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Consent-Community Services # 24.
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| Board of Supervisors |
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| Subject |
| Adopt resolution approving the City of Woodland's request to join Valley Clean Energy Alliance and waive the County's 45 day review period to consider a request by an eligible local government to join Valley Clean Energy Alliance. (No general fund impact) (Echiburu/Espinoza) |
| Recommended Action |
- Adopt resolution approving the City of Woodland's request to join Valley Clean Energy Alliance; and
- Waive the County's 45 day review period to consider a request by an eligible local government to join Valley Clean Energy Alliance.
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| Strategic Plan Goal(s) |
Operational Excellence
Thriving Residents
Sustainable Environment |
| Reason for Recommended Action/Background |
The Valley Clean Energy Alliance (VCEA), is a Joint Powers Authority formed in December 2016 by the City of Davis and Yolo County to launch a local Community Choice Energy (CCE) program. The CCE is scheduled to begin serving customers in Spring of 2018.
The City of Woodland has submitted a formal request to the VCEA Board for membership in VCEA.
Section 2.4.2 of the JPA agreement allows additional jurisdictions to join VCEA.
- Any city or county, that is not an initial member, may request to become a member of VCEA by submitting a resolution adopted by its City Council or Board of Supervisors to the Board of VCEA. The Board shall review the request and shall vote to approve or disapprove the request. The Board may establish conditions, including but not limited to financial conditions, under which the city or county may become a member of VCEA. The Board shall notify the then members of VCEA of this request and the date that the request will be on the Board’s meeting agenda for action. The date set for Board action shall be at least forty-five (45) days from the date the notice is mailed to the members. If the request is approved by the Board, the city or county shall become a member of VCEA under the terms and conditions set forth by the Board and upon approval and execution of this Agreement by the city or county.
The City of Woodland formally requested membership in VCEA on May 4, 2017 and the VCEA Board accepted the request at its May 9, 2017 meeting. In addition, to facilitate critical timeline program implementation planning, the VCEA Board requested that the City of Davis and Yolo County waive their 45 day review period of a new member request. Based on the actions taken by the City of Woodland as outlined below, County staff is recommending that the Board of Supervisors support the City of Woodland request and waive its 45 day review period.
City of Woodland CCE related activities
The City of Woodland has tracked VCEA’s progress for the past nine months and worked in partnership with VCEA staff during its due diligence assessment. This long-term and consistent engagement aligns with the VCEA Board’s stated openness to Woodland joining VCEA as an equal partner. Woodland has taken the following steps related to its current request to join VCEA:
- Formed a Council subcommittee and citizen’s advisory committee in Fall 2016 to assist in the evaluation of the risks and benefits of CCE and the potential to join VCEA’s emergent program.
- Held a public forum to solicit public input on the possibility of joining VCEA.
- Requested its community energy load data from PG&E and contracted with The Energy Authority (TEA) to update the VCEA Technical Study financial model with Woodland data.
- Invited VCEA staff and an Advisory Committee member to make presentations to its citizens CCE advisory committee.
- Received several progress updates at regularly scheduled City Council meetings.
On April 18, 2017, following its due diligence research, the Woodland City Council voted unanimously to accept the recommendation of its CCE Technical Advisory Committee that the City request membership in VCEA. On May 4, 2017 the Woodland City Council voted to request membership in VCEA.
Financial model update
In September 2016 The Energy Authority updated the financial model with then current PG&E rates, exit fees (PCIA), and the addition of Woodland’s electricity load. The analysis found that adding Woodland would increase the program size by roughly 1/3 (adding approximately 23,000 accounts and 280,000 MWh/yr). The financial model showed that the addition of Woodland resulted in positive financial outcomes, allowing VCEA to improve its rate competitiveness while building a larger financial reserve. Woodland contracted with TEA to again update the financial model numbers in early 2017 and found similar results.
The TEA analysis concludes that adding Woodland to VCEA would have the following impacts:
- For VCEA, the addition of Woodland will spread overhead cost over a significantly larger customer base, effectively reducing the cost per customer.
- Woodland joining VCEA would have little impact on electric power supply cost and revenue for VCEA (measured in dollars per megawatt-hour).
Recommended terms of membership
Based on its continuing involvement in the VCEA formation process and the results of the financial analysis, VCEA staff is recommending that the VCEA Board accept Woodland’s membership request subject to the following terms:
- City of Woodland adopt a resolution to execute the Joint Exercise of Powers Agreement of VCEA;
- City of Woodland adopt a CCE Ordinance authorizing participation and enrollment of municipal, commercial, agricultural and residential electrical accounts within the city limits;
- City of Woodland make a financial contribution equal to that of Yolo County and the City of Davis in the amount of $500,000 to cover its share of Agency and program implementation costs. Consistent with the treatment of the contributions of Yolo County and the City of Davis under the JPA agreement, this contribution will be fully reimbursable once the program is operational and generating revenues;
- City of Woodland is requested to designate a staff lead on CCE and continue its public outreach efforts and work in coordination with Yolo County and the City of Davis to assist VCEA with public outreach in their respective communities. Outreach activities may include community events and workshops, informational weblinks and articles about CCE and VCEA on its city website or newsletter;
- Appoint two City Council members to serve on the VCEA Board of Directors;
- Appoint three community members to serve on the VCEA Advisory Committee.
Next Steps
Based on the VCEA Board’s acceptance of the membership request, the City of Woodland is scheduled to conduct is first reading of its CCE ordinance on May 16th, followed by the second reading on June 6th. The County Board of Supervisors and Davis City Council would consider the Woodland membership request in mid-May, including the VCEA request that they each waive their 45 day review period. If all anticipated actions are taken by Woodland, the County, and Davis, VCEA would be in a position to take action on the membership request at its June 9th meeting.. |
| Collaborations (including Board advisory groups and external partner agencies) |
| Valley Clean Energy Alliance, Davis City Council, City of Woodland |
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| Fiscal Impact |
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| Source of Funds for this Expenditure |
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Explanation (Expenditure and/or Revenue) |
| Further explanation as needed: |
The updated Technical Study financial pro forma, analyzing inclusion of the City of Woodland and approximately 23,000 additional customers in VCEA, shows a net positive fiscal impact for VCEA and its customers. The updated financial model incorporates the effect of spreading operating overhead over a larger customer base made possible by Woodland’s entry into the program. Based on the financial model, the revenue that is estimated to remain in the local community increases from approximately $7.6M in 2018 for a Davis+Yolo County CCE program to approximately $14.7M for a Davis+Yolo+Woodland program.
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