Carlsbad takes next step toward new locally controlled energy utility

Carlsbad, Del Mar, Encinitas and Oceanside to present the findings of the feasibility study

Carlsbad CA— A new study shows the Community Choice Energy model is technically feasible and would save Carlsbad ratepayers 2 percent a year compared to SDG&E. Based on these draft findings, the Carlsbad City Council voted Tuesday to explore how a new locally control energy utility could be governed. The City Council also voted to direct city staff to return to the City Council with a statement of intent to pursue Community Choice Energy.
The cities of Carlsbad, Del Mar, Encinitas and Oceanside will hold a joint public meeting to present the findings of the feasibility study and hear input from community members:

• March 21, 6 to 8 p.m.
• Senior Center Auditorium
• 799 Pine Ave., Carlsbad, CA 92008

The draft study is also available for review on the City of Carlsbad website.
State law allows local governments to form Community Choice Energy programs that offer an alternative to investor owned utilities, such as SDG&E. Under this model, local governments purchase and manage their community’s electric power supply, and the existing utility continues to distribute the energy to customers.
In July 2017, the Carlsbad City Council decided to join the cities of Del Mar, Encinitas and Oceanside in conducting a technical feasibility study for Community Choice Energy. The study evaluated the feasibility based on three different approaches to the mix of energy sources:
The same renewable portfolio used by SDG&E
(Achieve between 42 and 59% renewables in 2021 through 2029 and 60% renewables beginning in 2030.)
A 100% renewable by 2030 portfolio:
(50% of retail loads are served with renewable resources through 2025, 75% through 2029, and 100% in 2030 and after.)
A 100% renewables portfolio
(100% of retail loads are served renewable resources in all years.)
The draft study also assessed the feasibility of each partner city forming its own, stand-alone Community Choice Energy utility. The larger cities, Oceanside and Carlsbad, could each form a financially feasible CCE offering retail rates at least 2 percent lower than SDG&E rates. A City of Encinitas stand-alone utility would save ratepayers 1 percent compared to SDG&E. The most financially feasible option would be where the four cities form a joint utility. The City of Del Mar did not prove feasible as a stand-alone model.
In addition to lower rates, Community Choice Energy provides an opportunity for cities to choose their own mix of energy sources and promote local economic development.
The draft study describes some of the potential risks and concerns associated with Community Choice Energy, which include power supply costs, financial risks, customer participation and the availability of renewable power. The draft study shows that even when taking these variables into account, costs projected under most combinations of variables and potential market conditions will not negatively affect Community Choice Energy rates compared to SDG&E rates, and where negative impacts may exist, those risks can be mitigated.

Governance

Several governance options will be evaluated as the next step in exploring Community Choice Energy:

• Forming a stand-alone City of Carlsbad Community Choice Energy utility
• Forming or joining a Community Choice Energy utility Joint Powers Authority with the other three partner cities (Carlsbad, Del Mar, Encinitas and Oceanside)
• Forming a Joint Powers Authority with North San Diego County/South Orange County cities
• Forming a San Diego regional Joint Powers Authority (including City/County of San Diego)
• Joining an existing Joint Powers Authority (i.e., Solana Beach, Los Angeles)

Marin County was the first to create a Community Choice Energy utility in 2008. Today there are 19 Community Choice Energy programs operating throughout California. In San Diego County, Solana Beach began using this model last year, and other cities and the county are exploring it currently.
The City of Carlsbad contributed about $30,000 toward the draft feasibility study, which started in January 2018. The final feasibility study is expected to be presented to the Carlsbad City Council in April. The City of Carlsbad’s share of the study of the governance options is expected to be $18,000. If the City of Oceanside declines to participate, Carlsbad’s share would be $35,000. The governance study is expected to be completed in July 2019. The soonest a new utility could be up and running would be 2021.
For more information
Jason Haber, assistant to the city manager, [email protected] or 760-434-2958