Choice Association
CCA Community Choice Aggregator/Aggregation
CCEA California Choice Energy Authority
CEC California Energy Commission
CO2e Carbon Dioxide Equivalent
CPA Clean Power Alliance
CPUC California Public Utilities Commission
CRS Cost Responsibility Surcharge
CTC Competition Transition Charge
DA Direct Access
DEG Distributed Energy Generation
DOE Department of Energy
EE Energy Efficiency
ESP Energy Service Provider
EV Electric Vehicle
FERC Federal Energy Regulatory Commission
FiT Feed-in-Tariff
GGRP Greenhouse Gas Reduction Program
GHG Greenhouse Gas
GTSR Green Tariff Shared Renewable
GTSR-GR Green Tariff Shared Renewable - Green Rate
GWh Gigawatt Hour
IOU Investor-Owned Utility
IRP Integrated Resource Planning
kW Kilowatt
kWh Kilowatt Hour
LSE Load Serving Entity
MCE Marin Clean Energy
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MT Metric Ton
MWh Megawatt Hour
NREL National Renewable Energy Laboratory
O&M Operations and Maintenance
OCPA Orange County Power Authority
PCIA Power Charge Indifference Adjustment
PG&E Pacific Gas & Electric
POLR Provider of Last Resort
PPA Power Purchase Agreement
PPP Public Purpose Program
PSPS Public Safety Power Shutoffs
PV Photovoltaic
RA Resource Adequacy
REC Renewable Energy Credit
RFP Request for Proposal
RPS Renewable Portfolio Standard
SB Senate Bill
SC Scheduling Coordinator
SCE Southern California Edison
SDG&E San Diego Gas and Electric
SJCE San Jose Clean Energy
SVCEA Silicon Valley Clean Energy Authority
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Executive Summary
The City of Huntington Beach (the City) is currently a member city of the Orange County
Power Authority (OCPA) Community Choice Aggregation (CCA) program but has the option
to withdraw from the JPA within a certain timeframe and with no consequences. The City
requested MRW & Associates (MRW) to provide an independent analysis of OCPA's financial
viability, to review the OCPA Implementation Plan, and to provide an analysis of the risks the
City would face if it remained in the OCPA.
Main Findings
The general conclusions of this study are as follows:
1. MRW's independent analysis performed here finds that the OCPA CCA program is
projected to be financially feasible. That is, over the long run the CCA would likely be
able to offer Orange County residents and businesses power that is priced at or a few
percent lower than that offered by Southern California Edison (SCE).
2. The financial margins are smallest during the first years of operation, due to the initial
investment in startup costs, loan repayments, and SCE rates. As such, OCPA's targeted
rate discount of 2% may not be achievable during the first years of operation; however,
beyond 2023, OCPA's rates should be lower than SCE's rates.
3. While feasible, CCA formation is not risk-free. OCPA will be participating in a
competitive power market and subject to evolving state requirements and regulations.
While an OCPA rate discount in the long run should be achievable, market prices and
SCE rate volatility could combine to, in some isolated years, occasionally prevent the
CCA from offering lower rates than SCE.
4. The financial analysis underlying OCPA's Implementation Plan is generally sound. That
is, the underlying customer phase-in, assumed power prices, operating costs, and CCA
revenues are all reasonable or conservative. Our primary concern with the
Implementation Plan is with the financing assumptions, which may be understating
OCPA's initial working capital requirement.
5. OCPA's Joint Powers Agreement specifically states that the debts of the OCPA cannot
be transferred to its member cities, nor can the OCPA compel a member city to
financially contribute to the OCPA. As such, the City's General Fund should not be
impacted by joining OCPA, nor would its membership negatively impact the City's
credit rating or ability to borrow.' If Huntington Beach chose to form a stand-alone CCA
enterprise, the City would have to provide a short-term loan to the CCA enterprise and
provide a financial guarantee that provides the start-up capital to the CCA. As a member
Note that MRW is not a law firm and that these conclusions do not represent a legal opinion, only a laymen's
reading of the JPA document.
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of OCPA, these financial burdens are being met by Irvine and are therefore not
applicable to Huntington Beach.
6. Forming a CCA does not guarantee greenhouse gas (GHG) savings. Achieving GHG
reductions requires the CCA to do more than just meet the state renewable requirements;
it requires the CCA to either acquire energy from large hydroelectric facilities (which
are carbon-free but do not qualify as "renewable" under State law) or increase the
renewable content of its electricity supply beyond that required by the State.
CCA Background
California Assembly Bill 117, passed in 2002, established Community Choice Aggregation in
California, for the purpose of providing the opportunity for local governments or special
jurisdictions to procure and provide electric power for their residents and businesses. Under
existing rules administered by the California Public Utilities Commission (CPUC) an investor-
owned utility (IOU), such as Southern California Edison (SCE), must use its transmission and
distribution system to deliver the electricity supplied by a CCA in a non-discriminatory manner.
That is, it must provide these electricity delivery services at the same price and at the same level
of reliability to customers supplied by a CCA as it does for its own full-service customers.
CCAs are now quite common in California. There are currently 23 CCAs providing power in
the State, with at least another half-dozen planning on doing so in the next two years. As shown
in Figure ES-1, CCAs are expected to serve over 63 GWhs in the State by the end of 2021, with
some projecting that by the mid-2020s between 50 to 80 percent of the load in the three main
IOU service territories will be served by non-utility entities (CCAs and Direct Access
providers).
Figure ES-1. California CCA Load Growth
California CCAs: Annual Load 2016 - 2021 (GWh)*
70,000
63,130
60,000
50,040
50,000 44,400
40,000
30,000 24,300
20,000 12,300
10,000 5,400
„F
0
CCA Growth 2016-2019
■CCA 2016 1 CCA 2017 ■CCA 2018 ■CCA 2019 CCA 2020 CCA 2021
*Source: Cal-CCA. Values for 2020 and 2021 are estimates.
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Huntington Beach and OCPA's Electric Loads
Table ES-1 shows that OCPA's total annual electric load in 2019 is about 4,500 GWh with
1,000 GWh of that load coming from Huntington Beach. OCPA has over 330,000 customer
accounts, of which 86,000 (23%) are in Huntington Beach. For comparison, Irvine's load will
make up about 42% of OCPA's, load, Fullerton 15% and Lake Forest and Buena Park each at
10%.
Table ES-1. Potential OCPA Customers and Associated Load
Huntington Beach OCPA(Total)
Annual . . . Annual Load
Customers Customers
Residential 75,940 418,684 288,041 1,579,280
Small Commercial 8,732 92,635 32,138 368,188
Medium Commercial 1,145 233,810 6,216 1,452,384
Large Commercial & Industrial 26 287,178 191 1,028,396
Other* 539 12,833 4,032 82,769
Total 86,382 1,045,139 330,617 4,511,017
*e.g., streetlights,traffic control, agriculture/pumping.
As shown above and in Figure ES-2 below, Huntington Beach has a higher percentage of
residential load compared to the other OCPA members and a lower percentage coming from
small commercial and the "other" category (streetlights, pumping, and agriculture).
Figure ES-2. Huntington Beach Load Distribution
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
■Huntington
800,000 Beach
600,000
■OthPr OCPA
400,000 Cities
200,000 ,
Residential Small Medium Large Other*
Commercial Commercial Commercial
&Industrial &Industrial
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Financial Results
Figure ES-3 shows the forecast of average MRW-modeled OCPA costs and SCE's generation
rates. The bars in the chart show the forecasts of the major cost components of CCA operation,
while the single line shows the forecast of SCE's generation rate. When the bars are below the
black line, the CCA's average operating costs will be below the SCE generation rate; meaning
that it can offer power to customers at a rate lower than or competitive with SCE. As is clearly
seen in the figure, the average cost of power provided by the CCA is consistently below the
SCE generation rate, although much closer in the first few years of OCPA operation.
The bottom-most green segment represents the cost of renewable power to the CCA. The brown
segment is for the costs of non-renewable, wholesale market power. This segment slowly
decreases, as renewable power increases. (Because renewables are currently more costly than
market power, the analysis assumes OCPA will initially meet the State's minimum renewable
power content requirement and ramp up as the requirements increase). The light blue segment is
for capacity. That is, the CCA must demonstrate that it has the generating capacity(in
megawatts)to ensure that it can serve all its load. The gray segment is for debt service,
operations, franchise fees, and uncollectibles. The yellow segment is for carbon cap and trade
allowances. Note that for practical purposes, the cost of carbon cap-and-trade allowances
would be built into the purchase price of natural gas-fired market resources. However, because
it is an important variable on its own, the costs are shown separately.
Figure ES-3. Average OCPA Cost Projection versus SCE Generation Rate
12.00
10.00 IIIIm PCIA
GHG
8.00
®0/M
6.00
�Capacity
4.00 Other Energy
2.00 �Renewable
0.00 IOU
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Does not include the reserve fund or other programs
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The top-most pink segment is for the Power Charge Indifference Adjustment(PCIA), a fee paid
to SCE to ensure that the operation of the CCA does not strand SCE's remaining bundled
customers with costs associated with power purchased on behalf of customers who have shifted
to the CCA.
The black line represents SCE's average generation rate. To forecast SCE's generation rates, the
comparison model used information regarding SCE's utility-owned generation, power contracts,
power market costs, and by closely tracking changes in SCE revenues and costs through its
filings in several CPUC proceedings. In particular, it takes the most recent SCE filing of
generation rates and applies the known and anticipated changes to the wholesale power market
prices and SCE's power purchase contracts.
Table ES-2 shows the "margin"between the CCA's costs (including the PCIA) and SCE's
generation rate (i.e., the difference between the top of the CCA cost columns and the SCE
generation rate line in the above figure). The margin between the CCA's cost and SCE's
generation rates need not go fully to offering rate savings. In fact, during the first few years, the
CCA's set their rates so that most of the margin between their ongoing costs and SCE's
generation rates is set aside for financial reserves and paying down the initial startup loans.
Once the financial reserve targets are met and the start-up loans paid off, CCAs typically use a
portion of the margin for programs serving their residents and businesses, purchasing greater
amounts of renewable power, and providing greater rate discounts that could be offered during
the first years. It is up to the CCA Board of Directors to balancing these competing uses (i.e.,
rate discounts, programs, financial reserves, and greener power).
Table ES-2. Projected OCPA Margins*
2022 First 3 years First 5 years 2 nd 5 years 10-Years
t/kWh (average) 1.0 1.2 1.6 2.9 2.2
*�X'ithout rate savings, reserve contributions or program funding
Analysis Underlying the OCPA Implementation Plan
Overall,the assumptions and analysis in the Implementation Plan are sound. That is, the
underlying customer phase-in, assumed power prices, operating costs, and CCA revenues are all
reasonable or conservative. However, we note the following concerns. First, the Implementation
Plan does not reflect the State's changing policy concerning Local Resource Adequacy. While
this does not impact the overall competitiveness of the OCPA, it should be addressed in any
future documents. Second, the Implementation Plan's generation rate is on average about 5%
lower than MRW's projections while significantly overestimating the PCIA. The PCIA
overestimation more than makes up for the low generation rate and results in a net level of
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conservatism in the Implementation Plan's financial position. Third, MRW believes that the
Implementation Plan may be underestimating the initial working capital requirements. The
Implementation plan assumes $15.5 million for starting and a working capital loan/line of
credit, $2.5 million directly from the city of Irvine and $13 million from a third party. This
represents about 30 days of average cash flow in the first year, in which, the phase-in is only a
fraction of the load would be served. MRW's more conservative analysis assumes that the
working capital loan/line of credit would be for 60 days of cash flow assuming the full load is
served.
San Diego Community Power (SDCP) provides another data reference. OCPA's load is
projected to be about 62% of that of SDCP. SDCP required $40 million initial line of credit.
Simply scaling SDCP's requirement down to OCPA suggests an initial bank load/line of credit
around $25 million.
We note that Irvine has agreed to provide up to $5 million collateral and a loan guarantee if
required for the power purchase loan requirements. (Exhibit D, section 1.3 of the JPA
agreement). While Irvine's commitment may provide sufficient backstop for OPCA financing,
it cannot be known until OCPA secures financing.
Risks and Risk Management
The primary risk faced by a CCA is that it cannot provide power to its residents and businesses
at a competitive price. (Many of the factors that can impact the CCA's price position are
explored in the sensitivity analyses). This risk is caused not only by changes to the power
market but also changing regulatory requirements SCE. The primary way that a CCA can
address these risks is to use sound power procurement and risk management practices. While
complex, these practices are well known and implementable.
The risk of joining OCPA to the City's general fund is minimal. OCPA's Joint Powers
Agreement specifically states that the debts of the OCPA cannot be transferred to its member
cities, nor can the OCPA compel a member city to financially contribute to the OCPA. As such,
the City's General Fund should not be impacted by joining OCPA, nor would its membership
negatively impact the City's credit rating or ability to borrow.2 If Huntington Beach chose to
form a stand-alone CCA enterprise, the City would have to provide a short-term loan to the
CCA enterprise and provide a financial guarantee to the bank or other financial institution that
provides the start-up capital to the CCA. As a member of OCPA, these financial burdens are
being met by Irvine and are therefore not applicable to Huntington Beach.
2 Note that MRW is not a law firm and that these conclusions do not represent a legal opinion, only a laymen's
reading of the JPA document.
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Chapter 1. Introduction
What is a CCA?
California Assembly Bill 117, passed in 2002, established Community Choice Aggregation in
California, for the purpose of providing the opportunity for local governments or special
jurisdictions to procure and provide electric power for their residents and businesses.
Under existing rules administered by the California Public Utilities Commission, an investor-
owned utility (IOU) must use its transmission and distribution system to deliver the electricity
supplied by a CCA in a non-discriminatory manner. That is, it must provide these delivery
services at the same price and at the same level of reliability to customers supplied by a CCA as
it does for its own full-service customers. By state law, an IOU also must provide all metering
and billing services, its customers receiving a single electric bill each month from the IOU,
which would differentiate the charges for generation services provided by the CCA as well as
charges for IOU delivery services. Money collected by the IOU on behalf of the CCA must be
remitted in a timely fashion (e.g., within 3 business days).
As a power provider, the CCA must abide by the rules and regulations placed on it by the state
and its regulating agencies, such as maintaining demonstrably reliable supplies and fully
cooperating with the State's power grid operator. However, the State has no rate-setting
authority over the CCA; the CCA may set rates as it sees fit so as to best serve its constituent
customers. This is in contrast to SCE, which require approval by the California Public Utility
Commission to set its rates.
Per California law, when a CCA is formed all the electric customers within its boundaries will
be placed, by default, onto CCA service. However, customers retain the right to return to SCE
service at will, subject to whatever administrative fees the CCA may choose to impose
typically $5 for a residential customer and $25 for a non-residential customer.
Possible OCPA Objectives
The feasibility of a CCA program is a function of that program's ability to meet the sponsoring
city's or JPA's goals and objectives. This section lays out the typical CCA goals and objectives
and how they might apply to Huntington Beach.
Rate Competitiveness and Financial Stability
OCPA has set a goal to offer rates that are competitive with the projected generation rates
offered by the incumbent electric utility, Southern California Edison (SCE). "Competitive" here
means that the CCA, over the long run, could offer rates that are equal to or less than those
offered by SCE. It does not mean that in every year a specific rate savings is offered. In fact,
some CCAs have had to offer rates slightly higher than those offered by their host utilities
during one or more of their first few years. We note that they did not experience significant opt-
outs because of this.
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In addition, the CCA would be committed to providing equitable treatment of all classes of
customers without undue discrimination in setting rates. At the same time, the rates would have
to generate sufficient revenue to the CCA, so all liabilities are covered in a manner consistent
with an investment-grade entity. The CCA should not move forward unless there is confidence
that both rate competitiveness and financial stability can be achieved.
The CCA would also intend to offer long-term rate stability to its customers as well as maintain
its own financial condition. This could be accomplished through conservative phasing in of
customers and projects; establishing and maintaining appropriate lines of credit and financial
reserves; and contracting with only experienced and financially solid providers of goods and
services.
Contribute to Greenhouse Gas Reduction Program Objectives
In October 2017, the City of Huntington Beach updated its General Plan to include a
Greenhouse Gas Reduction Program (GGRP), which includes greenhouse gas (GHG) emissions
reduction targets and general emissions reduction strategies. As discussed later, a CCA, if it is
financially able and so chooses, can contribute to the
City meeting its GGRP objectives. CCA and SCE Rates j
It must be noted that California is moving toward a
carbon-free electricity policy. Senate Bill 100, which A CCA provides only generation
services: the actual power that
was signed into law by Governor Brown on
CCA customers use. The
September 17, 2018, increases the renewable power
incumbent utility, SCE, would
content requirement of all retail power providers, still deliver the power to the home
including utilities and CCAs, from 50% to 60% by or business, even though the CCA
2030. The bill also says, "that it is the policy of the is providing the power.
state that eligible renewable energy resources and
zero-carbon resources supply 100% of retail sales of Therefore, the CCA customer
electricity to California end-use customers by would still pay the SCE delivery
December 31, 2045," and that all state agencies rates, but instead of paying SCE's
regulating electricity build this goal into their generation rates, they would pay
planning. This effectively means that the difference the CCA's generation rates. CCA
customers also pay an additional
between the electricity carbon content of the CCA fee so that the remaining SCE
following the City's GGRP and remaining with status customers are not harmed by the
quo utility service may not be significant. CCA (the "PCIA" charge).
Additional Objectives Because a customer pays the same
While maintaining rate competitiveness, financial delivery rates no matter who
provides their power, the rate
stability, and contributing to the City's GGRP are comparisons here focus on the
non-negotiable objectives, a CCA can also serve as a CCA rate (plus the PCIA charge)
vehicle to pursue other objectives that benefit the versus SCE's generation rate.
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City, its residents, and businesses. Examples of
additional objectives could include the following: Power primer
Economic development. A CCA can potentially The California Independent
contribute to local economic development in two System Operator (CAISO)
ways. First, if the CCA offers reduced electricity manages the balance between
rates, additional dollars can flow into the local electricity load and supply on its
economy as households and businesses spend their system for both CCAs and IOUs.
incomes on items and services other than Each utility, CCA or energy
electricity. Second, the CCA can offer programs service provider (ESP) on the
that allow households and businesses to reduce CAISO system provides, each day,
their power consumption, such as energy a forecast of its load and the
resources it will be using to meet
efficiency and distributed energy resources. that load. These load serving
Local jobs and employment. Beyond the entities' (LSEs) forecasts are
potential jobs that could result from the economic updated throughout the day by the
stimulus of possibly lower rates, the CCA can LSE's "scheduling coordinator."
The CAISO also maintains markets
more directly incentivize and support local job for power plants to be standing by
creation. This includes employing residents in to meet unexpected load,or to back
CCA administration, using local contractors for off production if load is lower than
energy efficiency programs, and distributed forecasted,
energy generation (e.g., rooftop solar installers
and maintainers). The CCA can also partner with For LSE planning and procurement
local community colleges and/or trades purposes, electricity supply
apprenticeship programs to support quality local consists of two components:
energy in kilowatt hours (kWh),
job opportunities. and capacity or demand in
Prioritization of renewable power development. kilowatts (M). Using an analogy
Beyond support of locally sited distributed energy of a railroad car: the size of the car
generation ("DEG," e.g., rooftop solar), a CCA represents capacity; and the goods
may prioritize siting larger, grid connected DEG inside the car represent energy. A
and utility-scale renewable project locally. CCA must purchase both energy
(kWh) to meet its customer's
Local citizen input and participation. A primary consumption needs and capacity to
purpose of a CCA is to better reflect its account for customer demand. The
community's interests and values than a large- CCA must always purchase both
scale, investor-owned utility like SCE can. This is the correct amount of energy
illustrated in the CCA's objective of supporting (kWh) and an adequate amount of ;
the City's GGRP. However, it can go beyond this; capacity to meet its customers'
the CCA can commit to creating opportunities for energy requirements. As such, the
citizens to provide input into its programs and CCA must appropriately forecast
both the energy usage (kWh) and
policies. peak demand(kW)requirements of
its customers.
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Reaching CCA Objectives
Financial
As noted above, OCPA would expect to offer rates that are competitive with those offered by
SCE. At the same time, the rates would have to generate sufficient revenue for the CCA so that
all liabilities are covered in a matter consistent with an investment-grade entity. The CCA
would not move forward unless there is confidence that both rate competitiveness and financial
stability can be achieved.
The CCA would also intend to offer long-term rate stability to its customers as well as maintain
its own financial condition. This will be accomplished through conservative phasing in of
customers and projects; establishing and maintaining appropriate lines of credit and financial
reserves; and contracting with only experienced and financially solid providers of goods and
services.
We assume that OCPA would be a financially independent enterprise with no funds or debts co-
mingling with City of Huntington Beach or any other member's, General Fund. It will establish
reserve funds commensurate with the working capital, operating reserves, and contingency
requirements of the enterprise. To do so, the CCA would have to develop a rate design that
recovers sufficient revenue to adequately fund these reserves in the intermediate term.
Climate Change Mitigation
As noted above, the City has included the GGRP in its General Plan. According to the GGRP,
the mission for the reduction plan is to:
• Quantify greenhouse gas emissions, both existing and projected over a specified time
period, resulting from activities within a defined geographic area.
• Establish a level, based on substantial evidence, below which the contribution to
greenhouse gas emissions from activities covered by the plan would not be
cumulatively considerable.
• Identify and analyze the greenhouse gas emissions resulting from specific actions or
categories of actions anticipated within the geographic area.
• Specify measures or a group of measures, including performance standards, that
substantial evidence demonstrates, if implemented on a project-by-project basis, would
collectively achieve the specified emissions level.
• Establish a mechanism to monitor the plan's progress toward achieving the level and to
require amendment if the plan is not achieving specified levels.3
Through the GGRP, as well as existing actions taken by the City of Huntington Beach, the City
has set a GHG emissions target of 570 metric tons (MT) CO2e by 2040. This target value
s City of Huntington Beach General Plan,October, 2,2017.
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signifies a large reduction from the estimated future GHG emissions value of 66 MT CO2e in
2040 if the GGRP and existing reduction actions are not utilized.4
To the extent that the carbon content of the power provided by the CCA is lower than that
provided by SCE, the CCA can contribute to meeting the GGRP's 2040 aspiration.
Renewables — What Does It Mean to be 100% Green?
Most CCAs offer rate options to customers that are "100% Green;"that is, the power consumed
by customers on these rates is fully provided by qualifying renewable resources. Other CCAs
have a goal of being 100% Green by a certain date (e.g., the newly formed San Diego
Community Power intends to be fully green by 2035). The ability of a CCA or a customer to
rely fully on renewable power is accurate within the framework of power procurement, but not
necessarily transparent to the lay audience.
When a CCA is sourced fully by renewable power, it does not mean that for each hour of the
day, 100% of the power injected into the California power grid by the CCA (that is, by the
renewable generators owned or under contract to the CCA) will be renewable. There will be
hours of the day where the CCA's solar resources will be generating more electricity than the
CCA's customers are consuming. This power is sold into the CAISO's wholesale market. There
will also be hours of the day when the CCA's load is greater that their renewable resources'
output, at which point they purchase power from the CAISO wholesale market. Currently, to be
100% renewable, the CCA's renewable resources would need to generate as much power as the
CCA's customers consume, albeit not necessarily at the same time. This is analogous to the
"net-zero" energy home, where, over the course of a year, the solar panels on the house generate
in total as much (or more) power than the house uses, but with some hours having the solar
panels inject power into the grid while in others it takes power from the grid.
In the long run, in the late 2020s and beyond, the "balancing" function of the non-renewable
generators in the wholesale market will likely be replaced in part with energy storage systems,
such as pumped hydroelectric or batteries. At the point when fossil resources are not needed,
one can say that the CCA—and the California Grid—is 100% renewable/carbon free.
How are CCAs financially competitive with the utilities?
All but two active CCAs in California currently offer rates that are at or lower than their
incumbent utility, be it SCE, Pacific Gas & Electric (PG&E) or San Diego Gas & Electric
(SDG&E). CCAs' ability to do this, even with the exit fees (PCIA), is attributable to three
factors. First, the CCAs serving coastal areas do not have to serve as much air conditioning load
as their incumbent utilities as a whole. (SCE also serves inland regions that are much warmer
than coastal areas, while coastal CCAs do not.) Because air conditioning loads often occur at
the times of the day with the highest priced wholesale power, they are more costly to serve.
n General Plan Update:Program Environmental Impact Report,Prepared by Atkins for the City of Huntington
Beach,August 2017.
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Second, the incumbent utilities have in their portfolios some relatively expensive, generally
renewable, power purchase contracts. This raises the utilities' rates, but also begs the question
of what happens when those contracts expire. Two things happen. First, the Power Change
Indifference Amount (PCIA) fee is reduced because it is the mechanism to capture the above-
market costs of these expensive power contracts and pass them on to customers who were on
utility service when the contracts were signed. Second, at worst, the utility will be participating
equally in the same wholesale power and renewable markets as the CCA.
Third, the incumbent utilities are still under the jurisdiction of the California Public Utilities
Commission (CPUC). This means that each and every power purchase contract the utility enters
into goes through a cumbersome vetting process and must be approved by the full CPUC.
Furthermore, the utilities must often comply with non-economic directives from the CPUC,
which is why they have the expensive contracts in their portfolio in the first place. CCA
procurement is not so tightly bound by the state; they can be nimbler in responding to market
movement and have much greater control over their purchasing, hedging, and risk management
than the incumbent utilities. It is these latter points that give the existing CCAs confidence that
they will be able to compete even after the higher-priced contracts in the incumbent utilities'
portfolios expire.
Status of CCAs in California
Even though the enabling legislation was enacted in 2002, the first CCA to provide power,
Marin Clean Energy (MCE), did not enroll customers until 2010. For the next five years, others
investigated CCA formation, with a few early adopters stepping up in 2014 through 2016. As
shown in Figure 1, once these early adopters showed that CCAs could work, the flood gates
opened in 2017. By the end of 2021, CCAs are expected to serve over 63 GWhs, with some
projecting that by the mid-2020s between 50 to 80 percent of the load in the three main IOU
service territories will be served by non-utility entities (CCAs and Direct Access providers).
Figure 1. California CCA Load Growth
California CCAs: Annual Load 2016 - 2021 (GWh)*
70,000 63,130
60,000
50,040
50,000 44,400
40,000
30,000 24,300
20,000 12,300
10,000 5,400
0
CCA Growth 2019-2021
■CCA 2016 CCA 2017 ■CCA 2018 ■CCA 2019 CCA 2020 CCA 2021
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Table 1 lists the active CCAs in California, including those that have announced intended
launches in 2021, along with their location and governance structure. As the table shows, most
of the current CCAs are in PG&E's service area, but the growth in 2020 came from new CCAs
in SCE's territory. Currently, there is only one small CCA in SDG&E's territory, Solana Energy
Alliance, but two large JPAs in the San Diego region are intending to begin service in 2021.
The table also shows that the majority of CCAs are organized as joint powers authorities
(JPAs). There are also many smaller cities in SCE's area that use the "JPA Light" model, in
which the CCA is technically a city enterprise that relies upon the California Choice Energy
Authority (CCEA) to provide the technical operations. There are also three stand-alone city
CCA enterprises, King City, San Francisco, and San Jose.
Table 1. CCAs in California
Load,CCA IOU Type Formed
CCAs Currently Delivering Power in California
Clean Power San Francisco PG&E City May 2016 3,135
East Bay Community Energy PG&E JPA Jan.2018 6,200
Marin Clean Energy PG&E JPA May 2010 5,275
Central Coast Community Energy
(formerly Monterey Bay Community PG&E JPA March 2018 3,202
Power)
Peninsula Clean Energy PG&E JPA Oct. 2016 3,600
Pioneer Community Energy PG&E JPA 2018 NA
Redwood Coast Energy Authority PG&E JPA May 2017 699
San Jose Clean Energy PG&E City Sept. 2018 3,286
Silicon Valley Clean Energy PG&E JPA April 2017 3,898
Sonoma Clean Power PG&E JPA May 2014 2,502
Valley Clean Energy Alliance PG&E JPA Dec. 2016 682
King City Community Power PG&E City July 2018 35
Clean Power Alliance SCE JPA Feb. 2018 10,295
Apple Valley Choice Energy SCE City; CCEA April 2017 260
Lancaster Choice Energy SCE City; CCEA May 2015 600
Pico Rivera Innovative Muni'I Energy SCE City; CCEA Sept. 2017 220
Rancho Mirage Energy Authority SCE City; CCEA May 2018 300
San Jacinto Power SCE City; CCEA April 2018 170
s 2019 Load(GWh)reported by Ca1CCA:https://cal-cca.org/cca-impact/
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CCA IOU Type Formed Load,
Desert Community Energy SCE JPA April 2020 640
Western Community Energy SCE JPA April 2020 1,285
Baldwin Park SCE City; CCEA Oct. 2020 255
Pomona SCE City; CCEA Oct. 2020 655
Solana Energy Alliance SDG&E City June 2018 37
Planned Launch
Palmdale SCE City; CCEA 2021 655
Hanford PG&E City; CCEA 2021 285
Commerce SCE City; CCEA 2021 460
Drafted Ordinances for Implementation as Soon as 2021
San Diego Community Power SDG&E JPA 2021 6,800
North SD County CCA SDG&E JPA 2021 2,750
Butte County PG&E JPA 2021 1,080
Figure 2 shows the 2019 annual loads of several active California CCAs. Three observations
can be made from this figure. First, Clean Power Alliance (CPA), the CCA that serves Los
Angeles and Ventura counties along with selected communities therein, is the largest CCA in
California by load—nearly twice the size of the second largest CCA, East Bay Community
Energy. Second, were Huntington Beach to join OCPA, OCPA would be one of the largest
CCAs in California by load, indicating that economies of scale would have been reached. Third,
Huntington Beach's load would make up almost a quarter of OCPA's total load (dark green
segment of the OCPA bar).
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Figure 2. California Active CCA Loads (Annual GWhs,2020)
Clean Power Alliance
East Bay Community Energy
Marin Clean Energy
CJCPA ri
Silicon Valley Clean Energy
Peninsula Clean Energy
San lose Clean Energy
Central Coast Community Energy
Clean Power San Francisco
Sonoma Clean Power
Redwood Coast Energy Authority wraA••
Valley Clean Energy Alliance
Lancaster Choice Energy .w.
Rancho Mirage Energy Authority
Apple Valley Chace Energy m
Pico Rivera(PRIME) s
San Jacinto Power •
Solana Energy Alliance
King City Community Power
0 2,000 4,000 6,000 8,000 10,000 12,000
Annual Lead(GWh)
:: SDG&E wSCE nPG&E
CCA Evolution
Over the first years of operation, many California CCAs have been evolving from a simple
commodity procurement entity—providing power, albeit greener, at a competitive rate. After a
year or two (or more), many CCAs have expanded into providing targeted and specialized
customer programs that while customized for their communities, are variations of services
provided by their host IOU or are generally proven in the industry. Examples of this include
CCAs like NICE, which has exercised its right to apply for energy efficiency (EE)program
funding from the CPUC.6 To do so, it must file various plans explicitly detailing what they
intend to do in the EE program along with reporting requirements and protocols to verify that
the energy savings that is projected will occur. If approved,the CCA receives money that is
collected in IOU rates through the Public Purpose Program (PPP) rate element. Another
example of this second phase of CCA evolution is offering rooftop solar programs and feed-in-
6 Note that customers taking commodity service from a CCA are still eligible to participate in EE programs
administered by their host IOU,regardless of whether or not the CCA is administering their own PPP-funded EE
programs or not.
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tariffs (FiTs) for local renewable generation projects that connect "in front of the customer
meter. A third example is installing additional electric vehicle (EV) charging stations and
encouraging EV purchasing and leasing.
The third phase in evolution observed with California CCAs is the movement into innovative
and less common power-related programs and services. These are programs that are not
common in California or elsewhere and may be more in the "demonstration"part of the
program/technology lifecycle. Examples of these programs include Sonoma Clean Power's
efforts to electrify the areas that were destroyed in wildfires (i.e., work with PG&E to perhaps
not provide gas service to these areas) or the microgrid programs being pursued by Redwood
Coast Energy Authority and Monterey Bay Community Power(now known as Central Coast
Community Energy).
Table 2, below, shows a range of the programs being pursued by some California CCAs.
These non-commodity program offerings are becoming the focus of CCAs in the state. At the
Business of Local Energy Symposium, a large CCA-oriented conference held in June 2019 in
Irvine, CA, the speakers,panels, and presentations overwhelmingly focused on innovation that
CCAs can do and are doing.'None addressed power procurement or cost competitiveness.
'https://theclimatecenter.org/the-business-of-local-energy-symposium-2019-presentations/
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CCA Review for Huntington Beach
Chapter Z. MRW Financial Study Methodology and Key
Inputs
This chapter summarizes the key inputs and methodologies used to evaluate the cost-
effectiveness and cost-competitiveness of OCPA relative to SCE under different scenarios. It
considers the regulatory requirements that OCPA would need to meet(e.g., compliance with
renewable portfolio standard (RPS) requirements), the resources that the City has available or
could obtain to meet these requirements, and the SCE rates against which the CCA would
compete. It also describes the pro forma analysis methodology that is used to evaluate the
financial feasibility of the CCA.
The load and rate forecasts go out 10 years—from 2022, the earliest a CCA could be formed,
through 2031. While all forecasting contains uncertainty, the years beyond 2030 are particularly
uncertain and should be seen as broadly indicative and not predictive.
OCPA and Huntington Beach Loads and CCA Load Forecasts
A fundamental operational role of a CCA is to forecast customer electricity needs in the short,
medium, and long terms. Power procurement and day-to-day decision-making rely heavily on
short-term forecasts of consumer demand for power, while procurement planning requires
forecasts of longer-term loads. Procurement must also account for the risks associated with
demand forecasting and develop appropriate risk mitigation strategies. Though it is not possible
for any entity to predict with absolute certainty future energy demand; logical, data-driven,
industry-standard methodologies for load forecasting will be used to provide the foundation of
future procurement.
Because OCPA is still hypothetical and has yet to serve any customers, the CCA's estimated
load to be served is based on historical consumption data from SCE. Of course, if the CCA
moves forward the load forecast will be continually updated and refined to reflect ongoing
economic development in the Huntington Beach and the other four cities and changes in load
from energy efficiency and distributed generation.
As shown in Table 3, OCPA has over 330,000 customer accounts compared to the 86,000
customers in Huntington Beach. OCPA's total annual electric load in 2019 is about 4,500 GWh,
with 1000 GWh of that load demand coming from Huntington Beach. As shown in both the
table and in Figure 3, Huntington Beach has a higher percentage of residential load compared to
the other OCPA cities and a lower percentage coming from small commercial and the "other"
category (street and traffic lights, pumping, agriculture).
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Table 3. Potential OCPA Customers and Associated Load for 2019
OCPA HuntingtonOCPA
Annual Annual
Annual
Customers Load Customers Load Customers
. .
Residential 288,041 418,684 75,940 1,579,280 26% 27%
Small Commercial' 32,138 92,635 8,732 368,188 27% 25%
Medium Commercial 6,216 233,810 1,145 1,452,384 18% 16%
Large Commercial & 191 287,178 26 1,028,396 14% 28%
Industrial
Other* 4,032 12,833 539 82,769 13% 16%
Total 330,617 1,045,139 86,382 4,511,017 26% 23%
*e.g., streetlights, traffic control, agriculture/pumping.
Figure 3. Huntington Beach Load Distribution 2019
1,800,000
1,600,000
1,400,000
1,200,000 ■Huntington
1,000,000 Beach
800,000
600,000
■Other OCPA
400,000 CCAs
200,000 ,
Residential Small Medium Large Other*
Commercial Commercial Commercial
&Industrial &Industrial
9 In this study, Schedule GS-1 is"Small Commercial"and Schedules GS-2 and GS-3 are classified as"Medium
Commercial."
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Figure 4, below shows the potential monthly load for the OCPA. The highest load months are in
the summer, while the lowest are in November and the spring. This is attributable to the cities in
OCPA using air conditioning in the summer and heating in the winter. There is a 39%
difference between the highest load month and lowest load month. This means OCPA will need
to acquire less "resource adequacy" capacity to cover their summer peaking loads as compared
to other CCAs. 10
Figure 4. OCPA Load (Monthly, 2019)
500,000
450,000
400,000
350,000 ■Medium C&I
_r_ 300,000 Other*
250,000
200,000 a Large C& 1
150,000 ■Small
100,000 Commercial
50,000 ■Residential
0
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To be able to project the cost of buying power for the CCA, one must not only know how much
must be purchased, but when. This is accomplished using load profiles: the breakdown of the
total load into hourly consumption values. SCE provided an hourly load profile for different rate
classes and monthly data for each city.
Figure 5 below illustrates the 24-hour load curve for OCPA. It compares the average day in the
highest load month of August with the peak day of the year, September 0. The peak hour was
3 pm on September 0'with a load of nearly 900 MWh. This is the maximum capacity needed
for the CCA and is the basis for the OCPA's resource adequacy requirement in September.
Compare this to the peak on an average August day where the peak hour was also 3 pm and the
peak load was 805 MWh. The significant difference between the two maximum loads highlights
the load volatility in the CCA. It is also interesting that the load peaks so early in the day, an
afternoon peak will pair well with solar resources.
11 The ratio of the usage in the highest-load month to the lowest-load month for OCPA is 1.4;for the City of
Riverside,a municipal utility,the ratio of the highest-load month to the lowest-load month is 1.7.(City of
Riverside Public Utilities,2018 Integrated Resource Plan, September 26,2018.page 2-2.)
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Figure 5. OCPA Load Shape Peak Day Vs Peak Month
1000
900
800
Peak Day
700
600 Average August Day
Soo
400
300
200
100
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour
Forecasting
The CCA's base load forecast through 2031 reflects the annual average growth rate from the
California Energy Commission's most recent electricity demand forecast for SCE's planning
area.
CCA Power Supplies
The cost to provide power is by far the largest expenditure a CCA makes. A CCA the size of
OCPA should expect to spend over $200 million per year for wholesale power. The OCPA
power supply plan will be guided by legislative requirements, regulatory mandates, and CCA
policies, as well as future market dynamics.
Regulatory Procurement Requirements
California places a number of important power-procurement requirements on all "load serving
entities" (LSEs) in California(e.g., utilities like SCE and CCAs). These requirements apply to
all LSEs and thus can limit the options that a CCA can pursue to lower costs or implement
lower-GHG emitting power portfolios.
Renewable Energy. One of these requirements is the renewable portfolio standard (RPS). This
requirement has been in place since 2002 with passage of Senate Bill (SB) 1078, which set a
requirement that 20% of retail electricity sales be served by renewable resources by 2017. Since
then, the RPS requirement has been accelerated and expanded by subsequent legislation, most
recently by SB 100 passed in 2018. SB 100 requires all LSEs to procure 50% of their power
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from renewable resources by 2026 and 60% by 2030." SB 100 also sets a state-wide policy
goal of having 100% of the electric power met by renewable or carbon-free resources (e.g.,
large hydroelectric dams) by 2045.
This means that SCE is subject to the same renewable resource mandates under SB 100 as
OCPA will be. Unless OCPA makes an explicit decision to exceed the state requirements, it
would be offering no incremental renewable "benefits" to the City. This is why many existing
CCAs' goals are often to accelerate the implementation of green power above and beyond the
state's mandates and goals.
Energy Storage. Assembly Bill (AB) 251 requires LSEs to procure energy storage capacity.
The storage mandate was implemented by the California Public Utility Commission (CPUC)
through a requirement that CCAs procure energy storage equal to one percent of their forecasted
2020 peak load. CCAs must demonstrate progress towards meeting this target in biennial advice
letter filings and must have the energy storage capacity in place by 2024. Some energy storage
technologies, especially lithium-ion batteries, have fallen steeply in cost in recent years, though
they are still relatively expensive compared to supply resources and demand response. Battery
costs are expected to continue to fall, suggesting there is a benefit to deferring procurement
until required by the mandate.
Resource Adequacy. Since 2006, all LSEs, including CCAs, that are participants in the CAISO
balancing area and under the jurisdiction of the CPUC are responsible for complying with
Resource Adequacy (RA) obligations required under Assembly Bill 380 (codified as Section
380 of the Public Utilities Code and implemented by CPUC rulemaking). There are three
components to the RA compliance program:
1) System capacity requirements to meet expected peak loads in the entire CAISO
balancing area.
2) Local capacity requirements to meet contingency needs in locally constrained areas; and
3) Flexible capacity requirements to meet the largest continuous three-hour ramp in each
month.
Specifically, to meet the System RA requirement, load serving entities must contract for 115%
of their projected monthly peak demand as determined by the CPUC in consultation with the
California Energy Commission (CEC) load forecasts. The peak demand forecasts are based on a
1-in-2 (average) weather year. Year-ahead filings must show that the LSE has contracted for
90% of the projected System RA requirement in summer months (May-September). The
forecasts must be updated on a month-ahead basis and show that 100% of the requirement has
been contracted.
" In practice,the utility code establishes multi-year compliance periods ending in 2020,2024,2027 and 2030,with
the average renewable energy supply as a percentage of retail sales for each compliance period required to be 33%,
44% 52%and 60%,respectively.
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The Local RA requirement must be met by LSEs with customers in 10 local reliability areas
identified by the CAISO. The Local RA requirement is based on the CAISO's assessment of the
generation needed in the local area. Beginning with the 2020 compliance year,12 the Local RA
requirements are set three years ahead and updated each year.13
On June 11, 2020, the CPUC adopted a framework (D. 20-06-002) that designated a central
buyer for the procurement of multi-year Local RA in the SCE and SCE distribution areas,
beginning in 2021. Currently, both SCE and SCE serve as central procurement entities for their
distribution service areas and have begun procuring Local RA for the 2023 compliance year.
Therefore, SCE would act as the Local RA procurer for any future CCA that served Huntington
Beach.
The CAISO also determines the required Flexible RA needs operating criteria. Currently there
are three flexible capacity categories with varying must-offer obligations, energy limits and
number of starts, with associated requirements for how much of each category may be used to
meet the LSE's obligation. LSEs must demonstrate the purchase of 90% of their flexible RA
requirement in their annual RA filing, and 100% of the requirement in their monthly RA
filings.14
There is a bilateral market for RA capacity, with standardized products for each type of RA
capacity.
Integrated Resource Planning (IRP). In addition to its role as the authority for implementing
the state's RA program, the CPUC also has an active rulemaking to "Develop an Electricity
Integrated Resource Planning Framework and to Coordinate and Refine Long-Term
Procurement Planning Requirements" (R. 16-02-007). This program requires each California
LSE to file a procurement plan that demonstrates that it is contributing its pro rata share to
meeting the State's GHG reduction goals while maintaining sufficient generating and storage
capacity to maintain a reliable power grid.
On November 11, 2019, the CPUC issue a decision (D.19-11-016) that addressed the potential
for system resource adequacy shortages in SCE's area due to the impending retirement of 3,750
MW of once-through cooled (OTC) generation by December 31, 2020 as well as the risk of
additional non-OTC retirements. The decision recommended that the State Water Resources
Control Board extend OTC compliance deadlines for the impacted power plants and required
additional procurement of 3,300 MW of system-level RA capacity by all LSEs serving load
12 The"compliance year"is the year in which the RA resources are used to meet the LSE's RA requirements for
that year. For example, an LSE must demonstrate in 2019 that it has adequate RA capacity under contract for the
2020 RA compliance year.
13 Note that Local RA capacity is a substitute for System RA capacity.However,the converse is not always true,
meaning that System RA capacity might not help an LSE meet its Local RA requirements.
14 Flexible RA can substitute for System RA and possibly for Local RA but the converse is not always true: System
and Local RA resources might not help an LSE meet its Flexible RA obligations.
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within the CAISO balancing area. Because this analysis assumes that OCPA begins service in
2023, it will not need to take any special action to comply with these directives.
Power Supply Portfolio and Cost Assumptions
Operating within the regulatory framework described above, MRW has developed sample
electric supply portfolios for use in evaluating the economics of CCA formation in Huntington
Beach. These sample portfolios are a proxy for a working portfolio that would be developed
using a more rigorous assessment of costs and risk attributes developed as part of an
implementation plan and ultimately through direct engagement with market participants via a
request for proposals process. With RPS requirements increasing to 62% of load during the
period of analysis, renewable resource assumptions are the primary driver of portfolio costs.
After accounting for the hourly CCA load shape and the generation profile of resources in the
renewable energy portfolio, the residual net short is assumed to be met with market purchases at
hourly market prices forecast by S&P Global. Likewise, resource adequacy requirements are
estimated based on peak loads and after accounting for net qualifying capacity from renewable
resources. The remaining capacity need is assumed to be purchased at a forecasted market price
as described below.
Renewable
The cost of renewable energy from solar photovoltaic (PV) facilities has steadily fallen since
the establishment of the California RPS mandate in 2002. Looking forward, solar PV prices are
expected to continue to decline, although perhaps at a slower rate as the technology matures and
if import tariffs continue to be applied. At the same time, the incremental value of solar energy
is decreasing as more and more solar resources are added to the electrical system, leading at
times to conditions where solar energy must be curtailed to avoid over generation. Thus, there
are advantages to a diversified supply portfolio including wind, geothermal and biomass, as
well as energy storage.
Figure 6 below shows the assumed mix of renewable resources in Supply Scenario 1: meeting
but not exceeding the State's renewable portfolio requirement, e.g., 50% by the end of 2026,
with incremental hydroelectric power so that the CCA has the same net GHG output as SCE. In
the first few years, the RPS requirement will be met using contracts for unspecified in-state
renewable generation, with some generation from power purchase agreements (PPAs) with
existing solar resources. Over time, the reliance on unspecified in-state renewables decreases
and is replaced with PPAs with specific wind resources as well as PPAs with solar bundled with
storage facilities. This reflects a reasonable balance of renewable resources: wind and solar are
generally complementary in California—that is, when solar output is high, wind output is low.
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Figure 6. Renewable Power Generation by Source
3,000,000
2,500,000 Wind
2,000,000
L
Q�
1,500,000
2 Solar
1,000,000
Solar+Storage
500,000 e,
0
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Assumed renewable power prices are shown in Figure 10. The 2022 prices are consistent with
current reported renewable contract prices from other load-serving entities, including California
CCAs and municipal utilities."
With the rate of utility-scale solar PV cost declines flattening in recent years, we assume a slight
increase in solar PV costs over the forecast period. Based on data provided by Lawrence
Berkeley Laboratory, solar combined with battery storage is assumed to be available at a
$5/MWh premium relative to solar-only projects and to follow the same trends as utility-scale
solar. For local solar and solar plus storage, we assume projects are likely to be commercial
scale (i.e., large rooftop), so we relied on NREL's U.S. Solar Photovoltaic System Cost
Benchmark and Cost-Reduction Roadmap for Residential Solar Photovoltaics Report for
Commercial PV, which show declines from 2020 costs through 2030.16
For wind prices we relied on the DOE's Wind Vision report to establish a forecasted price for
2020 through 2040 and continued the price trend for subsequent years.17
"Index+" refers to the cost of a Bundled Renewable Energy Credit ("Bucket 1" REC) whose
associated energy is priced at the CAISO hourly market price. The REC value is assumed to be
$15/MWh, remaining level in nominal dollars.
Alternative renewable energy costs are explored in the sensitivity scenarios.
is htips://emp.lbl.pov/sites/default/files/2020 utility-scale solar data update.pdf
la https://www.energy.Qov/eere/solar/sunshot-2030
17 https://www.enerjzv.gov/sites/prod/files/WindVision Report final.pdf,Figure 3-12.
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Figure 7. Projected Average Renewable Power Costs
50.00
45.00
40.00
35.00
L
v 30.00 Wind PPA
r
25.00 Solar+Stor PPA
20.00 Solar PPA
15.00 Index+
10.00
5.00
0.00
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Wholesale Power Costs
The residual net load after accounting for renewable energy supplies is assumed to be supplied
from wholesale market purchases, either from the day-ahead market operated by the CAISO or
through bilateral contracts with similar market pricing. To forecast market prices, we used S&P
Global Market Intelligence's 2020 3rd Quarter Forecast for CAISO SP15 Hourly Energy Prices.
S&P Global provides 20-year forward-looking wholesale electricity and capacity price
projections based on forward market prices and fundamentals-based modeling relying on data
from regulatory filings, planning guidelines, coal plant retirements, firm construction plans, and
additions of renewable energy.
Figure 8 shows the average hourly price comparison of the 10-year price forecast. In real terms,
there is little difference in the peak period energy prices across years. However, as increased
renewables are built over the 10-year period,the mid-day prices during high solar hours are
anticipated to get more depressed and evening prices are forecast to rise. In California,
electricity prices are often set by gas-fired resources operating on the margin. However, as
increasing supplies of renewable energy are added to the system, there are periods where prices
are being set by zero or even negative marginal cost resources. As a result, market prices have
been trending downward, especially during seasons and periods of the day when loads are low
and solar output is high. The modeling provided by S&P shows a continuation of the trend, with
prices falling during the middle of the day and increasing in the morning and evening when gas-
fired resources are needed to meet peak loads outside of the solar supply period. Figure 8
presents the average hourly shape of forecasted SP15 CASIO market prices over a 10-year
period. Price data for individual months or days demonstrate even greater variation across the
hours of a day.
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Figure S. Assumed Market Prices (2022-2031)
30000
25000
20000
15000
10000
5000
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
2022 2023-- 2024 2025 2026
2027 2028 2029 2030 2031
Capacity Costs
As noted above, CCAs are also responsible for complying with Resource Adequacy (RA)
obligations. These products are typically contracted on a short-term basis (e.g., year-ahead).
There has historically been an excess supply of both system and flexible capacity in the market,
leading to depressed prices for these products. This changed dramatically in 2019, when RA
prices doubled. MRW predicts that the system RA price will continue to fluctuate between
$6.00/MWh to $9.00/MWh, but that the flexible RA price will remain stable.
Traditionally, CCAs have also bought local RA,but as of 2023, CCAs in SCE's territory will no
longer be responsible for acquiring local RA. SCE will purchase and allocate local RA to
CCAs. The specifics of this new process are still being worked out in regulatory filings and
future analysis will be needed to see how this new model will affect costs.
Pro Forma Elements and CCA Costs of Service
This section outlines the main elements of the pro forma analysis, the assumptions underlying
the elements and the output results. The analysis also includes a comparison between the
generation-related costs that would be paid by OCPA customers and the generation-related costs
that would be paid by SCE bundled service customers. Costs paid by CCA customers include all
CCA-related costs (i.e., supply portfolio costs and administrative and general costs) and exit fee
payments that CCA customers will be required to make to SCE.
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Pro Forma Elements
Figure 9 provides a schematic of the pro forma analysis, outlining the input elements of the
analysis and the output results.
As discussed in previous sections, supply portfolio costs are informed and affected by CCA
loads, by the requirements the CCA will need to meet(or will choose to meet) such as with
respect to renewable procurement, and by CCA participation levels. Administrative and general
costs are discussed further below.
Figure 9. Pro forma Analysis
Inputs: selection of cities, scenarios, and sensitivity cases
Local
renewable Load
cost forecIF
Forecast
upply Costs Adm. Costs Exit fees Market Power
orecast Forecast Forecast Price Forecast
i.:
-------------------------------- ----------- ---------- ------------------- ------------------------------;
Generation Rates paid by Huntington Beach/OCPA Customers
Assessment of CCA viability and CCA customer rates vs. PG&E customer rates
-------
Startup Costs
Startup costs are the costs OCPA will incur before operations begin. Table 4 shows the
estimated CCA startup costs. They are based on the experience of existing CCAs as well as
from other CCA technical and feasibility assessments. If Huntington Beach were to move
forward with OCPA,these values would be refined based on more detailed projections.
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Table 4. Estimated Start-Up and Annual Ongoing Costs
Item Cost • Ongoing?
Professional Services/Consulting $150,000 Ongoing at reduced level
Staffing $2,100,000 Ongoing, lower initially
Administrative and General costs $250,000 Ongoing at reduced level
SCE Fees $10,000 One-time
CAISO deposit $500,000 One-time
Power contracting, portfolio and rate design, scheduling $350,000 Ongoing, lower initially
Integrated Resource Plan/Long-Term Procurement $150,000 Ongoing, lower initially
Marketing strategy and brand development $75,000 Ongoing at reduced level
Website $20,000 Ongoing at reduced level
PR/Advertising $60,000 Ongoing at reduced level
Customer Notifications $260,000 One-time
Community Sponsorships, etc. $5,000 Ongoing, lower initially
General Counsel Services $120,000 Ongoing, lower initially
Legal review of power supply and other vendor contracts $75,000 Ongoing at reduced level
Cal-CCA Membership $200,000 Ongoing, lower initially
Regulatory Monitoring, Reporting and Compliance $100,000 Ongoing, lower initially
Total: $4,400,000
Working Capital (3 months cash flow at full service) —$60,000,000 One-time; maximum line
of credit amount
Total: $64 million
Typically, the city forming a CCA would directly pay for the initial start-up costs, such as the
technical study. In this situation, the City of Irvine has offered to supply the collateral for a bank
loan to finance the initial start-up costs. Once the CCA is formed by City Council action, the
CCA would issue an RFP for banking services. These would set up a short-term loan or line of
credit to pay back the city its CCA expenditures and fund ongoing start-up costs until the CCA
is operational. At that point, the short-term loans could be rolled into a longer-term loan that
would also include working capital.
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Working capital reflects the fact that a business will have bills to pay prior to receiving payment
from its customers. This amount would cover the timing lag between when invoices for power
purchases (and other account payables) must be remitted and when income is received from the
customers. Per industry standard, total working capital is set to equal three months of CCA
revenue, or approximately $64 million when the OCPA is fully operational (i.e., serving all
potential customers.)18 Initially, the working capital is provided by a bank on credit to the CCA.
Typical power purchase contracts require payment for the prior month's purchases by the 20th
of the current month. Customers' payments are typically received 60 to 90 days from when the
power is delivered.
These startup costs are assumed to be financed over 5 years at 5% interest.19 Historically, CCAs
have paid down their start-up loans much more quickly.
Reserves
CCAs to date have all committed to setting aside revenues into a reserve fund to account for
times in the short-term when its costs may not allow it charge rates that are competitive to SCE.
For this study, we assume that the CCA will endeavor to set aside revenues until a reserve fund
reaches an amount equal to 50% of its annual revenue (e.g., 50% of$324 million = a reserve
fund goal of$165 million). After the reserve target is met, it is held at the target level or drawn
upon so that the desired CCA rate is achieved. If the reserve is drawn upon, the rate reserve is
replenished in the next year in which headroom is available.
Administrative and General Cost Inputs
Administrative and general costs cover the everyday operations of the CCA, including costs for
billing, data management, customer service, employee salaries, contractor payments, and fees
paid to SCE. Table 5, below summarizes the assumed ongoing administrative and general
costs. These costs are assumed to trend with inflation.
" CCAs frequently"phase-in"their service,initially offering service to a smaller subset of customers and then
expanding service to the remaining customers over the following months or years.
19 5%is currently equal to the prime rate plus 175 basis points.
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Table 5. Ongoing Administrative and General Costs
i
SCE Fees, $/cust./month $0.13 $0.13 $0.14 $0.14
Data Management Fees $/cust./mo. $1.00 $1.00 $1.00
Administration—Labor21 $330,000 1 $1,300,000 $2,100,000 $2,200,000
Administration- Non-Labor $25,000 $260,000 $150,000 $160,000
Outreach-communications $80,000 $160,000 $67,000 $68,000
Professional Services $150,000 $330,000 $560,000 $580,000
Data Management Fees $0 $2,500,000 $3,900,000 $3,900,000
SCE Metering and Billing Fees $0 $500,000 $510,000 $530,000
Total $590,000 $3,300,000 $7,300,000 $7,400,000
4
SCE Rate and PCIA Forecasts
SCE Generation Rates
Forecasts of SCE's generation rates and exit fees are necessary to compare the projected rates
that customers would pay as OCPA customers to the projected rates and fees they would pay as
bundled SCE customers.
To ensure a consistent and reliable financial analysis, a 10-year bottoms-up forecast of SCE
rates was developed using market prices that are consistent with those used in the forecast of the
OCPA's supply costs. The forecasted costs include the cost of SCE's existing resource
portfolio, adding in market purchases only when necessary to meet projected demand.
To develop this forecast, the key cost drivers of each of SCE's generation rate components were
examined, separately evaluating costs for renewable and non-renewable energy purchases, for
SCE-owned generation facilities, and for capacity purchases. The study assumed that near-term
changes to SCE's generation portfolio would be driven primarily by modest increases in
underlying gas market prices. In 2028-2030, consistent with the OCPA forecast, the SCE must
pay higher prices for incremental capacity and resource adequacy, reflecting the tightening of
the capacity market at that time.
21 See page 60 for staffing estimate details.
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The forecast further assumes that SCE is compliant with the renewable and carbon-free
requirements ordered in Senate Bill 100: a minimum of 60% renewable content in 2030 and a
trajectory that would, when extrapolated, result in carbon-free power in 2045. In fact, given the
current SCE renewable portfolio and the loss of load from the OCPA, SCE would need minimal
if any new renewables to meet the 2030 goal.
The forecast for SCE's generation resources is based on publicly available data and forecasts.
We relied on the market price forecast produced by S&P Global to estimate the cost of market
purchases. However, since SCE protects data that would reveal its detailed net short position,
we were unable to perform the hourly analysis completed for Huntington Beach and instead
relied on average market prices to develop estimates of the cost of SCE market purchases.
Over the 10-year period, the study forecasts that SCE's generation rates will escalate by an
average of 3%per year. This forecast is show in Figure 10, below.
Figure 10. Forecast SCE Average Generation Rates
14
12 Small Com'i(TOU-GS-1)
—Residential
10 «-+ Medium Com'1(TOU-GS-2)
." Large Com'l(TOU-GS-3)
g _ _ industrial(TOU-8)
x
6
4
2
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
PCIA
The Power Charge Indifference Adjustment (PCIA) is a fee charged by SCE intended to prevent
customers that remain with SCE bundled service from paying for energy generation procured on
behalf of customers that have since switched to CCA service. More specifically, it pays for the
above-market costs of SCE generation resources that were acquired, or which SCE committed
to acquire, prior to the customer's departure to CCA. The total cost of these resources is
compared to a market-based price benchmark to calculate the "stranded costs" associated with
these resources, and CCA customers are charged what is determined to be their fair share of the
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stranded costs through the PCIA. Bundled customers also pay the PCIA, which is embedded
into their commodity portion of their total rate.
The PCIA is not paid directly by the CCA, but by the individual customers taking CCA service.
Thus, it does not appear explicitly on the CCA's books, however it must be accounted for in any
CCA cost analysis. While both CCA customers and customers that choose to remain in SCE
bundled service pay this fee, it appears as a separate line item for CCA customers and is
embedded in the energy generation costs of SCE bundled customers.
To forecast the PCIA, this study used the formula and approach dictated by the Alternative
Proposed Decision of Assigned Commissioner Carla Peterman in Commission Rulemaking 17-
06-026, which was approved by the Commission on October 11, 2018. In addition, the market
price and SCE portfolio assumptions used in the PCIA calculations are consistent with those
used to forecast SCE's generation rates.
This study forecasts the PCIA charge by directly modeling expected changes to PCIA-eligible
resources and to the market-based price benchmark. Based on our modelling, we expect the
PCIA to remain close to 2¢ per kWh through 2023. After 2023, the PCIA is forecast to decrease
markedly to about 1.5¢ per kWh and to continue a steady decline through 2031. The decline is
mainly caused by the expiration of many of the costlier renewable power contracts entered into
by SCE, which decreases the total stranded costs. MRW's forecast of the PCIA charge through
2031 is shown in Figure 11. As such, it can be anticipated that the savings from lower PCIA
rates will result in lower CCA rates over time.
Figure 11. Forecast Average PCIA
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
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Chapter 3. Financial Analysis Results
Costs and benefits are evaluated by comparing total average cost to serve the CCA customer
(cents per kWh or dollar per MWh) (including PCIA) to SCE generation rates. The pro forma
results for the first 10 years of the OCPA are summarized in this chapter.
Supply Scenario assumes that the OCPA simply complies with the State's requirements
concerning renewable power. It starts in 2022 with 37% of its power being met using renewable
resources and escalates this faction to 62% by 2031. The non-renewable output is assumed to be
met using system power from the CAISO.
Figure 12 shows the forecast of average MRW-modeled OCPA costs and SCE's generation
rates. The bars in the chart show the forecasts of the major cost components of CCA operation,
while the single line shows the forecast of SCE's generation rate. When the bars are below the
black line, the CCA's average operating costs will be below the SCE generation rate; meaning
that it can offer power to customers at a rate lower than or competitive with SCE. As is clearly
seen in the figure, the average cost of power provided by the CCA is consistently below the
SCE generation rate, although much closer in the first few years of OCPA operation.
The bottom-most green segment represents the cost of renewable power to the CCA. The brown
segment is for the costs of non-renewable, wholesale market power. This segment slowly
decreases, as renewable power increases. (Because renewables are currently most costly than
market power, the analysis assumes OCPA will initially meet the State's minimum renewable
power content and ramp up as the requirements increase). The light blue segment is for
capacity. That is, the CCA must demonstrate that it has the generating capacity (in megawatts)
to ensure that it can serve all its load. The gray segment is for debt service, operations, franchise
fees, and uncollectibles. The yellow segment is for carbon cap and trade allowances. Note that
for practical purposes, the cost of carbon cap-and-trade allowances would be built into the
purchase price of natural gas-fired market resources. However, because it is an important
variable on its own, the costs are shown separately.
The top-most pink segment is for the Power Charge Indifference Adjustment (PCIA), a fee paid
to SCE to ensure that the operation of the CCA does not strand SCE's remaining bundled
customers with costs associated with power purchased on behalf of customers who have shifted
to the CCA.
The black line represents SCE's average generation rate. To forecast SCE's generation rates, the
comparison model used information regarding BCE's utility-owned generation, power contracts,
power market costs, and by closely tracking changes in SCE revenues and costs through its
filings in several CPUC proceedings. In particular, it takes the most recent SCE filing of
generation rates and applies the known and anticipated changes to the wholesale power market
prices and SCE's power purchase contracts.
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Figure 12. Average OCPA Cost Projection versus SCE Generation Rate
12.00
10.00 ®PCIA
GHG
8.00
O/M
6.00
Capacity
4.00 Other Energy
2.00 ®Renewable
-
0.00 IOU
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Does not include the reserve fund or other programs
As shown in Figure 12, the costs of CCA operation are consistently below that of the SCE rate.
This difference between the top of the CCA cost columns and the SCE rate line represents the
operating "margin."the CCA may do a combination of one or more of three things with this
margin:
• Rate Savings: The CCA can keep its rates as the cost of operations and allow the
margin to flow fully to customers through lower electric rates. (i.e., if the margin is
0.5¢/kWh, then the CCA could offer rates that are 0.5¢/kWh less than SCE while still
covering all its costs).
• Reserves: The CCA can charge customers the same rate as SCE to retain the margin and
build up cash reserves for a rainy day.
• Programs: The CCA can eventually use the margin to fund other energy-related
services, such as providing incentives for customers to purchase an EV, install energy-
efficient home upgrades, install solar PV, etc.
In practice, CCAs use the margin for all three purposes: they set a rate that is marginally lower
than SCE's and then use the remaining margin for cash reserves or programs.
In 2022,this "margin"between CCA average cost and SCE rate is about 1¢/kwh, increasing to
about 3¢/kwh in 2031. Note that this does not mean that the CCA can or will fully pass on this
margin as rate savings to its customers (Table 6). In fact, during the first few years, the CCA's
set their rates so that most of the margin between their ongoing costs and SCE's generation
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rates is set aside for financial reserves and paying down the initial startup loans. Once the
financial reserve targets are met and the start-up loans paid off, CCA's typically use a portion of
the margin for programs serving their residents and businesses,purchasing greater amounts of
renewable power, and providing greater rate discounts that could be offered during the first
years. It is up to the CCA Board of Directors to balancing these competing uses (i.e., rate
discounts, programs, financial reserves, and greener power).
Table 6. Projected OCPA Margins*
2022 First 3 years First 5 years 2"d 5 years 10-Years
t/kWh (average) 1.0 1.2 1.6 2.9 2.2
*Without rate savings, reserve contributions or program funding
For the CCA, GHG savings is achieved when the average GHG emissions from the set of
generation resources used by the CCA is less than the average GHG emissions from SCE.
Unless the CCA procured GHG-free power above and beyond California's renewable
requirement, SCE's average GHG emission will be less than the CCAs. This result is caused by
SCE not only meeting the state-requirement minimum renewable content, but also using other
non-renewable but still GHG-free power sources: large hydroelectric dams and nuclear power
from the Palo Verde Nuclear Generating Station, of which SCE is a partial owner. The GHG-
emitting portfolios for Power Supply Scenario 1 and SCE are shown in Table 7.
Table 7. 2022 CCA (Supply Scenario 1) and 2019 SCE Power Content
�M=
Renewable 37% 35%
Hydro 8%
Nuclear 8%
GHG-Free 37% 51%
Gas 16%
System 63% 33%
Total 100% 100%
21SCE Power Mix from SCE's 2019 Power Content Label Template_v2
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Sensitivity to Key Inputs
The results shown in the scenarios above reflect expected market conditions and outcomes with
variations only in the amount and type of renewable generation. However, it is unlikely that the
conditions assumed in these scenarios will occur exactly as assumed. In order to evaluate the
robustness of the analysis, the key variables were identified, and analyses conducted with other
assumptions for those key variables to "stress test"the assumptions. The four variables with the
greatest potential impact on the overall average cost of the CCA were investigated:
(1)Higher Renewable Supply Costs
(2) Higher PCIA
(3) Lower SCE Rates
(4) High Opt-Out
The specific assumptions on the sensitivity scenarios are shown in Table 8.
Table 8. Sensitivity Case Definitions
Sensitivity Case Definition
Base Supply Scenario 1
Higher renewable costs Renewable costs 25% higher than Base
Higher PCIA PCIA 33% higher than calculated in Base
Lower SCE Rate SCE rates 10% lower than in Base
Higher Opt-Out 30% opt-out versus 5-10% opt-out in Base
Figure 13 summarizes the CCA margins resulting from the modeling of the sensitivity cases.
The figure shows the margin in cents per kilowatt-hour between the SCE rate and the average
cost for the CCA to serve its load, including the PCIA, but without any rate discounts or
contributions to reserves. When the bar is positive,then the CCA's cost of service is less than
SCE's generation rates, which means the CCA can offer a rate discount, contribute to reserves,
or fund programs. Consistent with the rest of the analysis, the margins are the smallest during
the first years of operation, suggesting that the targeted rate discount may not be achievable
during the first few years of OCPA operation.
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Figure 13. Sensitivity Results
2.5
2.0 '
1.5
Y
u 1.0
0.5
0.0 _
2022 2022-2026 2022-2031
■Base ■High Renewable Prices Higher PCIA Prices ■Low SCE portfolio costs ■High Opt-Out
Rate Savings Currently Offered by CCAs
To assist customers, each CCA must offer a "Joint Rate Comparison" document that
summarizes what an average monthly bill would be for each rate schedule that the CCA offers
and the analogous rate and average bill available from their incumbent utility. These can be
found on both the CCAs' and utilities' websites.22 Based on these Joint Rate comparisons,
Figure 14 shows the residential rate savings currently offered by operating CCAs relative to
their host utility's rates. The values were calculated using the lowest cost rate offering for each
of the CCAs and their utility's base rate (i.e., not a utility green tariff).
As the figure shows, none of the CCAs in SCE's territory and only three state-wide are
currently offering a residential rate discount equal to or greater than 2%--the target savings
level of OCPA. Two CCAs in Northern California, in fact, have residential rates that are
currently higher than their host utility.
These data support MRW's assessment that the margins in the next few years will likely be
particularly tight for CCAs. As such, we are skeptical that OCPA will be able to offer the full
2% savings until 2023 or later.
"E.g.,https://cleanpoAeralliance.org/wp-content/uploads/2020/11/SCE-and-CPA-.loint-Rate-Comparison-
October-2020-2018-yint.pdf;https://w1N-w.sce.com/sites/default/files/inline-
_files/SC E%20and%20DCE%20Joint%20Rate%20Comparison%20Effective%20April°/o2013%202020%201.pdf
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Figure 14. CCA Residential Rate Savings as of January 13, 20201 (lowest cost CCA
offering versus standard utility rate)
Pico Rivera(PRIME)
Lancaster Choice Energy
Apple Valley Choice Energy
San Jacinto Power
Clean Power Alliance ® ■SCE
Western Community Energy
Desert Community Energy
Sonoma Clean Power
Marin Clean Energy
Valley Clean Energy Alliance
Silicon Valley Clean Energy o
j PG&E
Redwood Coast Energy Authority
d
San Jose Clean Energy
East Bay Community Energy
Monterey Bay Community Power
Rancho Mirage Energy Authority
King City Community Energy
Peninsula Clean Energy
a SDG&E
Pioneer Community Energy
Clean Power San Francisco
Solana Energy Alliance RUNANEW
-3% -2% -1% 0% 1% 2% 3%
Pct.Bill Savings
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Chapter 4: Review of Implementation Plan
This section reviews the analytical approach, assumptions, and results of the OCPA
Implementation Plan pro forma financial analysis and compares the key assumptions and results
against the independent analysis conducted by MRW. Table 9 summarizes MRW's findings on
the financial analysis underlying the OCPA Implementation Plan. Each entry is discussed in the
following sections.
Table 9. Implementation Plan Assumption Summary
Conservative Reasonable Potential
Issue
Modeling Approach ✓
Load Forecast ✓
Load
Line Losses ✓
Assumptions
Opt-Out Rate ✓
CCA Power Portfolio ✓
CCA Power Wholesale Power Prices ✓
Assumptions Renewable Power Prices ✓
RA Costs ✓ X
Startup Costs ✓
CCA Admin.
and Other Cost Financing Costs ✓ X
Assumptions
Admin. Costs ✓
SCE Rate PCIA ✓
Assumptions SCE Generation Rate ✓ X
Implementation Plan Approach
The Implementation Plan's financial analysis approach is sound and complete. It includes all
the necessary expense and revenue categories and modeled a CCA program's pro forma cash
flow accurately.
Implementation Plan Assumptions
This section reviews each of the major assumptions that the Implementation Plan makes and
opines on the reasonableness of the assumptions. While most of the assumptions made by the
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Implementation Plan were reasonable, two of the assumptions were understated or outdated.
Additionally, many of the assumptions that the Implementation Plan characterizes as
"conservative" MRW would consider reasonable, but not necessarily conservative.
Opt-Out
The magnitude of the costs and revenues a CCA program incurs depends upon the electric load
that it serves. MRW finds the Implementation Plan's load analysis and forecast to be
reasonable-to-conservative. The Implementation Plan's forecast begins with actual electric load
data provided by SCE and assumes conservative opt-out rates: 5% for residential accounts and
10% for commercial/industrial accounts. (That is, 5% of eligible residential customers and 10%
of eligible commercial customers would choose not to take service from OCPA). With one
notable exception, opt-out rates seen by recent CCA program launches have been less than this,
making the assumption conservative. The exception is the Clean Power Alliance of Southern
California (CPA), the CCA that serves Los Angeles and Ventura counties, which experienced a
much higher opt-out rate, closer to 50%, for its largest industrial customers. This was because
CPA chose not to offer rates that were lower than SCE's for this customer class,but instead
chose to set rates at levels equal to CPA's cost to provide power to them. Because the CPA
rates were higher, and this class is especially sensitive to power costs, a large fraction of the
industrial customers declined to take service from CPA. (This issue of competitive rate setting
is discussed in greater detail in the Risk section of this report.)
The Implementation Plan shows that OCPA would not offer service to all its customers at once,
but would instead offer service in three phases: commercial and industrial customers in Phase 1
(April); and residential customers in Phase 2 (October); and those customers with net-metered
solar in Phase 3 (to be determined). This roll-out is sound for three reasons. First, it is simpler
to begin serving only a small number of customers, so as to work out the metaphorical kinks on
less sensitive accounts before rolling out to the general public. Second, due to SCE's rate
design, CCA revenues for the larger commercial classes in SCE's territory are much higher in
the summer months than in the winter or spring (Figure 15). Thus, it can be advantageous to
phase in the commercial loads before the summer to take advantage of the higher margins.
Because of the higher margins in the summer months, MRW suggests that the OCPA consider
delaying Phase 1 to June when the rates are higher rather than in April, when SCE's generation
rates are very low.
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Figure 15. SCE Monthly Average Generation Rates (2021)23
12
10
s
6 Residential
Mhe, e
between commercial and Commercial
4 industrial summer and Industrial
winter rates.
2
0
Third, since the CCA's rates will, at least initially, be tied to SCE's, it is better to phase in new
customers a month or two after SCE's rates are set. For example, SCE implements major rate
changes, including the PCIA, at the beginning of the calendar year. What exactly those January
1 rates will be is not fully known until late December. Thus, if the CCA was launching on
January 1,too, it would have to estimate what SCE's rates would be months in advance in order
to go through its own rate-setting process. These guesses could very well be wrong and require
an adjustment within the first months of service, a logistical and customer-relations gaffe better
avoided.
Power Costs
As the Implementation Plan notes, around 90% to 95% of a CCA's program's costs are
associated with the procurement of power. As such, the assumptions concerning the costs,
sources, and mixes of the power are particularly important.
Wholesale Power Prices. The Implementation Plan relied upon a reputable source for
wholesale power prices, S&P Global, which is consistent with MRW's selected forecast of
long-term wholesale power prices in California.
Renewable Power. Given the total amount of renewable power being purchased in each
scenario, the next question is whether the Implementation Plan's assumed sources of renewable
11 These projected rates are based on the PG&E rates effective on January 1,2021.
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power and the associated costs are reasonable. The Implementation Plan's approach to
renewable power costs differed from MRW's. Unlike MRW's analysis, which assumes explicit
types of renewable power(PCC 1 RECs, stand-alone solar, wind, solar+storage), the
Implementation Plan assumed a simple combination of PCC 1 RECS and unspecified
"renewable" contracts. Figure 16 compares the MRW renewable power cost assumptions and
the assumptions built into the Implementation Plan. While the two differ, the Implementation
Plan's assumptions appear reasonable.
Figure 16. Comparison of Renewable Resource Costs
$4S
$40 Renewable Contract (Ave.) MRW
$35 OCPA
$30
$25
$20 OCPA
PCC1 REC
$15 N1RW
$10
$5
$0
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Other Power Procurement Related Costs
As discussed, the OCPA must demonstrate it has enough physical power supply capacity to
meet its projected peak demand plus a 15% reserve margin, on a monthly basis. The
Implementation Plan assumes the cost of basic ("system") RA to be $6.50/kW per month,
escalated at 3%per year. While this is higher than the value used in the CCA Feasibility Study
for the City of Irvine,24 it is at the low end of what we would consider reasonable.
In addition to the system RA, all utilities and CCAs must all meet local capacity requirements
to meet contingency needs in locally constrained areas (i.e., areas that need to have generation
located within it because there is not enough transmission alone capacity to serve that area's
needs). The Local RA requirement is based on the CAISO's assessment of the generation
14 See links at https://www.citvofirvine.orp-/energy/community-choice-energy
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needed in the local area. Beginning with the 2020 compliance year,25 the Local RA
requirements are set three years ahead and updated each year.26
On June 11, 2020, the CPUC adopted a framework (D. 20-06-002) that fundamentally changed
the requirements for Local RA. That decision designated PG&E and SCE to be responsible for
all the Local RA in their respective service areas, beginning in 2023. Therefore, SCE will be
responsible for all the Local RA for OCPA and all other CCAs within its service area. This has
two implications for the Implementation Plan's financial analysis. First, the analysis should not
reflect any local RA costs beginning in 2023. Second, the policy change would also reduce
SCE's generation rate. (This can be seen in Figure 17, where MRW's forecast slightly decreases
in 2023 while in the Implementation Plan forecast the 2023 SCE rate increases.)
From the perspective of OCPA competitiveness with SCE, these two impacts tend to cancel
each other out. Therefore, while the Implementation Plan does not correctly address Local RA,
it does not change in the competitiveness position of OCPA.
CCA Operating Costs
As noted, —95% of a CCA's costs are associated with power procurement, leaving the
remaining 5% with CCA operating costs. The Implementation Plan thoroughly presents what
types of activities a new CCA program should expect along with providing reasonable detailed
estimates for the costs of those activities.
CCA Financing
The Implementation Plan anticipates "one or more rounds of financing, inclusive of prospective
direct term loans between OCPA and its Member Agencies, will be necessary to support OCPA
Program implementation," with any subsequent capital requirements met through OCPA's
accrued financial reserves.22-'MRW understands that "loans from its Member Agencies"refers
to the $2.5 million loan from the City of Irvine. OCPA currently projects repaying this loan by
2027, subject to change based on final power prices.
The Implementation Plan projects that its full start-up and working capital requirements for the
OCPA Program will be $15.5 million, or $13 million beyond the Irvine loan. The
Implementation Plan assumes that the remaining financing will be primarily via a short-term
loan or letter of credit, which would allow OCPA to draw cash as required. Requisite financing
would need to be arranged no later than the first quarter of 2021.
2s The"compliance year"is the year in which the RA resources are used to meet the LSE's RA requirements for
that year.For example,an LSE must demonstrate in 2019 that it has adequate RA capacity under contract for the
2020 RA compliance year.
26 Note that Local RA capacity is a substitute for System RA capacity. However,the converse is not always true,
meaning that System RA capacity might not help an LSE meet its Local RA requirements.
27 Implementation Plan, page 36.
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MRW finds the start-up cost estimate to be reasonable, but the working capital amount to be
low. The Implementation Plan assumes 30 days of cash or line of credit. MRW expects that a
financer would require something closer to 60 days of working cash. Second, MRW notes that
in addition to the loan by Irvine, OCPA's financer will likely require a guarantor to any short-
term loan or line of credit. Section 1.3 of the draft Loan Agreement between the City of Irvine
and OCPA includes an agreement by Irvine to post "necessary cash collateral, not to exceed
$5,000,000, in order for the Authority to secure a credit facility for its Launch Costs for
additional working capital associated with power procurement and operational support."
Collateral in excess of the $5 million will likely have to be from an OCPA Member or
Members.
The experience of the most recent large CCA formed, San Diego Community Power (SDCP), is
instructive of what is currently required for CCA financing. Because of its projected narrow
operating margin—which is similar to that shown in the Implementation Plan—and general
uncertainties facing CCAs, SDCP's finance provider required SDCP to have $5 million in
collateral in order for it to provide a $5 million pre-launch loan plus a $35 million line of
credit.28 OCPA's load is projected to be about 62% of the load of SDCP. SDCP required $40
million initial line of credit. Simply scaling SDCP's requirement down to OCPA suggests an
initial bank load/line of credit around $25 million.
We note that Irvine has agreed to provide up to $5 million collateral and a loan guarantee if
required for the power purchase loan requirements. (Exhibit D, section 1.3 of the JPA
agreement). While Irvine's commitment may likely provide a sufficient backstop for OPCA
financing, it cannot be known until OCPA secures financing.
SCE Rates
Critical to the cost-effectiveness of OCPA is the rates it can offer relative to those offered by
SCE. Thus, the forecast of SCE's generation rates and PCIA are equally as important as the
forecast costs to operate the CCA program.29 The Implementation Plan appears to perform its
forecast of SCE generation rates by starting at the known 2020 SCE generation rates and
escalates theirs at 2% per year.
Figure 17 shows the Implementation Plan's and MRW's rate forecast. While the two are
relatively consistent, MRW's is about 5% (0.4¢/kWh) lower than that shown in the
Implementation Plan. A 0.4¢/kWh decrease in rates translates to a $13 million decrease in CCA
revenue, which could in some years hamper the OCPA's ability to offer its target rate savings.
28 See SDCP April 23,2020 Board Packet, Staff Report on Item 4,at https://www.sdcommunitypower.org/board-
meetings.
29 Recall, for a customer to financially benefit from CCA service,the CCA rate plus the PCIA must be less than
SCE's generation rate.
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However, as discussed below, these lower generation rates would be offset by the
Implementation Plan's very conservative PCIA assumption discussed below.
Figure 17. SCE Generation Rate Forecasts
$0.12
—aCPA
$0.10 —®MRW
$0.08
L
$0.06
$0.04
$0.02
$0.00
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
PCIA
The Power Charge Indifference Adjustment (PCIA) is a fee charged by SCE to prevent
customers that remain with SCE bundled service from paying for energy generation procured on
behalf of customers that have since switched to CCA service. More specifically, it pays for the
above-market costs of SCE generation resources that were acquired, or which SCE committed
to acquire,prior to the customer's departure to CCA. Bundled customers also pay the PCIA,
but it is embedded into the commodity portion of their total rate.
The PCIA is the single largest uncertainty in a CCA analysis. It can vary significantly from year
to year, depending upon the wholesale power market, the costs of RA, the costs of renewables,
and how well the prior years' PCIAs collected the correct amount so as to keep non-CCA
customers whole. It can increase up to 0.5¢/kWh (roughly 25%) year over year due to market
changes but can increase even more due to insufficient funds being collected in the PCIA.
The Implementation Plan starts with the current PCIA and escalates it at 5%per year through
2030.
As seen in Figure 18, the PCIA assumption in the Implementation Plan differs markedly from
MRW's PCIA forecast. The two differ because MRW modeled the PCIA in a bottoms-up
fashion, using the commission prescribed formula with assumptions consistent with the rest of
the forecast, while the Implementation Plan escalated current PCIA rate. As shown below, the
Implementation Plan's assumed PCIA is very conservative relative to MRW's forecast.
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Figure 18. PCIA Rate Forecasts
$0.05
$0.04
�.► —OCPA
$0.03
ZZ
Y
$0.02
$0.01 —MRW
$0.00
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Conclusions
Overall, the assumptions and analysis in the Implementation Plan are sound. However, we note
the following concerns. First, the Implementation Plan does not address the changing state
policies concerning Local RA. Second, the Implementation Plan's generation rate is on average
about 5% lower than MRW's forecast, while significantly overestimating the PCIA. The
overestimated PCIA more than makes up for the low generation rate, so the net effect is
conservative. Third, MRW believes that the Implementation Plan may be understating the
financing assumptions for launching a CCA. While Irvine's commitment to provide the startup
loan and financial collateral may likely provide a sufficient backstop for OPCA financing, it
cannot be known until OCPA secures financing.
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Chapter 5: Risks & Mitigating Strategies
As discussed so far, there are clear benefits to CCA formation, but there are also risks. This
chapter lists many of the larger risks that OCPA would face—and in fact all CCAs must deal
with—along with summaries of how the CCA can address the risk. If Huntington Beach were to
pursue CCA, it should create a risk management plan that would flesh out more specific risk
policies and proceedings.
Financial Risk to City
A single-city CCA is assumed to be formed as a financially independent enterprise, with no
dollars flowing into or out of the City's general fund. As such, the general fund cannot be drawn
upon by the CCA's creditors, nor can CCA dollars flow into the general fund.
In the event that Huntington Beach joined OCPA, the JPA agreement defines the rights and
responsibilities of each member of the CCA. With respect to financial support, Section 5.6 of
the OCAP JPA agreement addresses Member contributions and payments. That section
explicitly states, "except as otherwise specified herein, the Parties are not required under this
Agreement to make any financial contribution of payments to the Authority, and the authority
shall have no right to require such a contribution or payment." (§5.6) It goes on to say, "Unless
otherwise agreed to by the Parties, the debts, liabilities and obligations of the agency shall not
be the debts, liabilities and obligations, either jointly or severally, of the members" of the
Authority. (§5.7) Still, a OCPA Member may, "in its sole discretion," agree to assume of the
Authority's debts, liabilities, or obligations. (§5.7) (Note that MRW is not a law firm and does
not offer a legal opinion as to the financial obligations of OCPA Members to the Authority.)
Nonetheless, starting up a CCA often requires a credit-worthy entity to backstop its initial
financing. Some, such as CleanPowerSF, use the balance sheet from its existing power
enterprise to backstop initial financing. Others have relied upon their host city or county as a
backstop to initial financing. For example, MCE's initial bank loans for working capital were
guaranteed by Marin County and the Town of Fairfax. After approximately six years, the CCA
had demonstrated its creditworthiness and the guarantees were lifted. Still, the JPA cannot place
any financial obligations or risks onto any of its members without that member's approval.
Opt-Out Risk
Customers may choose to opt-out of a CCA service before or during their transfer to CCA, or in
fact at any time. (Reduced CCA participation due to high rates is addressed in Section B,
below). The opt-out risk comes at two district time periods. The first is the initial roll-out of the
CCA program. The most recent CCA launches have experienced only very modest opt-outs:
around two to three percent of the eligible customers have elected not to take service from their
CCA. If there are negative communications to Huntington Beach citizens and businesses during
the initial roll out(e.g., bad press of some sort), then the opt-out rate could increase. Second,
customers could choose to leave CCA service after the initial opt-out period. The most likely
driver of this opt-out risk is expanding Direct Access (DA) eligibility, which is addressed in
more detail below.
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Mitigation: The experience of the prior CCAs suggests that opt-outs at the beginning of service
tend to be in a relatively narrow range, allowing for some predictability in initial opt-outs. In
addition, prudent power procurement strategies will allow for a reasonable uncertainty in load,
especially uncertainty associated with DA expansion, without having to either dump power at a
loss or purchase excessive amounts at high spot market prices. CCAs also can charge an "exit
fee" akin to the PCIA to customers who have left CCA service after power contracts have been
signed to serve their load, but to date none have been imposed.
Rate and PCIA Uncertainty
A primary goal of a CCA is to offer power to Huntington Beach residents and businesses at a
competitive price relative to SCE. In this circumstance, competitiveness is tied to the rate
offered by SCE. A number of factors can cause OCPA's net power costs to exceed SCE's costs.
OCPA will have in place risk management plans and options to both mitigate these risks by
lowering rates passed on to customers back down to a competitive rate as well as to address
unexpected risks.
Changes to SCE Generation Rates: There could be circumstances that result in SCE's
generation' rates being less than OCPA's. Assuming that SCE's rates are based on its cost of
service, OCPA obviously has little or no ability to influence the rates that SCE offers.
Mitigation: While OCPA has little ability to affect SCE's generation rates, it can take proactive
steps to mitigate the impact of reductions in SCE's generation rate. These steps are discussed
below.
Changes to SCE's PCIA Rate: Assembly Bill 117, which established the Community Choice
Aggregation program in California, included a provision that states that the customers that
remain with the utility should be "indifferent" to the departure of customers from utility service
to CCA service. This has been broadly interpreted by the CPUC to mean that the departure of
customers to CCA service cannot cause the rates of the remaining utility "bundled" customers
to go up. To maintain bundled customer rates, the CPUC has instituted an exit fee, known as the
"Power Charge Indifference Amount" or "PCIA" that is charged to all CCA customers. The
PCIA is intended to ensure that generation costs incurred by SCE before a customer transitions
to CCA service are not shifted to remaining SCE bundled service customers.
Thus, for an OCPA customer to realize an economic benefit (i.e., pay the same or less for
electricity), the sum of the OCPA charges plus the PCIA must be lower than SCE's generation
rate.
Mitigation: The PCIA is established at the CPUC. To ensure that this charge is properly
calculated and that it is correctly allocated to OCPA customers, it will be necessary for OCPA
to monitor and possibly actively participate in the regulatory proceedings in which the CPUC
sets the PCIA.
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CPUC "Financial Security Requirement" Risk
Pursuant to CPUC Decision 05-12-041, a new CCA must include in its registration packet
evidence of insurance or bond that will cover costs as potential re-entry fees, specifically, the
cost to SCE if the CCA were to suddenly fail and be forced to return all its customers back to
SCE bundled service. Currently, a bond amount for CCAs is set at $147,000.
This CCA bond amount covers SCE's administrative cost to reintegrate a failed ESP's customers
back into bundled service, plus any positive difference between market-based costs for SCE to
serve the unexpected load and SCE's retail generation rates. Since the CCA bonding requirement
has been in place, retail rates have always exceeded wholesale market prices, and thus CCAs'
bond requirements have been simply equal to the modest administrative cost.
Mitigation During normal conditions, the CCA Bond amount will not be a concern. However,
during a wholesale market price spike, the bond amount could potentially increase to millions of
dollars. But the high bond amount would likely be only short term, until more stable market
conditions prevailed. Also, it is important to note that high power prices (that would cause a high
bond requirement) would also depress SCE's PCIA and would also raise SCE's rates, which
would in turn likely provide the CCA sufficient headroom to handle the higher bonding
requirement and keep its customers' overall costs competitive with what they would have paid
had they remained with SCE.
Direct Access and Competitive Retail Services
The most likely driver of opt-out risk is expanding Direct Access eligibility. As noted earlier,
about 15% of the load in SCE's territory is served through Direct Access, with an additional 3%
likely to have occur in 2020 due to the limited expansion of the DA cap from SB 237. In
addition to modestly expanding the availability of DA service, SB 237 also directed the CPUC
to report to the Legislature by June 1 of 2020, a deadline that the Commission missed on how to
open DA completely for all non-residential customers. The CPUC's report on how to fully open
DA service was delayed due to the outbreak of COVID-19, and preliminary Staff Report was
eventually issued in September 2020. The Staff Report recommended that ESP's demonstrate
obligation compliance by submitting robust IRPs and meeting their procurement, RA, and RPS
requirements before further DA is opened. If legislation directs further reopening of
nonresidential DA, then a re-opening schedule of increments of 10 percent of eligible non-
residential load per year should be used under the condition that each expansion meets IRP, RA,
and RSP requirements and allows LSEs to fully comply with RA requirements. A fully opened
DA market would allow any commercial or industrial customer to switch its provider to a third-
party, potentially reducing OCPA's revenue and creating a mismatch between its wholesale
power portfolio and the CCA's load.
Additional expansions are possible, if not likely. If they come to pass, CCAs will have to
compete with the DA providers on price and/or other services.
Mitigation: As stated earlier, CCAs' history suggests that opt-outs at the beginning of service
tend to be minor. Prudent power procurement strategies will allow for a reasonable uncertainty
in load, including potential DA expansion, without having to dump power or purchase power at
high spot prices. CCAs also can charge an "exit fee" akin to the PCIA to customers who have
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left CCA service after power contracts have been signed to serve their load, but to date none
have been imposed.
Energy Risk Management
A Load Serving Entity (LSE) that is formed as a CCA faces financial risk of procuring energy,
capacity, Renewable Energy Credits (RECs) and carbon-free energy (if needed) at a cost that
exceeds the revenue that it receives from its retail customers. The other risks that are faced by
the CCA roll up into the overarching risk of buying products and operating the CCA at a cost
that exceeds revenue.
Mitigation:The CCA must establish a sound risk management program that forms the structure
for measuring, monitoring, and managing risk. This section describes the elements that
comprise risk, components, and functions of a Risk Management Program, and approaches that
can be used to manage risk. CCA Risk Management plans can be found on their respective
websites.30
Legislative and Regulatory Risks
As noted above, the CCA must meet various procurement requirements established by the State
and implemented by the CPUC or other agencies. Regulatory risk, which changes the rules
under which CCAs operate, affects the CCA's ability to maintain stable procurement activities,
manage costs to its customers, and compete with the local incumbent utility and direct access
providers.
Regulation of the electric utility sector that affects CCAs at the federal level is provided by the
Federal Energy Regulatory Commission (FERC) which regulates the CAISO and at the state
level by the California Public Utilities Commission (CPUC) which implements legislation
passed by the California State Legislature and signed into law by the governor. Although CCAs
are not directly regulated by the CPUC but rather their own local governing bodies, the CPUC
is tasked with implementing details of legislation signed into law.
The risk to CCAs is in changes in the regulatory environment that affects the CCAs ability to
attract, compete for, and retain customers, the products that it has already procured, and
procurement practices going forward. Major issues that are currently evolving include:
• Direct Access
• Resource Adequacy31
3'E.g., San Jose Clean Energy:http://w-\vw.sanioseca.goviDocunientCenter/Vie«7/77619; Silicon Valley Clean
Power:https://wNN,w.svcleanenera�orL,/wp-content/uploads/2019/03/2019-Risk-Management-Poliev-F.pdf.
3' For example,on September 12,2019,the CPUC issued a proposed decision requiring electric system reliability
procurement for 2021-2023 in the Integrated Resource Planning proceeding,Rulemaking 16-02-007. That
proposed decision directs Southern California Edison to procure 1,745 MW of Resource Adequacy with a start date
ranging between August 1,2021 and August 1,2023. Although the decision is not final,if it holds,and Southern
California Edison moves forward,it most likely will be long Resource Adequacy and will need to re-sell it or have
it allocated to Load Serving Entities.
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• Power Charge Indifference Adjustment
• Renewable Energy Purchase Requirement
• Power Content Label Reporting
• Central Procurement Entity
• Energy Provider of Last Resort (POLR)
These include procuring sufficient resource adequacy capacity of the proper type and meeting
RPS requirements that are evolving.32 Additional rules and requirements might be established.
These could affect the economic performance of the CCA.
There are potential risks associated with legislative proceedings that affect the Power Charge
Indifference Adjustment(PCIA), which is a fee ($/kWh) charged by IOUs to cover the
generation costs incurred before a customer changed to a new service provider, such as a CCA.
The fee fluctuates per year based on the difference between an IOU's actual generation cost and
the current market value of its generation portfolio. The PCIA charge also varies per customer
based on the date or "vintage" they enrolled with an alternative provider. CCAs are concerned
with changes in the PCIA since significant increases in the PCIA can affect the rate
competitiveness of CCAs with IOUs.
Legislation that affects RA creates risks for CCAs since all CCAs, like IOUs and Energy
Service Providers (ESPs), have RA obligations. These obligations require LSEs to procure a
specific amount of capacity so that this capacity is available to the CAISO in order to ensure
electric service reliability. Drastic changes in RA requirements, particularly increases in
obligation, would concern any LSE, especially since recently there was a decrease in available
resource adequacy capacity in 2019.
Due to the rise in wildfire risks over the past several years, CCAs are following legislation that
addresses wildfire mitigation and public safety power shutoffs (PSPS). Some CCAs are focused
on insulating their customers from potential wildfire risks and subsequent power shutoffs.
Mitigation: Regulatory and legislative risk can only be managed though close monitoring of the
relevant proceedings at the CPUC and legislation in Sacramento and intervening where needed
to advocate for the CCA. If Huntington Beach pursues CCA, the organization should consider
teaming with other CCA, such as through the Cal-CCA trade organization on regulatory and
legislative monitoring.
"Rules to establish RPS requirements under the new 50%RPS mandate established by SB 100 are currently being
debated at the CPUC.
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Chapter 6. Governance Model Options
In addition to selecting an operating structure, the City will decide between three primary
governance options for the CCA:
1. Where the City is the sole government agency responsible for the CCA's creation and
operation,
2. Participation with other agencies in a Joint Powers Agency (JPA), where multiple
agencies share oversight responsibilities for the new agency; or
3. Joining an existing CCA JPA.
Forming a Single City Agency
In a sole jurisdiction approach, the City maintains full flexibility—and responsibility—for
developing policies and procedures. This means that they can be tailored to and responsive to
the City's stakeholders and constituents only and based upon their own objectives. The City
would be responsible for setting policy priorities in general and making specific decisions about
power generation, staffing policies, local economic development activities and strategies, the
formulation of financial and debt policies, and the development of EE, demand response,
electric vehicle (EV), and distributed generation programs. Along with greater autonomy, the
City would assume all risk, liability, and costs associated with operating the CCA. In this case,
the likely path would be for the City to establish the CCA as an enterprise fund, and work with
appropriate legal counsel to explore options for controls and structural safeguards to insulate it
and minimize risk to the City's general fund.
The City would need to establish the CCA as an enterprise. Enterprises are commonly used for
public utilities such as electric, water and wastewater, or other city functions where a public
service is operated and provided in a manner similar to a business enterprise, where fees and
charges are collected for services provided, and accounting and budgeting are separate from a
city's general fund. Setting the CCA up as an enterprise provides a structure where the revenues
and expenditures are separated into different funds, budgeted for on their own, and reported on
their own financial statements. In an enterprise, financial transactions are reported like business
activity accounting; revenues are recognized when earned and expenses are recognized when
incurred. Establishing an enterprise fund provides management and CCA customers with more
visibility and accountability, and the ability to more easily separate and measure performance,
analyze the impact of management decisions, determine the cost of providing electric service,
and use this information to develop cost-of-service electric rates. Enterprise accounting will
allow the City to demonstrate to customers, the public and other stakeholders, that the cost of
power is being recovered through its rates, and not being subsidized or comingled with other
City funds or functions.
Within the City-Only option, the City would determine if it is to be a fully in-house operation
with existing or added City Staff, or if the City would outsource some of all of the activities,
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with the City only administering contracts and managing vendors. Examples of some of the
categories of operating activities that would need to be performed in-house or outsourced:
• Power procurement, scheduling
• Finance, budgeting, and accounting
• Coordinating with SCE on billing
• Customer service
• Communications, outreach and public relations
• Specific programs such as demand response, EE, EV, or rooftop solar PV
• Regulatory monitoring and compliance, CPUC filings, etc.
The likely best short-term option would be to outsource the highly technical functions, and
maintain some of the management, planning, and other public-facing functions like
communications in-house. The range of options depends upon the degree of operating control
the City wishes to maintain, the costs associated with maintaining those functions, and the
degree of risk it is willing to accept on its own, or delegate to (and pay) third-party providers to
assume.
No matter the amount of outsourcing, a CCA of Huntington Beach's size would eventually (i.e.,
within the first three years) require a core staff of experienced professionals for CCA-specific
operations. This would include:
• Executive Director
• Finance Director
• Data/IT manager
• Power resources/procurement director
• Customer relations/outreach director
• Account service manager
• General Counsel
• Regulatory affairs director
If the CCA were to pursue additional services, such as their own energy efficiency, rooftop
solar, or other customer-facing program, more managers would be needed. Additionally, many
of these would be supported by 1 or 2 support analyst professionals, some of whom could be
shared with other Huntington Beach departments.
All larger CCA have dedicated staffs of 15 —40 employees. For example, San Jose Clean
Energy (SJCE) is a larger city with an enterprise CCA. Its planning documents show an
eventual staff of 20.
Forming or Joining a Joint Powers Agency
The second option would be the formation of a JPA, where the JPA is an independent agency
that operates on behalf of the public agencies which are party to its creation. This is the option
that OCPA is currently offering the City of Huntington Beach. In this approach, the City
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effectively shares responsibility with the other agencies participating in the JPA. The divisions
of these responsibilities and the sharing of decision-making authority would be determined at
the time the JPA is created. Other critical `ground rules' would also need to be negotiated and
memorialized, such as financial and possibly staffing commitments of each participating
agency, and the composition of the board and voting procedures.
Sections 6500 to 6536 of the California Government Code constitute the enabling legislation for
Joint Powers Authorities, and the Public Utilities Code allows a CCA program to be carried out
under a joint powers agreement between entities that each have the capacity to implement a
CCA program individually. A JPA may be formed when it is to the advantage of two or more
public entities with common powers to combine resources, or when local public entities wish to
pool with other public entities to save costs and/or gain economies. It can also be employed to
provide the JPA with powers and authority that participating entities might not have on their
own. A JPA is a legal and separate public entity with the ability to enter contracts, issue debt,
and provide public services, among other things, and like the City, it would have broad powers
related to the operation and management of the CCA, and the study, promotion, development,
and conduct of electricity-related projects and programs.
The JPA structure may reduce the risks of implementing a CCA program to the City by
immunizing the financial assets of the City and the other participating agencies, and distributing
the risks and costs associated with the CCA among the participating entities. It could also
provide the benefits of scale and economy for certain aspects of CCA operation, such as power
procurement or back office billing and accounting functions.
A CCA operated under a JPA could benefit from increased negotiating and buying power for
power purchases, access to better financing terms for borrowing, and operating efficiencies
gained by combining back-office functions such as billing and accounting. These benefits
would accrue to customers through better pricing for power and debt, and ultimately more
competitive electric rates. A larger JPA could also wield more political influence, which could
be beneficial when participating in CPUC or other regional or state regulatory, legislative, or
policy making activities.
Key tradeoffs to the benefits of a JPA are that decision making is allocated amongst the parties
and management independence is diminished. Objectives of participating agencies will likely
differ, and reduced autonomy can manifest when setting priorities for local generation,
economic development activities, and the importance of support programs. When the JPA is
formed, a Board must be appointed to set policy and make decisions. The makeup of this board
is subject to negotiation among the participating entities but would likely be made up of elected
officials from each participating agency. The process of determining the makeup of the board
and each respective members' voting weight can be based on several factors, such as the
percentage of customers or load or relative financial contribution, but in any case, decision
making is certainly more complicated. The number of stakeholder interests and priorities are
multiplied, and in many cases, reaching consensus on key decisions is more complex and time-
consuming than if only one agency were involved.
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Chapter 7. Conclusions
Overall, establishing a CCA in Orange County, such as the OCPA, appears feasible. Given
current and expected market and regulatory conditions, a CCA should be able to, over the long
run, offer its residents and business customers electric rates that are less than that available from
SCE.
Sensitivity analyses suggest that these results are relatively robust. Nonetheless, the margins are
tight in the first few years which could prevent the OCPA from offering a rate discount or
contributing to financial reserves. This conclusion is supported by the rate savings offered by
the current CCAs, only three of which are offering residential rate savings of 2% (the OCPA
target) or more.
OCPA could conceivably reduce the amount greenhouse gases associated with the consumption
of electricity in Orange County, but only under certain circumstances. Because SCE's supply
portfolio has significant carbon-free generation (large hydroelectric and nuclear generators), the
CCA must contract for significant amounts of carbon-fee power above and beyond the required
qualifying renewables in order to actually reduce Orange County's electric carbon footprint.
Therefore, if carbon reductions are a high priority for the CCA, a concerted effort to contract
with hydroelectric or other carbon-free generators would be needed.
Huntington Beach's two options for CCA are forming a City-only enterprise or joining OCPA.
The primary benefits of forming a Huntington Beach-only CCA are more local control over
procurement practices and budgets and being able to offer services that are better tailored to
Huntington Beach. The primary benefits of forming or joining OCPA are forgoing the need for
the City to provide startup funding and loan guarantees, faster implementation, reduced risk,
and reduced administrative burden on City Staff, both in CCA formation and in ongoing
management.
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COMMUNITY CHOICE AGGREGATION
IMPLEMENTATION PLAN AND STATEMENT
OF INTENT
December 28, 2020
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Orange County Power Authority Implementation Plan
Table of Contents
TABLEOF CONTENTS....................................................................................................................................................I
CHAPTER 1—INTRODUCTION......................................................................................................................................1
ORGANIZATION OF THIS IMPLEMENTATION PLAN....................................................................................................................... 2
AB117 CROSS REFERENCES................................................................................................................................................. 3
CHAPTER 2-AGGREGATION PROCESS.........................................................................................................................4
INTRODUCTION...................................................................................................................................................................4
PROCESS OF AGGREGATION..................................................................................................................................................4
CONSEQUENCES OF AGGREGATION......................................................................................................................................... 5
RateImpacts..............................................................................................................................................................5
Local Economic Development Impacts...................................................................................................................... 6
RenewableEnergy Impacts........................................................................................................................................ 6
EnergyEfficiency Impacts.......................................................................................................................................... 7
CHAPTER 3—ORGANIZATIONAL STRUCTURE...............................................................................................................8
ORGANIZATIONAL OVERVIEW................................................................................................................................................8
GOVERNANCE ....................................................................................................................................................................8
MANAGEMENT................................................................................................................................................................... 9
Administration........................................................................................................................................................... 9
Finance....................................................................................................................................................................... 9
Marketing&Public Affairs....................................................................................................................................... 10
Power Resources& Energy Programs...................................................................................................................... 11
ElectricSupply Operations....................................................................................................................................... 11
LocalEnergy Programs............................................................................................................................................ 12
Governmental Affairs& General Counsel................................................................................................................ 12
CHAPTER 4—STARTUP PLAN &FUNDING..................................................................................................................14
STARTUPACTIVITIES.......................................................................................................................................................... 14
Staffing and Contract Services................................................................................................................................. 15
CapitalRequirements............................................................................................................................................... 15
FINANCINGPLAN.............................................................................................................................................................. 15
CHAPTER 5—PROGRAM PHASE-IN............................................................................................................................16
ADDITIONAL MEMBERS ROLL-OUT....................................................................................................................................... 16
NEW RESIDENTIALAND NON-RESIDENTIAL CUSTOMERS........................................................................................................... 16
CHAPTER 6—LOAD FORECAST&RESOURCE PLAN.....................................................................................................17
INTRODUCTION................................................................................................................................................................. 17
RESOURCEPLAN OVERVIEW................................................................................................................................................ 18
SUPPLYREQUIREMENTS..................................................................................................................................................... 20
CUSTOMER PARTICIPATION RATES........................................................................................................................................ 20
CUSTOMERFORECAST........................................................................................................................................................ 21
SalesForecast.......................................................................................................................................................... 22
CapacityRequirements............................................................................................................................................ 22
RENEWABLES PORTFOLIO STANDARDS ENERGY REQUIREMENTS................................................................................................. 25
BasicRPS Requirements........................................................................................................................................... 25
OCPA's Renewables Portfolio Standards Requirement............................................................................................26
PurchasedPower..................................................................................................................................................... 29
RenewableResources..............................................................................................................................................29
EnergyEfficiency......................................................................................................................................................29
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DemandResponse...................................................................................................................................................29
DistributedGeneration............................................................................................................................................ 30
CHAPTER 7—FINANCIAL PLAN...................................................................................................................................32
DESCRIPTION OF CASH FLOW ANALYSIS................................................................................................................................. 32
COST OF CCA PROGRAM OPERATIONS.................................................................................................................................. 32
REVENUES FROM CCA PROGRAM OPERATIONS...................................................................................................................... 32
CASHFLOW ANALYSIS RESULTS........................................................................................................................................... 33
CCA PROGRAM IMPLEMENTATION PRO FORMA..................................................................................................................... 33
OCPAFINANCING ............................................................................................................................................................ 36
CCA PROGRAM START-UP AND WORKING CAPITAL.................................................................................................................36
RENEWABLE RESOURCE PROJECT FINANCING.......................................................................................................................... 36
CHAPTER 8—RATE SETTING, PROGRAM TERMS AND CONDITIONS...........................................................................37
INTRODUCTION................................................................................................................................................................. 37
RATEPOLICIES.................................................................................................................................................................. 37
RateCompetitiveness.............................................................................................................................................. 37
RateStability............................................................................................................................................................ 38
EquityAmong Customer Classes..............................................................................................................................38
CustomerUnderstanding.........................................................................................................................................38
RevenueSufficiency.................................................................................................................................................39
RateDesign.............................................................................................................................................................. 39
CustomPricing Options............................................................................................................................................ 39
NetEnergy Metering................................................................................................................................................39
Disclosure and Due Process in Setting Rates and Allocating Costs among Participants.......................................... 39
CHAPTER 9—CUSTOMER RIGHTS AND RESPONSIBILITIES..........................................................................................41
CUSTOMERNOTICES..........................................................................................................................................................41
TERMINATIONFEE.............................................................................................................................................................42
CUSTOMERCONFIDENTIALITY..............................................................................................................................................42
RESPONSIBILITYFOR PAYMENT............................................................................................................................................43
CUSTOMERDEPOSITS........................................................................................................................................................43
CHAPTER 10-PROCUREMENT PROCESS....................................................................................................................44
INTRODUCTION.................................................................................................................................................................44
PROCUREMENTMETHODS..................................................................................................................................................44
KEYCONTRACTS...............................................................................................................................................................44
ElectricSupply Contract...........................................................................................................................................44
DataManagement Contract....................................................................................................................................45
ELECTRIC SUPPLY PROCUREMENT PROCESS............................................................................................................................46
CHAPTER 11—CONTINGENCY PLAN FOR PROGRAM TERMINATION..........................................................................47
INTRODUCTION.................................................................................................................................................................47
TERMINATIONBY OCPA....................................................................................................................................................47
TERMINATIONBY MEMBERS...............................................................................................................................................48
APPENDIX—OCPA JOINT POWERS AGREEMENT........................................................................................................47
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Chapter 1 - Introduction
Orange County Power Authority (OCPA) is a public agency located within Orange County, formed
for the purpose of implementing a community choice aggregation program (CCA). Member
Agencies of the OCPA includes five (5) cities all of which are municipalities located within Orange
County, and together the "Members" or "Member Agencies," have elected to allow OCPA to
provide electric generation service within their respective jurisdictions. Currently, the following
Members Agencies comprise OCPA:
■ City of Buena Park
■ City of Fullerton
■ City of Huntington Beach
■ City of Irvine
■ City of Lake Forest
This Implementation Plan and Statement of Intent("Implementation Plan")describes OCPA's plans
to implement a CCA program for applicable electric customers within the jurisdictional boundaries
of the County that currently take bundled electric service from Southern California Edison ("SCE").
The OCPA Program will provide electricity customers the opportunity to join together to procure
electricity from competitive suppliers,with such electricity being delivered over SCE's transmission
and distribution system. The planned start date for the Program is April 1, 2022. All current SCE
customers within OCPA's service area will receive information describing the CCA Program and will
have multiple opportunities to choose to remain full requirement ("bundled") customers of SCE,
in which case they will not be enrolled. Thus, participation in the OCPA Program is completely
voluntary; however, customers, as provided by law,will be automatically enrolled according to the
anticipated phase-in schedule later described in Chapter 5 unless they affirmatively elect to opt-
out.
Implementation of OCPA will enable customers within OCPA's service area to take advantage of
the opportunities granted by Assembly Bill 117 ("AB 117"), the Community Choice Aggregation
Law. OCPA's primary objectives in implementing this Program are to provide cost competitive
electric services; promote economic development, reduce electric sector greenhouse gas
emissions ("GHGs") within the County; stimulate renewable energy development; implement
distributed energy resources; promote energy efficiency and demand reduction programs; and
sustain long-term rate stability for residents and businesses through local control.The prospective
benefits to consumers include stable and competitive electric rates, increased renewable and
other low-GHG emitting energy supplies, and the opportunity for public participation in
determining which technologies are utilized to meet local electricity needs.
To ensure successful operation of the Program, OCPA will solicit energy suppliers and marketers
through a competitive process and will negotiate with one or more qualified suppliers throughout
the summer and fall of 2021. Final selection of OCPA's initial energy supplier(s) will be made by
CHAPTER 1—Introduction 1
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OCPA following administration of the aforementioned solicitation process and related contract
negotiations. Information regarding the anticipated solicitation process for OCPA's initial energy
services provider(s) is contained in Chapter 10.
The California Public Utilities Code provides the relevant legal authority for OCPA to become a
Community Choice Aggregator and invests the California Public Utilities Commission ("CPUC" or
"Commission") with the responsibility for establishing the cost recovery mechanism that must be
in place before customers can begin receiving electrical service through the OCPA Program. The
CPUC also has the responsibility for registering OCPA as a Community Choice Aggregator and
ensuring compliance with basic consumer protection rules. The Public Utilities Code requires that
an Implementation Plan be adopted at a duly noticed public hearing and that it be filed with the
Commission in order for the Commission to determine the cost recovery mechanism to be paid by
customers of the Program in order to prevent shifting of costs to bundled customers of the
incumbent utility.
On December 22, 2020, at a duly noticed public hearing, the OCPA Board considered and adopted
this Implementation Plan, through Resolution 2020-05. The Commission has established the
methodology that will be used to determine the cost recovery mechanism, and SCE has approved
tariffs for imposition of the cost recovery mechanism. Finally, each of OCPA's Members has
adopted an ordinance to implement a CCA program through its participation in OCPA, and each of
the Members has adopted a resolution permitting OCPA to provide service within its jurisdiction.
With each of these milestones accomplished, OCPA submits this Implementation Plan to the CPUC.
Following the CPUC's certification of its receipt of this Implementation Plan and resolution of any
outstanding issues, OCPA will take the final steps needed to register as a CCA prior to initiating the
customer notification and enrollment process.
Organization of this Implementation Plan
The content of this Implementation Plan complies with the statutory requirements of AB 117. As
required by Public Utilities Code Section 366.2(c)(3), this Implementation Plan details the process
and consequences of aggregation and provides OCPA's statement of intent for implementing a CCA
program that includes all of the following:
■ Universal access;
■ Reliability;
■ Equitable treatment of all customer classes; and
■ Any requirements established by State law or by the CPUC concerning aggregated service.
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Orange County Power Authority Implementation Plan
The remainder of this Implementation Plan is organized as follows:
Chapter 2: Aggregation Process
Chapter 3: Organizational Structure
Chapter 4: Startup Plan & Funding
Chapter 5: Program Phase-In
Chapter 6: Load Forecast & Resource Plan
Chapter 7: Financial Plan
Chapter 8: Rate setting
Chapter 9: Customer Rights and Responsibilities
Chapter 10: Procurement Process
Chapter 11: Contingency Plan for Program Termination
Appendix: OCPA Joint Powers Agreement
The requirements of AB 117 are cross-referenced to Chapters of this Implementation Plan in the
following table.
AB 117 Cross References
i I7!wm4t6ATION
Statement of Intent Chapter 1: Introduction
Process and consequences of aggregation Chapter 2:Aggregation Process
Organizational structure of the program, its Chapter 3: Organizational Structure Chapter
operations and funding 4:Startup Plan & Funding Chapter 7:
Financial Plan
Disclosure and due process in setting rates and Chapter 8: Rate setting
allocating costs among participants
Rate setting and other costs to participants Chapter 8: Rate setting Chapter 9:
Customer Rights and Responsibilities
Participant rights and responsibilities Chapter 9: Customer Rights and
Responsibilities
Methods for entering and terminating Chapter 10: Procurement Process
agreements with other entities
Description of third parties that will be Chapter 10: Procurement Process
supplying electricity under the program,
including information about financial,
technical and operational capabilities
Termination of the program Chapter 11: Contingency Plan for Program
Termination
CHAPTER 1—Introduction 3
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Chapter 2 - Aggregation Process
Introduction
This chapter describes the background leading to the development of this Implementation Plan
and describes the process and consequences of aggregation, consistent with the requirements
of AB 117.
Beginning in 2018,the City of Irvine began investigating formation of a CCA, pursuant to California
state law, with the following objectives: 1) provide cost-competitive electric services; 2) promote
local economic development; 3) reduce greenhouse gas emissions related to the use of electric
power within the County; and 4) increase the use of renewable energy resources relative to the
incumbent utility. A technical feasibility study for a CCA Program serving the City was completed
County in January 2020.
After nearly 11 months of collaborative work by representatives of the Member Agency city
governments plus independent consultants, local experts and stakeholders, OCPA was formed in
November 2020 for purposes of implementing the OCPA Program.Subsequently, OCPA approved
this Implementation Plan through a duly noted public hearing, complying with the standards
stated in California Public Utilities Code Section 366.2. OCPA is continuing discussions with
additional Cities regarding membership in the JPA. This Implementation Plan will be updated if
and when additional Cities become partners in OCPA.
The OCPA Program represents a culmination of planning efforts that are responsive to the
expressed needs and priorities of the citizenry and business community within the Member
Agencies. OCPA plans to offer choices to eligible customers through the creation of innovative
programs for voluntary purchases of renewable energy, net energy metering to promote
customer-owned renewable generation, energy efficiency, demand responsiveness to promote
reductions in peak demand, distributed energy generation, customized pricing options for large
energy users, and support of local renewable energy projects through offering of a standardized
power purchasing agreement or Feed-In Tariff. The analysis contained in this Plan does not
include non-residential direct access customers as it is assumed that customers taking direct
access service from a competitive electricity provider will continue to remain with their current
supplier.
Process of Aggregation
Before they are enrolled in the Program, prospective OCPA customers will receive two written
notices in the mail from OCPA that will provide information needed to understand the Program's
terms and conditions of service and explain how customers can opt-out of the Program, if desired.
All customers that do not follow the opt-out process specified in the customer notices will be
automatically enrolled, and service will begin at their next regularly scheduled meter read date
no later than thirty days following the date of automatic enrollment, subject to the service phase-
in plan described in Chapter 5. Non-residential Direct Access and Standby customers will not be
CHAPTER 2—Aggregation Process 4
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Orange County Power Authority Implementation Plan
automatically enrolled. The initial enrollment notices will be provided to the first phase of
customers in November 2021. Initial enrollment notices will be provided to subsequent customer
phases consistent with statutory requirements and based on schedule(s) determined by OCPA.
These notices will be sent to customers in subsequent phases twice within 60 days of automatic
enrollment.
Customers enrolled in the OCPA Program will continue to have their electric meters read and to
be billed for electric service by the distribution utility(SCE).The electric bill for Program customers
will show separate charges for generation procured by OCPA as well as other charges related to
electricity delivery and other utility charges assessed by SCE.
After service initiation, customers will have approximately 60 days (two billing cycles) to opt-out
of the OCPA Program without penalty and return to the distribution utility(SCE). OCPA customers
will be advised of these opportunities via the distribution of two additional enrollment notices
provided within the first two months of service. Customers that opt-out between the initial
cutover date and the close of the post enrollment opt-out period will be responsible for Program
charges for the time they were served by OCPA but will not otherwise be subject to any penalty
for leaving the program. Customers that have not opted-out within thirty days of the fourth
enrollment notice will be deemed to have elected to become a participant in the OCPA Program
and to have agreed to the OCPA Program's terms and conditions, including those pertaining to
requests for termination of service, as further described in Chapter 9.
Consequences of Aggregation
Rate Impacts
OCPA customers will pay the generation charges set by OCPA and no longer pay the costs of SCE
generation. Customers enrolled in the Program will be subject to the Program's terms and
conditions, including responsibility for payment of all Program charges as described in Chapter 9.
OCPA's rate setting policies described in Chapter 8 establish a goal of providing rates that are
competitive with the projected generation rates offered by the incumbent distribution utility
(SCE). OCPA will establish rates sufficient to recover all costs related to operation of the Program,
and actual rates will be adopted by OCPA's Board.
Initial OCPA Program rates will be established following approval of OCPA's inaugural program
budget, reflecting final costs from the OCPA Program's energy supplier(s). OCPA's rate policies
and procedures are detailed in Chapter 8. Information regarding final OCPA Program rates will be
disclosed along with other terms and conditions of service in the pre- enrollment and post-
enrollment notices sent to potential customers.
Once OCPA gives definitive notice to SCE that it will commence service, OCPA customers will
generally not be responsible for costs associated with SCE's future electricity procurement
contracts or power plant investments. Certain pre-existing generation costs and new generation
costs that are deemed to provide system-wide benefits will continue to be charged by SCE to CCA
CHAPTER 2—Aggregation Process 5
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Orange County Power Authority Implementation Plan
customers through separate rate components, called the Cost Responsibility Surcharge and the
New System Generation Charge. These charges are shown in SCE's electric service tariffs, which
can be accessed from the utility's website, and the costs are included in charges paid by both SCE
bundled customers as well as CCA and Direct Access customers.'
Local Economic Development Impacts
The indirect effects of creating a OCPA includes the effects of increased commerce, and disposable
income. The technical feasibility study completed for Orange County included an input-output-
(10) analysis that analyzed indirect effects of implementing a CCA. The 10 model turns on the
assumption that forming a CCA will lead to lower energy rates for their customers. Three types of
impacts are analyzed in the 10 model. These are described below.
Local Investment — OCPA may choose to implement programs to incentivize investments in local
distributed energy resources (DER). Participants in OCPA may pursue local clean DER. These
resources can be behind the meter or community projects where several customers participate in
a centrally located project (e.g. "community solar"). This demand for local renewable resources
will lead to an increase in the manufacturing and installation of DER, and lead to an increase in
employment in the related manufacturing and construction sectors.
Increased Disposable Income — OCPA retail rates may be lower that SCE rates creating more
disposable income for individuals and greater revenues for businesses. These cost savings could
then lead to more investment by individuals and businesses for personal or business purposes.This
increase in spending could result in increased employment for multiple sectors such as retail,
construction, and manufacturing.
Environmental and Health Impacts — With the creation of a CCA, such as OCPA, other non-
commerce indirect effects will occur.These may be environmental, such as improved air quality or
improved human health due to the CCA potentially utilizing more renewable energy sources versus
continuing use of traditional energy sources which may have a greater GHG footprint.
Renewable Energy Impacts
A second consequence of the Program will be a likely increase in the proportion of energy
generated and supplied by renewable resources. The resource plan includes procurement of
renewable energy sufficient to meet California's prevailing renewable energy procurement
mandate for all enrolled customers. OCPA customers will also have the opportunity to participate
in a 100 percent renewable supply option. To the extent that customers choose 100 percent
renewable energy option, the renewable content of OCPA's aggregate supply portfolio will further
increase. Initially, requisite renewable energy supply will be sourced through one or more power
purchase agreements. Over time, however, OCPA will likely consider independent development of
new local renewable generation resources. OCPA seeks to establish a resource portfolio that
encourages the use and development of cost-effective local renewable and distributed energy
resources.
1 For SCE bundled service customers, the Power Charge Indifference Adjustment element of the Cost Responsibility Surcharge is
contained within the tariffed Generation rate. Other elements of the Cost Responsibility Surcharge are set forth in SCE's tariffs as separate
rates/charges paid by all customers(with limited exceptions).
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Energy Efficiency Impacts
A third consequence of the Program will be an anticipated increase in energy efficiency program
investments and activities. The existing energy efficiency programs administered by the
distribution utility are not expected to change as a result of OCPA Program implementation. OCPA
customers will continue to pay the public benefits surcharges to the distribution utility, which will
fund energy efficiency programs for all customers, regardless of generation supplier.
The energy efficiency investments ultimately planned for the OCPA Program, as described in
Chapter 6, will follow OCPA's successful application for and administration of requisite program
funding (from the CPUC) to independently administer energy efficiency programs within its
jurisdiction. Such programs will be in addition to the level of investment that would continue in the
absence of OCPA-administered energy efficiency programs. Thus, the OCPA Program has the
potential for increased energy savings and a further reduction in emissions due to expanded energy
efficiency programs.
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Chapter 3 - Organizational Structure
This section provides an overview of the organizational structure of OCPA and its proposed
implementation of the CCA program. Specifically, the key agreements, governance,
management, and organizational functions of OCPA are outlined and discussed below.
Organizational Overview
On November 20, 2020, OCPA formed its Board of Directors to serve as its Governing Board.
The Board is responsible for establishing OCPA Program policies and objectives and overseeing
OCPA's operation. On December 16, 2020, the Board appointed an Interim Executive Director
to manage the operation of OCPA in accordance with policies adopted by the Board. When
OCPA receives CPUC certification, the Executive Director will proceed to appoint staff and
contractors to manage OCPA's activities. These activities include support services
(administration,finance and IT), marketing and public affairs(community outreach, key account
management and customer advocacy), supply acquisition (energy trading, contract negotiation
and system development), and legal and government affairs.
Governance
The OCPA Program will be governed by OCPA's Board, which shall include two appointed
designees from the City of Irvine (initially) and one appointed designee for each of the other
Members. OCPA is a joint powers agency created on November 20, 2020 and formed under
California law. The Members of OCPA include five (5) municipalities located within Orange
County, all of which have elected to allow OCPA to provide electric generation service within
their respective jurisdictions. OCPA's Board will be comprised of representatives appointed
by each of the Members in accordance with the JPA agreement with the exception of the City
of Irvine, who will appoint two directors until start-up funds are repaid. The OCPA Program
will ultimately be operated under the direction of an executive director appointed by the
Board, with legal and regulatory support provided by a Board appointed General Counsel.
The Board's primary duties are to establish program policies, approve rates and provide policy
direction to the Executive Director, who has general responsibility for program operations,
consistent with the policies established by the Board. The Board has elected a Chairman and
Vice Chairman and may establish an Executive Committee, Finance Committee, and
Community Advisory Committee. In the future, the Board may also establish other
committees and sub-committees, as needed, to address issues that require greater expertise
in particular areas. OCPA may also form various standing and ad hoc committees, as
appropriate, which would have responsibility for evaluating various issues that may affect
OCPA and its customers and would provide analytical support and recommendations to the
Board in these regards.
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Management
The OCPA Board of Directors has appointed an Interim Executive Director, who has
management responsibilities over functional areas of Administration & Finance, Marketing &
Public Affairs, Power Resources & Energy Programs, and Government Affairs as well as OCPA's
General Counsel. In performing the obligations to OCPA, the Executive Director may utilize a
combination of internal staff and/or contractors. Certain specialized functions needed for
program operations, namely the electric supply and customer account management functions
described below, may be performed initially by third-party contractors. The organization chart
below illustrates the management structure proposed for OCPA.
PA i • . • of
Directors
Executive
Director
Director •
DirectorPower
Administration Outreach
Resources
• Finance
Manager
Major functions of OCPA that will be managed by the Executive Director are summarized below.
Some of these functions will, at least initially, be fulfilled by outside consultants.
Administration
OCPA's Executive Director is responsible for managing the organization's human resources and
administrative functions and will coordinate with the OCPA Board, as necessary, with regard to
these functions.The functional area of administration will include oversight of employee hiring
and termination, compensation and benefits management, identification and procurement of
requisite office space and various other issues.
Finance
The Executive Director is also responsible for managing the financial affairs of OCPA, including
the development of an annual budget, revenue requirement and rates; managing and
maintaining cash flow requirements; arranging potential bridge loans as necessary; and other
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financial tools.
Revenues via rates and other funding sources (such as a rate stabilization fund, when
necessary) must, at a minimum, meet the annual budgetary revenue requirement, including
recovery of all expenses and any reserves or coverage requirements set forth in bond
covenants or other agreements. OCPA will have the flexibility to consider rate adjustments
within certain ranges, administer a standardized set of electric rates, and may offer optional
rates to encourage policy goals such as economic development or low-income support
programs, provided that the overall revenue requirement is achieved.
OCPA may also offer customized pricing options such as dynamic pricing or contract-based
pricing for energy intensive customers to help these customers gain greater control over their
energy costs. This would provide such customers — mostly larger energy users within the
commercial sector—with greater rate-related flexibility than what is currently available.
OCPA's finance function will be responsible for arranging financing necessary for any capital
projects, preparing financial reports, and ensuring sufficient cash flow for successful operation
of the OCPA Program. The finance function will play an important role in risk management by
monitoring the credit of energy suppliers so that credit risk is properly understood and
mitigated. In the event that changes in a supplier's financial condition and/or credit rating are
identified, OCPA will be able to take appropriate action, as would be provided for in the electric
supply agreement(s).
Marketing& Pubtic Affairs
The marketing and public affairs functions include general program marketing and
communications as well as direct customer interface ranging from management of key account
relationships to call center and billing operations. OCPA will conduct program marketing to
raise consumer awareness of the OCPA Program and to establish the OCPA "brand" in the
minds of the public, with the goal of retaining and attracting as many customers as possible
into the OCPA Program. Outgoing communications will also promote OCPA's customer
programs. Additionally, OCPA will communicate with key policy makers at the State and local
level, community business and opinion leaders, and the media.
In addition to general program communications and marketing, a significant focus on customer
service, particularly representation for key accounts, will enhance OCPA's ability to
differentiate itself as a highly customer-focused organization that is responsive to the needs
of the community. OCPA will also establish a customer call center designed to field customer
inquiries and routine interaction with customer accounts.
The customer service function also encompasses management of customer data. Customer
data management services include retail settlements/billing-related activities and
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Orange County Power Authority Implementation Plan
management of a customer database. This function processes customer service requests and
administers customer enrollments and departures from the OCPA Program, maintaining a
current database of enrolled customers.This function coordinates the issuance of monthly bills
through the distribution utility's billing process and tracks customer payments. Activities
include the electronic exchange of usage, billing,and payments data with the distribution utility
and OCPA, tracking of customer payments and accounts receivable, issuance of late payment
and/or service termination notices (which would return affected customers to bundled
service), and administration of customer deposits in accordance with credit policies of OCPA.
The customer data management services function also manages billing-related
communications with customers, customer call centers, and routine customer notices. OCPA
will initially contract with a third party that has demonstrated the necessary experience and
administers an appropriate customer information system to perform the customer account and
billing services functions.
Power Resources& Energy Programs
OCPA must plan for meeting the electricity needs of its customers utilizing resources consistent
with its policy goals and objectives as well as applicable legislative or regulatory mandates.
OCPA's long-term resource plans (addressing the 10 to 20-year planning horizon) will comply
with California Law and other pertinent requirements of California regulatory bodies. OCPA
may develop and administer complementary energy programs that may be offered to OCPA
customers, including green pricing, energy efficiency, net energy metering, feed-in-tariff or
local resource portfolios, and various other programs that may be identified to support the
overarching goals and objectives of OCPA.
OCPA will develop integrated resource plans that meet program supply objectives and balance
cost, risk and environmental considerations. Integrated resource plans are planning documents
used by electric utilities to produce least cost resource planning by looking at both supply-side
(solar, natural gas) and demand-side (energy efficiency) resources. Such integrated resource
plans will also conform to applicable requirements imposed by the State of California.
Integrated resource planning efforts by OCPA will make maximum use of demand side energy
efficiency, distributed generation and demand response programs as well as traditional supply
options which rely on structured wholesale transactions to meet customer energy
requirements. Integrated resource plans will be updated and adopted by OCPA on an annual
basis.
Electric Supply Operations
Electric supply operations encompass the activities necessary for wholesale procurement of
electricity to serve end use customers. These highly specialized activities include the following:
■ Electricity Procurement—assemble a portfolio of electricity resources to supply the electric
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Orange County Power Authority Implementation Plan
needs of Program customers.
■ Risk Management—application of standard industry techniques to reduce exposure to the
volatility of energy and credit markets and insulate customer rates from sudden changes in
wholesale market prices.
■ Load Forecasting—develop load forecasts, both long-term for resource planning and short-
term for the electricity purchases and sales needed to maintain a balance between hourly
resources and loads.
■ Scheduling Coordination — scheduling and settling electric supply transactions with the
CAISO.
OCPA will initially contract with one or more experienced and financially sound third-party
energy services providers to perform all electric supply operations for the OCPA Program.
These requirements include the procurement of energy, capacity and ancillary services,
scheduling coordinator services, short-term load forecasting and day-ahead and real-time
electricity trading.
Locat Energy Programs
A key focus of the OCPA Program will be the development and implementation of local energy
programs, including energy efficiency programs, distributed generation programs (i.e. behind
the meter solar or community projects), and other energy programs responsive to community
interests.These programs are likely to be phased in during the first several years of operations.
The implementation of such programs will follow the identification of requisite funding
sources.
OCPA will eventually administer energy efficiency, demand response and distributed
generation programs that can be used as cost-effective alternatives to procurement of supply-
resources. OCPA will attempt to consolidate existing demand side programs into this
organization and leverage the structure to expand energy efficiency offerings to customers
throughout its service territory, including the CPUC application process for third party
administration of energy efficiency programs and use of funds collected through the existing
public benefits surcharges paid by OCPA customers.
Governmental Affairs&General Counsel
The OCPA Program will require ongoing regulatory and legislative representation to manage
various regulatory compliance filings related to resource plans, resource adequacy, compliance
with California's Renewables Portfolio Standard ("RPS"), and overall representation on issues
that will impact OCPA, its Members and customers. OCPA will maintain an active role at the
CPUC, the California Energy Commission, the California Independent System Operator, the
California legislature and, as necessary, the Federal Energy Regulatory Commission.
In coordination with the Executive Director and Board of Directors, OCPA has retained outside
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Orange County Power Authority Implementation Plan
legal counsel in the areas of general counsel and regulatory advice/engagement to support
OCPA's administrative operations and governance, review contracts, monitor regulatory
proceedings and provide overall legal support related to the various activities of OCPA.
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Orange County Power Authority Implementation Plan
Chapter 4 - Startup Plan & Funding
This Chapter presents OCPA's plans for the start-up period, including necessary expenses and
capital outlays. The start-up period is defined as the period where OCPA requires financing for
implementation. The start-up period is split into pre-launch and post-launch expenses. The pre-
launch period is estimated to start January 1, 2021 and end on March 31, 2022 when OCPA plans
to begin service to customers. Pre-launch expenses include overhead and notification for
program implementation. Post launch financing includes working capital and annual debt
repayment. As described in the previous Chapter,OCPA may utilize a mix of staff and contractors
in its CCA Program implementation.
Startup Activities
The initial program startup activities include the following:
■ Hire staff and/or contractors to manage implementation
■ Identify qualified suppliers (of requisite energy products and related services) and
negotiate supplier contracts
o Electric supplier and scheduling coordinator
o Data management provider (if separate from energy supply)
o Define and execute communications plan
o Customer research/information gathering
■ Media campaign
o Key customer/stakeholder outreach
o Informational materials and customer notices
■ Customer call center
■ Post CCA bond and complete requisite registration requirements
■ Pay utility service initiation, notification and switching fees
■ Perform customer notification, opt-out and transfers
■ Conduct load forecasting
■ Establish rates
■ Legal and regulatory support
■ Financial management and reporting
Other costs related to starting up the OCPA Program will be the responsibility of the OCPA
Program's contractors (and are assumed to be covered by any fees/charges imposed by such
contractors). These may include capital requirements needed for collateral/credit support for
electric supply expenses, customer information system costs, electronic data exchange system
costs, call center costs, and billing administration/settlements systems costs.
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Orange County Power Authority Implementation Plan
Staffing and Contract Services
Personnel in the form of OCPA staff or contractors will be added incrementally to match
workloads involved in forming the new organization, managing contracts, and initiating customer
outreach/marketing during the pre-operations period. During the startup period, minimal
personnel requirements would include an Executive Director, a General Counsel, and other
personnel needed to support regulatory, procurement, finance and communications activities.
For budgetary purposes, it is assumed that 5 to 10 full-time equivalents (staff or contracted
professional services) supporting the above listed activities would be engaged during the initial
start-up period. Following this period, additional staff and/or contractors may be retained, as
needed, to support the roll-out of additional value-added services (e.g., efficiency projects) and
local generation projects and programs.
Capital Requirements
The start-up of the CCA Program will require capital for three major functions: (1) staffing and
contractor costs; (2) deposits and reserves; and (3) working capital. Based on OCPA's anticipated
start-up activities and phase-in schedule, a total need of $15.5 million has been identified to
support the aforementioned functions. The finance plan in Chapter 7 provides some additional
detail regarding OCPA's expected capital requirements and general Program finances.
Related to OCPA's initial capital requirement, this amount is expected to cover staffing and
contractor costs during startup and pre-startup activities, including direct costs related to public
relations support, technical support, and customer communications. Requisite deposits and
operating reserves of $13 million are reflected in the initial capital requirement, including the
following items: 1) operating reserves to address anticipated cash flow variations (as well as
operating reserve deposits that will likely be required by OCPA's power supplier(s)); 2) requisite
deposit with the California Independent System Operator prior to commencing market
operations; and 3) SCE financial security requirement ($147,000). In addition, the CCA bond
posted to the CPUC ($100,000) is included in the total capital requirements of$13 million.
Operating revenues from sales of electricity will be remitted to OCPA beginning approximately
sixty days after the initial customer enrollments. This lag is due to the distribution utility's
standard meter reading cycle of 30 days and a 30-day payment/collections cycle. OCPA will need
working capital to support electricity procurement and costs related to program management,
which is included in OCPA's initial capital requirements.
Financing Plan
OCPA's initial capital requirement will be provided via a combination of cash contributions from
the Member Agencies and loans from conventional financial institutes.These loans will be repaid
by OCPA no later than June 30, 2027. OCPA will recover the principal and interest costs
associated with the start-up funding via retail generation rates charged to OCPA customers.
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Orange County Power Authority Implementation Plan
Chapter 5 - Program Phase-In
v -
OCPA will roll out its service offering to customers over the course of three phases:
Phase 1. All Non-Residential Accounts (April 1, 2022)
Phase 2. Residential Accounts (October 1, 2022)
Phase 3. Net Energy Metering Accounts (Various)
This approach provides OCPA with the ability to initiate its program with sufficient economic scale
before building to full program integration for an expected customer base of approximately
288,963 accounts, post customer opt-out. OCPA will offer service to all customers on a phased
basis, which is expected to be completed within 24 months of initial service to Phase 1 customers.
The Program is targeted to begin on or about April 1, 2022, subject to a decision to proceed by
OCPA. At start-up, OCPA anticipates serving approximately 35,742 larger customer accounts,
comprised of all non-residential accounts within Member Agency jurisdictions. Depending on final
wholesale power prices,the balance of the OCPA customers will be launched in October 2022. Net
energy metering accounts will be phased into OCPA at the time of their annual true-up.
Additional Members Roll-Out
Cities can join OCPA at any time they decide to join. This leaves room for OCPA to expand its
territory. On a regular basis, an updated Plan will be submitted to the CPUC, if any new members
join the Program, however, load will not be served until the next year, in accordance with the
Resource Adequacy Proceeding and Resolution E-4907. Prior to submitting an updated Plan, OCPA
will work with SCE on the timeline to begin service and will provide notification to the CPUC staff
that an update will be submitted.
New Residential and Non-Residential Customers
For any new customers moving into the OCPA service territory after it has begun servicing load,
OCPA intends to provide service to all customer classes (i.e., Residential, Commercial, and NEM
customers) during one billing cycle. However, if a customer moves into the OCPA region prior to
April 1, enrollment, OCPA will begin to service the load-based timeline stated above.
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Chapter 6 - Load Forecast & Resource Plan
Introduction
This chapter describes the planned mix of electric resources that will meet the energy
demands of OCPA customers using a diversified portfolio of electricity supplies. Several
overarching policies govern the resource plan and the ensuing resource procurement
activities that will be conducted in accordance with the plan. These key polices are as follows:
■ OCPA will manage a diverse resource portfolio to increase control over energy costs
and maintain competitive and stable electric rates.
■ OCPA will likely seek to increase use of renewable energy resources and distributed
energy resources in order to reduce reliance on fossil-fueled electric generation for
purposes of reducing electric sector GHG emissions.
■ OCPA will likely apply for the administration of energy efficiency program funding to
help customers reduce energy costs through administration of enhanced customer
energy efficiency, distributed generation, and other demand reducing programs.
■ OCPA will benefit the area's economy through lower electric bills and investment in
local infrastructure, energy projects and energy programs.
OCPA's initial resource mix will include a proportion of renewable energy meeting California's
prevailing RPS procurement mandate. As the OCPA Program moves forward, incremental
renewable supply additions will be made based on resource availability as well as economic
goals of the OCPA Program to achieve increased renewable energy content over time.
OCPA's commitment to renewable generation adoption may involve both direct investment
in new renewable generating resources, partnerships with experienced public power
developers/operators and purchases of renewable energy from third party suppliers.
The plan described in this section would accomplish the following:
■ Procure energy through one or more contracts with experienced, financially stable
energy suppliers sufficient to offer three distinct generation rate tariffs: 1) 100 percent
renewable energy; 2) 50 percent renewable energy; and 3) a program service option
that includes a proportion of renewable energy meeting California's prevailing
renewable energy procurement mandate.
■ Member agencies will choose the default option into which their customers will be
enrolled when service begins. After enrollment, customers will be allowed to
participate in any of the three available energy supply options.
■ Continue increasing renewable energy supplies over time to meet or exceed state
mandates, subject to resource avai►ability and economic viability.
■ Actively pursue energy efficiency projects and programs using program revenues, in
collaboration with the other efficiency program administrators in the region.
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Orange County Power Authority Implementation Plan
Additionally, if OCPA is successful in applying for administration of public funding to
support locally administered efficiency programs, it will even more robustly work to
reduce net electricity purchases within the region.
■ Encourage distributed renewable generation in the local area through the offering of a
net energy metering tariff, a possible standardized power purchase agreement or"Feed
-In Tariff," and other creative, customer-focused programs targeting increased access
to local renewable energy sources.
OCPA will comply with regulatory rules applicable to California load serving entities. OCPA will
arrange for the scheduling of sufficient electric supplies to meet the demands of its customers.
OCPA will adhere to capacity reserve requirements established by the CPUC and the CAISO
designed to address uncertainty in load forecasts and potential supply disruptions caused by
generator outages and/or transmission contingencies. These rules also ensure that physical
generation capacity is in place to serve OCPA's customers, even if there were a need for the
OCPA Program to cease operations and return customers to SCE. In addition, OCPA will be
responsible for ensuring that its resource mix contains sufficient production from renewable
energy resources needed to comply with the statewide RPS (33 percent renewable energy by
2020, increasing to 60 percent by 2030). The OCPA resource plan will meet or exceed all of the
applicable regulatory requirements related to resource adequacy and the RPS.
Resource Plan Overview
To meet the aforementioned objectives and satisfy the applicable regulatory requirements
pertaining to OCPA's status as a California load serving entity, OCPA's resource plan includes a
diverse mix of power purchases, renewable energy, distributed energy, new energy efficiency
programs, demand response and distributed generation.A diversified resource plan minimizes
risk and volatility that can occurfrom overreliance on a single resource type or fuel source, and
thus increases the likelihood of rate stability. The ultimate goal of OCPA's resource plan is to
reduce electric sector GHG emissions while offering competitive generation rates to
participating customers. The planned power supply is initially comprised of power purchases
from third party electric suppliers and, in the longer-term, may also include renewable
generation assets owned or controlled by OCPA.
Once the OCPA Program demonstrates it can operate successfully, OCPA may begin evaluating
opportunities for investment in renewable generating assets, subject to then-current market
conditions, statutory requirements, financial constraints and regulatory considerations. Any
renewable generation owned by OCPA, or controlled under long-term power purchase
agreement with a power developer, could provide a portion of OCPA's electricity requirements
on a cost-of-service basis.A cost-of-service basis means that the cost of power is based on the
variable cost to operate the generation asset. Depending upon market conditions and,
importantly, the applicability of tax incentives for renewable energy development, electricity
purchased under a cost-of-service arrangement can be more cost-effective than purchasing
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renewable energy from third party developers, which will allow the OCPA Program to pass on
cost savings to its customers through competitive generation rates. Any investment decisions
will be made following thorough environmental reviews and in consultation with qualified
financial and legal advisors.
As an alternative to direct investment, OCPA may consider partnering with an experienced
power developer and could enter into a long-term (20-to-30 year) power purchase agreement
that would support the development of new renewable generating capacity. Such an
arrangement could be structured to reduce the OCPA Program's operational risk associated
with capacity ownership while providing its customers with all renewable energy generated by
the facility under contract. This option may be attractive to OCPA as it works to achieve
increasing levels of renewable energy supply and competitive rate levels for its customers.
OCPA's resource plan will integrate supply-side resources (solar, natural gas etc.) with
programs that will help customers reduce their energy costs through improved energy
efficiency and other demand-side measures. As part of its integrated resource plan, OCPA will
actively pursue, promote and ultimately administer a variety of customer energy efficiency
programs that can cost-effectively displace supply-side resources.
OCPA's indicative resource plan for the years 2022 through 2031 is summarized in the
following table. Note that OCPA's projections reflect a portfolio mix of 36% renewable
resources and 64% conventional resources. Subject to the availability of funds, a sizable
percentage of the conventional resources reflected in the following table will be replaced with
GHG-free resources.
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Table 1
Orange County Power Authority
Proposed Resource Plan(GWh)
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
OCPA Demand(GWh)
Retail Demand 2,399 4,124 4,150 4,175 4,201 4,228 4,254 4,280 4,307 4,334
Distributed Generation 0 0 0 0 0 0 0 0 0 0
Energy Efficiency 0 0 0 0 0 0 0 0 0 0
Losses and LIFE 134 231 232 234 235 237 238 240 241 243
TOTAL DEMAND 2,533 4,355 4,382 4,409 4,437 4,464 4,492 4,520 4,548 4,576
OCPA Supply(GWh)
Total Renewable Resources 864 1,608 1,660 1,879 2,101 2,198 2,340 2,483 2,584 2,600
Total Conventional Resources 1,670 2,746 2,722 2,530 2,336 2,266 2,152 2,037 1,964 1,976
TOTAL SUPPLY 2,533 1 4,355 4,382 4,409 4,437 4,464 4,492 1 4,520 4,548 4,576
Energy Open Position 0 0 0 0 0 0 0 0 0 0
Supply Requirements
OCPA power supply requirements are developed based on the customer and consumption
data provided by SCE for the Member Agencies. Program participation rates are applied such
that 95%of residential and 90%of non-residential customers are included in the load forecast.
Hourly load profiles, developed by SCE, are applied to customer rate classes and summed up
to develop OCPA system loads by month and hour. The electric sales forecast and load profile
will be affected by OCPA's plan to introduce the OCPA Program to customers in phases, and
the degree to which customers choose to remain with SCE during the customer enrollment
and opt-out periods. OCPA's phased roll-out plan and assumptions regarding customer
participation rates are discussed below.
Customer Participation Rates
Customers will be automatically enrolled in the OCPA Program unless they opt-out during the
customer notification process conducted during the 60-day period prior to enrollment and
continuing through the 60-day period following commencement of service. For all phases,
OCPA anticipates a 90-95% participation of SCE bundled service customers, based on reported
opt-out rates for the Clean Power Alliance, Western Community Energy, Sonoma Clean Power
and Lancaster Choice Energy CCA programs plus the increase in the cap on Direct Access
service. It is assumed that new and existing non-residential Direct Access (DA) customers will
continue to remain with their current electricity supplier.
The participation rate is not expected to vary significantly among customer classes, in part due
to the fact that OCPA will offer three distinct rate tariffs that will address the needs of cost-
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Orange County Power Authority Implementation Plan
sensitive customers as well as the needs of both residential and business customers that prefer
a highly renewable energy product. The assumed participation rates will be refined as OCPA's
public outreach and market research efforts continue to develop.
Customer Forecast
Once customers enroll in each phase, they will be switched over to service by OCPA on their
regularly scheduled meter read date over an approximately thirty-day period. Approximately
700 service accounts per day will be switched over during the first month of service. The
estimated number of accounts by rate class is shown in Table 2 below.
Table 2
Orange County Power Authority
Eligible Retail Service Accounts
Not Adjusted for Participation Rates
OCPA Customers Phase 1 Eligible Accounts Phase 2 Eligible Accounts
Residential -- 271,260
Small Commercial 32,138 32,138
Medium Commercial 5,755 5,755
Large Commercial 461 461
Industrial 191 191
Street Lighting&Traffic 3,635 3,635
Agricultural & Pumping 397 397
Total 42,576 313,836
OCPA assumes that customer growth will generally offset customer attrition (opt-outs) over
time, resulting in a relatively stable customer base (0.6% annual growth) over the noted
planning horizon. OCPA believes that its assumptions regarding the offsetting effects of growth
and attrition are reasonable in consideration of the historical customer growth within Orange
County and the potential for continuing customer opt-outs following mandatory customer
notification periods. The forecast of service accounts (customers) served by OCPA for each of
the next ten years is shown in the following table:
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Table 3
Orange County Power Authority
Retail Service Accounts(End of Year)
OCPA Customers
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Residential 261,000 262,618 264,246 265,885 267,533 269,192 270,861 272,540 274,230 275,930
Small Commercial 29,000 29,180 29,361 29,543 29,726 29,910 30,096 30,282 30,470 30,659
Medium Commercial 5,000 5,031 5,062 5,094 5,125 5,157 5,189 5,221 5,253 5,286
Large Commercial 378 380 383 385 387 390 392 395 397 400
Industrial 159 160 161 162 163 164 165 166 167 168
Street Lighting&Traffic 3,000 3,019 3,037 3,056 3,075 3,094 3,113 3,133 3,152 3,172
Agricultural&Pumping 341 343 345 347 350 352 354 356 358 361
Total 298,878 300,731 302,596 304,472 306,359 308,259 310,170 312,093 314,028 315,975
Sales Forecast
OCPA's forecast of GWh sales reflects the roll-out and customer enrollment schedule shown
above. Annual energy requirements are shown below in GWh.
Table 4
Orange County Power Authority
Annual Energy Requirements(GWh)2022 to 2031
OCPA Energy Requirement(GWh)
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Retail Energy 2,399 4,124 4,150 4,175 4,201 4,228 4,254 4,280 4,307 4,334
Losses and LIFE 134 231 232 234 235 237 238 240 241 243
Total Load Requirement 2,533 1 4,355 1 4,382 1 4,409 1 4,437 1 4,464 1 4,492 1 4,520 1 4,548 1 4,576
Capacity Requirements
The CPUC's resource adequacy standards applicable to the OCPA Program require a
demonstration one year in advance that OCPA has secured physical capacity for 90 percent of its
projected peak loads for each of the five months May through September, plus a minimum 15
percent reserve margin. On a month-ahead basis, OCPA must demonstrate 100 percent of the
peak load plus a minimum 15 percent reserve margin.
A portion of OCPA's capacity requirements must be procured locally,from the SCE area as defined
by the CAISO. Local area resource needs will be defined by the CPUC annually based on the
capacity study. A local resource for OCPA is likely to be located within the LA Basin area on the
Figure below. Local resources ensure system reliability within areas that are not constrained by
transmission capacity.
CHAPTER6-Load Forecast&Resource Plan 22
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Orange County Power Authority Implementation Plan
Figure 1 CA1SO Local Capacity Area Mapz
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The local capacity requirement is a percentage of the total (SCE service area) local capacity
requirements adopted by the CPUC based on OCPA's forecasted peak load. OCPA must
demonstrate compliance or request a waiver from the CPUC requirement as provided for in cases
where local capacity is not available.
OCPA is also required to demonstrate that a specified portion of its capacity meets certain
operational flexibility requirements under the CPUC and CAISO's flexible resource adequacy
framework. The estimated forward resource adequacy requirements for 2022 through 2024 are
shown in the following tables.'
Z CAISO. 2021 Local Capacity Area Technical Study Draft. October 24, 2019.
3 The figures shown are estimates. The OCPA's resource adequacy requirements will be subject to modification due to application
of certain coincidence adjustments and resource allocations relating to utility demand response and energy efficiency programs, as
well as generation capacity allocated through the Cost Allocation Mechanism. These adjustments are addressed through the CPUC's
resource adequacy compliance process.
CHAPTER 6—Load Forecast&Resource Plan 23
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Orange County Power Authority Implementation Plan
Table 5
Orange County Power Authority
Forward Capacity and Reserve Requirements(MW)
2021 to 2023
Month 2022 2023 2024
January 641 645
February 565 549
March 590 594
April 384 565 568
May 417 613 617
June 425 625 629
July 484 748 752
August 485 777 782
September 404 683 688
October 663 667 671
November 555 558 562
December 624 628 632
OCPA's plan ensures that sufficient reserves will be procured to meet its peak load at all times.
OCPA's projected annual capacity requirements are shown in the following table:
Table 6
Orange County Power Authority
Capacity Requirements(MW)
2022 to 2031
Demand(MW) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Retail Demand 628 736 740 745 750 754 759 763 768 772
Losses and LIFE 35 41 41 42 42 42 42 43 43 43
Total Net Peak Demand 663 777 j 782 787 792 796 801 806 j 811 816
Reserve Requirement(%) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%
Capacity Reserve Requirement 99 117 117 118 119 119 120 121 122 122
Capacity Requirement Including Reserve 762 894 899 905 910 916 921 927 932 938
Local capacity requirements are a function of the SCE area resource adequacy (RA) requirements
and OCPA's projected peak demand. OCPA will need to work with the CPUC's Energy Division
and staff at the California Energy Commission to obtain the data necessary to calculate its
monthly local capacity requirement. A preliminary estimate of OCPA's annual local capacity
requirement for the ten-year planning period ranges from approximately 331 MW to 408 MW as
CHAPTER 6—Load Forecast&Resource Plan 24
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Orange County Power Authority Implementation Plan
shown in the following table:
Table 7
Orange County Power Authority
Estimated Local Capacity Requirements(MW)
2022 to 2031
2022 2023 2024 2025 2026 2027 1 2028 2029 2030 2031
OCPA Peak 663 777 782 787 792 796 801 806 811 816
Local Capacity Req.(%of Peak) 50% 50% 50% 50% 50% 50% 50% 50% 50% 50%
OCPA Local Capacity Req.,Total 331 389 391 393 396 398 401 403 405 408
The CPUC assigns local capacity requirements during the year prior to the compliance period;
thereafter, the CPUC provides local capacity requirement true-ups for the second half of each
compliance year. Local capacity requirements apply to a three-year process where an LSE must
show 100% local RA compliance for the first 2 years and 50%for the third year. The rules around
RA requirements are being reviewed as part of the central procurement proceeding.
OCPA will coordinate with SCE and appropriate state agencies to manage the transition of
responsibility for resource adequacy from SCE to OCPA during CCA program phase-in. For system
resource adequacy requirements, OCPA will make month-ahead showings for each month that
OCPA plans to serve load, and load migration issues would be addressed through the CPUC's
approved procedures. OCPA will work with the California Energy Commission and CPUC prior to
commencing service to customers to ensure it meets its local and system resource adequacy
obligations through its agreement(s) with its chosen electric supplier(s).
Renewables Portfolio Standards Energy Requirements
Basic RPS Requirements
As a CCA, OCPA will be required by law and ensuing CPUC regulations to procure a certain
minimum percentage of its retail electricity sales from qualified renewable energy resources. For
purposes of determining OCPA's renewable energy requirements, the same standards for RPS
compliance that are applicable to the distribution utilities are assumed to apply to OCPA.
California's RPS requires OCPA purchase a minimum of 60% renewable energy by 2030. OCPA
will also adopt an integrated resource plan in compliance with SB 350. OCPA understands that
various details related to this planning requirement are continuing to be developed, and OCPA
intends to monitor and participate, as appropriate, in pertinent proceedings to promote the
preparation and submittal of a responsive planning document. Furthermore, OCPA will ensure
that all long-term renewable energy contracting requirements, as imposed by SB 350, will be
satisfied through appropriate transactions with qualified suppliers and will also reflect this intent
CHAPTER 6—Load Forecast&Resource Plan 25
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Orange County Power Authority Implementation Plan
in ongoing resource planning and procurement efforts.
In September of 2018, Governor Brown signed into law SB 100, which calls for all electricity
supplies in the State to be "carbon-free" by 2045. The legislation is important for all LSEs in that
is tightens the RPS targets even from SB 350. While the PCC categorization has not been
determined, the overall targets in SB 100 are as follows:
• 50% eligible renewable energy by 2026
• 60% eligible renewable by 2030
• 100% carbon free by 2045 (note "carbon-free" vs. "renewable").
Table 8 summarizes the various California targets.
Table 8
California Renewable Portfolio Standards and Greenhouse Gas Mandates
Target Date: 2017 2020 2026 2030 2045
RPS Goal 20% 33% 50% 60% 100%1
Year Passed 2002(SB 1078) 2011(SB 21X) 2018(SB 100) 2018(SB 100) 2018(SB 100)
1100%carbon free,60%renewable.
For the purposes of meeting the RPS, what qualifies a resource as renewable varies by the
resource's location and type of contract. Resources which have their first point of
interconnection or are delivered directly to the California grid (Balancing Authorities within
California) and are contracted for by the LSE as energy bundled with their renewable energy
credits (RECs) qualify as Portfolio Content Category 1 (PCC1) resources. Resources which sell
energy and RECs together but are not necessarily connected to the California grid and not
delivered simultaneously (i.e. the energy may be "shaped" into flat blocks of power) qualify as
PCC2 resources. RECs sold independently of the energy produced qualify as PCC3 resources.
Current RPS mandates are provided in the table below.
OCPA's Renewables Portfolio Standards Requirement
OCPA's annual RPS procurement requirements, as specified under California's RPS program, are
shown in the table below. When reviewing this table, it is important to note that OCPA projects
increases in energy efficiency savings as well as increases in locally situated distributed
generation capacity, resulting in only a slight upward trend in projected retail electricity sales.
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Orange County Power Authority Implementation Plan
Table 9
Orange County Power Authority
RPS Requirements(GWh)
2022 to 2031
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Retail Sales 2,399 4,124 4,150 4,175 4,201 4,228 4,254 4,280 4,307 4,334
Renewable Energy Purchase 864 1,608 1,660 1,879 2,101 2,198 2,340 2,483 2,584 2,600
%of Current Year Retail Sales 36% 39% 40% 45% 500 52% 55% 58% 60% 60%
65%Long-Term Contracts 561 1,045 1,079 1,221 1,365 1,429 1,521 1,614 1,680 1,690
Table 10 illustrates additional details for renewable procurement and long-term
procurement. The table does not include an estimate for the minimum margin of
procurement (MMOP) at this time. The MMOP is the amount by which OCPA will over-
acquire renewable resources to hedge against the risk of underperformance. OCPA plans
to revise and adopt an MMOP through the IRP process and to include an estimate in its RPS
procurement plan. OCPA notes that existing CCAs vary in their assessment of MMOP. Some
CCAs do not adopt a specific MMOP since their base power portfolio exceeds the RPS
requirement. Others assess an MMOP varying from 2% to 10%. MMOP will be established
through OCPA power procurement and risk policies.
CHAPTER6—Load Forecast&Resource Plan 27
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Orange County Power Authority Implementation Plan
Table 10
OCPA Renewable Procurement
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Net Retail Sales(MWh) 2,399,094 4,124,068 4,149,699 4,175,490 4,201,442 4,227,554 4,253,829 4,280,268 4,306,870 4,333,638
Annual Procurement 863,674 1,608,386 1,659,880 1,878,971 2,100,721 2,198,328 2,339,606 2,482,555 2,584,122 2,600,183
Target(MWh)
Minimum Margin of
Procurement* (MWh)
Annual L/T Procurement 561,388 1,045,451 1,078,922 1,221,331 1,365,469 1,428,913 1,520,744 1,613,661 1,679,679 1,690,119
Target(MWh)
%of L-T Procurement
Target 65% 65% 65% 65% 65% 65% 65% 65% 65% 65%
Forecasted L-T 561,388 1,045 451 1,078,922 1,221 331 1,365,469 1,428,913 1,520 744 1,613 661 1,679,679 1,690,119
Procurement(MWh)
%of L/T Procurement
Forecasted 65% 65% 65% 65% 65% 65% 65% 65% 65% 65%
Surplus of L-T 0 0 0 0 0 0 0 0 0 0
Procurement(MWh)
*At this time OCPA has not yet evaluated a minimum margin of procurement for renewable energy.
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Orange County Power Authority Implementation Plan
Purchased Power
Power purchased from power marketers, public agencies, generators, or utilities will be a significant
source of supply during the first several years of OCPA Program operation. OCPA will initially
contract to obtain all of its electricity from one or more third party electric providers under one or
more power supply agreements, and the supplier(s) will be responsible for procuring the specified
resource mix, including OCPA's desired quantities of renewable energy,to provide a stable and cost-
effective resource portfolio for the Program.
Renewable Resources
OCPA will initially secure necessary renewable power supply from its third-party electric supplier(s).
OCPA may supplement the renewable energy provided under the initial power supply contract(s)
with direct purchases of renewable energy from renewable energy facilities or from renewable
generation developed and owned by OCPA. At this point in time, it is not possible to predict what
projects might be proposed in response to future renewable energy solicitations administered by
OCPA, unsolicited proposals or discussions with other agencies. Renewable projects that are located
virtually anywhere in the Western Interconnection can be considered as long as the electricity is
deliverable to the CAISO control area, as required to meet the Commission's RPS rules and any
additional guidelines ultimately adopted by OCPA. The costs of transmission access and the risk of
transmission congestion costs would need to be considered in the bid evaluation process if the
delivery point is outside of OCPA's load zone, as defined by the CAISO.
Energy Efficiency
OCPA's energy efficiency goals will reflect a commitment to increasing energy efficiency within the
County, expanding beyond the savings achieved by SCE's programs.To promote the achievement of
this goal, OCPA will likely complete the CPUC application process for third party administration of
energy efficiency programs and use of funds collected through the existing public benefits
surcharges paid by OCPA customers. To the extent that OCPA is successful in this application
process, it will seek to maximize end-use customer energy efficiency by facilitating customer
participation in existing utility programs as well as by forming new programs that will displace
OCPA's need for traditional electric procurement activities. Additional details related to OCPA's
energy efficiency plan will be developed once OCPA Program phase-in is underway.
Demand Response
Demand response programs provide incentives to customers to reduce demand upon request by
the load serving entity (i.e., OCPA), reducing the amount of generation capacity that must be
maintained as infrequently used reserves. Demand response programs can be cost effective
alternatives to procured capacity that would otherwise be needed to comply with California's
resource adequacy requirements. The programs also provide rate benefits to customers who have
the flexibility to reduce or shift consumption for relatively short periods of time when generation
capacity is most scarce. Like energy efficiency, demand response can be a win/win proposition,
providing economic benefits to the electric supplier as well as customer service benefits.
CHAPTER 6—Load Forecast&Resource Plan 29
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Orange County Power Authority Implementation Plan
In its ruling on local resource adequacy, the CPUC found that dispatchable demand response
resources as well as distributed generation resources should be counted for local capacity
requirements. This resource plan will likely anticipate that OCPA's demand response programs
would partially offset its local capacity requirements.
SCE offers several demand response programs to its customers, and OCPA intends to recruit those
customers that have shown a willingness to participate in utility programs into similar programs
offered by OCPA. OCPA may also adopt a demand response program that enables it to request
customer demand reductions during times when capacity is in short supply or spot market energy
costs are exceptionally high.
Appropriate limits on customer curtailments, both in terms of the length of individual curtailments
and the total number of curtailment hours that can be called should be included in OCPA's demand
response program design. It will also be important to establish a reasonable measurement protocol
for customer performance of its curtailment obligations and deploy technology to automate
customer notifications and responses. Performance measurement should include establishing a
customer specific baseline of usage prior to the curtailment request from which demand reductions
can be measured. OCPA may utilize experienced third-party contractors to design, implement and
administer its demand response programs.
Distributed Generation
Consistent with OCPA's policies and the state's Energy Action Plan, clean distributed generation is a
component of the integrated resource plan. OCPA will work to promote deployment of photovoltaic
(PV) plus storage systems within OCPA's service territory, with the goal of optimizing the use of the
available incentives that are funded through current utility distribution rates and public benefits
surcharges. OCPA also plans to implement a net energy metering program and possibly a feed-in-
tariff to promote local investment in distributed generation.
There are clear environmental benefits and strong customer interest in distributed PV systems. To
support such systems, OCPA may provide direct financial incentives from revenues funded by
customer rates to further support use of solar power or other renewable resources within the local
area. Due to the increasing penetration of solar PV in California's energy mix, OCPA will also consider
incentives for behind the meter solar plus storage projects.
With regard to OCPA's prospective net energy metering program, it is anticipated that OCPA will
adopt a program that would allow participating customers to sell excess energy produced by
customer-sited renewable generating sources to OCPA. Such a program would be generally
consistent with principles identified in Assembly Bill 920 ("AB 920"), which directed the CPUC to
establish and implement a compensation methodology for surplus renewable generation produced
by net energy metered facilities located within the service territories of California's large investor
owned utilities, including SCE. However, OCPA may choose to offer enhanced compensation
structures, relative to those implemented as a result of AB 920, as part of the direct incentives that
may be established to promote distributed generation development within Orange County. To the
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Orange County Power Authority Implementation Plan
extent that incentives offered by OCPA improve project economics for its customers, it is reasonable
to assume that the penetration of distributed generation within the County would increase.
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Orange County Power Authority Implementation Plan
Chapter ? - Financial Plan
This Chapter examines the monthly cash flows expected during the startup and customer phase-
in period of the OCPA Program and identifies the anticipated financing requirements. It includes
estimates of program startup costs, including necessary expenses and capital outlays. It also
describes the requirements for working capital and long-term financing for the potential
investment in renewable generation, consistent with the resource plan contained in Chapter 6.
Description of Cash Flow Analysis
OCPA's cash flow analysis estimates the level of capital that will be required during the startup and
phase-in period. The analysis focuses on the OCPA Program's monthly costs and revenues and
specifically accounts for the phased enrollment of OCPA Program customers described in Chapter
5.
Cost of CCA Program Operations
The first category of the cash flow analysis is the Cost of CCA Program Operations.To estimate the
overall costs associated with CCA Program Operations, the following components were taken into
consideration:
■ Electricity Procurement
■ Ancillary Service Requirements
■ Grid Management and other CAISO Charges
■ Scheduling Coordination
■ Exit Fees
■ Staffing and Professional Services
■ Data Management Costs
■ Administrative Overhead
■ Billing Costs
■ CCA Bond and Security Deposit
■ Pre-Startup Cost
■ Debt Service
Revenues from CCA Program Operations
The cash flow analysis also provides estimates for revenues generated from CCA operations or
from electricity sales to customers. In determining the level of revenues, the analysis assumes the
customer phase-in schedule described herein, and assumes that OCPA charges a standard, default
electricity tariff similar in rate design as the generation rates of SCE for each customer class and
an optional 100% renewable energy tariff, both at a premium reflective of incremental renewable
power costs. More detail on OCPA Program rates can be found in Chapter 8. In general, CCA
CHAPTER 7—Financial Plan 32
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Orange County Power Authority Implementation Plan
generation rates are expected to be 20-30% lower than SCE generation rates to account for the
PCIA rate charged to CCA customers.
Cash Flow Analysis Results
The results of the cash flow analysis provide an estimate of the level of capital required for OCPA
to move through the CCA startup and phase-in periods. This estimated level of capital is
determined by examining the monthly cumulative net cash flows (revenues from CCA operations
minus cost of CCA operations) based on assumptions for payment of costs or other cash
requirements (e.g., deposits) by OCPA, along with estimates for when customer payments will be
received. This identifies, on a monthly basis, what level of cash flow is available in terms of a
surplus or deficit.
The cash flow analysis identifies funding requirements in recognition of the potential lag between
revenues received and payments made during the phase-in period. The estimated financing
requirements for the startup and phase-in period, including working capital needs associated with
all three phases of customer enrollments, was determined to be $15.5 million. This $15.5 million
will be covered via $2.5 million in cash outlay from the City of Irvine and roughly$13 million from
financial institutions.
CCA Program Implementation Pro Forma
In addition to developing a cash flow analysis which estimates the level of working capital required
to move OCPA through full CCA phase-in,a summary pro forma analysis that evaluates the financial
performance of the CCA program during the phase-in period is shown below. The difference
between the cash flow analysis and the CCA pro forma analysis is that the pro forma analysis does
not include a lag associated with payment streams. In essence, costs and revenues are reflected in
the month in which service is provided. All other items, such as costs associated with CCA Program
operations and rates charged to customers remain the same. Cash provided by financing activities
are shown in the pro forma analysis as are the payments for debt service.
The results of the pro forma analysis are shown in the following tables. In particular,the summary
of CCA program startup and phase-in addresses projected OCPA Program operations for the period
beginning January 2021 through December 2031.1 OCPA has also included a summary of Program
reserves, which are expected to accrue over this same period of time.
4 Costs projected for staffing&professional services and other administrative&general relate to energy procurement,administration of energy
efficiency and other local programs,generation development,customer service,marketing,accounting,finance,legal and regulatory activities
necessary for program operation.
CHAPTER 7—Financial Plan 33
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Orange County Power Authority Implementation Plan
Table 11
OCPA 10-Year Pro Forma
2021 2022 2023 2024 2025 Z026 2027 2028 2029 2030 2031
'Revenues from Operations($)
Electric Sales Revenues for CCE $0 $159,153,839 $258,745,572i $263,271,475 $258,480,484 $262,537,580. $265,418,956 $269,097,975 $271,936,858 $274,738,599 $285,555,703
Less Uncollected Accounts $0 $795,769 $1,293,728 $1,316,357 $1,292,402 $1,312,688 $1,327,095 $1,345,490 $1,359,684 $1,373,693 $1,427,779
Total Revenues for CCA $0 $158,358,070. $257,451,844' $261,955,118 $257,198,082 $261,224,892 $264,091,862 $267,752,485 $270,577,174 $273,364,906 $284,127,924
-.Cost of Operations($)
Block Energy Purchases $82,303,089 $125,785,751 $124,184,542 $115,170,755 $111,516,665 $101,943,339 $97,859,441 $93,674,492 $90,593,344 $90,723,327
RPS Adders and Long-Term Energy $17,105,348 $39,363,554 $41,250,983 $47,582,645 $53,929,147 $58,405,483 $63,220,341 $67,896,565 $71,529,617 $72,155,610
Resource Adequacy $25,315,557 $45,047,355 $47,505,682 $50,283,976 $53,126,324 $56,129,338 $59,302,100 $62,654,206 $66,195,793 569,937,571
Everything Else $12,122,663 $20,895,425 $21,614,984 $22,539,900 $23,263,758 $25,253,021 $26,937,643 $28,635,523 $30,342,289 $31,960,530
Total Cost of Power Supply $0 $136,846,658 $231,092,085 $234,556,191 $235,577,275 $241,835,893 $241,731,181 $247,319,525 $252,860,786 $258,661,042 $264,777,037
.Operating&Administrative
Data Management $0 $867,494 $3,834,572 $3,935,573 $4,047,890 $4,154,510 $4,263,937 $4,376,247 $4,491,515. $4,609,819 $4,731,239
Scheduling Coordinator $0 $340,000 $515,800 $527,136 $538,563 $549,334 $560,321 $571,527 $582,958 $594,617 $606,509
SCE Fees(includes billing) $0 $8,338 $36,193 j $36,418 $36,663 $36,891 $37,120 $37,351 $37,583 $37,817 $38,052
Consulting Services $586,500 $993,582 $923,251 $941,716 $960,550 $979,761 $999,357 $1,019,344 $1,039,731 $1,060,525 $1,081,736
Staffing $656,370 $1,248,010 $2,103,498 $2,166,460 1 $2,213,406 $2,257,674 $2,302,828 $2,348,884 $2,395,862 $2,443,779 $2,492,655
General&Administrative expenses $24,480 $302,548 $207,682 $244,446 $249,743 $254,738 $259,833 $265,029 $270,330 $275,737 $281,251
Debt Service Payment on Financing $0 $2,292,855 $2,751,426 $3,613,981 $3,613,981 $3,613,981 $458,571 $0 $0 $o S0
Total O&A Costs $1,267,350 $6,052,817 $10,373,421 $11,465,730 $11,660,797 $11,846,889 $8,881,966 $8,618,383 $8,817,978 $9,022,294- $9,231,442
,'Total Cost of Operations $1,267,350 $142,899,475 $241,465,506 $246,021,921 $247,238,072 $253,682,783 $250,613,147 $255,937,908 $261,678,764 $267,683,336 $274,008,479
Net Income ($1,267,350) $15,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109 $13,478,715 $11,814,577 $8,898,409 $5,681,570 $10,119,445
Cash From Operations and Financing _
j Net Income From Operations ($1,267,350) $15,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109: $13,478,715 $11,814,577 $8,898,409 $5,681,570 $10,119,445
Cash from Financing $2,500,000 $13,000,000' $0 $0 $0 $0 $0 $0 $0 $0. $0
Total Cash Available $1,232,650 $28,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109 $13,478,715 $11,814,577 $8,898,409' $5,681,570- $10,119,445.
Net Income Allocation
Reserve Fund Contribution $416,663 _ $28,458,5.95 $15,986,339- $15,933,197 $9,950,009 $7,542,109 $9,718,568 $0: $0 $0 _ _ $2,079,499
Money Available for Discretionary Programs $475,987 $0 $0 $0 $0 $0 $3,760,146 $11,814,577 $8,898,409 $5,681,570 $8,039,946
'.Total Cash Outlays $1,232,650 $0 $0 $0 $0 $0 $3,760,146 $11,814,577 $8,898,409 $5,681,570. $8,039,946
Rate Stabilization Reserve Balance $416,663 $28,875,258 $44,861,597' $60,794,793 $70,744,803 $78,286,912 $88,005,480 $98,005,480 $88,005,480 $88,005,480 $90,084,980
(Reserve Balance Target $416,663 $46,950,649 $79,385,920' $80,883,919. $81,283,750 $83,402,559. $82,393,363 $84,143,970 $86,031,375• $88,005,480 $90,084,980
CCATotal Bill 5485,278,313 $876,756,236 $900,502,297 $915,604,019 $940,253,495 $964,455,280- $990,212,406 $1,015,918,138 $1,042,407,959 $1,070,562,853
SCE Total Bill $494,209,857: $892,307,669 $915,810,576 $931,263,827_ $955,792,818- $980,967,890 $1,006,806,059 $1,033,324,792 $1,060,542,014 I $1,088,476,124
Difference $8,931,544_ $15,551,4341 $15,308,279 $15,659,808: $15,539,324. $16,512,609 $16,593,653 $17,406,654' $18,134,055 $17,913,271
Total Bill Savings _ 2% 2%, 2% 2%i 2%i 2%� 2%' 2% 2%_ 2%-
Generation Rate Discount 4%, 4%1 4% 491i 4%_ 4% 4% 4%: 4%' 4%
764 34
Orange County Power Authority Implementation Plan
Table 12
Orange County Power Authority
Reserves Summary
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Reserve Additions
Operating Reserve Contr. $28,875,258 $44,444,934 $31,919,535 $25,883,206 $17,492,119 $17,260,678 $9,718,568 $0 $0 $2,079,499
Cash from Financing $15,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Additions $44,375,258 $44,444,934 $31,919,535 $25,883,206 $17,492,119 $17,260,678 $9,718,568 $0 $o $2,079,499
Reserves Outlays
Start-Up Funding Payments $0 $0 $862,555 $862,555 $862,555 $0 $0 $0 $0 $0
Working Capital Repayment $2,292,855 $2,751,426 $2,751,426 $2,751,426 $2,751,426 $458,571 $0 $0 $0 $0
New Programs $0 $0 $0 $0 $0 $3,760,146 $11,814,577 $8,898,409 $5,681,570 $8,039,946
Total Reserve Outlays $3,276,465 $5,639,788 $14,375,635 $14,226,893 $12,707,456 $10,338,615 $19,423,723 $17,225,072 $16,421,966 $16,232,700
Rate Stabilization Reserve Balance $28,875,258 $44,861,597 $60,794,793 $70,744,803 $78,286,912 $88,005,480 $88,005,480 $88,005,480 $88,005,480 $90,084,980
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Orange County Power Authority Implementation Plan
The surpluses achieved during the phase-in period serve to build OCPA's net financial position and
credit profile and to provide operating reserves for OCPA in the event that operating costs (such
as power purchase costs) exceed collected revenues for short periods of time. In addition,financial
surpluses could be used to increase renewable and GHG-free resources within OCPA's resource
mix.
OCPA Financing
It is anticipated that one or more rounds of financing, inclusive of prospective direct term loans
between OCPA and its Member Agencies, will be necessary to support OCPA Program
implementation. Subsequent capital requirements will be self-funded from OCPA's accrued
financial reserves. The anticipated financing approach is described below.
CCA Program Start-up and Working Capital
As previously discussed, the anticipated start-up and working capital requirements for the OCPA
Program are$15.5 million.This amount is dependent upon the electric load served by OCPA, actual
energy prices, payment terms established with the third-party supplier and program rates. This
figure would be refined during the startup period as these variables become known. Once the
OCPA Program is up and running, these costs would be recovered from customers through retail
rates.
The City of Irvine has provided $2.5 million in initial funding for start-up costs. OCPA currently
projects repaying this loan by 2027, subject to change based on final power prices. It is assumed
that the remaining financing will be primarily secured via a short-term loan or letter of credit,
which would allow OCPAto draw cash as required. Requisite financing would need to be arranged
no later than the first quarter of 2021.
Renewable Resource Project Financing
OCPA may consider project financings for renewable resources, likely local wind, solar, biomass
or geothermal as well as energy efficiency projects. These financings would only occur after a
sustained period of successful OCPA Program operation and after appropriate project
opportunities are identified and subjected to appropriate environmental review. OCPA's ability
to directly finance projects will likely require a track record of five to ten years of successful
program operations demonstrating strong underlying credit to support the financing.
In the event that such financing occurs, funds would include any short-term financing for the
renewable resource project development costs, and financing would likely extend over a 20- to
30-year term.The security for such bonds would be the revenue from sales to the retail customers
of OCPA.
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Chapter 8 - Rate Setting, Program Terms and
Conditions
Introduction
This chapter describes the initial policies proposed for OCPA in setting its rates for electric
aggregation services. These include policies regarding rate design, rate objectives and provision
for due process in setting Program rates. Program rates are ultimately approved by OCPA's Board.
OCPA would retain authority to modify program policies from time to time at its discretion.
Rate Policies
OCPA will establish rates sufficient to recover all costs related to operation of the OCPA Program,
including any reserves that may be required as a condition of financing and other discretionary
reserve funds that may be approved by OCPA. As a general policy, rates will be uniform for all
similarly situated customers enrolled in the OCPA Program throughout the service area of OCPA.
The primary objectives of the rate setting plan are to set rates that achieve the following:
■ Rate competitive tariff option including a proportionate quantity of renewable
energy meeting California's prevailing renewable energy procurement mandate
■ 100 percent renewable energy supply option
■ Allow individual member agencies to choose the default energy supply option into
which their customers will be enrolled
■ Allow customers to participate in any of the three energy supply options after
enrollment
■ Rate stability
■ Equity among customers in each tariff
■ Customer understanding
■ Revenue sufficiency
Each of these objectives is described below.
Rate Competitiveness
OCPA's primary goal is to offer its customers competitive rates for electric services relative to the
incumbent utility SCE. As planned, the value provided by the OCPA Program will also include
options for a higher proportion of renewable energy and reduced GHG emissions relative to the
incumbent utility, enhanced energy efficiency and customer programs, community focus, local
investment and control. OCPA currently plans to offer customers rates that are lower than SCE's
bundled rates. Final rates for the launch phase will be subject to final power price bids.
As previously discussed, the OCPA Program will offer increased renewable energy supply to
CHAPTER 8—Rate Setting,Program Terms and Conditions 37
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Orange County Power Authority Implementation Plan
program customers, relative to the incumbent utility, by offering three distinct rate tariffs. The
initial renewable energy content provided under OCPA's base Tariff will meet California's
prevailing renewable energy procurement mandate, and OCPA will endeavor to increase this
percentage on a going forward basis, subject to operational and economic constraints. OCPA will
also offer its customers a 50% and 100% renewable energy Tariff, which will supply participating
customers with reflective renewable energy supply at rates equal to the procurement cost for
those portfolios.
Participating qualified low- or fixed-income households, such as those currently enrolled in the
California Alternate Rates for Energy (CARE) program, will be automatically enrolled in the
standard Tariff and will continue to receive related discounts on monthly electricity bills through
SCE.
Rate Stability
OCPA will offer stable rates by hedging its supply costs over multiple time horizons and by including
longer-term renewable energy supplies that exhibit stable costs. OCPA will attempt to maintain
general rate design parity with SCE to ensure that OCPA Program rates are not drastically different
from the competitive alternative.
Equity Among Customer Classes
OCPA's initial rates will be set at a discount to the rates offered by SCE, subject to final power price
bids. The level of the discount will depend upon the default product chosen by the Member
Agency. Rate differences among customer classes will reflect the rates charged by the local
distribution utility as well as differences in the costs of providing service to each class. Rate benefits
may also vary among customers within the major customer class categories, depending upon the
specific rate designs adopted by OCPA.
Customer Understanding
The goal of customer understanding involves rate designs that are relatively straightforward so
that customers can readily understand how their bills are calculated. This not only minimizes
customer confusion and dissatisfaction but will also result in fewer billing inquiries to the OCPA
Program's customer service call center. Customer understanding also requires rate structures to
reflect rational rate design principles (i.e., there should not be differences in rates that are not
justified by costs or by other policies such as providing incentives for conservation).
CHAPTER 8—Rate Setting,Program Terms and Conditions 38
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Revenue Sufficiency
OCPA Program rates must collect sufficient revenue from participating customers to fully fund
OCPA's annual budget. Rates will be set to collect the adopted budget based on a forecast of
electric sales for the budget year. Rates will be adjusted as necessary to maintain the ability to fully
recover all of costs of the OCPA Program, subject to the disclosure and due process policies
described later in this chapter. To ensure rate stability, funds available in OCPA's rate stabilization
fund may be used from time to time to augment operating revenues.
Rate Design
OCPA will generally match the rate structures from the utilities' standard rates to avoid the
possibility that customers would see significantly different bill impacts as a result of changes in
rate structures that would take effect following enrollment in the OCPA Program. In October 2020,
SCE began to move bundled residential customers toward default time-of-use rates. OCPA
anticipates that rates implemented at launch will be based on default SCE TOU rates. OCPA will
review SCE rate structure changes and finalize the OCPA rate structures closer to the proposed
launch date.
Custom Pricing Options
OCPA may work to develop specially-tailored rate and electric service products that meet the
specific load characteristics or power market risk profiles of larger commercial and industrial
customers. This will allow such customers to have access to a wider range of products than is
currently available under the incumbent utility and potentially reduce the cost of power for these
customers. OCPA may provide large energy users with custom pricing options to help these
customers gain greater control over their energy costs. Some examples of potential custom pricing
options are rates that are based on an observable market index (e.g., CAISO prices) or fixed priced
contracts of various terms.
Net Energy Metering
As planned, customers with on-site generation eligible for net metering from SCE will be offered
a net energy metering rate from OCPA. Net energy metering allows for customers with certain
qualified solar or wind distributed generation to be billed on the basis of their net energy
consumption. The objective is that OCPA's net energy metering tariff will apply to the generation
component of the bill, and the SCE net energy metering tariff will apply to the utility's portion of
the bill. OCPA plans to pay customers for excess power produced from net energy metered
generation systems in accordance with the rate designs adopted by OCPA.
Disclosure and Due Process in Setting Rates and Atlocating Costs among Participants
Initial program rates will be adopted by OCPA following the establishment of the first year's
operating budget prior to initiating the customer notification process. Subsequently, OCPA will
prepare an annual budget and corresponding customer rates. Any proposed rate adjustment will
be made to the Board of Directors and ample time will be given to affected customers to provide
comment on the proposed rate changes.
CHAPTER 8—Rate Setting,Program Terms and Conditions 39
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Orange County Power Authority Implementation Plan
After proposing a rate adjustment, OCPA will furnish affected customers with a notice of its intent
to adjust rates. The notices may be issued via separate mail to affected customers, as part of the
regular billing and/or placed on the various social media options. The notice will provide a
summary of the proposed rate adjustment and will include a link to the OCPA Program website
where information will be posted regarding the amount of the proposed adjustment, a brief
statement of the reasons for the adjustment and the mailing address of OCPA to which any
customer inquiries relative to the proposed adjustment, including a request by the customer to
receive notice of the date, time and place of any hearing on the proposed adjustment, may be
directed.
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Chapter 9 - Customer Rights and Responsibilities
This chapter discusses customer rights, including the right to opt-out of the OCPA Program and
the right to privacy of customer usage information, as well as obligations customers undertake
upon agreement to enroll in the CCA Program. All customers that do not opt out within 30 days of
the fourth enrollment notice will have agreed to become full status program participants and must
adhere to the obligations set forth below, as may be modified and expanded by the OCPA Board
from time to time.
By adopting this Implementation Plan, OCPA will have approved the customer rights and
responsibilities policies contained herein to be effective at Program initiation. OCPA retains
authority to modify program policies from time to time at its discretion.
Customer Notices
At the initiation of the customer enrollment process, a total of four notices will be provided to
customers describing the Program, informing them of their opt-out rights to remain with utility
bundled generation service and containing a simple mechanism for exercising their opt-out rights.
The first notice will be mailed to customers approximately sixty days prior to the date of automatic
enrollment. A second notice will be sent approximately thirty days later. OCPA will likely use its
own mailing service for requisite enrollment notices rather than including the notices in SCE's
monthly bills. This is intended to increase the likelihood that customers will read the enrollment
notices, which may otherwise be ignored if included as a bill insert. Customers may opt out by
notifying OCPA using the OCPA Program's designated telephone- based or internet opt-out
processing service.Should customers choose to initiate an opt-out request by contacting SCE,they
would be transferred to the OCPA Program's call center to complete the opt-out request.
Consistent with CPUC regulations, notices returned as undelivered mail would be treated as a
failure to opt out, and the customer would be automatically enrolled.
Following automatic enrollment, at least two notices will be mailed to customers within the first
two billing cycles (approximately sixty days) after OCPA service commences. Opt-out requests
made on or before the sixtieth day following start of OCPA Program service will result in customer
transfer to bundled utility service with no penalty. Such customers will be obligated to pay charges
associated with the electric services provided by OCPA during the time the customer took service
from the OCPA Program, but they will otherwise not be subject to any penalty or transfer fee from
OCPA.
Customers who establish new electric service accounts within the Program's service area will be
automatically enrolled in the OCPA Program and will have sixty days from the start of service to
opt out if they so desire. Such customers will be provided with two enrollment notices within this
sixty-day post enrollment period. Such customers will also receive a notice detailing OCPA's privacy
policy regarding customer usage information. OCPA will have the authority to implement entry
fees for customers that initially opt out of the Program, but later decide to participate.
CHAPTER 9—Customer Rights and Responsibilities 41
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Orange County Power Authority Implementation Plan
Termination Fee
Customers that are automatically enrolled in the OCPA Program can elect to transfer back to the
incumbent utility without penalty within the first two months of service. After this free opt-out
period, customers will be allowed to terminate their participation but may be subject to payment
of a Termination Fee. Customers that relocate within OCPA's service territory would have OCPA
service continued at their new address. If a customer relocating to an address within OCPA's
service territory elected to cancel OCPA service, the Termination Fee could be applied. Program
customers that move out of OCPA's service territory would not be subject to the Termination Fee.
If deemed applicable by OCPA, SCE would collect the Termination Fee from returning customers
as part of OCPA's final bill to the customer.
For illustrative purposes, OCPA Termination Fees could be set at $5 per residential account and
$25 per non-residential account. Actual fee amounts and requirements to impose Termination
Fees are subject to a final determination by OCPA.
If adopted, the Termination Fee would be clearly disclosed in the four enrollment notices sent to
customers during the sixty-day period before automatic enrollment and following commencement
of service. The fee could also be changed prospectively by OCPA subject to applicable customer
noticing requirements.
Customers electing to terminate service after the initial notification period would be transferred
to SCE on their next regularly scheduled meter read date if the termination notice is received a
minimum of fifteen days prior to that date. Such customers would also be liable for the nominal
reentry fees imposed by SCE and would be required to remain on bundled utility service for a
period of one year, as described in the utility CCA tariffs.
Customer Confidentiality
OCPA will establish policies covering confidentiality of customer data that are fully compliant with
the required privacy protection rules for CCA customer energy usage information, as detailed
within Decision 12-08-045. OCPA will maintain the confidentiality of individual customer data
including service addresses, billing addresses, telephone numbers, account numbers and
electricity consumption, except where reasonably necessary to conduct business of OCPA or to
provide services to customers, including but not limited to where such disclosure is necessary to
(a) comply with the law or regulations; (b) enable OCPA to provide service to its customers; (c)
collect unpaid bills; (d) obtain and provide credit reporting information; or (e) resolve customer
disputes or inquiries. OCPA will not disclose customer information for telemarketing, e-mail or
direct mail solicitation. Aggregate data may be released at OCPA's discretion.
CHAPTER 9—Customer Rights and Responsibilities 42
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Orange County Power Authority Implementation Plan
Responsibility for Payment
Customers will be obligated to pay OCPA Program charges for service provided through the date
of transfer including any applicable Termination Fees. Pursuant to current CPUC regulations, OCPA
will not be able to direct that electricity service be shut off for failure to pay OCPA bills. However,
SCE has the right to shut off electricity to customers for failure to pay electricity bills, and SCE
Electric Rule 23 mandates that partial payments are to be allocated pro rata between SCE and the
CCA. In most circumstances, customers would be returned to utility service for failure to pay bills
in full and customer deposits (if any) would be withheld in the case of unpaid bills. SCE would
attempt to collect any outstanding balance from customers in accordance with Rule 23 and the
related CCA Service Agreement.
The proposed process is for two late payment notices to be provided to the customer within 30
days of the original bill due date. If payment is not received within 45 days from the original due
date, service would be transferred to the utility on the next regular meter read date, unless
alternative payment arrangements have been made. Consistent with the CCA tariffs, Rule 23,
service cannot be discontinued to a residential customer for a disputed amount if that customer
has filed a complaint with the CPUC and that customer has paid the disputed amount into an
escrow account.
Customer Deposits
Under certain circumstances, OCPA customers may be required to post a deposit equal to the
estimated charges for two months of CCA service prior to obtaining service from the OCPA
Program. A deposit would be required for an applicant who previously had been a customer of SCE
or OCPA and whose electric service has been discontinued by SCE or OCPA during the last twelve
months of that prior service arrangement as a result of bill nonpayment. Such customers may be
required to reestablish credit by depositing the prescribed amount. Additionally, a customer who
fails to pay bills before they become past due as defined in SCE Electric Rule 11 (Discontinuance
and Restoration of Service), and who further fails to pay such bills within five days after
presentation of a discontinuance of service notice for nonpayment of bills, may be required to pay
said bills and reestablish credit by depositing the prescribed amount.This rule will apply regardless
of whether or not service has been discontinued for such nonpayment'. Failure to post deposit as
required would cause the account service transfer request to be rejected, and the account would
remain with SCE.
5 A customer whose service is discontinued by OCPA is returned to SCE generation service.
CHAPTER 9—Customer Rights and Responsibilities 43
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Chapter 10 - Procurement Process
Introduction
This chapter describes OCPA's initial procurement policies and the key third party service
agreements by which OCPA will obtain operational services for the OCPA Program. By adopting
this Implementation Plan, OCPA will have approved the general procurement policies contained
herein to be effective at Program initiation. OCPA retains Authority to modify Program policies
from time to time at its discretion.
Procurement Methods
OCPA will enter into agreements for a variety of services needed to support program development,
operation and management. It is anticipated that OCPA will generally utilize Competitive
Procurement methods for services but may also utilize Direct Procurement or Sole Source
Procurement, depending on the nature of the services to be procured. Direct Procurement is the
purchase of goods or services without competition when multiple sources of supply are available.
Sole Source Procurement is generally to be performed only in the case of emergency or when a
competitive process would be an idle act.
OCPA will utilize a competitive solicitation process to enter into agreements with entities providing
electrical services for the program. Agreements with entities that provide professional legal or
consulting services, and agreements pertaining to unique or time sensitive opportunities, may be
entered into on a direct procurement or sole source basis at OCPA's discretion. Authority for
terminating agreements will generally mirror the Authority for entering into such agreements.
Key Contracts
Electric Supply Contract
OCPA will initiate service using supply contracts with one or more qualified providers to supply
sufficient electric energy resources to meet OCPA customer demand as well as applicable resource
adequacy requirements, ancillary and other necessary services. OCPA may complete additional
solicitations to supplement its energy supply and/or to replace contract volumes provided under
the original contract. OCPA would begin such procurement sufficiently in advance of contract
expiration so that the transition from the initial supply contract occurs smoothly, avoiding
dependence on market conditions existing at any single point in time.
OCPA will solicit the services of a certified Scheduling Coordinator to schedule loads and resources
to meet OCPA customer demand. OCPA may designate the primary supplier to be responsible for
day-to-day energy supply operations of the OCPA Program and for managing the predominant
supply risks for the term of the contract. The primary supplier will ensure OCPA meets renewable
energy mandates as well as resource-specific mandates such as the storage requirement.' Finally,
the primary supplier may be responsible for ensuring OCPA's compliance with all applicable
6 Assembly Bill 2514 requires LSEs to procure energy storage targets by 2020
CHAPTER 10- Procurement Process 44
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Orange County Power Authority Implementation Plan
resource adequacy and regulatory requirements imposed by the CPUC or FERC.
OCPA will be commencing the requisite competitive solicitation process to identify its initial energy
supplier(s). OCPA anticipates executing the electric supply contract for Phase 1 loads in late 2021.
The contracts for Phase 2 loads will be executed shortly thereafter. Resource adequacy may be
acquired prior to the rest of power supply in order to meet CPUC requirements.
Data Management Contract
A data manager will provide the retail customer services of billing and other customer account
services (electronic data interchange or EDI with SCE, billing, remittance processing and account
management). Recognizing that some qualified wholesale energy suppliers do not typically
conduct retail customer services whereas others (i.e., direct access providers) do, the data
management contract may be separate from the electric supply contract. It is anticipated that a
single contractor will be selected to perform all of the data management functions.'
The data manager is responsible for the following services:
■ Data exchange with SCE
■ Technical testing
■ Customer information system
■ Customer call center;
■ Billing administration/retail settlements
■ Settlement quality meter data reporting
■ Reporting and audits of utility billing
Utilizing a third party for account services eliminates a significant expense associated with
implementing a customer information system. Such systems can impose significant information
technology costs and take significant time to deploy. Separation of the data management contract
from the energy supply contract gives OCPA greater flexibility to change energy suppliers, if
desired, without facing an expensive data migration issue.
OCPA will be commencing the requisite competitive solicitation process to identify its data
management services provider. It is anticipated that OCPA will execute a contract for data
management services by January 31, 2021.
The contractor providing data management may also be the same entity as the contractor supplying electricity for the program.
CHAPTER 10- Procurement Process 45
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Orange County Power Authority Implementation Plan
Electric Supply Procurement Process
In the latter half of 2021, OCPA plans to solicit proposals for shaped energy, renewable energy,
carbon free energy and resource adequacy capacity from a highly qualified pool of suppliers. OCPA
will also solicit proposals for scheduling coordinator services from a separate bidder. Contract
negotiations will commence immediately following proposal evaluation. It is anticipated that
selection of the final suppliers will be made by OCPA in early 2022.
CHAPTER 10- Procurement Process 46
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Chapter 11 - Contingency Plan for Program
Termination
1,11M, ,r,U."115 IMiN�ali67@W!
Introduction
This chapter describes the process to be followed in the case of OCPA Program termination. By
adopting the original Implementation Plan, OCPA will have approved the general termination
process contained herein to be effective at Program initiation. In the unexpected event that OCPA
would terminate the OCPA Program and return its customers to SCE service,the proposed process
is designed to minimize the impacts on its customers and on SCE. The proposed termination plan
follows the requirements set forth in SCE's tariff Rule 23 governing service to CCAs. OCPA retains
authority to modify program policies from time to time at its discretion.
Termination by OCPA
OCPA will offer services for the long term with no planned Program termination date. In the
unanticipated event that OCPA decides to terminate the Program, each of its Member Agencies
would be required to adopt a termination ordinance or resolution and provide adequate notice to
OCPA consistent with the terms set forth in the JPA Agreement. Following such notice, OCPA's
Board would vote on Program termination subject to voting provisions as described in the JPA
Agreement. In the event that OCPA affirmatively votes to proceed with JPA termination, OCPA
would disband under the provisions identified in its JPA Agreement.
After any applicable restrictions on such termination have been satisfied, notice would be provided
to customers six months in advance that they will be transferred back to SCE. A second notice
would be provided during the final sixty-days in advance of the transfer.The notice would describe
the applicable distribution utility bundled service requirements for returning customers then in
effect, such as any transitional or bundled portfolio service rules.
At least one year of advance notice would be provided to SCE and the CPUC before transferring
customers, and OCPA would coordinate the customer transfer process to minimize impacts on
customers and ensure no disruption in service. Once the customer notice period is complete,
customers would be transferred en masse on the date of their regularly scheduled meter read
date.
OCPA will post a bond or maintain funds held in reserve to pay for potential transaction fees
charged to the Program for switching customers back to distribution utility service. Reserves would
be maintained against the fees imposed for processing customer transfers (CCASRs). The Public
Utilities Code requires demonstration of insurance or posting of a bond sufficient to cover reentry
fees imposed on customers that are involuntarily returned to distribution utility service under
certain circumstances.The cost of re-entry fees is the responsibility of the energy services provider
or the community choice aggregator, except in the case of a customer returned for default or
because its contract has expired. OCPA will post financial security in the appropriate amount as
Chapter 11—Contingency Plan for Program Termination 47
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Orange County Power Authority Implementation Plan
part of its registration materials and will maintain the financial security in the required amount, as
necessary.
Termination by Members
The JPA Agreement defines the terms and conditions under which Members may terminate their
participation in the program.
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Appendix - OCPA Joint Powers Agreement
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Appendices
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ORANGE COUNTY POWER AUTHORITY
JOINT POWERS AGREEMENT
This Joint Powers Agreement ("Agreement"), effective as of the date specified in Section
1.2, below, which is November 20, 2020 ("Effective Date") is made and entered into pursuant to
the Joint Exercise of Powers Act (California Government Code § 6500 et seq.)relating to the joint
exercise of powers among the parties set forth in Exhibit A. All parties that execute this Agreement
prior to December 31, 2020 shall be designated individually as"Founding Party"and collectively
as "Founding Parties". All cities, counties, or other public agencies added as parties to this
agreement after December 31, 2020 shall be designated individually as "Additional Party" and
collectively"Additional Parties". The term "Party"refers individually to any Founding Party or
Additional Party, and the term "Parties" refers collectively to the Founding Parties and the
Additional Parties.
RECITALS
A. In 2002, Assembly Bill 117 (Stat. 2002, Ch. 838, codified at Public Utilities Code
Sections 218.3, 366, 394, 394.25, 331.1 366.2, and 381.1)was signed into law allowing customers
to aggregate their electrical loads as members of their local community with public agencies
designated as community choice aggregators, and allowing such public agencies to aggregate the
electrical load of interested consumers within their jurisdictional boundaries and purchase
electricity on behalf of those consumers.
B. In 2006,Assembly Bill 32 (Stat. 2006, Ch. 488, codified at Health and Safety Code
Sections 38500 et seq.), known as the Global Warming Solutions Act, was signed into law,
mandating a reduction in greenhouse gas emissions to 1990 levels by 2020.
C. In 2015, Senate Bill 350 (Stat. 2015, Ch. 547, codified at Health and Safety Code
Section 44258.5; Labor Code Section 1720; Public Resources Code Sections 25302.2, 25310,
25327 and 25943; and Public Utilities Code Sections 237.5, 337, 352, 359, 365.2, 366.3, 399.4,
399.11, 399.12, 399.13, 399.15, 399.16, 399.18, 399.21, 399.30, 454.51, 454.52, 454.55, 454.56,
701.1, 740.8, 740.12, 9505, 9620, 9621, 9622, and Article 17 (commencing with Public Utilities
Code Section 400))was signed into law,mandating a reduction in greenhouse gas emissions to 40
percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050.
D. In 2018, Senate Bill 10 (Staff 2018, Ch. 312, codified at Public Utilities Code
sections 399.11, 399.15, 399.30, and 454.53) was signed into law, directing that the Renewables
Portfolio Standard to be increased to 60 percent renewables by 2030 and establishing a policy for
eligible renewable energy resources and zero-carbon resources to supply 100 percent of electricity
retail sales to California end-use customers by 2045.
E. The Parties each hold various powers under California law, including, but not
limited to, the power to purchase, supply, and aggregate electricity for themselves and customers
within their jurisdictions in accordance with Public Utilities Code Sections 333.1 and 366.2; they
are therefore properly empowered to enter into this Agreement under the Joint Exercise of Powers
Act (Government Code Section 6500 et seq., the "Act").
1
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F. The purposes for entering into this Agreement are more fully specified in
subsection 1.4 below, but principally consist of the study, promotion, development, funding,
financing, purchasing, conduct, operation, and management of energy, energy efficiency and
conservation, and other energy-related and community choice aggregation programs (the "CCA
Program"), through which the following objectives may be advanced: (a) reducing greenhouse
gas emissions related to the use of power throughout the Parties' jurisdictions and neighboring
regions; (b)providing electric power and other forms of energy to customers at a competitive cost;
(c) carrying out programs for ratepayers of all income levels to reduce energy consumption; (d)
stimulating and sustaining the local economy by developing local jobs in renewable and
conventional energy; and (e) promoting long-term electric rate stability, energy security and
reliability for residents through local control of electric generation resources.
G. The Founding Parties desire to establish a separate public agency, known as the
Orange County Power Authority("Authority"), under the Act and consistent with Assembly Bill
117, in order to collectively implement the CCA Program, and to exercise any powers common to
the Authority's members to further these purposes.
H. The Parties have each adopted an ordinance electing to participate as a group in a
community choice aggregation program through the Authority, as authorized by California Public
Utilities Code § 366.2(a)(12)(B).
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions
hereinafter set forth, it is agreed by and among the Parties as follows:
SECTION 1. FORMATION OF AUTHORITY
1.1 Creation of Agency. Pursuant to the Act there is hereby created a public entity to
be known as The Orange County Power Authority. Pursuant to Section 6507 of the Act, the
Authority is a public agency separate from the Parties. The jurisdiction of the Authority shall be
all territory within the geographic boundaries of the Parties; however, the Authority may, as
authorized under applicable law, undertake any action outside such geographic boundaries as is
necessary to accomplish its purpose.
1.2 Effective Date and Term. This Agreement shall become effective and the Authority
shall exist as a separate public agency on the date this Agreement is executed by at least two
Parties. The Authority shall continue to exist, and this Agreement shall be effective, until this
Agreement is terminated in accordance with this Agreement, subject to the rights of a Party to
withdraw from the Authority.
1.3 Parties. The names, particular capacities, and addresses of the Parties are shown
on Exhibit A, as it may be amended from time to time.
1.4 Purpose. The purpose of this Agreement is to establish an independent public
agency in order to exercise powers common to each Party to implement the CCA Program, and to
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exercise all other powers necessary and incidental to accomplishing this purpose. This Agreement
authorizes the Authority to provide opportunities by which the Parties can work cooperatively to
create economies of scale and implement sustainable energy initiatives that reduce energy demand,
increase energy efficiency, provide consumer choice and cost savings, and advance the use of
clean, efficient, and renewable resources in the region for the benefit of all the Parties and their
constituents,including,but not limited to,establishing and operating a CCA Program(collectively,
the "Purpose"). The Parties intend for this Agreement to be used as a contractual mechanism by
which they are authorized to participate in the CCA Program and achieve the Purpose. The Parties
intend that other agreements shall define the terms and conditions associated with the
implementation of the CCA Program and any energy programs approved by the Authority.
SECTION 2. POWERS OF AUTHORITY
2.1 Powers. The Authority shall have all powers common to the Parties and such
additional powers accorded to it by law. The Authority is authorized, in its own name, to exercise
all powers and do all acts necessary and proper to carry out the provisions of this Agreement and
fulfill its Purpose, including, but not limited to, each of the following powers:
2.1.1 Serve as a forum for the consideration, study, and recommendation of
energy services for the CCA Program;
2.1.2 To make and enter into any and all contracts to effectuate the purpose of
this Agreement, including, but not limited to, those relating to the purchase or sale of
electrical energy or attributes thereof, and related service agreements;
2.1.3 To employ agents and employees, including, but not limited to, engineers,
attorneys,planners, financial consultants, and separate and apart therefrom to employ such
other persons, as it deems necessary;
2.1.4 To acquire, contract, manage, maintain, and operate any buildings, works,
or improvements, including, but not limited to, electric generation resources;
2.1.5 To acquire property by eminent domain, or otherwise, except as limited by
Section 6508 of the Act, and to hold or dispose of property;
2.1.6 To lease or license any property;
2.1.7 To sue and be sued in its own name;
2.1.8 To incur debts, liabilities, and obligations, including, but not limited to,
loans from private lending sources pursuant to its temporary borrowing powers, such as
California Government Code § 53850 et seq. and authority under the Act;
2.1.9 To form subsidiary or independent corporations or entities, if appropriate,
to carry out energy supply and energy conservation programs, or to take advantage of
legislative or regulatory changes;
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2.1.10 To issue revenue bonds and other forms of indebtedness;
2.1.11 To apply for, accept,and receive all licenses, permits,grants, loans,or other
assistance from any federal, state, or local agency;
2.1.12 To submit documentation and notices, register, and comply with orders,
tariffs, and agreements for the establishment and implementation of the CCA Program and
other energy and climate change programs;
2.1.13 To adopt rules, regulations, policies, bylaws, and procedures governing the
operation of the Authority;
2.1.14 To receive loans, gifts, contributions, and donations of property, funds,
services,and other forms of financial assistance from persons,firms, corporations,and any
governmental entity;
2.1.15 To make and enter into service agreements relating to the provision of
services necessary to plan, implement, operate and administer the CCA Program and other
energy programs, including the acquisition of electric power supply and the provision of
retail and regulatory support services;
2.1.16 To receive revenues from sale of electricity and other energy-related
programs;
2.1.17 To partner or otherwise work cooperatively with other CCAs on the
acquisition of electric resources,joint programs, advocacy and other efforts in the interests
of the Authority; and
2.1.18 To the extent not specifically provided in this Agreement, to exercise any
powers authorized by the member agencies to achieve the Authority's objectives and such
further powers not specifically mentioned herein, but common to Parties, and authorized
by the California Government Code.
2.2 Additional Powers to be Exercised. In addition to those powers common to each
of the Parties, the Authority shall have those powers that may be conferred upon it by law and by
subsequently enacted legislation.
2.3 Manner of Exercising Powers. The powers specified in subsections 2.1 and 2.2
shall be exercised by the Board (as defined in subsection 3.1, below), unless otherwise delegated
to a committee of the Board or the Chief Executive Officer of the Authority in accordance with a
Board adopted policy or action. All such powers shall be exercised in the manner set forth in this
Agreement.
2.4 Limitation on Exercise of Powers: The powers of the Authority are subject to the
restrictions upon the manner of exercising power possessed by the City of Irvine, California and
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any other restrictions on exercising the powers of the Authority that may be adopted by the
Authority's Board of Directors.
SECTION 3: GOVERNANCE
3.1 General Governance; Board of Directors. The governing body of the Authority
shall be a Board of Directors ("Board") consisting of one director for each Party appointed in
accordance with subsection 3.2, except the City of Irvine whose governing body shall appoint two
directors(the"Irvine Directors"). Notwithstanding the foregoing,the governing body of the City
of Irvine shall appoint one director upon the full satisfaction and repayment of the Capital Loan,
as defined in subsection 5.5.
3.2 Appointment of Directors. The governing body of each Party shall appoint and
designate in writing the Director(s) who shall be authorized to act for and on behalf of the Party
on matters within the powers of the Authority. The governing body of each Party shall also appoint
and designate in writing an alternate Director(s)who may vote in matters when the regular Director
is absent from a Board meeting. The governing bodies of the Founding Parties may, in their sole
discretion, elect to appoint their respective Director(s) prior to the Effective Date, in which case
such appointment(s) to the Board shall take effect on the Effective Date. The persons appointed
and designated as the regular Director and the alternate Director shall be a member of the
governing body of the Party when appointed.
3.3 Terms of Office. Each regular and alternate Director shall serve a term of four
years. If at any time a vacancy occurs on the Board, a replacement shall be appointed by the
governing body to fill the position of the previous Director within ninety(90)days of the date that
such position becomes vacant. Replacement Directors shall serve until the scheduled expiration
of the four year term of the Board member that they replace.
3.4 Quorum. A majority of the Directors of the entire Board shall constitute, and is
necessary to constitute, a quorum,except that less than a quorum may adjourn a meeting from time
to time in accordance with law.
3.5 Powers of the Board of Directors. The Board may exercise all the powers
enumerated in this Agreement and shall conduct all business and activities of the Authority
consistent with this Agreement and any bylaws, operating procedures, and applicable law.
3.6 Executive Committee. The Board shall establish an executive committee
consisting of a smaller number of Directors upon the Authority's membership consisting of nine
or more members. The initial members of the executive committee shall be the Directors of the
Founding Members with the chair of the Board serving as chair of the Executive Committee.
3.7 Committees. The Board may establish committees as the Board deems appropriate
to assist the Board in carrying out its functions and implementing the purposes of this Agreement.
In accordance with subsection 2.3, the Board may delegate to any committees that consist solely
of Board members any of the powers specified in subsection 2.1, except for the power to acquire
property by eminent domain specified in subsection 2.1.5. Committees that include or consist of
non-Board members shall be advisory only.
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3.8 Director Compensation. The Board shall adopt policies establishing compensation
attendance at Board and Committee meetings and work performed by each Director on behalf of
the Authority as well as policies for the reimbursement of expenses incurred by each Director;
provided that in no instance shall the per meeting or per day compensation be less than the
compensation provided to directors of the Orange County Sanitation District.
3.9 Voting by the Board of Directors.
3.9.1 Equal Vote. Each Director or participating alternate shall have one vote.
Except as provided for in Sections 3.9.2, 3.9.3 and 3.9.4, action of the Board on all matters shall
require an affirmative vote of a majority of all Directors who are present at the subject meeting
("Equal Vote").
3.9.2 Voting Shares Vote. Immediately after(and during the same Board Meeting
as) an affirmative or tie Equal Vote, two or more Directors shall have the right to request and
conduct a Voting Shares Vote (defined below) to reconsider that action approved by the Equal
Vote. In the event of a Voting Shares Vote where the City of Irvine appoints two Directors to the
Board and one or more Irvine Directors requests a Voting Shares Vote, a Party other than the City
of Irvine must constitute the second Director for purposes of having the right to request and
conduct a Voting Shares Vote. A "yes" vote on the Voting Shares Vote shall be a vote to reverse
and reject the Equal Vote; a "no" vote on the Voting Shares Vote shall be a vote to affirm the
Equal Vote. For Voting Shares Votes, votes shall be weighted as described in subsection 3.9.3. A
"yes"vote on a Voting Shares Vote shall require(i)for votes requiring a majority under subsection
3.9.1, more than fifty percent (50%) of the voting shares of all Directors voting; (ii) for votes
requiring a supermajority of two-thirds under this Agreement, sixty-seven percent(67%) or more
of the voting shares of all Directors voting; and (iii) for votes requiring a supermajority of three
quarters under this Agreement more than seventy-five percent (75%) of the voting shares of all
Directors voting. All votes taken pursuant to this subsection 3.9.2 shall be referred to as a"Voting
Shares Vote." If a Voting Shares Vote yields a "no" vote, the legal effect is to affirm the Equal
Vote with respect to which the Voting Shares Vote was taken. If the Voting Shares Vote succeeds,
the legal effect is to nullify the Equal Vote with respect to which the Voting Shares Vote was
taken. If the underlying Equal Vote was a tie, the Voting Shares Vote replaces that tie vote. No
action may be taken solely by a Voting Shares Vote without first having taken an Equal Vote.
3.9.3 Voting Shares Formula. When a Voting Shares Vote is requested by two or
more Directors, voting shares of each Director shall be determined by the following formula:
(Annual Energy Use/Total Annual Energy) x 100
For purposes of this formula(a)"Annual Energy Use"means(i) for the first two years following
the Effective Date, the annual electricity usage, expressed in kilowatt hours ("kWh"), within the
jurisdiction of the Party appointing the Director(s)and(ii) following the second anniversary of the
Effective Date, the annual electricity usage, expressed in kWh, of accounts within the jurisdiction
of the Party appointing the Director(s) that are served by the Authority, and (b) "Total Annual
Energy" means the sum of all Parties' Annual Energy Use. The initial values for Annual Energy
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use are designated in Exhibit B and the initial voting shares are designated in Exhibit C. Both
Exhibit B and Exhibit C shall be adjusted annually as soon as reasonably practicable after January
1 of each year,but no later than March 1 of each year, subject to the approval of the Board. Voting
shares attributable to Irvine shall be divided equally between the Irvine Directors.
3.9.4 Special Voting.
3.9.4.1 Two-Thirds Supermaiority Votes. An affirmative vote of two-thirds of the
Directors of the entire Board shall be required to take any action on the following(i)issuing
or repayment of bonds loans or other forms of debt; (ii) adding or removing Parties on or
after January 1, 2021; (iii) amending or terminating this Agreement or adopting or
amending the bylaws of the Authority; and (iv)terminating the CCA Program.
3.9.4.2 Three-Fourths Supermaiority Votes. An affirmative vote of three-fourths of
the Directors of the Board shall be required to initiate any action for eminent domain and
no eminent domain action shall be approved within the jurisdiction of a Party without the
affirmative vote of such Party's Director(or both Irvine Directors, if applicable, in the case
of eminent domain action within the City of Irvine).
3.9.4.3 Advance Notice of Special Voting. At least thirty(30)days advance written
notice to the Parties shall be provided for all special voting items under subsection 3.9.4.1
and/or subsection 3.9.4.2. Such notice shall include a copy of all substantive documents
necessary to meaningfully deliberate and consider the proposed vote (e.g., any proposed
amendment to this Agreement or the bylaws of the Authority). The Authority shall also
provide prompt written notice to all Parties of the action taken, which shall include any
resolution, ordinance, rule, policy, agreement, filing or other operative document (if any)
adopted or approved by the Board.
3.10 Officers.
3.10.1 Chair and Vice Chair. The Directors shall select from among themselves a
Chair and a Vice-Chair. The Chair shall be the presiding officer of all Board meetings.
The Vice-Chair shall serve in the absence of the Chair. The term of office of the Chair and
Vice-Chair shall continue until the expiration of the office of the Directors serving in such
positions. There shall be no limit on the number of terms held by the Chair and the Vice-
Chair. The office of either the Chair or Vice-Chair shall be declared vacant and a new
selection shall be made if. (i) the person serving dies, resigns, or becomes legally unable
to fulfill his or her duties,or(b)the Party that appointed the Chair or Vice-Chair withdraws
from the Authority pursuant to the provisions of this Agreement.
3.10.2 Secretary. The Secretary shall be responsible for keeping the minutes of all
meetings of the Board and all other official records of the Authority.
3.10.3 Treasurer/Auditor. In accordance with California Government Code §
6505.5, the Board shall appoint a qualified person to act as the Treasurer and a qualified
person to act as the Auditor,neither of whom need be members of the Board. The Treasurer
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and the Auditor shall possess the powers of, and shall perform those functions required of
them by California Government Code §§ 6505, 6505.5, and 6505.6, and by all other
applicable laws and regulations and amendments thereto.
3.11 Meetings. The Board shall provide for its regular meetings, the date, hour, and
place of which shall be fixed by resolution of the Board. Regular,adjourned,and special meetings
shall be called and conducted in accordance with the provisions of the Ralph M. Brown Act,
California Government Code § 54950 et seq.
3.12 Chief Executive Officer. The Board shall appoint a Chief Executive Officer. The
Chief Executive Officer shall be the chief administrative officer of the Authority, and shall be
Secretary of the Board. The powers and duties of the Chief Executive Officer shall be those
delegated and/or assigned to the Chief Executive Officer by duly adopted action of the Board.
3.13 Additional Officers and Employees. The Board shall have the power to authorize
such additional officers and assistants as may be necessary and appropriate, including retaining
one or more administrative service providers for planning, implementing, and administering the
CCA Program. Such officers and employees may also be, but are not required to be, officers and
employees of the Parties.
3.14 Bonding Requirement. The officers or persons who have charge of,handle,or have
access to any property of the Authority shall be the members of the Board, the Treasurer, the
Executive Director, and any such officers or persons to be designated or empowered by the Board.
Each such officer or person shall be required to file an official bond with the Authority in an
amount which shall be established by the Board. Should the existing bond or bonds of any such
officer be extended to cover the obligations provided herein, said bond shall be the official bond
required herein. The premiums on any such bond attributable to the coverage required herein shall
be the appropriate expenses of the Authority.
3.15 Audit. The records and accounts of the Authority shall be audited annually by an
independent certified public accountant with the final audit completed within six months of the
fiscal year end,and copies of such audit report shall be filed with the State Controller, and each
Party no later than fifteen (15) days after receipt of said audit by the Board.
3.16 Privileges and Immunities from Liability. All of the privileges and immunities
from liability, exemption from laws, ordinances and rules, all pension, relief, disability, workers'
compensation, and other benefits which apply to the activities of officers, agents, or employees of
a public agency when performing their respective functions shall apply to the officers, agents, or
employees of the Authority to the same degree and extent while engaged in the performance of
any of the functions and other duties of such officers, agents, or employees under this Agreement.
None of the officers, agents, or employees directly employed by the Authority shall be deemed,
by reason of such employment to be employed by the Parties (or any of them).
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SECTION 4: ADDITIONAL PARTIES AND IMPLEMENTATION OF CCA PROGRAM
4.1 Additional Parties. An incorporated city or county, or other public agency as
authorized by California Public Utilities Code § 331.1, may become a member of the Authority
and a Party to this Agreement upon satisfaction of the following:
4.1.1 Adoption of a resolution by the governing body of the proposed additional
party approving the Agreement, and requesting participation and an intent to join the
Authority;
4.1.2 Adoption by the Board of a resolution authorizing participation of the
proposed additional party;
4.1.3 Satisfaction of any additional conditions as established by the Board or
applicable laws or regulations; and
4.1.4 Execution of the Agreement by the proposed additional party.
4.2 Continuing Participation. The Parties acknowledge that participation in the CCA
Program may change by the addition or withdrawal or termination of a Party. The Parties agree
to participate in good faith with additional members as may later be added. The Parties also agree
that the withdrawal or termination of a Party shall not affect the enforceability of this Agreement
as to the remaining Parties, or the remaining Parties' continuing obligations under this Agreement.
4.3 Implementation of CCA Program. The Authority shall cause to be prepared an
implementation plan meeting the requirements of California Public Utilities Code § 366.2
("Implementation Plan") and any applicable regulations of the California Public Utilities
Commission ("CPUC"). The Board shall approve the Implementation Plan prior to it being filed
with the CPUC. The Authority, acting by and through the Board, shall take all such steps as are
necessary and appropriate to implement the Implementation Plan and the CCA Program in a
manner consistent with this Agreement.
4.4 Power Supply. The Board will establish power supply options for the Authority.
The Authority's power supply options will include,but not be limited to,renewable and GHG-free
base product that is equivalent to the minimum required by law. Each Party may select its power
supply base product for the ratepayers in its jurisdiction. Each Party shall also have the flexibility
to achieve its climate goals without impeding any other Party from doing the same.
4.4 Authority Documents. The Parties acknowledge and agree that the operations of
the Authority will be implemented through various program documents and regulatory filings duly
adopted by the Board, including, but not limited to, bylaws, an annual budget, and plans and
policies related to the CCA Program. The Parties agree to abide by and comply with the terms and
conditions of all such Authority documents that may be approved or adopted by the Board.
4.5 Termination of CCA Program. Nothing contained in this Agreement shall be
construed to limit the discretion of the Authority to terminate the implementation or operation of
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the CCA Program at any time, so long as such termination is in accordance with any applicable
requirements of state law and the voting procedures specified in subsection 3.9.4.1, above.
SECTION 5: FINANCIAL PROVISIONS
5.1 Fiscal Year. The Authority's fiscal year shall be twelve (12) months commencing
July 1 of each year and ending June 30 of the succeeding year.
5.2 Treasurer. The Treasurer for the Authority shall be the depository for the Authority.
The Treasurer of the Authority shall have custody of all funds and shall provide for strict
accountability thereof in accordance with California Government Code § 6505.5 and other
applicable laws. The Treasurer shall perform all of the duties required in California Government
Code § 6505 et seq. and all other such duties as may be prescribed by the Board.
5.3 Depository & Accounting. All funds of the Authority shall be held in separate
accounts in the name of the Authority and not commingled with the funds of any Party or any other
person or entity. Disbursement of such funds during the term of this Agreement shall be accounted
for in accordance with generally accepted accounting principles applicable to governmental
entities and pursuant to California Government Code § 6505 et seq. and other applicable laws.
There shall be a strict accountability of all funds. All revenues and expenditures shall be reported
regularly to the Board. The books and records of the Authority shall be promptly open to
inspection by the Parties at all reasonable times.
5.4 Budjzet. The Board shall establish the budget for the Authority,and may from time
to time amend the budget to incorporate additional income and disbursements that might become
available to the Authority for its purposes during a fiscal year.
5.5 City of Irvine Initial Funding of Authority. The Authority shall, concurrent with
the execution of this Agreement, enter into an agreement that covers repayment to the City of
Irvine of(i)funding and collateral provided by the City of Irvine to the Authority to facilitate start-
up and launch costs for the Authority and the CCA Program, and (ii) costs incurred by the City
(including staff, consultant, and legal expenses, and associated allocated overhead and
administrative expenses) in connection with the study and analysis of the CCA, the formation of
the Authority, and the creation of the Implementation Plan (the "Capital Loan Agreement" or
the "Capital Loan"). The Capital Loan shall be repaid from customer charges for electrical
services to the extent permitted by law when the CCA Program becomes operational. The form
of the Capital Loan Agreement is attached hereto as Exhibit D. The Authority shall enter into the
Capital Loan Agreement so long as its final form is substantially consistent with the form attached
as Exhibit D.
5.6 No Requirement for Contributions or Payments. Except as otherwise specified
herein, the Parties are not required under this Agreement to make any financial contributions or
payments to the Authority, and the Authority shall have no right to require such a contribution or
payment.
5.6.1 Notwithstanding subsection 5.6, the Board may adopt a membership fee to
be paid by Additional Parties upon entering into the Agreement, which
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membership fee shall be established (if at all) by the Board and may cover
a reasonable estimate of the transactional and other costs incurred by the
Authority in processing the addition of the Additional Party to the
Authority.
5.6.2 Notwithstanding subsection 5.6, the Authority and a Party may mutually
and voluntarily enter into an agreement to provide the following: (i)
contributions of public funds for the purposes set forth in this
Agreement; (ii) advances of public funds for the purposes set forth in this
Agreement, such advances to be repaid as provided by such written
agreement; or(iii) its personnel, equipment or property.
5.6.31 For the avoidance of doubt, nothing in this Agreement requires, nor shall
the Authority for any reason ever require,that any Party adopt any local tax,
assessment, fee or charge for the benefit of the Authority.
5.7 Obligations of the Authority. Unless otherwise agreed by the Parties, the debts,
liabilities, and obligations of the agency shall not be the debts, liabilities, and obligations, either
jointly or severally, of the members of the agency. A Party may, in its sole discretion, agree to
assume one or more of the debts, liabilities, and obligations of the Authority if, and only if, such
Party, with the approval of its governing body, agrees in writing to assume any such debts,
liabilities, or obligation of the Authority.
SECTION 6: WITHDRAWAL AND TERMINATION
6.1 Right to Withdraw.
6.1.1 Right to Withdraw Prior to March 1, 2021. Except for the City of Irvine, a
Party may withdraw from the Authority for any reason and without liability or cost prior to March
1, 2021 upon providing the Authority fifteen (15) days advance written notice.
6.1.2 Right to Withdraw After March 1, 2021. Except for the withdrawal
provided for in Section 6.1.1, a Party may withdraw its membership in the Authority, effective as
of the beginning of the Authority's fiscal year, by giving no less than one hundred eighty (180)
days advance written notice of its election to do so, which notice shall be given to the Authority
and each Party. Withdrawal of a Party shall require an affirmative vote of the Party's governing
board. A Party that withdraws from the Authority pursuant to this subsection may be subject to
certain continuing liabilities as described in this Agreement. The withdrawing Party and the
Authority shall execute and deliver all further instruments and documents, and take any further
actions as may be reasonably necessary to effectuate the orderly withdrawal of such Party.
6.2 Involuntary Termination. This Agreement may be terminated with respect to a
Party for material non-compliance with provisions of this Agreement upon a two-thirds vote of the
entire Board (excluding the vote of the Party subject to possible termination)taken in accordance
with subsection 3.9.4.1. Prior to any vote to terminate this Agreement with respect to a Party,
written notice of the proposed termination and the reason(s)for such termination shall be delivered
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to the Party whose termination is proposed at least thirty (30) days prior to the regular Board
meeting at which such matter shall first be discussed as an agenda item. The written notice of
proposed termination shall specify the particular provisions of this Agreement that the Party has
allegedly violated with supporting documentation. The Party subject to possible termination shall
have the opportunity at the next regular Board meeting following the expiration of the thirty-day
(30) day notice period to respond to any reasons and allegations that may be cited as a basis for
termination. The Party's response shall be evaluated at a public meeting prior to a vote regarding
termination. A Party that has had its membership in the Authority terminated may be subject to
certain continuing liabilities, as described in subsection 6.3. If the Board votes to terminate a
Party's membership in the Authority, the effective date of the termination shall be scheduled by
the Board, in its reasonable discretion, to ensure adequate time for the transition of the terminated
Party's CCA Program customers to another electricity provider. The Parties expressly intend,
agree and acknowledge that a Board action to terminate a Party's membership in the Authority
shall be upheld so long as it is not arbitrary and capricious, and is supported by substantial
evidence.
6.3 Continuing Liability; Refund. Upon a withdrawal of a Party under subsection 6.1.2
or involuntary termination of a Party under subsection 6.2, the Party shall be responsible for any
claims, demands, damages, or liabilities attributable to the Party through the effective date of its
withdrawal or involuntary termination. Such Party also shall be responsible liable to the Authority
for (a) any damages, losses, or costs incurred by the Authority which result directly from the
Party's withdrawal or termination, including, but not limited to, costs arising from the resale of
capacity, electricity, or any attribute thereof no longer needed to serve such Party's load, and
removal of customers from the CCA Program resulting from the withdrawal or termination of the
Party; and (b) any costs or obligations associated with the Party's participation in any program in
accordance with the program's terms,provided such costs or obligations were incurred prior to the
withdrawal of the Party. Except as otherwise specified, such Party shall not be responsible for any
claims, demands, damages, or liabilities commencing or arising after the effective date of the
Party's withdrawal or involuntary termination. From and after the date a Party provides notice of
its withdrawal or is terminated, the Authority shall reasonably and in good faith seek to mitigate
any costs and obligations to be incurred by the withdrawing or terminated Party under this
subsection through measures reasonable under the circumstances; provided, however, that this
obligation to mitigate does not impose any obligation on the Authority to transfer any cost or
obligation directly attributable to the membership and withdrawal or termination of the
withdrawing or terminated Party to the ratepayers of the remaining Parties. Further the liability of
the withdrawing or terminated Party shall be based on actual costs or damages incurred by the
Authority and shall not include any penalties or punitive charges imposed by the Authority. The
Authority may withhold funds otherwise owing to the Party or may require the Party to deposit
sufficient funds with the Authority,as reasonably determined by the Authority,to cover the Party's
liability for the costs described above. The withdrawing or terminated Party agrees to pay any
such deposit determined by the Authority in consultation with a third party audit firm. Any amount
of the withdrawing or terminated Party's funds held on deposit with the Authority above that which
is required to pay any liabilities or obligations shall be returned to that Party. In the implementation
of this subsection 6.3, the Parties intend, to the maximum extent possible, without compromising
the viability of ongoing Authority operations, that any claims, demands, damages, or liabilities
covered hereunder, be funded from the rates paid by CCA Program customers located within the
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service territory of the withdrawing Party, and not from the general fund of the withdrawing Party
itself. The liability of a withdrawing Party under this subsection shall be only to the Authority and
not to any other Party.
6.4 Termination of Agreement. This Agreement may be terminated by vote of the
Board in accordance with subsection 3.9.4.1, or by mutual agreement of all the Parties approved
by majority votes of their respective governing bodies. provided, however, that this subsection
shall not be construed as limiting the rights of a Party to withdraw in accordance with Section 6.
6.5 Disposition of Authority Assets Upon Termination of Agreement. Upon
termination of this Agreement, any surplus money or assets in possession of the Authority for use
under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred by the
Authority, shall be returned to the then-existing Parties in proportion to the contributions made by
each.
SECTION 7: MISCELLANEOUS PROVISIONS
7.1 Dispute Resolution. The Parties and Authority shall make efforts to settle all
disputes arising out of or in connection with this Agreement. Before exercising any remedy
provided by law, a Party or Parties and the Authority shall engage in nonbinding mediation in the
manner agreed to by the Party or Parties and the Authority. In the event that nonbinding mediation
does not resolve a dispute within one hundred twenty (120) days after the demand for mediation
is made, any Party or the Authority may pursue any all remedies provided by law.
7.2 Liability of Directors, Officers, and Employees. The Directors, officers, and
employees of the Authority shall use ordinary care and reasonable diligence in the exercise of their
powers and in the performance of their duties pursuant to this Agreement. No current or former
Director, officer, or employee will be responsible for any act or omission by another Director,
officer, or employee. The Authority shall defend, indemnify, and hold harmless the individual
current and former Directors, officers, and employees for any acts or omissions in the scope of
their employment or duties in the manner provided by California Government Code § 995 et seq.
Nothing in this subsection shall be construed to limit the defenses available under the law to the
Parties, the Authority, or its Directors, officers, or employees.
7.3 Indemnification. The Authority shall acquire such insurance coverage as the Board
deems necessary to protect the interests of the Authority, the Parties, and the Authority's
ratepayers. The Authority shall indemnify,defend, and hold harmless the Parties and each of their
respective board members or council members, officers, agents, and employees, from any and all
claims, losses, damages, costs, injuries, and liabilities of every kind to the extent arising directly
or indirectly from the conduct, activities, operations, acts, and omissions of the Authority under
this Agreement.
7.4 Assignment. The rights and duties of a Party may not be assigned or delegated
without the advance written consent of all other Parties. Any attempt to assign or delegate such
rights or duties without express written consent of all other Parties shall be null and void. This
Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of
the Parties. This subsection does not prohibit a Party from entering into an independent agreement
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with another entity regarding the financing of that Party's contributions to the Authority (if any),
or the disposition of proceeds which that Party receives under this Agreement, so long as such
independent agreement does not affect, or purport to affect, the rights and duties of the Authority
or the Parties under this Agreement.
7.5 Severability. If any part of this Agreement is held, determined, or adjudicated to
be illegal, void, or unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall be given effect to the fullest extent reasonably possible.
7.6 Further Assurances. Each Party agrees to execute and deliver all further
instruments and documents, and take any further action that may be reasonably necessary to
effectuate the purposes of this Agreement.
7.7 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute but one and the
same instrument.
7.8 Notices. Any notice authorized or required to be given pursuant to this Agreement
shall be validly given if served in writing either personally, by deposit in the United States mail,
first class postage prepaid with return receipt requested, or by a recognized courier service to the
addresses specified on Exhibit A. Notices given (a) personally or by courier service shall be
conclusively deemed received at the time of delivery and receipt and (b) by mail shall be
conclusively deemed given 48 hours after the deposit thereof(excluding Saturdays, Sundays and
holidays) if the sender receives the return receipt. All notices shall be addressed to the office of
the clerk or secretary of the Authority or Party, as the case may be,or such other person designated
in writing by the Authority or Party. Notices given to one Party shall be copied to all other Parties.
Notices given to the Authority shall be copied to all Parties.
[Signature to Follow on Next Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as evidenced by the
signatures below
MEMBER AGENCY:
CITY OF IRVINE CITY O NA PARK
By: l'WuvA A"L By: / A4
Name:Marianna Marysheva ame: Aaron France
Title:Interim City Manager Title: Interim CityManager
Dated: 11120t2020 2020 g
Dated: December 15, 2020
Approved as to Form: Approved as to Form:
V4 "t4 4��
City Attorney City Attorney
Approved as to Form:
NOLIA, 1506V, ATTEST:
Special Counsel
CITY OF FULLERTON
ADRIA M. JIMENEZ, Mhtlt
CITY CLERK
Name:
Title: ,a•T'�
Dated: , 2020 ram.
cgIL-IFO��
Approved as to Form:
City Attorney
15
55695.00001'3 34853 67.1
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as evidenced by the
signatures below
MEMBER AGENCY:
CITY OF IRVINE
By:
Name:
Title:
Dated: 12020
Approved as to Form:
City Attorney
Approved as to Form:
Special Counsel
CITY LL ON
Name:
Title: C.� M 9n-1 je!
Dated: 1 1- Z O , 2020
rov d to Form:
C
Atto
n
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795
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as evidenced by the
signatures below
MEMBER AGENCY:
CITY OF IRVINE CITY OF HUNTINGTON BEACH
By: m
Name:
Title: May
Dated: , 2020 42
Approved as to Form: City Clerk
VIE A APP VED
City Attorney
Approved as to Form: City Manager
Approve as to Form
Special Counsel City Attorney�v
CITY OF FULLERTON
By:
Name:
Title:
Dated: , 2020
Approved as to Form:
City Attorney
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55695.00001\33485367.1
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IN WITNESS WHEREOF,the parties hereto have executed this Agreement as evidenced by the
signatures below
MEMBER AGENCY:
CITY OF IRVINE
By:
Name:
Title:
Dated: , 2020
By: .
Nan eeki Moatazedi
T' e: Mayor
Dated: December 15, 2020
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EXHIBIT A
LIST OF PARTIES
Founding Members:
City of Irvine City of Fullerton
1 Civic Center Plaza 303 W. Commonwealth Ave.
Irvine, CA 92606 Fullerton, CA 92832
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EXHIBIT B
ANNUAL ENERGY USAGE BY JURISDICTION
2019
Annual
Load
GWhI
City of Buena Parke 450
City of Fullerton 676
City of Huntington Beach 1,046
City of Irvine 1,937
City of Lake Forest 459
Total 4,569
1. Annual energy usage is preliminary data and has not been validated by Southern California Edison
(SCE)at the time of execution of the Agreement.This Exhibit will be updated without requiring
an amendment of the Agreement upon SCE validation of the data.
2. City's 2019 annual load is an estimated value that may change pending preliminary and validated
data from SCE.
5 5695.0000 1\33526896.1
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EXHIBIT C
PARTY VOTING SHARES
Estimated
Voting
Sharel
City of Buena Park 9.8%
City of Fullerton 14.8%
City of Huntington Beach 22.9%
City of Irvine 42.4%
City of Lake Forest 10.0%
Total 100.0%
1. Estimated Voting Share is based on Exhibit B (Annual Energy Usage by Jurisdiction). Annual
energy usage is preliminary data and has not been validated by Southern California Edison(SCE)
at the time of execution of the Agreement. This Exhibit will be updated without requiring an
amendment of the Agreement upon SCE validation of the data.
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EXHIBIT D
FORM OF CAPITAL LOAN AGREEMENT
AGREEMENT BETWEEN THE CITY OF IRVINE AND THE ORANGE COUNTY
POWER AUTHORITY FOR THE ADVANCE OF FUNDS FOR IMPLEMENTATION
OF A COMMUNITY CHOICE ENERGY PROGRAM
This Agreement, effective ("Effective Date"), is by and between the
CITY OF IRVINE, a municipal corporation and charter city("City"), and the ORANGE
COUNTY POWER AUTHORITY, a California joint powers authority("Authority"), for the
purpose of stating the terms for an advance of funds from the City to be repaid to City by the
Authority as provided herein. City and Authority shall be referred to individually as a"Party"
collectively as the "Parties."
RECITALS
A. On , the Authority was formed by participating Orange County cities,
including the City, to administer a community choice aggregation ("CCA") program within the
jurisdictional boundaries of its members in Orange County.
B. Prior to formation of the Authority, the City funded a feasibility study, peer review, and
other activities necessary to evaluate the feasibility and implementation of a CCA program. The
City also funded certain costs to form the Authority and implement the CCA program for itself
and the Authority's founding members.
C. As expressly stated in that certain document entitled, Orange County Power Authority
Joint Powers Agreement, at Section 5.5, which is incorporated herein by this reference, it was
agreed upon by the parties thereto that the City would be reimbursed by the Authority for all
costs regarding the feasibility and implementation of the CCA program, contingent upon the
Authority's launch of the CCA program.
D. The City estimates that its costs to study, form and implement the Authority are
$250,000, which include, but are not limited to, costs for its feasibility study, peer review, City
staffing, legal costs, member and stakeholder outreach, and formation of the Authority
("Formation Costs").
E. The City estimates that the Authority will need approximately$2,500,000 for working
capital to pay for implementation costs through a projected launch of the CCA program in 2022
("Pre-Launch Costs").
F. The City further estimates that the Authority will need up to an additional $8,000,000 to
$20,000,000 in the form of a credit facility for operational support and power procurement as
well as other cash flow needs, and that any such credit facility may require cash collateral from
an Authority member between$2,000,000 to $5,000,000("Launch Costs").
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G. The Parties desire to enter into this Agreement to document the Authority's repayment
obligations to the City for all such funds expended on behalf of, or in support of, the formation of
the Authority and implementation of the CCA program.
AGREEMENT
NOW THEREFORE, in consideration of their mutual promises and obligations, the
Parties hereby agree as follows:
1. City Loan to the Authority.
1.1. Formation Costs. The Authority acknowledges that the City has expended certain
City funds toward Formation Costs and agrees to reimburse the City for such costs in an amount
not to exceed $250,000 dollars, subject to the repayment provisions herein.
1.2. Pre-Launch Costs. The City agrees to loan the Authority Pre-Launch Costs in the
amount of$2,500,000 by January 1, 2021, which shall be used by the Authority for working
capital costs associated with the Authority's launch, anticipated in 2022.
1.3 Launch Costs. The City agrees to post the necessary cash collateral, not to exceed
$5,000,000, in order for the Authority to secure a credit facility for its Launch Costs for
additional working capital associated with power procurement and operational support ("Credit
Agreement"). The City will also provide a loan for Launch Costs if needed by the Authority
should a Credit Agreement be unavailable or insufficient to cover the Authority's working
capital needs. The terms and conditions of any City loan to the Authority for Launch Costs
(excluding the cash collateral requirement above) shall be negotiated and agreed upon in an
amendment to this Agreement, subject to the reasonable approval of the Parties. The Authority
shall provide the City with the Authority's pro forma demonstrating the amount needed for the
aforementioned City loan.
1.4. City Loan Amount. Formation Costs, Pre-Launch Costs, and Launch Costs shall
be collectively referred to herein as "City Loan Amount."
2. Repayment; Interest.
2.1 Repayment Date. The Authority shall repay the City Loan Amount to City, plus
interest, no later than the repayment date, which shall be January 1, 2027. The Parties
acknowledge that they may modify the Repayment Date for the Launch Costs in an amendment
to this Agreement depending on the terms and conditions of the Credit Agreement.
2.2 Interest Rate. In accordance with subsection 2.3, interest shall be paid on all
outstanding portions of the City Loan-Amount that bear interest. The interest rate on any
outstanding amount shall be calculated according to the sum of the following calculation of each
respective quarter:
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Principal x Quarterly Interest Rate x(No. of Days in Quarter/No. of Days in
Year)
Where"Principal"is the relevant funding of the City Loan Amount as described herein;
"Quarterly Interest Rate" is the gross earnings for the respective quarter as reported in the City
of Irvine Treasurer's monthly investment report found on the Treasurer's website
https://www.cityofirvine.org/administrative-services-department/investment-policies-and-reports
"No. of Days in Quarter" is the sum of days of each month that make up each respective
quarter; and"No. of Days in Year" is 365, except in leap years, in which the number of days in
the year shall be 366.
The City Loan Amount shall bear interest as follows:
a. Formation Costs shall bear no interest whatsoever and shall be repaid to City
as reimbursement for out-of-pocket expenses by the Repayment Date.
b. Pre-Launch Costs shall bear interest beginning January 1, 2021 through the
Repayment Date as estimated and set forth on Exhibit A, attached hereto.
c. Launch Costs for the City's collateral associated with the Credit
Agreement shall bear interest beginning on the effective date of the Credit
Agreement. Launch Costs for amendment to this Agreement, as set forth
in subsection 1.3, through the Repayment Date.
In the event the City Loan Amount, along with any and all interest owed pursuant to this Section
2, are not repaid by the Repayment Date, any such amounts that remain outstanding shall accrue
interest at the rate specified by law for prejudgment interest.
3. City Liability; Hold Harmless; Indemnification.
3.1 City Liability. The Authority acknowledges and agrees that by lending said funds
to the Authority, the City does not assume any debt, liability, obligation, or duty whatsoever with
respect to the Authority's operations, liabilities, business, or transactions.
3.2. Hold Harmless/Indemnification. The Authority shall hold harmless, indemnify
and defend the City, its elected officials, officers, employees, and agents from and against any
and all claims, suits or actions of every kind which arise out of the performance or
nonperformance of the Authority's covenants, responsibilities, and obligations under this
Agreement, and which result from the negligent or wrongful acts of the Authority or its board
members, officers, employees, or agents. City shall hold harmless, indemnify and defend the
Authority, its board members, officers, employees and agents from and against any and all
claims, suits or actions of any kind which arise out of the performance or non-performance of the
City's covenants, responsibilities and obligations under this Agreement and which result from
the negligent or wrongful acts of the City or its elected officials, officers, employees or agents.
In the event of concurrent negligence of the City, its officer or employees, and the Authority, its
officers and employees, the liability for any and all claims for injuries or damages to persons
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and/or property or any other loss or costs which arise out of the terms, conditions, covenants or
responsibilities of this Agreement shall be apportioned according to the California theory of
comparative negligence.
4. General Provisions.
4.1. Audit. Prior to January 1, 2023, the City may audit the Authority's expenditure
of Pre-Launch Costs to confirm that such expenditures have been made consistent with the
purposes of this Agreement.
4.2 Waiver. The waiver by City or Authority of any term, covenant, or condition
herein contained shall not be deemed to a waiver of such term, covenant, or condition or any
subsequent breach of the same or any other term, covenant, or condition herein contained.
4.2. Successors and Assigns/Assignment. The terms of this Agreement shall apply
and bind the heirs, successors, executors, administrators and assigns of the Parties. No Party
may assign this Agreement without the express written consent of the other Party, which shall
not be unreasonably withheld.
4.3. Entirety/Amendment. This Agreement contains the entire understanding between
the Parties relating to the obligations of the Parties described herein. No provision of this
Agreement may be amended or added to except by an agreement in writing signed by the Parties
or their respective successors in interest. This Agreement shall not be effective or binding until
fully executed by both Parties.
4.4. Venue& Choice of Law. This Agreement shall be governed by and construed
under the laws of the State of California. In the event of any legal action to enforce or interpret
this Agreement, the sole and exclusive venue shall be a court of competent jurisdiction located in
Orange County, California.
4.5. Independent Entities. This Agreement is by and between two independent
entities and is not intended to and shall not be construed to create the relationship of agent,
servant, employee, partnership,joint venture,joint employer, or association.
4.6. Authority to Execute Agreement. The Parties each warrant that they have the
authority to execute this Agreement and that all actions have occurred, and all necessary
approvals or consents have been obtained to allow each party to enter into this Agreement.
4.7. Notices. All notices provided for herein shall be in writing and shall be delivered
to the appropriate parties as provided below:
For City: Attn: City Manager
City of Irvine
1 Civic Center Plaza
Irvine, CA 92606
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For Authority: TBD
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IN WITNESS WHEREOF, Authority and City have executed this Agreement on the
date set forth below.
CITY OF IRVINE
11/20/2020
Date:
By: Ariauka titw+�sGeua
Title: Interim City Managcr
Approved as to Form:
City Attorney
ORANGE COUNTY POWER AUTHORITY
Date:
By:
Title:
Approved as to Form:
General Counsel
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EXHIBIT A
PRE-LAUNCH COSTS INTEREST SCHEDULE
Loan Borrower Orange County Power Authority
Loan Amount/Pre-Launch $2,500,000
Loan Start Date 1/1/2021
Loan Maturity Date l/1/2027
Estimated Interest Rate 1.75% See Note on Interest Rate
Period Interest Cumulative Interest
3/31/2021 10,787.67 $10,787.67
6/30/2021 10,907.53 21,695.21
9/30/2021 11,027.40 32,722.60
12/31/2021 11,027.40 43,750.00
3/31/2022 10,787.67 54,537.67
6/30/2022 10,907.53 65,445.21
9/30/2022 11,027.40 76,472.60
12/31/2022 11,027.40 87,500.00
3/31/2023 10,787.67 98,287.67
6/30/2023 10,907.53 109,195.21
9/30/2023 11,027.40 120,222.60
12/31/2023 11,027.40 131,250.00
3/31/2024 10,877.73 142,127.73
6/30/2024 10,877.73 153,005.46
9/30/2024 10,997.27 164,002.73
12/31/2024 10,997.27 175,000.00
3/31/2025 10,787.67 185,787.67
6/30/2025 10,907.53 196,695.21
9/30/2025 11,027.40 207,722.60
12/31/2025 11,027.40 218,750.00
3/31/2026 10,787.67 229,537.67
6/30/2026 10,907.53 240,445.21
9/30/2026 11,027.40 251,472.60
12/31/2026 11,027.40 $262,500.00
Pre-Launch Loan $2,500,000.00
Total Due l/l/2027 $2,762,500.00
Note: Interest Rate is based on the average of last six
months of interest earned on the City's investment
portfolio.
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55695.00001`33485367.1
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ORANGE COUNTY POWER AUTHORITY
JOINT POWERS AGREEMENT
This Joint Powers Agreement("Agreement"), effective as of the date specified in Section
1.2,below,which is November_,2020 ("Effective Date") is made and entered into pursuant to
the Joint Exercise of Powers Act(California Government Code § 6500 et seq.)relating to the joint
exercise of powers among the parties set forth in Exhibit A, All parties that execute this Agreement
prior to December 31,2020 shall be designated individually as"Founding Party"and collectively
as "Founding Parties". All cities, counties, or other public agencies added as parties to this
agreement after December 31, 2020 shall be designated individually as "Additional Party" and
collectively"Additional Parties", The term"Party"refers individually to any Founding Party or
Additional Party, and the term "Parties" refers collectively to the Founding Parties and the
Additional Parties,
RECITALS
A. In 2002,Assembly Bill 117 (Stat. 2002, Ch. 838, codified at Public Utilities Code
Sections 218.3,366,394,394,25,331.1 366.2,and 381.1)was signed into law allowing customers
to aggregate their electrical loads as members of their local community with public agencies
designated as community choice aggregators,and allowing such public agencies to aggregate the
electrical load of interested consumers within their jurisdictional boundaries and purchase
electricity on behalf of those consumers.
B. In 2006,Assembly Bill 32(Stat.2006,Ch.488,codified at Health and Safety Code
Sections 38500 et seq.), known as the Global Warming Solutions Act, was signed into law,
mandating a reduction in greenhouse gas emissions to 1990 levels by 2020.
C. In 2015, Senate Bill 350 (Stat, 2015, Ch. 547, codified at Health and Safety Code
Section 44258.5; Labor Code Section 1720; Public Resources Code Sections 25302.2, 25310,
25327 and 25943; and Public Utilities Code Sections 237.5, 337, 352, 359, 365.2, 366.3, 399.4,
399.11, 399.12, 399.13, 399.15, 399.16, 399,18, 399.21, 399.30,454,51,454,52, 454.55, 454.56,
701.1, 740.8, 740.12, 9505, 9620, 9621, 9622,and Article 17 (commencing with Public Utilities
Code Section 400))was signed into law,mandating a reduction in greenhouse gas emissions to 40
percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050.
i
D. In 2018, Senate Bill 10 (Staff 2018, Ch, 312, codified at Public Utilities Code
sections 399.11, 399.15, 399.30, and 454,53) was signed into Iaw, directing that the Renewables
Portfolio Standard to be increased to 60 percent renewables by 2030 and establishing a policy for
eligible renewable energy resources and zero-carbon resources to supply 100 percent of electricity
retail sales to California end-use customers by 2045.
E. The Parties each hold various powers under California law, including, but not
limited to, the power to purchase, supply, and aggregate electricity for themselves and customers
within their jurisdictions in accordance with Public Utilities Code Sections 333.1 and 366.2; they
are therefore properly empowered to enter into this Agreement under the Joint Exercise of Powers
Act(Government Code Section 6500 et seq„ the"Act"),
1
5 5695.0000 1\33495367.1
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R The purposes for entering into this Agreement are more fully specified in
subsection 1.4 below, but principally consist of the study, promotion, development, funding,
financing, purchasing, conduct, operation, and management of energy, energy efficiency and
conservation, and other energy-related and community choice aggregation programs (the "CCA
Program"), through which the following objectives may be advanced: (a) reducing greenhouse
gas emissions related to the use of power throughout the Parties' jurisdictions and neighboring
regions; (b)providing electric power and other forms of energy to customers at a competitive cost;
(C) carrying out programs for ratepayers of all income levels to reduce energy consumption; (d)
stimulating and sustaining the local economy by developing local jobs in renewable and
conventional energy; and (e) promoting long-term electric rate stability, energy security and
reliability for residents through local control of electric generation resources.
G. The Founding Parties desire to establish a separate public agency, known as the
Orange County Power Authority("Authority"), under the Act and consistent with Assembly Bill
117, in order to collectively implement the CCA Program,and to exercise any powers common to
the Authority's members to further these purposes.
H. The Parties have each adopted an ordinance electing to participate as a group in a
community choice aggregation program through the Authority,as authorized by California Public
Utilities Code § 366.2(a)(12)(B),
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions
hereinafter set forth, it is agreed by and among the Parties as follows:
SECTION 1. FORMATION OF AUTHORITY
1,1 Creation of Agency. Pursuant to the Act there is hereby created a public entity to
be known as The Orange County Power Authority. Pursuant to Section 6507 of the Act, the
Authority is a public agency separate from the Patties. The jurisdiction of the Authority shall be
all territory within the geographic boundaries of the Patties; however, the Authority may, as
authorized under applicable law, undertake any action outside such geographic boundaries as is
necessary to accomplish its purpose.
1.2 Effective Date and Term. This Agreement shall become effective and the Authority
shall exist as a separate public agency on the date this Agreement is executed by at least two
Parties. The Authority shall continue to exist, and this Agreement shall be effective, until this
Agreement is terminated in accordance with this Agreement, subject to the rights of a Party to
withdraw from the Authority.
1.3 Parties, The names, particular capacities, and addresses of the Parties are shown
on Exhibit A,as it may be amended from time to time.
1.4 Purpose, The purpose of this Agreement is to establish an independent public
agency in order to exercise powers common to each Patty to implement the CCA Program,and to
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exercise all other powers necessary and incidental to accomplishing this purpose. This Agreement
authorizes the Authority to provide opportunities by which the Parties can work cooperatively to
create economies of scale and implement sustainable energy initiatives that reduce energy demand,
increase energy efficiency, provide consumer choice and cost savings, and advance the use of
clean, efficient, and renewable resources in the region for the benefit of all the Parties and their
constituents,including,but not limited to,establishing and operating a CCA Program(collectively,
the"Purpose"). The Parties intend for this Agreement to be used as a contractual mechanism by
which they are authorized to participate in the CCA Program and achieve the Purpose. The Parties
intend that other agreements shall define the terms and conditions associated with the
implementation of the CCA Program and any energy programs approved by the Authority.
I
SECTION 2. POWERS OF AUTHORITY
2.1 Powers, The Authority shall have all powers common to the Parties and such
additional powers accorded to it by law. The Authority is authorized, in its own name,to exercise
all powers and do all acts necessary and proper to carry out the provisions of this Agreement and
fulfill its Purpose, including, but not limited to, each of the following powers:
i
2.1.1 Serve as a forum for the consideration, study, and recommendation of
energy services for the CCA Program;
2.1.2 To make and enter into any and all contracts to effectuate the purpose of
this Agreement, including, but not limited to, those relating to the purchase or sale of
electrical energy or attributes thereof, and related service agreements;
2.1.3 To employ agents and employees, including, but not limited to, engineers,
attorneys,planners,financial consultants,and separate and apart therefrom to employ such
other persons, as it deems necessary;
2.1.4 To acquire, contract, manage, maintain, and operate any buildings, works,
or improvements, including, but not limited to,electric generation resources;
2.1.5 To acquire property by eminent domain, or otherwise, except as limited by
Section 6508 of the Act,and to hold or dispose of property;
2.1.6 To lease or license any property;
2.13 To sue and be sued in its own name;
2.1.8 To incur debts, liabilities, and obligations, including, but not limited to,
loans from private lending sources pursuant to its temporary borrowing powers, such as
California Government Code § 53850 et seq, and authority under the Act;
2.1.9 To form subsidiary or independent corporations or entities, if appropriate,
to carry out energy supply and energy conservation programs, or to take advantage of E
legislative or regulatory changes;
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2.1.10 To issue revenue bonds and other forms of indebtedness;
2.1.11 To apply for,accept,and receive all licenses,permits,grants,loans,or other
assistance from any federal, state, or local agency;
f
2.1.12 To submit documentation and notices, register, and comply with orders,
tariffs,and agreements for the establishment and implementation of the CCA Program and
other energy and climate change programs;
2.1.13 To adopt rules, regulations,policies,bylaws, and procedures governing the
operation of the Authority;
1
2.1.14 To receive loans, gifts, contributions, and donations of property, funds,
services,and other forms of financial assistance from persons,firms,corporations,and any
governmental entity;
2.1.15 To make and enter into service agreements relating to the provision of
services necessary to plan, implement,operate and administer the CCA Program and other
energy programs, including the acquisition of electric power supply and the provision of
retail and regulatory support services;
2.1.16 To receive revenues from sale of electricity and other energy-related
programs;
2.1.17 To partner or otherwise work cooperatively with other CCAs on the
acquisition of electric resources,joint programs,advocacy and other efforts in the interests
of the Authority; and
2.1.18 To the extent not specifically provided in this Agreement, to exercise any
powers authorized by the member agencies to achieve the Authority's objectives and such
further powers not specifically mentioned herein, but common to Patties, and authorized
by the California Government Code.
2.2 Additional Powers to be Exercised. In addition to those powers common to each
of the Parties, the Authority shall have those powers that may be conferred upon it by law and by
subsequently enacted legislation.
2.3 Manner of Exercising Powers. The powers specified in subsections 2.1 and 2.2
shall be exercised by the Board (as defined in subsection 3.1, below),unless otherwise delegated
to a committee of the Board or the Chief Executive Officer of the Authority in accordance with a
Board adopted policy or action. All such powers shall be exercised in the manner set forth in this
Agreement.
2.4 Limitation on Exercise of Powers: The powers of the Authority are subject to the
restrictions upon the manner of exercising power possessed by the City of Irvine, California and
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any other restrictions on exercising the powers of the Authority that may be adopted by the
Authority's Board of Directors,
SECTION 3: GOVERNANCE
3.1 General Governance• Board of Directors. The governing body of the Authority
shall be a Board of Directors {"Board") consisting of one director for each Party appointed in
accordance with subsection 3.2,except the City of Irvine whose governing body shall appoint two
directors(the"Irvine Directors"). Notwithstanding the foregoing,the governing body of the City
of Irvine shall appoint one director upon the full satisfaction and repayment of the Capital Loan,
as defined in subsection 5,5,
12 Appointment of Directors. The governing body of each Party shall appoint and
designate in writing the Director(s) who shall be authorized to act for and on behalf of the Patty
on matters within the powers of the Authority. The governing body of each Patty shall also appoint
and designate in writing an alternate Director(s)who may vote in matters when the regular Director
is absent from a Board meeting. The governing bodies of the Founding Parties may, in their sole
discretion, elect to appoint their respective Director(s) prior to the Effective Date, in which case
such appointment(s) to the Board shall take effect on the Effective Date. The persons appointed
and designated as the regular Director and the alternate Director shall be a member of the
governing body of the Party when appointed.
3.3 Terms of Office. Each regular and alternate Director shall serve a term of four
years, If at any time a vacancy occurs on the Board, a replacement shall be appointed by the
governing body to fill the position of the previous Director within ninety(90)days of the date that
such position becomes vacant. Replacement Directors shall serve until the scheduled expiration
of the four year term of the Board member that they replace.
3.4 Quorum. A majority of the Directors of the entire Board shall constitute, and is
necessary to constitute,a quorum,except that less than a quorum may adjourn a meeting from time
to time in accordance with law.
3.5 Powers of the Board of Directors, The Board may exercise all the powers
enumerated in this Agreement and shall conduct all business and activities of the Authority
consistent with this Agreement and any bylaws,operating procedures, and applicable law.
3.6 Executive Committee. The Board shall establish an executive committee
consisting of a smaller number of Directors upon the Authority's membership consisting of nine
or more members. The initial members of the executive committee shall be the Directors of the
Founding Members with the chair of the Board serving as chair of the Executive Committee.
3.7 Committees. The Board may establish committees as the Board deems appropriate
to assist the Board in carrying out its functions and implementing the purposes of this Agreement,
In accordance with subsection 2.3, the Board may delegate to any committees that consist solely
of Board members any of the powers specified in subsection 2.1, except for the power to acquire
property by eminent domain specified in subsection 2.1.5. Committees that include or consist of
non-Board members shall be advisory only.
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3.8 Director Compensation. The Board shall adopt policies establishing compensation
attendance at Board and Committee meetings and work performed by each Director on behalf of
the Authority as well as policies for the reimbursement of expenses incurred by each Director;
provided that in no instance shall the per meeting or per day compensation be less than the
compensation provided to directors of the Orange County Sanitation District.
3.9 Voting by the Board of Directors.
3.9.1 Equal Vote. Each Director or participating alternate shall have one vote.
Except as provided for in Sections 3.9.2, 3.9.3 and 3.9.4, action of the Board on all matters shall
require an affirmative vote of a majority of all Directors who are present at the subject meeting
("Equal Vote").
3.9.2 Voting Shares Vote. Immediately after(and during the same Board Meeting
as) an affirmative or tie Equal Vote, two or more Directors shall have the right to request and
conduct a Voting Shares Vote (defined below) to reconsider that action approved by the Equal
Vote. In the event of a Voting Shares Vote where the City of Irvine appoints two Directors to the
Board and one or more Irvine Directors requests a Voting Shares Vote, a Party other than the City
of Irvine must constitute the second Director for purposes of having the right to request and
conduct a Voting Shares Vote. A"yes"vote on the Voting Shares Vote shall be a vote to reverse
and reject the Equal Vote; a "no" vote on the Voting Shares Vote shall be a vote to affirm the
Equal Vote. For Voting Shares Votes,votes shall be weighted as described in subsection 3.9.3. A
"yes"vote on a Voting Shares Vote shall require(i)for votes requiring a majority under subsection
3.9.1, more than fifty percent (50%) of the voting shares of all Directors voting; (ii) for votes
requiring a supermajority of two-thirds under this Agreement,sixty-seven percent(67%) or more
of the voting shares of all Directors voting; and (iii) for votes requiring a supermajority of three
quarters under this Agreement more than seventy-five percent (75%) of the voting shares of all
Directors voting. All votes taken pursuant to this subsection 3.9.2 shall be referred to as a"Voting
Shares Vote." If a Voting Shares Vote yields a"no"vote, the legal effect is to affirm the Equal
Vote with respect to which the Voting Shares Vote was taken. If the Voting Shares Vote succeeds,
the legal effect is to nullify the Equal Vote with respect to which the Voting Shares Vote was
taken. If the underlying Equal Vote was a tie, the Voting Shares Vote replaces that tie vote. No
action may be taken solely by a Voting Shares Vote without first having taken an Equal Vote,
3.9.3 Voting;Shares Formula. When a Voting Shares Vote is requested by two or
more Directors,voting shares of each Director shall be determined by the following formula:
(Annual Energy Use/Total Annual Energy)x 100
For purposes of this formula(a)"Annual Energy Use" means(r) for the first two years following
the Effective Date,the annual electricity usage, expressed in kilowatt hours ("kWh"), within the
jurisdiction of the Party appointing the Director(s)and(ii)following the second anniversary of the
Effective Date,the annual electricity usage,expressed in kWh, of accounts within the jurisdiction
of the Party appointing the Directors) that are served by the Authority, and (b) "Total Annual
Energy"means the sum of all Parties' Annual Energy Use. The initial values for Annual Energy
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use are designated in Exhibit B and the initial voting shares are designated in Exhibit C. Both
Exhibit B and Exhibit C shall be adjusted annually as soon as reasonably practicable after January
l of each year,but no later than March 1 of each year,subject to the approval of the Board. Voting
shares attributable to Irvine shall be divided equally between the Irvine Directors.
3.9.4 Special Voting,
3.9.4.1 Two-Thirds Supermajority Votes. An affirmative vote of two-thirds of the
Directors of the entire Board shall be required to take any action on the following(i)issuing
or repayment of bonds loans or other forms of debt; (U) adding or removing Parties on or
after January 1, 2021; (M) amending or terminating this Agreement or adopting or
amending the bylaws of the Authority; and (lu)terminating the CCA Program.
3.9.4.2 Three-Fourths Supermajority Votes.An affirmative vote of three-fourths of
the Directors of the Board shall be required to initiate any action for eminent domain and
no eminent domain action shall be approved within the jurisdiction of a Party without the j
affirmative vote of such Party's Director(or both Irvine Directors, if applicable,in the case
of eminent domain action within the City of Irvine),
3.9.4.3 Advance Notice of Special Voting. At least thirty(30)days advance written
notice to the Parties shall be provided for all special voting items under subsection 3.9.4.1
and/or subsection 3.9.4.2. Such notice shall include a copy of all substantive documents
necessary to meaningfully deliberate and consider the proposed vote (e.g., any proposed
amendment to this Agreement or the bylaws of the Authority). The Authority shall also
provide prompt written notice to all Parties of the action taken, which shall include any
resolution, ordinance, rule, policy, agreement, filing or other operative document(if any)
adopted or approved by the Board.
3.10 Officers.
3.10.1 Chair and Vice Chair. The Directors shall select from among themselves a
Chair and a Vice-Chair. The Chair shall be the presiding officer of all Board meetings.
The Vice-Chair shall serve in the absence of the Chair. The term of office of the Chair and
Vice-Chair shall continue until the expiration of the office of the Directors serving in such
positions. There shall be no limit on the number of terms held by the Chair and the Vice-
Chair. The office of either the Chair or Vice-Chair shall be declared vacant and a new
selection shall be made if: Q)the person serving dies, resigns, or becomes legally unable
to fulfill his or her duties,or(b)the Party that appointed the Chair or Vice-Chair withdraws
from the Authority pursuant to the provisions of this Agreement.
3.10.2 Secretary. The Secretary shall be responsible for keeping the minutes of all
meetings of the Board and all other official records of the Authority.
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3.10.3 Treasurer/Auditor. In accordance with California Government Code §
6505.5, the Board shall appoint a qualified person to act as the Treasurer and a qualified
person to act as the Auditor,neither of whom need be members of the Board. The Treasurer
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and the Auditor shall possess the powers of, and shall perform those functions required of
them by California Government Code §§ 6505, 6505.5, and 6505.6, and by all other
applicable laws and regulations and amendments thereto.
3.11 Meetings. The Board shall provide for its regular meetings, the date, hour, and
place of which shall be fixed by resolution of the Board. Regular,adjourned,and special meetings
shall be called and conducted in accordance with the provisions of the Ralph M. Brown Act,
California Government Code § 54950 ed seq.
3.12 Chief Executive Officer. The Board shall appoint a Chief Executive Officer. The
Chief Executive Officer shall be the chief administrative officer of the Authority, and shall be
Secretary of the Board. The powers and duties of the Chief Executive Officer shall be those
delegated and/or assigned to the Chief Executive Officer by duly adopted action of the Board.
3.13 Additional Officers and Employees. The Board shall have the power to authorize
such additional officers and assistants as may be necessary and appropriate, including retaining
one or more administrative service providers for planning, implementing, and administering the
CCA Program. Such officers and employees may also be,but are not required to be, officers and
employees of the Parties.
3.14 Bonding Requirement. The officers or persons who have charge of,handle,or have
access to any property of the Authority shall be the members of the Board, the Treasurer, the
Executive Director, and any such officers or persons to be designated or empowered by the Board.
Each such officer or person shall be required to file an official bond with the Authority in an
amount which shall be established by the Board, Should the existing bond or bonds of any such
officer be extended to cover the obligations provided herein, said bond shall be the official bond
required herein. The premiums on any such bond attributable to the coverage required herein shall
be the appropriate expenses of the Authority.
3.15 Audit. The records and accounts of the Authority shall be audited annually by an
independent certified public accountant with the final audit completed within six months of the
fiscal year end,and copies of such audit report shall be filed with the State Controller, and each
Party no later than fifteen (15) days after receipt of said audit by the Board.
3.16 Privileges and Immunities from Liability. All of the privileges and immunities
from liability, exemption from laws, ordinances and rules, all pension, relief, disability, workers'
compensation,and other benefits which apply to the activities of officers, agents, or employees of
a public agency when performing their respective functions shall apply to the officers, agents, or
employees of the Authority to the same degree and extent while engaged in the performance of
any of the functions and other duties of such officers, agents, or employees under this Agreement.
None of the officers, agents, or employees directly employed by the Authority shall be deemed,
by reason of such employment to be employed by the Parties (or any of them).
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SECTION 4: ADDITIONAL PARTIES AND IMPLEMENTATION OF CCA PROGRAM.
4.1 Additional Parties. An incorporated city or county, or other public agency as
authorized by California Public Utilities Code § 331.1, may become a member of the Authority
and a Party to this Agreement upon satisfaction of the following:
4.1.1 Adoption of a resolution by the governing body of the proposed additional
party approving the Agreement, and requesting participation and an intent to join the
Authority;
4,1.2 Adoption by the Board of a resolution authorizing participation of the
proposed additional party;
4.1.3 Satisfaction of any additional conditions as established by the Board or
applicable laws or regulations; and
4.1.4 Execution of the Agreement by the proposed additional party.
4.2 ContinuingParticipation.articipation. The Parties acknowledge that participation in the CCA
Program may change by the addition or withdrawal or termination of a Party. The Parties agree
to participate in good faith with additional members as may later be added. The Parties also agree
that the withdrawal or termination of a Party shall not affect the enforceability of this Agreement
as to the remaining Parties,or the remaining Parties'continuing obligations under this Agreement.
4.3 Implementation of CCA Program. The Authority shall cause to be prepared an
implementation plan meeting the requirements of California Public Utilities Code § 366.2
("Implementation Plan") and any applicable regulations of the California Public Utilities
Commission ("CPUC"). The Board shall approve the Implementation Plan prior to it being;filed
with the CPUC. The Authority, acting by and through the Board, shall take all such steps as are
necessary and appropriate to implement the Implementation Plan and the CCA Program in a
manner consistent with this Agreement.
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4.4 Power Supply. The Board will establish power supply options for the Authority.
The Authority's power supply options will include,but not be limited to,renewable and GHG-free
base product that is equivalent to the minimum required by law. Each Party may select its power
supply base product for the ratepayers in its jurisdiction. Each Party shall also have the flexibility
to achieve its climate goals without impeding any other.Party from doing the same.
4.4 Authority Documents. The Parties acknowledge and agree that the operations of
the Authority will be implemented through various program documents and regulatory filings duly
adopted by the Board, including, but not limited to, bylaws, an annual budget, and plans and
policies related to the CCA Program, The Parties agree to abide by and comply with the terms and
conditions of all such Authority documents that may be approved or adopted by the Board.
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4.5 Termination of CCA Program. Nothing contained in this Agreement shall be
construed to limit the discretion of the Authority to terminate the implementation or operation of
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the CCA Program at any time, so long as such termination is in accordance with any applicable
requirements of state law and the voting procedures specified in subsection 3.9.4.1, above.
SECTION 5; FINANCIAL PROVISIONS
5.1 Fiscal Year. The Authority's fiscal year shall be twelve(12)months commencing
July 1 of each year and ending June 30 of the succeeding year.
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5.2 Treasurer. The Treasurer for the Authority shall be the depository for the Authority.
The Treasurer of the Authority shall have custody of all funds and shall provide for strict
accountability thereof in accordance with California Government Code § 6505.5 and other
applicable laws. The Treasurer shall perform all of the duties required in California Government
Code § 6505 et seq. and all other such duties as may be prescribed by the Board.
5.3 Depository & Accounting. All funds of the Authority shall be held in separate
accounts in the name of the Authority and not commingled with the funds of any Party or any other
person or entity. Disbursement of such funds dining the term of this Agreement shall be accounted
for in accordance with generally accepted accounting principles applicable to governmental
entities and pursuant to California Government Code § 6505 et seq. and other applicable laws.
There shall be a strict accountability of all funds. All revenues and expenditures shall be reported
regularly to the Board. The books and records of the Authority shall be promptly open to
inspection by the Parties at all reasonable times.
5.4 Budget. The Board shall establish the budget for the Authority,and may from time
to time amend the budget to incorporate additional income and disbursements that might become
available to the Authority for its purposes during a fiscal year.
5.5 City of Irvine Initial Funding of Authority. The Authority shall, concurrent with
the execution of this Agreement, enter into an agreement that covers repayment to the City of
Irvine of(i)funding and collateral provided by the City of Irvine to the Authority to facilitate start-
up and launch costs for the Authority and the CCA Program, and (ii) costs incurred by the City
(including staff, consultant, and legal expenses, and associated allocated overhead and
administrative expenses) in connection with the study and analysis of the CCA,the formation of
the Authority, and the creation of the Implementation Plan (the "Capital Loan Agreement" or
the "Capital Loan"). The Capital Loan shall be repaid from customer charges for electrical
services to the extent permitted by law when the CCA Program becomes operational. The form
of the Capital Loan Agreement is attached hereto as Exhibit D. The Authority shall enter into the
Capital Loan Agreement so long as its final form is substantially consistent with the form attached
as Exhibit D.
5.6 No Requirement for Contributions or Payments. Except as otherwise specified
herein, the Parties are not required under this Agreement to make any financial contributions or
payments to the Authority, and the Authority shall have no right to require such a contribution or
payment.
5.6,1 Notwithstanding subsection 5.6, the Board may adopt a membership fee to
be paid by Additional Parties upon entering into the Agreement, which
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membership fee shall be established (if at all) by the Board and may cover
a reasonable estimate of the transactional and other costs incurred by the
Authority in processing the addition of the Additional Party to the
Authority,
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5.6.2 Notwithstanding subsection 5.6, the Authority and a Party may mutually
and voluntarily enter into an agreement to provide the following: (i)
contributions of public funds for the purposes set forth in this
Agreement; (h) advances of public funds for the purposes set forth in this
Agreement, such advances to be repaid as provided by such written
agreement; or(ifi) its personnel,equipment or property,
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5.6.3 For the avoidance of doubt, nothing in this Agreement requires, nor shall
the Authority for any reason ever require,that any Party adopt any local tax,
assessment, fee or charge for the benefit of the Authority.
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5.7 Obligations of the Authority, Unless otherwise agreed by the Parties, the debts,
liabilities, and obligations of the agency shall not be the debts, liabilities, and obligations, either
jointly or severally, of the members of the agency. A Party may, in its sole discretion, agree to
assume one or more of the debts, liabilities, and obligations of the Authority if, and only if, such
Party, with the approval of its governing body, agrees in writing to assume any such debts,
liabilities, or obligation of the Authority. j
SECTION 6: WITHDRAWAL AND TERMINATION
6.1 Right to Withdraw.
6.1.1 Right to Withdraw Prior to March 1,2021, Except for the City of Irvine, a
Party may withdraw from the Authority for any reason and without liability or cost prior to March
1,2021 upon providing the Authority fifteen (15)days advance written notice.
6.1.2 Right to Withdraw After March 1, 2021, Except for the withdrawal
provided for in Section 6.1.1,a Party may withdraw its membership in the Authority,effective as
of the beginning of the Authority's fiscal year, by giving no less than one hundred eighty (180)
days advance written notice of its election to do so, which notice shall be given to the Authority
and each Party. Withdrawal of a Party shall require an affirmative vote of the Party's governing
board. A Party that withdraws from the Authority pursuant to this subsection may be subject to
certain continuing liabilities as described in this Agreement. The withdrawing Party and the
Authority shall execute and deliver all further instruments and documents, and take any further
actions as may be reasonably necessary to effectuate the orderly withdrawal of such Party.
6.2 Involuntary Termination. This Agreement may be terminated with respect to a
Party for material non-compliance with provisions of this Agreement upon a two-thirds vote of the
entire Board (excluding the vote of the Party subject to possible termination)taken in accordance
with subsection 3.9.4.1, Prior to any vote to terminate this Agreement with respect to a Party,
written notice of the proposed termination and the reason(s)for such termination shall be delivered
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to the Party whose termination is proposed at least thirty (30) days prior to the regular Board
meeting at which such matter shall first be discussed as an agenda item. The written notice of
proposed termination shall specify the particular provisions of this Agreement that the Party has
allegedly violated with supporting documentation. The Party subject to possible termination shall
have the opportunity at the next regular Board meeting following the expiration of the thirty-day
(30) day notice period to respond to any reasons and allegations that may be cited as a basis for
termination. The Party's response shall be evaluated at a public meeting prior to a vote regarding
termination. A Party that has had its membership in the Authority terminated may be subject to
certain continuing liabilities, as described in subsection 6.3. If the Board votes to terminate a
Party's membership in the Authority, the effective date of the termination shall be scheduled by
the Board, in its reasonable discretion,to ensure adequate time for the transition of the terminated
Party's CCA Program customers to another electricity provider. The Parties expressly intend,
agree and acknowledge that a Board action to terminate a Patty's membership in the Authority
shall be upheld so long as it is not arbitrary and capricious, and is supported by substantial !
evidence.
6.3 Continuing Liability;Refund. Upon a withdrawal of a Party under subsection 6.1.2
or involuntary termination of a Patty under subsection 6.2,the Patty shall be responsible for any
claims, demands, damages, or liabilities attributable to the Party through the effective date of its
withdrawal or involuntary termination. Such Party also shall be responsible liable to the Authority
for (a) any damages, losses, or costs incurred by the Authority which result directly from the
Party's withdrawal or termination, including, but not limited to, costs arising from the resale of
capacity, electricity, or any attribute thereof no longer needed to serve such Patty's load, and
removal of customers from the CCA Program resulting from the withdrawal or termination of the
Party; and (b)any costs or obligations associated with the Party's participation in any program in
accordance with the program's terms,provided such costs or obligations were incurred prior to the
withdrawal of the Party, Except as otherwise specified,such Party shall not be responsible for any
claims, demands, damages, or liabilities commencing or arising after the effective date of the
Party's withdrawal or involuntary termination. From and after the date a Party provides notice of
its withdrawal or is terminated, the Authority shall reasonably and in good faith seek to mitigate
any costs and obligations to be incurred by the withdrawing or terminated Party under this
subsection through measures reasonable under the circumstances; provided, however, that this
obligation to mitigate does not impose any obligation on the Authority to transfer any cost or
obligation directly attributable to the membership and withdrawal or termination of the
withdrawing or terminated Party to the ratepayers of the remaining Parties. Further the liability of
the withdrawing or terminated Patty shall be based on actual costs or damages incurred by the
Authority and shall not include any penalties or punitive charges imposed by the Authority. The
Authority may withhold funds otherwise owing to the Patty or may require the Patty to deposit
sufficient funds with the Authority,as reasonably determined by the Authority,to cover the?arty's
liability for the costs described above. The withdrawing or terminated Party agrees to pay any
such deposit determined by the Authority in consultation with a third patty audit firm. Any amount
of the withdrawing or terminated Party's funds held on deposit with the Authority above that which
is required to pay any liabilities or obligations shall be returned to that Party. In the implementation
of this subsection 6.3,the Parties intend, to the maximum extent possible, without compromising
the viability of ongoing Authority operations, that any claims, demands, damages, or liabilities
covered hereunder, be funded from the rates paid by CCA Program customers located within the
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service territory of the withdrawing Party,and not from the general fund of the withdrawing Party
itself. The liability of a withdrawing Party under this subsection shall be only to the Authority and
not to any other Party.
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6.4 Termination of Agreement. This Agreement may be terminated by vote of the
Board in accordance with subsection 3.9.4.1, or by mutual agreement of all the Parties approved
by majority votes of their respective governing bodies, provided, however, that this subsection
shall not be construed as limiting the rights of a Party to withdraw in accordance with Section 6,
6.5 Disposition of Authority Assets Upon Termination of Agreement. Upon
termination of this Agreement, any surplus money or assets in possession of the Authority for use
under this Agreement,after payment of all liabilities,costs,expenses,and charges incurred by the
Authority, shall be returned to the then-existing Parties in proportion to the contributions made by
each.
SECTION 7: MISCELLANEOUS PROVISIONS
7.1 Dispute Resolution. The Parties and Authority shall make efforts to settle all
disputes arising out of or in connection with this Agreement. Before exercising any remedy
provided by law, a Party or Parties and the Authority shall engage in nonbinding mediation in the
manner agreed to by the Party or Patties and the Authority, In the event that nonbinding mediation
does not resolve a dispute within one hundred twenty (120)days after the demand for mediation
is made,any Patty or the Authority may pursue any all remedies provided by law.
7.2 Liability of Directors, Officers, and Employ. The Directors, officers, and
employees of the Authority shall use ordinary care and reasonable diligence in the exercise of their
powers and in the performance of their duties pursuant to this Agreement, No current or former
Director, officer, or employee will be responsible for any act or omission by another Director,
officer, or employee, The Authority shall defend, indemnify, and hold harmless the individual
current and former Directors, officers, and employees for any acts or omissions in the scope of
their employment or duties in the manner provided by California Government Code § 995 et sect.
Nothing in this subsection shall be construed to limit the defenses available under the law to the
Patties,the Authority, or its Directors,officers, or employees.
7.3 Indemnification. The Authority shall acquire such insurance coverage as the Board
deems necessary to protect the interests of the Authority, the Parties, and the Authority's
ratepayers. The Authority shall indemnify,defend,and hold harmless the Parties and each of their
respective board members or council members,officers, agents, and employees, from any and all
claims, losses, damages, costs, injuries, and liabilities of every kind to the extent arising directly
or indirectly from the conduct, activities, operations, acts, and omissions of the Authority under
this Agreement.
7.4 Assignment, The rights and duties of a Patty may not be assigned or delegated
without the advance written consent of all other Parties. Any attempt to assign or delegate such
rights or duties without express written consent of all other Patties shall be null and void. This
Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of
the Patties. This subsection does not prohibit a Party from entering into an independent agreement
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with another entityregarding the financing of that Pant 's contributions to the Authority if an
g g g Y Y C Y),
or the disposition of proceeds which that Party receives under this Agreement, so long as such
independent agreement does not affect,or purport to affect,the rights and duties of the Authority
or the Parties under this Agreement.
7.5 Severability. If any part of this Agreement is held, determined, or adjudicated to
be illegal, void, or unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall be given effect to the fullest extent reasonably possible.
7.6 Further Assurances. Each Party agrees to execute and deliver all further
instruments and documents, and take any further action that may be reasonably necessary to
effectuate the purposes of this Agreement.
7.7 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute but one and the
same instrument.
7.8 Notices. Any notice authorized or required to be given pursuant to this Agreement
shall be validly given if served in writing either personally, by deposit in the United States mail,
first class postage prepaid with return receipt requested, or by a recognized courier service to the
addresses specified on Exhibit A. Notices given (a) personally or by courier service shall be
conclusively deemed received at the time of delivery and receipt and (b) by mail shall be
conclusively deemed given 48 hours after the deposit thereof(excluding Saturdays, Sundays and
holidays) if the sender receives the return receipt. All notices shall be addressed to the office of
the clerk or secretary of the Authority or Party, as the case may be,or such other person designated
in writing by the Authority or Party. Notices given to one Party shall be copied to all other Parties.
Notices given to the Authority shall be copied to all Parties.
[Signature to Follow on Next Page]
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IN WITNESS WHEREOF,the parties hereto have executed this Agreement as evidenced by the
signatures below
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MEMBER AGENCY:
CITY OF IRVINE CITY OF HUNTINGTON BEACH
By: o
Name:
Title: May
Dated: ,2020 l
Approved as to Form: City Clerk
VIE A APP VED
City Attorney
Approved as to Form: City Manager
Approve as to Form
Special Counsel
►(City Attorney
CITY OF FULLERTON
By:
Name:
Title:
Dated: ,2020
Approved as to Form:
City Attorney
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EXHIBIT A
LIST OF PARTIES
Founding Members:
City of Irvine City of Fullerton
1 Civic Center Plaza 303 W. Commonwealth Ave.
Irvine, CA 92606 Fullerton, CA 92832
City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
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55695.0000 1\3352693 1.1
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EXHIBIT B
ANNUAL ENERGY USAGE BY JURISDICTION
2019
Annual
Load
GWhi
City of Buena Parke 450
City of Fullerton 676
City of Huntington Beach 1,046 '
City of Irvine 1,937
City of Lake Forest 459
Total 4,569
1. Annual energy usage is prelminary data and has not been validated by Southern California Edison
(SCE)at the time of execution of the Agreement.This Exhibit will be updated without requiring
an amendment of the Agreement upon SCE validation of the data.
2. City's 2019 annual load is an estimated value that may change pending preliminary and validated
data from SCE.
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EXHIBIT C
PARTY VOTING SHARES
Estimated
Voting
Sharel
City of Buena Park 9.8%
City of Fullerton 14.8%
City of Huntington Beach 22.9%
City of Irvine 42.4%
City of Lake Forest 10.0%
Total 100.0%
1. Estimated Voting Share is based on Exhibit B(Annual Energy Usage by Jurisdiction). Annual
energy usage is preliminary data and has not been validated by Southern California Edison(SCE)
at the time of execution of the Agreement.This Exhibit will be updated without requiring an
amendment of the Agreement upon SCE validation of the data,
5 5695.00001\33 526896.1
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EXHIBIT D
FORM OF CAPITAL LOAN AGREEMENT
AGREEMENT BETWEEN THE CITY OF IRVINE AND THE ORANGE COUNTY
POWER AUTHORITY FOR THE ADVANCE OF FUNDS FOR IMPLEMENTATION
OF A COMMUNITY CHOICE ENERGY PROGRAM
This Agreement,effective ("Effective Date"), is by and between the
CITY OF IRVINE,a municipal corporation and charter city("City"),and the ORANGE
COUNTY POWER AUTHORITY, a California joint powers authority("Authority"),for the
purpose of stating the terms for an advance of funds from the City to be repaid to City by the
Authority as provided herein. City and Authority shall be referred to individually as a"Party"
collectively as the"Parties."
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RECITALS
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A. On ,the Authority was formed by participating Orange County cities,
including the City,to administer a community choice aggregation ("CCA") program within the
jurisdictional boundaries of its members in Orange County,
B. Prior to formation of the Authority, the City funded a feasibility study, peer review, and
other activities necessary to evaluate the feasibility and implementation of a CCA program. The
City also funded certain costs to form the Authority and implement the CCA program for itself
and the Authority's founding members.
C. As expressly stated in that certain document entitled, Orange County Pulver Authority
Joint Powers Agreement,at Section 5.5, which is incorporated herein by this reference, it was
agreed upon by the parties thereto that the City would be reimbursed bythe Authority for all
costs regarding the feasibility and implementation of the CCA program,contingent upon the
Authority's launch of the CCA program.
D. The City estimates that its costs to study,form and implement the Authority are
$250,000, which include, but are not limited to, costs for its feasibility study, peer review, City
staffing, legal costs,member and stakeholder outreach,and formation of the Authority
("Formation Costs").
E. The City estimates that the Authority will need approximately$2,500,000 for working
capital to pay for implementation costs through a projected launch of the CCA program in 2022
("Pre-Launch Costs").
F. The City further estimates that the Authority will need up to an additional $8,000,000 to
$20,000,000 in the form of a credit facility for operational support and power procurement as
well as other cash flow needs, and that any such credit facility may require cash collateral from C
an Authority member between$2,000,000 to$5,000,000("Launch Costs").
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55695.00001\33485367.1
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G. The Parties desire to enter into this Agreement to document the Authority's repayment
obligations to the City for all such funds expended on behalf of, or in support of, the formation of
the Authority and implementation of the CCA program.
AGREEMENT
NOW THEREFORE, in consideration of their mutual promises and obligations, the
Parties hereby agree as follows:
1. City Loan to the Authority.
1.1. Formation Costs. The Authority acknowledges that the City has expended certain
City funds toward Formation Costs and agrees to reimburse the City for such costs in an amount
not to exceed $250,000 dollars, subject to the repayment provisions herein.
1.2. Pre-Launch Costs. The City agrees to loan the Authority Pre-Launch Costs in the
amount of$2,500,000 by January 1,2021,which shall be used by the Authority for working
capital costs associated with the Authority's launch,anticipated in 2022.
1.3 Launch Costs. The City agrees to post the necessary cash col lateral,not to exceed
$5,000,000, in order for the Authority to secure a credit facility for its Launch Costs for
additional working capital associated with power procurement and operational support("Credit
Agreement"). The City will also provide a loan for Launch Costs if needed by the Authority
should a Credit Agreement be unavailable or insufficient to cover the Authority's working
capital needs. Tile terms and conditions of any City loan to the Authority for Launch Costs
(excluding the cash collateral requirement above) shall be negotiated and agreed upon in an
amendment to this Agreement, subject to the reasonable approval of the Parties, The Authority
shall provide the City with the Authority's pro forma demonstrating the amount needed for the
aforementioned City loan.
1.4. City Loan Amount. Formation Costs,Pre-Launch Costs, and Launch Costs shall
be collectively referred to herein as"City Loan Amount."
2. Repayment, Interest,
2.1 Repayment Date. The Authority shall repay the City Loan Amount to City, plus
interest, no later than the repayment date, which shall be January 1, 2027, The Parties
acknowledge that they may modify the Repayment Date for the Launch Costs in an amendment
to this Agreement depending on the terms and conditions of the Credit Agreement,
2.2 Interest Rate. In accordance with subsection 2.3, interest shall be paid on all
outstanding portions of the City Loan Amount that bear interest, The interest rate on any
outstanding amount shall be calculated according to the sum of the following calculation of each
respective quarter:
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55695.00001133485367,1
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Principal x Quarterly Interest Rate x(No. of Days in Quarter/No, of Days in
Yeas)
Where"Principal"is the relevant funding of the City Loan Amount as described herein;
"Quarterly Interest Rate" is the gross earnings for the respective quarter as reported in the City
of Irvine Treasurer's monthly investment report found on the Treasurer's website
https:Hw-Nvw.ci ofil-viiie,oi-g/administrative-services-department/investment-policies-and-reports
"No.of Days in Quarter"is the sum of days of each month that make up each respective
quarter;and"No.of Days in Year"is 365,except in leap years, in which the number of days in j
the year shall be 366.
y
The City Loan Amount shall bear interest as follows:
i
Formation Costs shall bear no interest whatsoever and shall be repaid to City
as reimbursement for out-of-pocket expenses by the Repayment Date.
b. Pre-Launch.Costs sha11 bear interest beginning January 1, 2021 through the i
Repayment Date as estimated and set forth on Exhibit A. attached hereto.
Launch Costs for the City's collateral associated with the Credit
Agreement shall bear interest beginning on the effective date of the Credit j
Agreement. Launch Costs for amendment to this Agreement, as set forth
in subsection 1.3,through the Repayment Date.
In the event the City Loan Amount, along with any and all interest owed pursuant to this Section
2,are not repaid by the Repayment Date, any such amounts that remain outstanding shall accrue
interest at the rate specified by law for prejudgment interest.
3. City Liability;Hold Harmless; Indemnification.
3.1 City Liability, The Authority acknowledges and agrees that by lending said funds
to the Authority,the City does not assume any debt, liability,obligation,or duty whatsoever with G
respect to the Authority's operations, liabilities,business,or transactions.
i
3.2. Hold Harmless/Indemnification. The Authority shall hold harmless, indemnify
and defend the City, its elected officials, officers, employees,and agents fi•om and against any
and all claims, suits or actions of every kind which arise out of the performance or
nonperformance of the Authority's covenants,responsibilities, and obligations under this
Agreement, and which result from the negligent or wrongful acts of the Authority or its board
members, officers, employees,or agents. City shall hold harmless, indemnify and defend the
Authority, its board members, officers, employees and agents from and against any and all
claims, suits or actions of any kind which arise out of the performance or non-performance of the
City's covenants, responsibilities and obligations under this Agreement and which result from
the negligent or wrongful acts of the City or its elected officials,officers, employees or agents,
In the event of concurrent negligence of the City, its officer or employees, and the Authority, its t
officers and employees, the liability for any and all claims for injuries or damages to persons
21
5 5695.00001\33485367.1
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i
and/or property or any other loss or costs which arise out of the terms, conditions,covenants or
responsibilities of this Agreement shall be apportioned according to the California theory of
comparative negligence.
i
4. General Provisions.
4.1. Audit. Prior to January 1,2023,the City may audit the Authority's expenditure
of Pre-Launch Costs to confirm that such expenditures have been made consistent with the
purposes of this Agreement.
4.2 Waiver. The waiver by City or Authority of any term,covenant,or condition
herein contained shall not be deemed to a waiver of such term,covenant,or condition or any
subsequent breach of the same or any other term,covenant, or condition herein contained.
4.2. Successors and Assigns/Assignment. The terms of this Agreement shall apply
and bind the heirs, successors, executors, administrators and assigns of the Parties. No Party
may assign this Agreement without the express written consent of the other Party, which shall
not be unreasonably withheld.
4.3. Entirety/Amendment. This Agreement contains the entire understanding between
the Parties relating to the obligations of the Parties described herein. No provision of this
Agreement may be amended or added to except by an agreement in writing signed by the Parties
or their respective successors in interest.This Agreement shall not be effective or binding until
fully executed by both Parties.
4.4. Venue&Choice of Law. This Agreement shall be governed by and construed
under the laws of the State of California. In the event of any legal action to enforce or interpret
this Agreement, the sole and exclusive venue shall be a court of competent jurisdiction located in
Orange County, California.
4.5. Independent Entities. This Agreement is by and between two independent
entities and is not intended to and shall not be construed to create the relationship of agent,
servant, employee, partnership,joint venture,joint employer, or association.
4.6. Authority to Execute Agreement. The Parties each warrant that they have the
authority to execute this Agreement and that all actions have occurred, and all necessary
approvals or consents have been obtained to allow each party to enter into this Agreement.
4.7. Notices. All notices provided for herein shall be in writing and shall be delivered
to the appropriate parties as provided below:
For City: Attn: City Manager
City of Irvine
1 Civic Center Plaza
Irvine, CA 92606
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For Authority; TBD
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IN WITNESS WHEREOF, Authority and City have executed this Agreement on the
date set forth below.
CITY OF IRVINE
Date:
By:
Title:
Approved as to Form:
City Attorney
ORANGE COUNTY POWER AUTHORITY
Date:
By:
Title:
Approved as to Form:
General Counsel
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EXHIBIT A
PRE-LAUNCH COSTS INTEREST SCHEDULE
Loan Borrower Orange County Power Authority
Loan Amount/Pre-Launch $2,500,000
Loan Start Date I/l/2021
Loan Maturity Date 1/1/2027
Estimated Interest Rate 1.75% See Note on Interest Rate
Period interest Cumulative Interest
3/31/2021 10,787.67 $10,787.67
6/30/2021 10,90T53 21,695.21
9/30/2021 11,027.40 32,722.60
12/31/2021 11,027.40 43,750.00
3/31/2022 10,787.67 54,537.67
6/30/2022 10,907.53 65,445.21
9/30/2022 11,027,40 76,472,60
12/31/2022 11,027.40 87,500.00
3/31/2023 10,787.67 98,287.67
6/30/2023 10,907.53 109,195.21
9/30/2023 11,027.40 120,222.60
12/31/2023 11,027.40 131,250.00
3/31/2024 10,877.73 142,127.73
6/30/2024 10,877.73 153,005.46
9/30/2024 10,997.27 164,002.73
12/31/2024 10,997.27 175,000.00
3/31/2025 10;787.67 185,787.67
6/30/2025 10,907.53 196,695.21
9/30/2025 11,027.40 207,722,60
12/31/2025 11,027.40 218,750.00
3/31/2026 10,787.67 229,537.67
6/30/2026 10,907.53 240,445,2I
9/30/2026 11,027,40 251,472,60
12/31/2026 11,027.40 $262,500.00
Pre-Launch Loan $2,500,000.00
Total Due 1/1/2027 $2,762,500,00
Note: Interest Rate is based on the average of last six
months of interest earned on the City's investment
portfolio.
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55695.00001133485367.1
832
City of Huntington Beach
2000 Main Street ♦ Huntington Beach, CA 92648
_ (714) 536-5227 ♦ www.huntingtonbeachea.gov
r _
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'7.tisflg,P� ` Office of the City Clerk
Robin.Estanislau, City Clerk
December 18, 2020
City of Irvine
Attn: City Manager
1 Civic Center Plaza
Irvine, CA 92606
Dear City Manager:
Enclosed is a partially executed original of the "Orange County Power Authority Joint
Powers Agreement' and a certified copy of"Resolution No. 2020 —A Resolution of the
City Council of the City of Huntington Beach, Approving the Orange County Joint
Powers Authority Agreement and Authorizing the Implementation of a Community
Choice Aggregation Program" approved by the Huntington Beach City Council on
December 10, 2020.
Upon complete execution, please return a copy of the fully executed agreement to us.
Please mail the Agreement to:
Robin Estanislau
City Clerk
2000 Main Street, 2"d Floor
Huntington Beach CA 92648
Your attention to this matter is greatly appreciated.
Sincerely,
Robin Estanislau, CIVIC
City Clerk
RE:ds
Enclosures
Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand
833
2/2/2021
Community Choice Energy
Considering Membership Status with the Orange County Power Authority
Huntington Beach City Council
February 1, 2021
[HUN
What Is A CCE?
• Mechanism authorized by the State in 2002 via AB 117, whereby electrical service
customers are provided with an option in determining if they procure power through a
traditional IOU, or through a local government entity known as a CCE
r_
�r ap
vV
Energy Purchased by the CCE Energy Transmitted by Energy Delivered to the
the IOU Customer by the IOU
SURPLEMENTAII
COMMUNICATION
M Date: a
1
:lgenda Item No.:
2/2/2021
CCE Background In HB
• The City has explored the possibility of engaging a CCE program during the past few
years
—August 5,2019: City Council directed that staff engage a firm to assess the feasibility of establishing a CCE
program for Huntington Beach
—February 23,2020: MRW&Associates was engaged by the City to perform a CCE feasibility analysis,
including an assessment related to Irvine's efforts to form a regional CCE JPA
—September 15,2020: Irvine hosted an informational meeting regarding their proposed CCE JPA
—October 8,2020: Irvine hosted a second meeting related to the proposed CCE JPA
—December 10,2020: City Council voted to join the Irvine-led effort to create a regional CCE JPA,called the
Orange County Power Authority(OCPA)
—January 26,2021: A virtual community informational meeting on CCE/OCPA was coordinated and held
3
OCPA Membership Considerations
• The City Council approved the requisite Ordinance, Resolution,and JPA Agreements to
facilitate OCPA membership in calendar year 2020
—OCPA's implementation plan identified the potential opportunity to achieve electrical power cost savings
when compared against SCE rates
—By joining in 2020, Huntington Beach was also classified as a Founding Party member agency
• Founding Party member agencies are provided with an automatic seat on the OCPA Executive Committee
• Fullerton, Buena Park,and Lake Forest also joined as Founding Party members of OCPA
•OCPA also provided that any entity joining in 2020 could withdraw from the JPA by
March 1, 2021,without any cost or liability
—Subsequently, OCPA extended the no-risk withdrawal deadline until April 1,2021
•City Council conditioned membership into OCPA by directing that a complete assessment
regarding the viability of the CCE JPA be completed and brought back for review by
February 1
4
2
2/2/2021
MRW Findings: OCPA Is A Viable CCE JPA
• Based on City Council direction, staff has been working with MRW during the past
several weeks to coordinate an overall review of the OCPA implementation plan
• MRW's main findings are as follows:
-The independent financial analysis found that OCPA's Implementation Plan is sound,and was developed
utilizing reasonable and conservative assumptions
-MRW's analysis confirmed that OCPA will be able to provide power at rates lower than that offered by SCE
> The review identified that projected OCPA rate savings are smallest during the first 2-3 years of operation,and that
the cost saving margins increase substantially overtime
-MRW further noted that projections for the amount of initial working capital that OCPA would need could
be slightly understated
> Of note,given that the City of Irvine is assuming all of the initial risk/start-up costs,this shouldn't be a matter of
particular concern regarding the viability of OCPA
OCPA vs. SCE Rates: Less By Between $0.01 - $0.03 / kWh
is MRW conducted independent modeling of OCPA's rate structure, and the margin
between the CCE's costs and SCE's generation rate indicates that OCPA will have the
capacity to provide power at $0.01 - $0.03/ kWh less than Southern California Edison
-According the US Energy Information Administration, the typical US household uses-11,000 kWh/year
-In California, the average household uses-7,200 kWh/year
Figure ES-3.A%erage 04CPA Cost Projection versus SCE Generation Rate
12.00
OCPA Costs(cfkWh) OCPA OCPA vs.SCE OCPA vs.SCE
Total SCE Costs Cost Savings Cost Savings 10.00 PCIA
Year Renewable Other Capacity ON GHG PCIA WkWh) N asav GHG
..toy &DID
2022 0.59 3.67 1.03 0.17 10.00 187 732 8,36 10 -12.5% some ON
2023 072 3.19 082 0.53 0.31 181 7.38 8.32 09 -11.3% 3 6.00
2024 110 2.52 076 0.53 031 156 6.79 8.53 17 2006 ssE,CaPadw
2025 134 2.34 0.83 0.53 0.32 1.48 6.83 877 19 -22.1% 4.00 sisse Other Energ,
2026 1.54 2.15 0 83 054 032 1 46 6.82 9.01 22 24 3%
2027 182 1.84 083 0.54 031 142 6.76 929 2.5 -27.2% 200 Renewable
2028 201 1 78 083 0.24 0.31 1 36 6.53 9.41 2.9 -30.6%
2029 2.21 168 084 025 030 1.32 6.61 9A5 28 -30.1% 000 -IOU
2W0 240 L56 0.85 025 029 124 6.59 9.55 30 1 -310% 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
2031 2.50 1.60 1 0.85 1 026 1 0.28 1 15 r 6.64 1 9.89 3.3 1 -32.9%
Does not Include the reserve fund or other programs
6
3
2/2/2021
Key Risks Identified For OCPA
• Electrical industry market volatility
—The review found that while OCPA should be able to provide an electrical rate discount against SCE, market
prices and SCE rate volatility could combine in some isolated years to occasionally prevent the CCE from
offering lower costs
—Furthermore, the energy sector exists in an evolving regulatory environment that could create operational
challenges in the future
• Customer opt-out risks
—Customers may choose to opt-out of OCPA before,during,or even after the CCE is formed
—MRW modeled an opt-out rate of 30%,and at that level, OCPA remained financially viable
• CCE's typically experience a very modest opt-out rate of around 2-3%
• OCPA's implementation plan assumes that 5%of residential and 10%of industrial customers will opt-out
OCPA Offers Tangible Financial Benefits, Mitigated Risks
• OCPA is projected to have the capacity to provide electrical costs that are $0.01-$0.03/
kWh less than what SCE charges
—The amount of costs savings to be passed onto consumers that are part of the CCE are subject to future
operational decisions by OCPA, however,the capacity to provide electrical savings exists
—In California,the average household uses—7,200 kWh of electricity/year
• Traditional risks associated with participating in a CCE are mitigated in OCPA based on
commitments made by the City of Irvine
—Irvine has agreed to provide all of the financial backing necessary to get OCPA up and running(start-up
costs, implementation costs, as well as collateral to secure initial financing funds)
—Further,the JPA agreement specifically stipulates that participating agencies are not required to make any
financial contributions/payments to OCPA
—Combined,these parameters mitigate the risks typically associated with participating in a CCE
8
4
2/2/2021
City Council Determination Regarding Membership In OCPA
• Tonight, the City Council has the following options available regarding future
participation in OCPA
1. Maintain membership in the Orange County Power Authority Community Choice Energy Joint Power
Authority
- OR
2. Withdraw from the Orange County Power Authority,and direct staff to complete all requisite
documents necessary to terminate our participation in the CCE JPA
Questions?
MRW&Associates,LLC Orange County Power Authority
Mark Fulmer Brian Probolsky
Chief Executive Officer
Gary Saleba
EES Consulting
HUNTING70N BEACH
Ryan Baron
Best, Best&Krieger Attorney at Law
5
Switzer, Donna
From: Fikes, Cathy
Sent: Friday, January 29, 2021 10:54 AM
To: Agenda Alerts
Subject: FW: TITO ORTIZ/CCE
-----Original Message-----
From: Sherry Kennedy<dksmrs5@yahoo.com>
Sent: Friday,January 29, 20219:54 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:TITO ORTIZ/CCE
Dear HB City Council,
I am writing to tell you I do NOT support your recall of Tito Ortiz or joining in the CCE.
Tito represents traditional Huntington Beach values and has overwhelming majority of votes from the tax paying citizens
of Huntington Beach. Do not use your liberal agenda to remove him so that you can do as you wish.
Do NOT join the CCE with Irvine.
Thank you,
Sherry Kennedy
HB Resident&Tax Payer
SUPPLEMENTAL
COMMUNICATION
McWft Data: 02//Z02/
Agenda Itam No.- '��—d 8
Switzer, Donna
From: Fikes, Cathy
Sent: Friday, January 29, 2021 10:5S AM
To: Agenda Alerts
Subject: FW: Tito. CCE
-----Original Message-----
From:JASON ATKINS <hairdresser_on_fire@verizon.net>
Sent: Friday,January 29, 2021 9:50 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Tito. CCE
I am writing to tell you I do NOT support your recall of Tito Ortiz or joining in the CCE.
Tito represents traditional Huntington Beach values and has overwhelming majority of votes from the tax paying citizens
of Huntington Beach. Do not use your liberal agenda to remove him so that you can do as you wish.
Do NOT join the CCE with Irvine.
Thank you,
Tiffanie
SUPPLEMENTAL
COMMUNICATION
McWft Date:
Agenda Item No. / (�/— o�s�
1
Switzer, Donna
From: Fikes, Cathy
Sent: Friday,January 29, 2021 10:57 AM
To: Agenda Alerts
Subject: FW:Tito. CCE
From: melissa zaiden<melissazaiden@hotmail.com>
Sent: Friday,January 29, 20219:30 AM
To:CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Tito. CCE
I am writing to tell you I do NOT support your recall of Tito Ortiz or joining in the CCE.
Tito represents traditional Huntington Beach values and has the overwhelming majority of votes from the tax-
paying citizens of Huntington Beach. Do not use your liberal agenda to remove him so that you can do as you
wish.
Do NOT join the CCE with Irvine.
Thank you,
Melissa Zaiden I REALTOR
Realty One Group
714-342-5847
SUPPLEMENTAL
COMMUNICATION
Moo"Date: a/'
Agenda Vern No.; a 6 0 Sl
Fikes, Cathy
From: MyHB <reply@mycivicapps.com>
Sent: Friday, January 29, 2021 10:49 AM
To: Jun, Catherine; Fikes, Cathy; Frakes, Sandie
Subject: ® MyHB-#513036 City Council [41638]
MyHB
New Report Submitted -#513036
Status
new
Work Order
#513036
Issue Type
City Council
Subtype
All Council Members
Notes
I am asking you to please vote NO on agenda items 21-085 &agenda item 21-102. Tito Ortiz was elected to the city council by
the greatest number of voters in HB history. He was not backed by any special interest groups such as the realtors who
always find a way to make money off the city council decisions. He is responsible to the citizens of HB and not to the council
members who do not like his demeanor. The voters of HB will look long and hard at the council members who are looking for
re-election and think twice about individuals who are only there to line their pockets.
View the Report
Reporter Name
Thomas Whalen
Email
tmbawha@verizon.net SUPPLEMENT L
Phone
714-842-4151 C3�t�: -- 6
Report Submitted
JAN 29, 2021 -10:49 AM Agenda Item No.!
----------------------------------------------------------------------------------------------
Please do not change subject line when responding.
1
Switzer, Donna
From: Fikes, Cathy
Sent: Friday, January 29, 2021 1:51 PM
To: Agenda Alerts
Subject: FW:Tito Ortiz/CCE
-----Original Message-----
From: Sherry Kennedy<dksmrs5@yahoo.com>
Sent: Friday, January 29, 2021 12:04 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Tito Ortiz/CCE
Dear HB Council Members,
I am writing to tell you I do NOT support your recall of Tito Ortiz or joining in the CCE.
Tito represents traditional Huntington Beach values and has overwhelming majority of votes from the tax paying citizens
of Huntington Beach. Do not use your liberal agenda to remove him so that you can do as you wish.
Do NOT join the CCE with Irvine.
Thank you,
Sherry Kennedy
HB Resident &Tax Payer
SUPPLEMENTAL
k Date: e -
Agenda Item No.
1
Switzer, Donna
From: Fikes, Cathy
Sent: Friday, January 29, 2021 3:49 PM
To: Agenda Alerts
Subject: FW: CCE
-----Original Message-----
From: Kevin Anderson <kpanderson@socal.rr.com>
Sent: Friday, January 29, 2021 3:35 PM
To: Posey, Mike <Mike.Posey@surfcity-hb.org>
Cc: Fikes, Cathy<CFikes@surfcity-hb.org>
Subject: CCE
I will be opting out ASAP. You need your head examined if you think you represent the people of HB-you don't.
Sent from my iPhone
SUPPLEMENTAL
COMMUNICATION
Meeting Date:m..,._ C�? / a'
Agenda ftem No.' cn.)lL21— U gsl
Moore, Tania
From: Fikes, Cathy
Sent: Friday, January 29, 2021 6:16 PM
To: Agenda Alerts
Subject: FW: Agenda Item 21-085(CCE) and Agenda Item 21-102
From: Brian White<b1w111575@gmail.com>
Sent: Friday,January 29, 2021 5:14 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Agenda Item 21-085(CCE) and Agenda Item 21-102
We respectfully request each of you vote "No" on Agenda Items 21-085(CCE) and 21-102. Tito Ortiz is a
highly loved and respected member of the Huntington Beach community and was voted into office with a
historic landslide majority of votes. His voters appreciate his views and actions and stand by him
wholeheartedly. Brian and Lorna White
SUPPLEMENTAL
COMMUNICATION
Meehng Date: �f'I 1A I
Agenda Item No.: r„621- n R-5-)
1
Moore, Tania
From: Fikes, Cathy
Sent: Friday,January 29, 2021 6:18 PM
To: Agenda Alerts
Subject: FW:Agenda item 21-085 (CCE) and Agenda item 21-102
-----Original Message-----
From:John Felton<jfelton@socal.rr.com>
Sent: Friday,January 29, 20215:39 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Agenda item 21-085 (CCE)and Agenda item 21-102
My wife and I respectfully request that each of you vote "No"on Agenda items 21-085 (CCE) and Agenda item 21-102.
We have the utmost amount of faith and respect for Tito Ortiz as a Huntington Beach council member,and know that he
will do best for our city which is invaluable to all of us. He was voted into office by a landslide,and for very good reason.
His dedication to the betterment of our city,views and actions,and love for HB speaks for itself.
Respectfully,
John and Stephanie Felton.
Sent from my iPhone
SUPPLEMENTAL
COMMUNICATION
Meeting Data: I
Agenda Item No.
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 1:57 PM
To: Agenda Alerts
Subject: FW:Voting
From: sherrie wolfe <sherriewolfe@earthlink.net>
Sent: Sunday,January 31, 2021 1:23 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>; Posey, Mike <Mike.Posey@surfcity-hb.org>; Kalmick, Dan
<Dan.Kalmick@surfcity-hb.org>; Delgleize, Barbara <Barbara.Delgleize@surfcity-hb.org>; Moser, Natalie
<Natalie.Moser@surfcity-hb.org>; Carr, Kim <Kim.Carr@surfcity-hb.org>
Subject: Voting
Dear Huntington Beach City Council Members,
I am writing to urge you to reject Agenda Item 21-085 (CCE). We have no business being in the energy business. There is
no justification in voting in the affirmative on that item.
I also urge you to reject Agenda Item 21-102 (Removing Tito Ortiz as Mayor Pro Tem). He was voted in with the most
votes in HB ever so that
proves he represents the majority of people in our city. It is no reason to remove his status because you disagree with
him. This smacks of silencing
a conservative just like social media is doing and I dare say, it resembles the "R" word. He is our first Mexican American
voted in for this position.
Also, it is despicable that the LA Times and the OC Register was notified by Oliver Chi and Kim Carr to write a hit piece
on Tito. Talk about childish actions. REALLY?
Why don't you all do the jobs you are paid to do and accept that there are differences between all people that should be
worked out, not just silenced when they are voiced. When you silence Tito, you silence all of the people who voted for him
to represent us. And all of you represent us.
Again, please vote NO on the CCE and on Item 21-102.
Sincerely,
Sherrie Wolfe
SUPPLEMENTAL
COMMUNICATION
Meeting Date. ��//,2 j
Agenda rem No., L'2/' D�'�
Moore, Tania
From: Fikes, Cathy
Sent: Sunday,January 31, 2021 2:01 PM
To: Agenda Alerts
Subject: FW:TITO ORTIZ/CCE
-----Original Message-----
From:Sherry Kennedy<dksmrs5@yahoo.com>
Sent: Sunday,January 31, 2021 1:16 PM
To: Ortiz,Tito<Tito.Ortiz@surfcity-hb.org>
Cc: Fikes, Cathy<CFikes@surfcity-hb.org>
Subject:TITO ORTIZ/CCE
We support you Tito!!!
Dear HB Council Members,
I am writing to tell you I do NOT support your recall of Tito Ortiz or joining in the CCE.
Tito represents traditional Huntington Beach values and has overwhelming majority of votes from the tax paying citizens
of Huntington Beach. Do not use your liberal agenda to remove him so that you can do as you wish.
Do NOT join the CCE with Irvine.
Thank you,
Sherry Kennedy
HB Resident&Tax Payer
Sherry Kennedy
SUPPLEMENTAL
COMMUNICATION
Meeting Date:_
Agenda Mem No.:
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 2:04 PM
To: Agenda Alerts
Subject: FW: vote
From: Felicia Coen <thecoens2@verizon.net>
Sent: Sunday,January 31, 2021 11:48 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:vote
Dear City Council Members,
Please vote no on CCE''!
Please do not remove Tito Ortez, a man of integrity who has the insight to work towards a better representation of his
constituents and a betterment of our wonderful community.
I have lived in HB since 1963; My husband , Al, served as mayor 3 times, and was on the City Council for 12 years.
May you continue in your dedication in keeping HB the wonderful city it is.
Sincerely
Felicia Coen
SUPPLEMENTAL
COMMUNICATION
,Meeting Date:')I//
a. nra Item No..
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 2:08 PM
To: Agenda Alerts
Subject: FW: Tito Ortiz Pro Tem Mayor
From: Valentina Bankhead <bankheadcountry@gmail.com>
Sent: Sunday,January 31, 2021 9:30 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Fwd: Tito Ortiz Pro Tem Mayor SUPPLEMENTAL
COMMUNICATION
---------- Forwarded message -------- Mae" Date: -4—I/q/
-
From: Valentina Bankhead <bankheadcountryna,gmail.com> Agenda rwn No._q/ LEI-De5
Date: Sun, Jan 31,2021 at 9:11 AM
Subject: Re: Tito Ortiz Pro Tem Mayor
To: Dan.Kalmick(i�surfcity-hb.org <Dan.Kalmick@surfcity-hb,org>, Kim.Carr@surfcity hb.org
<Kim.Carrgsurfcity-hb.org>,Natalie.Moser(acr�,surfcity-hb.org<Natalie.Mosergsurfcity-hb.org>,
barbara.del leize@surfcity-hb.org <barbara.del lg eizeAsurfcity hb.org>, erik.petersongsurfcity-hb.org
<erik.peterson(&surfcity-hb.org>, mike.posey2surfcity-hb.org <mike.poseyksurfcity-hb.org>,
tito.ortiz a-surfcity-hb.org <tito.ortizga surfcity-hb.org>
NO on Agenda Item 21-085(CCE) and Agenda Item 21-102 (Removing Tito as Mayor Pro Tem)
To Mayor Carr
Pro Tem Mayor Mr Tito Ortiz
Councilman Mr Erik Peterson
Councilwoman Natalie Moser
Councilwoman Barbara Delglize
Councilman Posey
Councilman Kalmick
Tito Ortiz, a grassroots LATINO candidate from HB, who won by the most votes in the HISTORY in
Huntingtons election November 2020, is now our Pro Tem Mayor. I understand that Carr, Posey and Kalmick
want to remove his ProTem status. You 3 are putting us on notice that you would like to hold a"No Confidence
Vote"to REMOVE Tito Ortiz from his position as Pro Tem Mayor. I believe you are making this move because
you do not like that Tito is anti mask. Besides the fact that Tito's personal views and values, are his own, and
which are absolutely honorable and guided by faith family country; you most likely do not agree with his
conservative nature nor his choice of President.
It is an outrageous attempt to vote on removing his leadership roles. How damn insulting, as well as the hugest
slap in the face to all your HB constituents that voted for him. And may I also say that he is the 2nd Latino on
our council history, since 1988 when the people voted in Jim Silva. Who also became our Mayor from 1992-
1
1994. That was historic for Huntington Beach to have a minority seat. And Mr Silva's legacy was
preserved. There was no character vandalizing such as this back then.
This is a witch hunt perpetrated by Gina Clayton Tarvin and her bully radical left hate crew. I'm sure you are
all aware of her dangerous divisive tactics. I'm not sure how this behavior is acceptable by Ginas school board
where she works at, as a teacher, is acceptable, let alone the party of tolerance she belongs to. These people
bully and silence everyone with a conservative view. By demonizing,race baiting, and so far, "legally"
harassing people on social media,publicly. I hope you understand that Tito holds a"No Bullying"program for
young kids yearly and teaches them the best rules to handle harassment. See website from the OC Weekly 2012.
HTTPS://WWW.OCWEEKLY.COM/TI TO-ORTIZ-BAD-BOY-OF-
HUNTING TON-BEACH-AND-MMA-HALL-OF-FAMER-JUST-SAYS-
NO-TO-BULLYING-64467641
TITO ORTIZ, `BAD BOY OF HUNTING TON BEACH"AND MMA HALL OF FAMER, JUST SA YS NO
TO BULLYING
POSTED ONOCTOBER 30, 2012
This item agenda vote should be rejected by the citizens that live in Huntington as well as yourselves. I reject
your item agenda, as I voted for Tito and I have lived here since 2018 and I am a resident that is blessed to
know that my vote counted, and I am represented by a Latino on that council.
How dare you even think you can remove him when you claim to be seated on city council to do the best job for
the citizens. This community has always been about hardworking people and it's a small beach town that
deserves honorable council members.
Simply,the uproar here is not because of corruption, fraud,bribery, breaking ones oath, illegal discretions, or
betrayal to the Huntington Beach residents and it's not about rescinding on policies, resolutions, or mandates
that affect any of us.
This is because you 3 simply do not like Tito. And this is a way to attempt, to remove his authority, position,
and election accomplishment.
Tito has always been about the citizens and prospering the city for our best interests.
Tito has given back to multiple local charities and supported youth groups as well as veteran groups and given
back to this community through a variety of organizations, 10 fold, over many many years. He is chosen and
was seated to help fix our homeless problem, further our safety in this town, and be a voice for the community,
not big union reps or jocking for more financial loss, or exposure to our bottom line. He is not onboard for his
own special interests, as Michael Posey has demonstrated, per this agreement to add this agenda item.
Tito does not want to take away any more from our pockets and will do everything he can to not add to our
city's debt. He will make the best decisions possible with city council,to avoid risk to HB residents. He will
support the best possible resolutions for our safety, economic growth and is extremely transparent.
He is NOT About HDD, or insane land deals that do not benefit the economy here or detract from our local
small businesses. Truly his personal agenda is not catering to a lobbying corporation for bigger business deals
for their pockets, as Posey has done so many times. Or defending police as a platform, which is under Carr&
Kalmicks platform with the Democrat party and union reps; and that they must accomplish before their tenure is
UP.
2
There is NO undermining agenda with Tito, but to make HB safe, affordable, and giving the citizens here, a
peace of mind that we are taken care of by our city officials. We need honest, hard working, & dedication from
city council.Not a circus show of Carr, Posey, & Kalmick pulling out the clownshow by removing a winner of
a seat for their own pleasure and threats from union and"crying Karen's" about Tito's personal choice to wear a
mask or NOT.
You need to stop this blatant disregard to Mr Ortiz's mask or no mask personal decision. Please work with him
in conjunction with your ideas on real issues that relate to our city.
He has listened and is respectful to you all. A Latino that literally blew your voting numbers out of the water,
you should be very impressed. Our Latino community is tremendously proud of him.
Please stop wasting our time and tax payer dollars to this dog&pony show. Your showboating to the liberal
agenda is in plain sight.
Thank you for your time; please make the best decision for our diverse community.
Regards,
Valentina Bankhead
Huntington Beach resident
3
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 2:23 PM
To: Agenda Alerts
Subject: FW: NO ON CCE
From: Dorothy Sheldon<dorshel@twc.com>
Sent: Saturday,January 30, 20213:53 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: NO ON CCE
City Council of Huntington Beach:
NO ON CCE!
Support Councilman Tito Ortiz
Dorothy Sheldon
14742 Mimosa Lane
Tustin, CA
SUPPLEMENTAL
COMMUNICATION
Meeting pate:
Agenda Item No.• a - s
Moore, Tania
From: Fikes, Cathy
Sent: Sunday,January 31, 2021 2:26 PM
To: Agenda Alerts
Subject: FW:Agenda Item 21-102 &Agenda Item 21-085(CCE)
From:Anthony Palumbo<apalumbo3@verizon.net>
Sent:Saturday,January 30, 2021 1:14 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Agenda Item 21-102 &Agenda Item 21-085(CCE)
Dear City Council Members; I oppose the agenda item to remove Tito Ortiz as Mayor Pro Tem. Although I did not vote
for Mr. Ortiz he was duly elected and the City Council Members behind this dirty trick will have to face voters like me in
the future. I City Council member who has been elected by the voters has every right to remain on the City Council and
to become mayor when his turn comes. Because some council members do not share his views or approve of his actions
is no reason to remove him from his position. I do not like Council Members trying to censor colleague.
I am also against the Community Choice Energy program. It seems that certain Council Members wish to get into the
energy business and want the ability to raise energy rates without input from the citizens of this city. This is dictatorial
control over our energy rates and I am firmly against the CCR and any council members that votes in favor of instituting
the ill-advised program on Huntington Beach. How about working for the best interest of the citizens of this city and
leave the power trip.
Anthony Palumbo CPA
(714) 274-5018
SUPPLEMENTAL
COMMUNICATION
Meeting Date:_a//�'/
Agenda tlem No.:__,:�1
i
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 2:27 PM
To: Agenda Alerts
Subject: FW:Tito
From: Brian White<bwrecondo@yahoo.com>
Sent:Saturday,January 30, 2021 12:58 PM
To:CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Tito
Please vote against agenda 21-085(cce) and 21-102
Thank you,
Brian and Lorna White
H.B. 92649
Sent from Yahoo Mail for iPhone
SUPPLEMENTAL
COMMUNICATION
MWN Dat+e:_ �2/ /a/
Agenda Clem No.•a/
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 2:45 PM
To: Agenda Alerts
Subject: FW:Yes on CCE, Admin Item 21, Feb. 1, 2021 CC mtg.
From: Dan Jamieson <broker_advocate@hotmail.com>
Sent:Saturday,January 30, 2021 10:06 AM
To:CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Yes on CCE,Admin Item 21, Feb. 1, 2021 CC mtg.
Dear City Council:
Please approve Administrative Item 21, regarding the Community Choice Energy (CCE) Joint Power Authority
(JPA), at the Feb. 1, 2021 council meeting.
CCE programs were designed by the state to introduce competition into the power-procurement market. Such a
program will likely lower power rates for HB residents and businesses, and offer more options on sourcing
electricity. Importantly, residents will still have the option of using S. Calif. Edison to procure power.
Sincerely,
Dan Jamieson
Huntington Beach
Sent from Mail for Windows 10
SUPPLEMENTAL
COMMUNICATION
Meeting Dab:_ // Zaz
Agenda Item No.L-9J !
i
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 3:12 PM
To: Agenda Alerts
Subject: FW: Feb 1 city council agenda items
From: Michelle Marciniec<michellemarym@gmail.com>
Sent: Friday,January 29, 20216:21 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Feb 1 city council agenda items
Dear honorable city council members,
We are writing today in opposition to the CCE: Agenda Item 21-085. Please vote No on this item. We are
against further bureaucracies and regulations.
Second, we prefer you to vote NO on removing Tito Ortiz as Mayor Pro Tem. Tito was elected by many
thousands of HB residents because we agree with his values; in spite of the fact that there were many other
Republican candidates to vote for.
It is arrogant and sanctimonious of council members to decide that Tito doesn't deserve the position he
rightfully earned. Huntington Beach is a conservative city, filled with freedom loving people, and we denounce
your left wing actions and the propaganda you fill our left wing papers with. You repeatedly tell lies, and are
dividing our city.
Yours,
Stephen& Michelle Marciniec
327 18th St.
Huntington Beach, CA 92648
SUPPLEMENTAL
COMMUNICATION
Meeting Date:1b b 1
Agenda Item No.: 02 I
1
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 9:24 PM
To: Agenda Alerts
Subject: FW: No CCE!
From: Sherry Daniels<sherryd628@gmail.com>
Sent: Sunday,January 31, 2021 8:36 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: No CCE!
Dear Councilmembers,
I and my entire family are strongly opposed to our city getting into the energy business
and urge you to vote No on joining a CCE. This is a disastrous proposition! It will not
provide any significant savings on our energy bills. The supposed 2% savings on my last
bill would have been $3; that's a joke. In addition, I have no confidence in our city hall
being able to manage this because we aren't in the energy business! Every electrician
and electrical engineer I have heard speak on CCEs say it's a sham and doesn't work the
way the sales pitch says it's going to work.
Now is the time to listen to the Huntington Beach residents, not the pro-CCE outsiders,
who monopolized the public comments the last time this was on the agenda. Should you
approve this agenda item, and this goes forward, we will be opting out, and encourage
all of our family, friends and neighbors to also opt out.
Sincerely,
Sherry Daniels
SUPPLEMENTAL
COMMUNICATION
Meeting Date: a
Agenda Item No. - D ,. S
i
Moore, Tania
From: Fikes, Cathy
Sent: Sunday, January 31, 2021 9:24 PM
To: Agenda Alerts
Subject: FW: Item #21 —Yes for Membership in Orange County Power Authority
From: Craig Preston <craigp4444@gmail.com>
Sent: Sunday,January 31, 2021 8:32 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Item#21—Yes for Membership in Orange County Power Authority
Dear City Council —
I ask for your strong support for staying in OCPA. Let's bring Community Choice for Huntington
Beach families and businesses ASAP. The lower cost energy and cleaner air benefit us all. I
support the citizens of HB getting consumer choice, cost savings, and energy resilience. Action is
needed now. Leadership is needed now, for we are facing fires, floods, and an economic
downturn.
Here are just two examples of leadership to move us to a lower carbon atmosphere.
1. U.S. Chamber of Commerce announced 1/19/21 a big shift in now supporting
"a market-based approach to accelerate greenhouse gas emissions reductions across the U.S.
economy." Here is one of the articles about it.
https://www.washingtonexaminer.com/policy/energy/us-chamber-carbon-pricing-climate-change
2. General Motors committing 1/28/21 to phase out gasoline-powered cars and trucks by 2035.
https://www.nytimes.com/2021/01/28/business/qm-zero-emission-
vehicles.html?campaign id=60&emc=edit na 20210128&instance id=0&nl=breaking-
news&ref=cta®i id=57132365&segment id=50516&user id=cic65ff567efb89e96dl720bfeb6374
4
1 say YES on Item #21-A! Let's increase your priority for CCE.
Thank you!
Sincerely,
Craig Preston
Costa Mesa, CA 92626
1,06etnq
,Agenda ftem No.; Z i
1
Moore, Tania
From: Fikes, Cathy
Sent: Sunday,January 31, 2021 9:26 PM
To: Agenda Alerts
Subject: FW: Agenda Item 21-085 - Vote No
From: Ginger Leibfreid<skincarebyginger@yahoo.com>
Sent: Sunday,January 31, 2021 7:49 PM
To: Carr, Kim<Kim.Carr@surfcity-hb.org>; Ortiz,Tito<Tito.Ortiz@surfcity-hb.org>; Posey, Mike<Mike.Posey@surfcity-
hb.org>; Delgleize, Barbara <Barbara.Delgleize@surfcity-hb.org>; Kalmick, Dan<Dan.Kalmick@surfcity-hb.org>;
atalie.Moser@surfcity-hb.org; Fikes, Cathy<CFikes@surfcity-hb.org>; Peterson, Erik<Erik.Peterson@surfcity-hb.org>
Subject:Agenda Item 21-085-Vote No
Dear Mayor Carr and Council Members,
After reviewing all of the information available on CCE with Irvine proposal, I am urging the City take a measured
approach and vote No on item 21-085. It would be best to see how other cities already in the CCE perform before
jumping into a financial disaster to Huntington Beach and its residents. As you know the city of Palmdale is already
pulling out of the deal.
Thank you.
Sincerely,
Ginger Leibfreid
32 Year Huntington Beach Resident and Home Owner
Costa Mesa Business Owner
SUPPLEMENTAL
COMMUNICATION
Meeting Date: I
Agenda Item No.:
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:00 AM
To: Agenda Alerts
Subject: FW: No on Agenda Item 21-085(CCE)
SUPPLEMENTAL
From:Ted Ross<tedross_0077@msn.com> COMMUNICATION
Sent:Sunday,January 31, 2021 2:02 PM
To: CITY COUNCIL<city.coundI@surfdty-hb.org> 9 = v2
Subject: No on Agenda Item 21-085(CCE)
Agenda►tem No. 1 1-6
As a resident of Huntington Beach, I urge this topic be stopped ASAP on behalf of the taxpay rs o
Huntington Beach. Rationale for this position follows:
1. "Green Energy" and Renewables are a failure wherever they are implemented. Simply put, Renewables
cannot compete with traditional sources of energy either fiscally or reliably. At this moment renewables
are entirely dependent on subsidies from Federal and State sources. As we see in South Australia, over
reliance on wind power has created severe blackouts.
2. "Greenwashing". The only way CCAs can claim to "bring Green Power"to an area is with the complex
shell game of RECs (Renewable Energy Certificates). Every time a renewable power plant generates
one MW of energy a renewable energy certificate or REC is generated. Here energy consultant Jim
Phelps describes the Shell Game of renewable energy certificates "Most of MCE's (Marin Clean
Energy) Deep Green energy is based on a paper trading scheme, known as a Renewable Energy
Certificate (REC). Each REC is produced by a renewable energy resource, such as a windfarm in
Washington or an industrial scale solar farm somewhere in the US. One REC represents one
megawatt-hour(MWh) of energy from the windfarm. In the case of MCE, Washington keeps the
wind energy and MCE buys its inexpensive RECs,giving MCE the right to tell everyone it is the one
that's green --not the wind farm. But since MCE still needs to deliver actual electricity to its Marin
customers, it purchases cheap gas-fired power, then reports that REC to governing agencies. Voila—
"clean"gas-fired energy!And it's all perfectly legal. Legal,yes. But not particularly ethical or
responsible to MCE customers,some of whom, thanks to MCE's misleading marketing tactics, still
believe they get "green electricity"through their light sockets."
3. The Fallacy of energy "Delivery". CCAs claim to "bring" green power to your area. From a
REC presentation in 2011 comes the CA definition of"Energy Delivery" and how RECs are used to
mislabel power. The Western Regional Grid is interconnected by nature, power cannot be "delivered"
from one destination to the next due to the fungibility of electricity.
1. For RPS compliance, electricity is deemed delivered if either generated at a location within state,
or scheduled for consumption by California end-use retail customers.
2. Electricity generated by facilities located in-state or having their first point of interconnection to
WEC transmission system in-state satisfies California RPS delivery requirements.
i
3. Electricity may be delivered into California, at different time than when RPS-certified facility
generated electricity per Cal. Public Resources Code § 25741(a).
4. Delivered electricity may also be generated at a different location than that of RPS-
certified facility.
5. PPA must include both RECs and electricity generated by facility as bundled commodity,
and matching quantity of electricity must be delivered to in-state market hub(a.k.a. a"zone)
or an in-state point of delivery (a.k.a. a"node") which is located within California.
6. For out-of-state generators, RPS-eligible generation from an out-of-state project that is
"scheduled . . . into a California balancing authority without substituting electricity from another
source" qualifies as an "in-state product." Intended to enable out-of-state projects that have
firm transmission rights and the corresponding right to schedule and deliver power into
California to qualify for the most advantageous of the three (REC) portfolio categories as
effectively an in-state bundled sale. May potentially provide broad exemption from limitations
on transactions involving both firmed and shaped products and unbundled RECs for existing
projects.
4) Current political climate. CCAs are entirely dependent on subsidized renewable energy. As we see with the
Trump Administration's moves with EPA and pronouncements on Climate Change it is likely that subsidies for
renewables will be curtailed. On March 16th OMB Director Mulvaney went so far as to say"As to Climate
Change we're not spending money on that anymore, we consider that a waste of your money". If and When the
subsidies are lowered or removed CCAs will no longer be viable yet the contracts binding SBCTA and other
COGs will be in place jeopardizing consumer's access to energy and opening the door to massive lawsuits.
5) The Key to Renewables is Storage. A lack of electrical energy storage facilities in transmission systems leads
to a key limitation. Electrical energy must be generated at the same rate at which it is consumed. A
sophisticated control system is required to ensure that the power generation very closely matches the demand. If
the demand for power exceeds supply, the imbalance can cause generation plant(s) and transmission equipment
to automatically disconnect and/or shut down to prevent damage. In the worst case,this may lead to a cascading
series of shut downs and a major regional blackout. Examples include the US Northeast blackouts of 1965,
1977, 2003, and major blackouts in other US regions in 1996 and 2011. Electric transmission networks are
interconnected into regional, national, and even continent wide networks to reduce the risk of such a failure by
providing multiple redundant, alternative routes for power to flow should such shut downs occur. Transmission
companies determine the maximum reliable capacity of each line (ordinarily less than its physical or thermal
limit)to ensure that spare capacity is available in the event of a failure in another part of the network.
As you can see, CCA will endanger ratepayers access to affordable energy and is far too risky to be
implemented at this time.
Yours truly,
Ted Ross SUPPLEMENTAL
Huntington Beach Voter! COMMUNICATION
Meet ng date.
Agenda Item Mo.� "— J
2
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:01 AM
To: Agenda Alerts
Subject: FW: Option A Item 21-085
From:Audrey Prosser<prosserga@gmail.com>
Sent: Monday, February 1,20218:34 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Option A Item 21-085
Please vote to approve Option A, of Item 21-085 to approve Huntington Beach staying in the Community
Choice JPA, OC Power Authority.
It will save residents and the City money.
It is a critical step for us to take for cleaner air. It will help me and many others that suffer from asthma.
Audrey Prosser
9382 Sunridge Dr
Huntington Beach, CA 92646
Sent from my iPhone
SUPPLEMENTAL
COMMUNICATION
Meebng Date:____-�a_ r
Agenda Item No. - S
1
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:05 AM
To: Agenda Alerts
Subject: FW: Support Option A, of Item 21-085
From:Jessica Castillo<castillo1191ove@gmail.com>
Sent: Monday, February 1, 20216:58 AM
To:CITY COUNCIL<city.council@surfcity-hb.org>
Subject:Support Option A, of Item 21-085
Dear Huntington Beach Mayor and Council Members,
I support Option A, of Item 21-085: Huntington Beach staying in the Community Choice
JPA, OC Power Authority.
It is important to me because reducing emissions is important to me to save our beaches
and keep our air clean. Also, I value renewable energy and CCE's and the option to choose
more renewables; CCA's are buying more renewables than SCE.
Signed,
Jessica Castillo
Huntington Beach
castillo119lovena,jzmai1.com
SUPPLEMENTAL
COMMUNICATION
Meeting Gate:
Agenda Item No.• �� �-O s
1
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:10 AM
To: Agenda Alerts
Subject: FW: I support option 'A', item 21-085 on today's agenda
From:suvangeer@sbcglobal.net<suvangeer@sbcglobal.net>
Sent: Monday, February 1, 20218:59 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: I support option 'A', item 21-085 on today's agenda
A) Maintain membership in the Orange County Power Authority Community Choice Energy Joint Power Authority.
It's the right thing for Huntington Beach residents—more jobs, lower utility rates, less pollution.
Suvan Geer
SUPPLEMENTAL
COMMUNICATION
Meeting Date. �,r Lal
Agenda Rem No.: dLaI-gq5)
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:17 AM
To: Agenda Alerts
Subject: FW: I support CCA for Huntington Beach
From: KIRK NASON <kirk_nason@hotmail.com>
Sent: Monday, February 1, 2021 12:45 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Cc: supplementalcomm@surfcity-hb.org
Subject: I support CCA for Huntington Beach
Dear Huntington Beach Mayor and Council Members,
I support Option A, of Item 21-085: Huntington Beach staying in the Community Choice JPA, OC Power
Authority.
I want clean power and choice. CCA has been proven across the state to be cheaper than monopolies like SCE
& PG&E
Regards,
Kirk J. Nason
714 321-7298
- Use my referral code to get 1 k miles of free Supercharging on a new Tesla:
http://ts.la/kirk4045
Excuse brevity &typos
SUPPLEMENTAL
COMMUNICATION
Meeting Date:_
Awda Item No.
i
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:18 AM
To: Agenda Alerts
Subject: FW: Vote NO on items 21-085 and 21-102
From: palatine@verizon.net<palatine@verizon.net>
Sent: Sunday,January 31, 2021 10:48 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Vote NO on items 21-085 and 21-102
To all city council members,
Please vote NO on these items
21-085 --The City of Huntington Beach does not need to be involved with the Community Choice Energy Program.
That is a poor decision on your part.
21-102 -- Do NOT remove Tito Ortiz from his Mayor Pro Tern position. The residents of Huntington Beach supported
him overwhelmingly in the election. Your attempt to remove him from this position is typical dirty politics that the
residents of Huntington Beach are fed up with. It shows you do not care at all who the voters want to represent
them. Disgusting!!!
We will turn out next election to vote the rest of you out of office.
Tito, and Erik, we support you!!
Janice Campbell
7572 Rhone Ln
Huntington Beach
CA 92647
SUPPLEMENTAL
COMMUNICATION
Meeting Date: ,,higai
Agenda Item No.; S►'O 8'S
i
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 9:45 AM
To: Agenda Alerts
Subject: FW: City Council agenda item: 21-085 Consider Maintaining Membership with the
Orange County Power Authority(OCPA), a Community Choice Energy (CCE)Joint Power
Authority (JPA)
From: H Meyers<hmeybsan@gmail.com>
Sent: Monday, February 1, 20219:41 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: City Council agenda item: 21-085 Consider Maintaining Membership with the Orange County Power Authority
(OCPA),a Community Choice Energy(CCE)Joint Power Authority(JPA)
I support Option A, of Item 21-085: Huntington Beach staying in the Community Choice JPA, OC Power
Authority. it is of the utmost importance for our future that you vote for Option A.
Option A is necessary so that we can transition more rapidly to renewable energy leading also to improved air
quality; so that our energy costs can be kept as low as possible, which would encourage businesses to come to
and remain in Huntington Beach; so that the community, not investors, benefits from utility services; and so that
we have choice in our energy provider and are not subject to the whims of a monopoly.
As a coastal city, Huntington Beach is especially endangered by climate change and the rising sea levels it
causes. We must act now for a livable future.
Thank you,
Hildy Meyers
201 20th St
Huntington Beach
SUPPLEMENTAL
COMMUNICATION
Meeting Date:
Agenda Item No.;_ 1-
i
Moore, Tania
From: Steven C. Shepherd, Architect <steve@shepherdarchitects.com>
Sent: Sunday, January 31, 2021 2:39 PM
To: supplementalcomm@surfcity-hb.org; CITY COUNCIL
Subject: YES on Item #21-A (Remain as founding member of Orange County Power Authority)
January 31, 2021
Supplemental Communications to City Council
Huntington Beach City Council Meeting for February 1, 2021
Re: Item #21— Membership in Orange County Power Authority
Dear City Council—
Your initial vote to become one of the Orange County Power Authority (OCPA)founding members showed tremendous
vision and leadership. I congratulate you all on your initial action and am writing today to encourage you to continue this
relationship.
I strongly support an aggressively affirmative vision for Huntington Beach's future and believe maintaining membership
in the OCPA fits into such a vision very nicely.
Please vote to support our continued membership in the OCPA! YES on Item #21-A!
Thank you!
Sincerely,
Steve Shepherd
Huntington Beach, CA 92646
SUPPLEMENTAL
COMMUNICATION
Meeft Dede: alpl
Agenda ftm Igo.` 91
1
Moore, Tania
From: Lisa Swanson <lisainlb@ymail.com>
Sent: Sunday,January 31, 2021 7:12 PM
To: supplementalcomm@surfcity-hb.org
Subject: 21-085 Consider Maintaining Membership with the Orange County Power Authority
(OCPA), a Community Choice Energy (CCE)Joint Power Authority (JPA)
Dear HB Council Members, thanks for your dedicated service to our community. My name is Lisa Swanson
and I have owned my home on Compass Lane for 11 years. I expressed my strong support for joining the
OCPA as a founding member in comments that are part of the record from the special meeting. I have reviewed
the report prepared by MRW & Associates, LLC and believe it provides very good justification to maintain
HB's membership. Thanks for commissioning the report and also for posting the CCE FAQ website. I hope
both of these efforts have helped to lessen any public concerns and disinformation related to this
endeavor. Please vote YES on Item 21 A and move forward with implementing CCE in Huntington Beach!
Sincerely,
Lisa Swanson
714-851-7523
SUPPLEMENTAL
COMMUNICATION
Meeting Date:_
Agenda Item No., * 1 �9
1
Moore, Tania
From: Audrey Prosser <prosserga@gmail.com>
Sent: Sunday, January 31, 2021 11:19 PM
To: supplementalcomm@surfcity-hb.org
Subject: Public Commemt Item 21-085
My name is Audrey Prosser. I am a resident of Huntington Beach.
I am writing to ask you to support Option A on Agenda Item 21-085
A) Maintain membership in the Orange County Power Authority Community Choice Energy Joint Power Authority.
Audrey Prosser
Sent from my iPhone
SUPPLEMENTAL
COMMUNICATION
Meeting Gate: a 1 I�
Agenda Item No.`s 1
Moore, Tania
From: Linda K <Ikteamtalk@gmail.com>
Sent: Monday, February 1, 2021 8:50 AM
To: supplementalcomm@surfcity-hb.org
Subject: In support of Community Choice Energy. It's a PROVEN revenue builder for cities
Dear Mayor and City Council,
Thank You for all your hard work for the City of Huntington Beach.
Please vote for Option A, Item 21-085 to stay in the first CCA JPA,Orange County Power Authority.
Community Choice Energy/Aggregation(CCE/CCA)is long overdue for Huntington Beach and all of Orange County!
Community Choice is a smart, fiscally responsible thing for a City to choose for its residents and businesses.
-It's supported by many conservative-leaning Mayors and Council members.
-CCA's have a strong record of financial and local rewards.
-5 CCA's have achieved increased Credit Ratings THIS YEAR by Standards and Poor and Moody's whereas utilities have not,(See
below for reference).
Here are some other facts:
Most of what I reference is found here:https:Hcal-cca.org/cca-impact/
23 CCA agencies are currently operating with over 10 million customers.
CCA's have been operating in California for TEN YEARS
They all deliver rates for the generation portion of electricity CHEAPER than the utilities
Over 10 million customers have the EASY TO DO choice of opting out of a CCA, but 94%stay in
(It's a click of a button and a short questionnaire to OPT-OUT).
In Irvine's feasibility study,they estimate that 3.4 million per year will be returned to the City for programs AFTER ALL
EXPENSES ARE PAID.That's all staffing, fees, loans,obligations. All of that money gets put back into energy programs,savings or
jobs for the ratepayers.
Elected Officials and staff on currently active CCA's are readily available to support you,answer questions,and tell you why it is a
wise choice to join. Please reach out to them. You can find all CCA contacts on the California CCA website by scrolling down and
clicking on the links. https://cal-cca.org/cca-impact/
Thank You!
Linda Kraemer, M.S.
OC Clean Power- www.occleanpower.orp,
SUPPLEMENTAL
COMMUNICATION
Meeting Date._ _ . I/gI
Agenda Item No.. ;� I l t I'O
J
1
Work Order: #513036 01/29/202110:49 Closed:
ResolutionThis issue is new Est. Date:
By Thomas Whalen
City Council Email tmbawha@venzon.net
Phone 714-842-4151
SUB TYPE Device
All Council Members
STREET ADDRESS Media Submitted
None
0
COMMENTS &ADDITIONAL NOTES
I am asking you to please vote NO on agenda items 21-085&agenda item 21-102.
Tito Ortiz was elected to the city council by the greatest number of voters in HB history.He
was not backed by any special interest groups such as the realtors who always find a way to
make money off the city council decisions.He is responsible to the citizens of HB and not to
the council members who do not like his demeanor.The voters of HB will look long and hard at
the council members who are looking for re-election and think twice about individuals who are
only there to line their pockets.
Notes Added By staff:01/31/2021 8:24 PM Cathy Fikes
Thank you for your message.If you intended for this message to be submitted as a formal public
comment,please re-state it via Zoom during the public comments portion of the upcoming City Council
meeting;read page 1 of the City Council Meeting Agenda for instructions.If you intended for this
message to be submitted as supplemental communication,please email it to
supplementalcomm@surfcity-hb.org.For questions,please contact the City Clerk's Office at(714)
536-5227.Thank you.
Share with Citizen:YES
SUPPLEMENTAL
COMMUNICATION
Meetlng Date:
Agenda kern No.:
Work Order: #513311 01291202121:38 Closed:
This issue is new Est. Resolution Date: Not Yet Set
By Martin Golden
City Council Email goelverl@gmail.com
Phone 714-390-8809
SUB TYPE Device
All Council Members
STREET ADDRESS Media Submitted
None
COMMENTS&ADDITIONAL NOTES
Vote no on Agenda Item 21-085(CCE)and item 21-102(re Tito)-Don't give control of City
away and respect ALL elected officials not just those you like
Notes Added By staff:01/31/2021 4:47 PM Cathy Fikes
Thank you for your message.If you intended for this message to be submitted as a formal public
comment,please re-state it via Zoom during the public comments portion of the upcoming City Council
meeting;read page 1 of the City Council Meeting Agenda for instructions.If you intended for this
message to be submitted as supplemental communication,please email it to
supplementalcomm@surfcity-hb.org.For questions,please contact the City Clerk's Office at(714)
536-5227.Thank you.
Share with Citizen:YES
SUPPLEMENTAL
COMMUNICATION
meting Deft: a l► I2 i
Agenda ftm INo.• a I - 0
�SS
Moore, Tania
From: Bev Sansone <drsansone001 @gmail.com>
Sent: Monday, February 1, 2021 11:38 AM
To: supplementalcomm@surfcity-hb.org
Subject: Item 21-085
Dear Huntington Beach Mayor and Council Members,
I support Option A, of Item 21-085: Huntington Beach staying in the Community Choice JPA,
OC Power Authority.
This is important to me because it makes sense for the future of our city and our country. We
can no longer keep our heads in the sand about climate change. Those who continue to deny the
science belong in the past and we can no longer listen to them. We need clean energy now and
joining the Community Choice JPA OC Power Authority is only the start of what needs to be
done to protect the country.
Thank you,
Beverly Sansone
HB resident for 25 years.
SUPPLEMENTAL
COMMUNICATION
Meeft Date: al� lai
Agenda Item No.• l i -
1
Moore, Tania
From: Sue Jervik <suejervik@pm.me>
Sent: Monday, February 1, 2021 11:50 AM
To: supplementalcomm@surfcity-hb.org
Subject: Comments for city council meeting on 2.1.21
Dear Huntington Beach City Council members,
Please take into consideration my comments on the following agenda items.
Agenda item 21-085
I OPPOSE our city joining the Community Choice Energy Program.
Agenda item 21-102
1 OPPOSE removing Council member Tito Ortiz from his Mayor Pro Tern position.
Thank you,
Sue Jervik
Sent from ProtonMail mobile
SUPPLEMENTAL
COMMUNICATION
Me*
Agenda item
i
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 11:40 AM
To: Agenda Alerts
Subject: FW: CCE
From: Bev Sansone <drsansone001@gmail.com>
Sent: Monday, February 1, 2021 11:36 AM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: CCE
Dear Huntington Beach Mayor and Council Members,
I support Option A, of Item 21-085: Huntington Beach staying in the Community Choice JPA,
OC Power Authority.
This is important to me because it makes sense for the future of our city and our country. We
can no longer keep our heads in the sand about climate change. Those who continue to deny the
science belong in the past and we can no longer listen to them. We need clean energy now and
joining the Community Choice JPA OC Power Authority is only the start of what needs to be
done to protect the country.
Thank you,
Beverly Sansone
HB resident for 25 years.
SUPPLEMENTAL
COMMUNICATION
Meeting Date: a I 1 I a-I
Agenda Item No.;_ C).'R
i
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 1:23 PM
To: Agenda Alerts
Subject: FW: In support of Community Choice Energy
From:Sandra Smallshaw<sgsmallshaw@gmail.com>
Sent: Monday, February 1, 2021 1:20 PM
To:CITY COUNCIL<city.council@surfcity-hb.org>
Subject: In support of Community Choice Energy
Dear Huntington Beach Mayor and Council Members,
I support Option A, of Item 21-085: Huntington Beach staying in the Community Choice JPA, OC Power
Authority. It is important to me because no one can deny the reality of a changing climate and its impact on our
lives, both now and in the future. As a beachside community, it is important that we take necessary steps now
to mitigate the effects of a changing climate, including the continued erosion of our beaches. I value renewable
energy and appreciate the competitive rates and energy choices that CCA allows. Thank you,
Sandy Smallshaw
Resident of Huntington Beach
S gsmal l shawk gmai 1.com
SUPPLEMENTAL
COMMUNICATION
Meeting Date:_ 0-1 I I a
Agenda Rom No.;-l_(
1
Moore, Tania
From: Tristan Miller-Mansey <tristan@mansey.com>
Sent: Monday, February 1, 2021 1:29 PM
To: supplementalcomm@surfcity-hb.org
Cc: CITY COUNCIL
Subject: Stay in OCPA
Dear City Council,
Please stay in the OCPA regarding Agenda item 21-085 and support to maintain membership in OCPA.
This is a revenue-positive program that keeps rate payer dollars in the city for the city.
Thank you!
Tristan
SUPPLEMENTAL
COMMUNICATION
Meeting Cate. 'oL
Agenda nern No.; cal (a - CUSS
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 1:48 PM
To: Agenda Alerts
Subject: FW: Stay in OCPA
-----Original Message-----
From: Tristan Miller-Mansey<tristan@mansey.com>
Sent: Monday, February 1, 2021 1:29 PM
To: supplementalcomm@surfcity-hb.org
Cc: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Stay in OCPA
Dear City Council,
Please stay in the OCPA regarding Agenda item 21-085 and support to maintain membership in OCPA.
This is a revenue-positive program that keeps rate payer dollars in the city for the city.
Thank you!
Tristan
SUPPLEMENTAL
COMMUNICATION
Meeting !ate:_ 1
Agenda item No.;,_
i
Work Order: #514406 02/01/202110:33 02/01/202
1
This issue is resolved Est. Resolution Date: Not Yet Set
City Council By Sue Jervik
Email Suejervik@pm.me
SUB TYPE Phone 714-904-0406
All Council Members Device
STREET ADDRESS
Media Submitted
None
-1
COMMENTS &ADDITIONAL NOTES
For the city council meeting on Monday,February 1,2021
Agenda item 21-085:I OPPOSE our city joining the Community Choice Energy Program.
Agenda item 21.102:I OPPOSE removing Councilman Tito Ortiz from his Mayor Pro Tern
position.
Status Changed:02/01/2021 10:41 AM Sandra Frakes
Work Order#514406 status has changed from new to resolved.
Thank you for your message.If you intended for this message to be submitted as a formal public
comment,please re-state it via Zoom during the public comments portion of the upcoming City Council
meeting;read page 1 of the City Council Meeting Agenda for instructions.If you intended for this
message to be submitted as supplemental communication,please email it to
supplementalcomm@surfcity-hb.org.For questions,please contact the City Clerk's Office at(714)
536-5227.Thank you.
Share with Citizen:YES
SUPPLEMENTAL
COMMUNICATION
Ming Date: a a ,
Agenda Ham No.: I
Switzer, Donna
From: Fikes, Cathy
Sent: Monday, February 1, 2021 10:24 PM
To: Agenda Alerts
Subject: FW: City Council Meeting, February 1, 2021, agenda item 21-085, CCE
From: DANNY GRAY<danny_gray@cox.net>
Sent: Monday, February 1, 2021 1:31 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: City Council Meeting, February 1, 2021, agenda item 21-085, CCE
To Mayor Carr, Council Members, and Staff,
I am in support of Huntington Beach maintaining its membership and participation with the Orange County
Power Authority (OCPA), a Community Choice Energy (CCE) Joint Power Authority (JPA). This will provide
local control over energy needs, promote competition in the energy sector, create a revenue stream for
environmental programs to benefit the community, and keep more money in the city. CCE keeps utility rates
lower which can be quite significant to large energy users such as The Hyatt and The Hilton properties on PCH.
Thank you,
Danny Gray
West Moon Productions
www.wmoon.com
Member of Climate Reality Leadership Corps/Orange County CA Chapter
www.climaterealiiyoc.com
1
Moore, Tania
From: Ayn Craciun <ayncraciun@gmail.com>
Sent: Monday, February 1, 2021 3:49 PM
To: CITY COUNCIL; supplementalcomm@surfcity-hb.org; Delgleize, Barbara; Carr, Kim; Ortiz,
Tito; Posey, Mike; Kalmick, Dan; Moser, Natalie; Peterson, Erik
Subject: CCE: New UCLA report on CCE clean energy and credit ratings of 5 CCEs in 2020
Attachments: CCE HB Letter 02-2021.docx
Dear Huntington Beach City Council,
Thank you for making HB a founding member of the OC Power Authority.
According to a new report from the UCLA Luskin Center for Innovation, California's community choice
energy programs have sped up the state's progress toward its clean energy goals by opting to
purchase even more carbon-free electricity than they're required to, providing the leadership we need
to meet the climate crisis.
The report found that between 2011 and 2019, CCEs in California purchased 23.5 million MWh of renewable
energy in excess of state requirements, more than twice what they were required to buy.
Moreover, the CCE model has proven safe and successful with California's 23 existing CCEs. Below is a table
showing credit ratings issued for California CCEs in 2020, which demonstrate the financial stability of the CCE
model. These ratings are from all three of the "big three" credit rating agencies - Standard & Poor's, Fitch, and
Moody's.
As you probably know, credit agency ratings rate the viability of investments relative to the likelihood of
default using a letter system; for example, a company rated AAA is very high quality with reliable cash flows,
while a company rated D has already defaulted.
We are in good hands with CCE.
Credit Issuer CCE Month, Credit Outlook Customer Year
(link to year Rating accounts CCE
announcement) credit launched
rating
issued
!VloodyLS CleanPowerSF Dec.2020 A2 Stable 378,000 2016
Standard& Central Coast Oct.2020 A Stable 277,000 2018
Poor's Community
Energy(formerly
Monterey Bay
Community Energy)
Fitch Marin Clean Aug.2020 BBB+ Stable 470,000 2010
Energy SUPPLEMENTAL
Fitch Peninsula Apr.2020 BBB+ Stable 293,000 2016 COMMUNICATION
Clean Energy
Moody's Silicon Valley Jul.2020 Baa2 Stable 270,000 12017 �9 : �� /I�
Clean Energy
Agenda tlem No.;
t
I recently heard someone say recently that we shouldn't think of this as the hottest year in the last 100 years, but
as the coolest year in the next 100. As leaders, you have a responsibility to act in the interest of your city and
all the people in it, including the kids, and that means staying in the OC Power Authority.
Thank you for doing the right thing for our children.
Sincerely,
Ayn Craciun
Irvine Climate Mom
949-400-9682
2
Dear Huntington Beach City Council,
Thank you for making HB a founding member of the OC Power Authority.
According to a new report from the UCLA Luskin Center for Innovation,California's community choice
energy programs have sped up the state's progress toward its clean energy goals by opting to purchase
even more carbon-free electricity than they're required to, providing the leadership we need to meet the
climate crisis.
The report found that between 2011 and 2019,CCEs in California purchased 23.5 million MWh of
renewable energy in excess of state requirements,more than twice what they were required to buy.
Moreover,the CCE model has proven safe and successful with California's 23 existing CCEs. Below is a
table showing credit ratings issued for California CCEs in 2020,which demonstrate the financial stability
of the CCE model. These ratings are from all three of the"big three"credit rating agencies- Standard&
Poor's,Fitch,and Moody's.
As you probably know, credit agency ratings rate the viability of investments relative to the likelihood of
default using a letter system; for example, a company rated AAA is very high quality with reliable cash
flows,while a company rated D has already defaulted.
We are in good hands with CCE.
Credit Issuer CCE Month, Credit Outlook Customer Year
(link to year credit Rating accounts CCE
announcement) rating j launched
issued
Moody's CleanPowerSF Dec. 2020 A2 Stable 378,000 2016
Standard & Central Coast Oct.2020 A Stable 277,000 2018
Poor's Community
Energy (formerly
Monterey Bay
Community Energy)
Fitch Marin Clean Aug.2020 BBB+ Stable 470,000 2010
Energy
Fitch Peninsula Apr. 2020 BBB+ Stable 293,000 2016
Clean Energy
Moody's Silicon Valley Jul.2020 Baa2 Stable 270,000 2017
Clean Energy
I recently heard someone say recently that we shouldn't think of 2020 as the hottest year in the last 100
years,but as the coolest year in the next 100. As leaders,you have a responsibility to act in the interest of
your city and all the people in it, including the kids,and that means staying in the OC Power Authority.
Thank you for doing the right thing for our children.
Sincerely,
Ayn Craciun
Irvine Climate Mom
949-400-9682
Moore, Tania
From: Fikes, Cathy
Sent: Monday, February 1, 2021 4:42 PM
To: Agenda Alerts
Subject: Agenda Item 21-085 and 21-102
From: Claire Ambrosio<cambrolaw@gmail.com>
Sent: Monday, February 1, 20214:09 PM
To:CITY COUNCIL<city.council@surfcity-hb.org>; Posey, Mike<Mike.Posey@surfcity-hb.org>; Delgleize, Barbara
<Barbara.Delgleize@surfcity-hb.org>; Kalmick, Dan<Dan.Kalmick@surfcity-hb.org>; Carr, Kim<Kim.Carr@surfcity-
hb.org>
Subject:
Dear Mayor Carr and City Council members:
VOTE NO on Agenda Item 21-085(CCE) and Agenda Item 21-102 (Removing Tito Oritz as Mayor Pro Tem).
Both of these Agenda items are hurtfaI to Huntington Beach residents and are simply petty.
If Mr Posey and Ms. Delgleize continue to support these actions,the residents of Huntington Beach will
respond accordingly and pull their financial support as well as their votes. Mr. Posey, you will never have my
vote or any of my family and friends for Orange County Supervisor or any other position.
Mayor Carr I expect no less from you. You and your little group of liberals wish to destroy life in Huntington
Beach. You can't stand that Mr. Ortiz received the highest number of votes in history but you are willing to
penalizies a council member who is a minority for your own gain even though your party screams about
discrimination for minorities.
The residents of Huntington Beach will not stand for these types of actions understanding that this is just
another selfish petty move by the liberals on the council.
Claire C. Ambrosio
Attorney at Law
310-993-9951 cell
email: cambrolawC&gmail.com
SUPPLEMENTAL
OFA UNICATION
Meeting Date:
Agenda Item No,
i
Switzer, Donna
From: Fikes, Cathy
Sent: Tuesday, February 2, 2021 1:30 PM
To: Agenda Alerts
Subject: FW: CCE &Tito
From:J&J RADZAI <RADZAI@msn.com>
Sent:Tuesday, February 2, 2021 12:17 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: CCE &Tito
Vote NO on CCE and stop maligning Tito! Shame on you!
1
Switzer, Donna
From: Fikes, Cathy
Sent: Tuesday, February 2, 2021 3:17 PM
To: Agenda Alerts
Subject: FW: Meeting
-----Original Message-----
From: Gongodsway@aol.com <Gongodsway@aol.com>
Sent: Tuesday, February 2, 2021 2:21 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Subject: Meeting
No on CCE and support Councilman Ortiz please.
Sent from my Whone
1
Switzer, Donna
From: Fikes, Cathy
Sent: Thursday, February 11, 2021 8:06 PM
To: Agenda Alerts
Subject: FW: Rethink the OCPA, please . . .
From: Gino J. Bruno<gbruno@socal.rr.com>
Sent:Thursday, February 11, 20214:30 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Cc: Chi, Oliver<oliver.chi@surfcity-hb.org>
Subject: Rethink the OCPA, please . . .
Mayor and Council members . . .
As you well know, in mid-December, Huntington Beach joined Irvine, Fullerton and Buena Park in forming the
Orange County Power Authority (Lake Forest was a "founding" member, but is now taking a serious second
look, and is thinking about getting out) (the OCPA), under the terms of which the OCPA will buy electricity from
wholesalers and sell it to us, the residents and businesses of Huntington Beach. The OCPA will be run by a
Board of Trustees consisting of two mayors and four city council members, including our very own Mike Posey
and Dan Kalmick, his alternate, none of whom have any expertise at all in the energy sector of our American
economy. The CEO two months ago was a wastewater company executive and the COO is a former assistant
to our then City Manager and more recently was the assistant City Manager of Fullerton. Hawkers for the
OCPA claim the electricity will be cheaper for the residents, and may help combat climate change.
But wait!! Looks like the City of Santa Ana may be smart and may not be interested in joining the OCPA.
Santa Ana staff has analyzed the facts and figures, the promises and the realities, and its Public Works
Director, Nabil Saba, said to the City Council "my opinion right now is that we should wait a couple years
before we join the (power authority). We have plenty of options, but I don't see us needing to rush into
joining,"
Among other things, Mr. Saba reasoned:
• The likelihood of potential shrinking profit margins due to anticipated costs of leaving Edison and the
projected long-term costs of wholesale power.
• The revenues from the OCPA would also be limited to, among other things, repaying the debt incurred
by Irvine, which fronted the monies to establish the OCPA.
• Joining the OCPA would not be "a money making engine for the city,"
• A 10-year financial study indicated that there wouldn't be any money to fund local energy programs,
benefits or incentives for Santa Ana residents until 2027.
• Things like senior discounts or solar panel incentives won't be offered to OCPA customers until 2027.
And Santa Ana Councilwoman Thai Viet Phan voiced concern over Santa Ana buying a considerable amount
of clean energy to power the same grid that services the entire region, only for it to get mixed in with fossil fuel
energy purchased by other local agencies and distributed to residents.
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I don't recall our Mayor Carr or Council members Posey (who sits on the Board of the OCPA), Delgleize,
Kalmick or Moser discussing any of these issues before voting to force everyone in our community to accept
their way of thinking. Council members Peterson and Ortiz voted against this venture.
Huntington Beach may, without penalty, still withdraw from this potential financial disaster on or before April 1,
2021. But that would require at least one of the five Council members who voted in favor to bring it back to
Council.
See, https://voiceofoc.org/2021/02/could-santa-ana-loin-the-community-choice-energy-movement-in-orange-
county/
Gino J. Bruno
Huntington Beach
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