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San Diego Becomes Largest City to Move Forward with Community Choice

Mayor Faulconer Chooses Pathway to Reach 100% Renewable Energy Goal by 2035, Will Seek to Create a Regional Joint-Powers Authority Aimed at Lowering Energy Costs for Ratepayers

Thursday, October 25, 2018 - NEWS RELEASE

San Diego – Marking a big step toward implementing San Diego’s Climate Action Plan and the goal of 100 percent renewable energy use citywide by 2035, Mayor Kevin L. Faulconer today announced the City would begin the process of forming a new joint-powers entity to take over the responsibility of purchasing power for its residents and, potentially, the San Diego region.

After three years of research and analysis, Mayor Faulconer has selected Community Choice Aggregation (CCA) as the preferred pathway to reach the 100 percent renewable energy goal in the City’s landmark Climate Action Plan. The new entity would create healthy competition to benefit San Diegans, lower energy costs by 5 percent or more for ratepayers, and help the City reach its renewable energy goal by 2035 – a decade ahead of the state’s goal.

“I want San Diego to lead this region into a cleaner future,” Mayor Faulconer said. “This gives consumers a real choice, lowers energy costs for all San Diegans, and keeps our city on the cutting edge of environmental protection. We are a city where our environment is central to our quality of life and Community Choice will ensure we leave behind a better and cleaner San Diego than the one we inherited.”

Mayor Faulconer will now seek City Council approval of a resolution of intent to establish a Joint Powers Authority (JPA) that would implement and operate the CCA and allow other cities and government agencies in the San Diego region to join. A regional approach would allow for greater negotiating and buying power as well as create efficiencies in operations and service.

Several other cities in the region are currently exploring the feasibility of a CCA and have expressed interest in joining a Joint Powers Authority.

“San Diego has long been at the forefront of the movement toward a future powered by 100 percent clean, renewable energy. By taking steps to ensure that local clean energy solutions are homegrown and will benefit all San Diegans, San Diego joins other cities in leading on California’s clean energy future,” said Jodie Van Horn, Director of the Sierra Club’s Ready for 100 Campaign. “This model is an answer for the public’s desire for cleaner air and a healthier place to live for all communities, especially low-income communities of color.”

Mayor Faulconer announced his decision today atop the Alvarado Water Treatment Plant where he first introduced the draft Climate Action Plan with then-City Council President Todd Gloria during Faulconer’s first year as Mayor in 2014.

“Community choice energy is the right choice for San Diego,” said Assemblymember Todd Gloria. “Community choice is the only pathway to achieve 100 percent renewable energy, a cornerstone of our Climate Action Plan, and ultimately puts the community in charge of our climate destiny. San Diegans deserve consumer choice. San Diegans deserve access to clean energy at a price they can afford. Community choice makes that possible and truly enables each of us to create a safe and clean future for our children and grandchildren.”

While evaluating potential pathways to reach the renewable energy goal, one of the biggest drivers of the decision was the ability to provide competitive pricing for ratepayers.

The City conducted a CCA feasibility study in 2017 that included extensive analysis and third-party peer review. It concluded that the CCA program would be reliably solvent and financially feasible. The City then tasked MRW & Associates – a firm with more than 20 years of experience advising the City, other municipalities and utilities on energy issues – to develop a PDF icon business plan for the CCA.

Earlier this month, the California Public Utilities Commission (CPUC) made a final ruling on exit fees – the charges ratepayers pay to switch from an investor-owned utility to a CCA – that allowed the City to determine the financial impacts of creating its own CCA. With this new information, the City now estimates that a CCA would have the ability to provide a cost reduction of 5 percent or more compared to the utility’s energy generation rates residents and businesses are currently paying.

“San Diegans deserve to have a choice in where their energy comes from,” said City Councilmember Lorie Zapf. “This is an opportunity to reach our climate goals while at the same time lowering costs for everyone, especially families struggling to make ends meet. With this decision, Mayor Faulconer is ensuring that San Diego continues to set an example for other cities to follow when it comes to protecting our environment.”

The creation of a regionwide CCA will be a multi-year process. After the formation of a JPA and appointment of its board of directors in 2019, the board would then hire an executive leadership team, including a chief executive and chief financial officer, which would guide the JPA through the CCA implementation process. The JPA would then seek CPUC approval with the goal of delivering power as soon as 2021.

“We have an opportunity to create a structure where all San Diegans will have a choice in how their energy is created and delivered,” said City Councilmember Georgette Gómez. “I look forward to the next steps and making sure that all San Diegans benefit from what we do here.”

The City’s Climate Action Plan has one of the most ambitious renewable energy goals in the world. San Diego’s 100 percent renewable goal is for 2035 – 10 years earlier than California’s goal of 2045 set earlier this year.

The City today also released the Climate Action Plan’s third PDF icon annual report which documents a 21 percent reduction in greenhouse gas emissions since 2010. The goal is to reduce emissions by 50 percent by 2035.

The Climate Action Plan is a landmark package of policies that benefits San Diego’s environment and economy. It has helped create new jobs in the renewable energy industry, improved public health and air quality, conserved water, more efficiently used existing resources, increased clean energy production, improved quality of life and saved taxpayer money.

COMMUNITY CHOICE ENERGY TIMELINE

December 2018: Resolution of intent available for docketing at City Council.

Spring 2019: Begin formal meetings with potential JPA partners to negotiate structure and guiding principles.

Summer 2019: City Council action to officially form new JPA.

Fall 2019: JPA begins hiring staff, including CEO and CFO. Staff develops implementation plan for submittal to CPUC.

2020: JPA continues to establish operations. CPUC approval expected.

2021: CCA begins service to customers with phased-in approach throughout the year.

For more information and documents related to the Mayor’s Community Choice decision, go to the City’s Sustainability website.

CONTACT: Craig Gustafson at 619-453-9880 or [email protected]

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