REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
PREPARED BY: Travis K. Hopkins, Assistant City Manager
Subject:
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Consider selection of Huntington Beach’s Orange County Power Authority (OCPA) Default Energy Product Rate and the City of Huntington Beach’s Municipal Accounts Rate Selection.
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Statement of Issue:
In February 2021, the City of Huntington Beach approved its participation as a Founding Member of the Orange County Power Authority (OCPA) after deciding to join the OCPA in Dec. 2020.
More recently on December 20, 2022, the City Council requested the following:
1. Options to change the Huntington Beach OCPA default rate offering for new OCPA customers to Basic Choice.
2. Options to change the OCPA default rate for City of Huntington Beach municipal accounts to Basic Choice.
3. Return to City Council at a Study Session in February 2023 with options, costs, and path forward to remove/withdraw the City from OCPA.
This item is in regard to the first two items requested on December 20, 2022.
Financial Impact:
There is no direct fiscal impact to the City for changing the Default Rate offered by OCPA to customers in Huntington Beach. Any customer may change their default rate selection or opt-out of OCPA to return as a customer of Southern California Edison.
If the City municipal accounts switch from the current 100% Renewable Choice to Basic Choice, the estimated annual savings to the City are $234,830. This estimate was provided to the City by OCPA.
Recommended Action:
recommendation
The following options are available to the City Council for the default energy product for new OCPA Customers in Huntington Beach:
A) Take no action. The current, default energy offering of 100% Renewable will remain for all new OCPA customers;
B) Select the Smart Choice option (at least 69% renewable energy) as the default offering for new OCPA customers; or
C) Select the Basic Choice option (at least 38.5% renewable energy) as the default offering for new OCPA customer.
The following options are available to the City Council for City of Huntington Beach municipal accounts.
A) Take no action, and retain the current energy offering of 100% Renewable for municipal accounts;
B) Select Smart Choice (at least 69% renewable energy) for municipal accounts; or
C) Select Basic Choice (at least 38.5% renewable energy) for municipal accounts.
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Alternative Action(s):
Do not approve one or more recommendation above and direct staff accordingly.
Analysis:
The City finalized its decision and joined OCPA, a Community Choice Energy (CCE) Joint Power Authority (JPA) in December 2020. Then on February 2021, the City Council approved its Founding Member participation in the OCPA (see Attachment).
In December 2021, the OCPA Board of Directors approved the addition of the County of Orange unincorporated areas as its fifth member agency with the anticipation of launching its service to all customers in 2023. OCPA launched services to customers in 2022 in the cities of Huntington Beach, Buena Park, Fullerton, and Irvine in two phases: municipal and commercial customers were enrolled in April 2022; residential customers were enrolled in October 2022.
As a member of the OCPA, the City of Huntington Beach selected the 100% Renewable Choice as the default energy product for Huntington Beach OCPA customers as well as Huntington Beach Municipal accounts. New members are enrolled at the default energy product and may select any of the three OCPA energy product choices as well as opting-out to Southern California Edison (SCE) generation services at any time.
The following are the three energy product offerings for new OCPA customers:
1. Basic Choice: If the City selects 38.5% renewables as its default energy product offering, then all Huntington Beach customers will automatically be enrolled in the Basic Choice product (38.5% renewables) unless the customer opts-up to either the Smart Choice product (at least 69% renewables) or 100% Renewable Choice product or the customer opts-out of OCPA service altogether and stays with SCE. Renewable energy content will increase over time.
2. Smart Choice: If the City selects at least 69% renewables as its default energy product, then all Huntington Beach customers will automatically be enrolled in the Smart Choice product (at least 69% renewables) unless the customer opts-up to the 100% Renewables product, opts down to the Basic Choice product, or the customer opts-out of OCPA service altogether and stays with SCE. Renewable energy content will increase over time.
3. 100% Renewable Choice: If the City selects 100% renewables as its default energy product, then all Huntington Beach customers will automatically be enrolled in the 100% Renewables product unless the customer opts-down to either the Basic Choice or the Smart Choice products or the customer opts-out of OCPA service altogether and stays with SCE.
The City Council may choose to change the default energy product by majority vote of the City Council. This will be transmitted to OCPA with details of the City Council direction. OCPA has estimated it will take approximately 10 business days but no longer than one full billing cycle (up to 60 days) to implement the new Huntington Beach default rate for new customers.
The City has 462 municipal accounts providing services to City facilities that are on the 100% Renewable Choice plan. The City may also change the City municipal accounts to one of the OCPA three choices. OCPA reviewed these accounts and estimated the annual cost reduction of $234,830 if the Basic Choice was chosen over the current 100% Renewable Choice.
New Southern California Edison (SCE) rates are effective January 1, 2023. OCPA new generation rates are scheduled to take effect in the billing system on January 9, 2023. With the implementation of the new rates, the OCPA Basic Choice will be 2% less than the standard SCE generation rates. The OCPA new Smart Choice is 1 cent per kWh more than Basic Choice and 100% Renewable Choice is 1.5 cents per kWh more than Basic Choice. All customers will receive the new OCPA generation rates.
If the City Council chooses to change the municipal accounts to Basic Choice or other option, OCPA has estimated that all municipal accounts will be moved to the new rate within one full billing cycle (up to 60 days) after notification by the City.
OCPA’s 2023 rates will be published and communicated on all customer bills, and available in the annual Joint Rate Comparison (JRC) mailer sent to all customers in spring 2023. Each IOU (Investor-Owned-Utility) and CCA are required to develop a JRC that shows how the rates compare to each other - each time rates are changed. With SCE new rates effective January 1, 2023, the new JRC will be completed and published by the end of March 2023. Rate comparisons are also available on the CCA and IOU websites.
The City Council also requested options, costs and paths for the City to withdraw as a Founding member of the OCPA. Staff is performing research on this topic and will bring forward to City Council in a study session in February 2022.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(5), administrative activities of governments that will not result in direct or indirect physical changes in the environment do not constitute a project.
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. December 20, 2022 Van Der Mark McKeon Council Item
2. February 1, 2022 OCPA City Council Report
3. February 1, 2021 OCPA City Council Report