LOCAL REGULATION AND CLIMATE CHANGE QUICK TELECONFERENCE American Bar Association Section of Environment, Energy, and Resources Climate Change, Sustainable Development and Ecosystem Committee April 11, 2008 April 11, 2008 Greg Stepanicich san francisco ● los angeles ● orange county Richards | Watson | Gershon

California Community Choice Aggregation Program California Public Utilities Code Section allows cities and counties or a combination of cities and counties pursuant to a Joint Powers Agreement (“JPA”) to purchase electricity that will be distributed by the existing private electricity utility over the utility’s distribution system. This program is called Community Choice Aggregation and the local public agency provider of electricity is called a Community Choice Aggregator (“CCA”)

California Community Choice Aggregation Program The CCA has full discretion to decide the sources of electricity that it will purchase and provide to its residents. This provides the CCA with the opportunity to provide electricity from renewable rather than fossil fuel sources. Studies indicate that greater reliance on renewable energy sources can provide more stable consumer rates over the long run.

CCA is a Public-Private Mix IOU CCA Gov. Muni ( investor-owned utility) (municipal utility) IOU Purchases Power Gov. Purchases Power IOU Maintains Transmission Lines Gov. Maintain Transmission Lines IOU Provides Customer Service Gov. Provide Customer Service

Requirements For Establishing CCA A CCA may be established only if electricity in jurisdiction is being provided by private utility; not permitted if publicly owned utility serves community. CCA must offer the opportunity to purchase electricity to all residential customers within jurisdiction.

Requirements For Establishing CCA Customers must be given the opportunity to opt-out of program. However, if customer does not take affirmative action in opting out of program, customer will automatically participate. Private utility must cooperate with the city or county attempting to establish a CCA, including providing relevant customer information.

Procedure For Establishing CCA Proposed CCA must prepare a business plan and implementation plan. Proposed CCA must adopt ordinance establishing program that is subject to final approval by California Public Utilities Commission (“PUC”). Implementation plan filed with PUC.

Procedure For Establishing CCA PUC gives written notice to local private utility of proposal. Within 90 days PUC must certify the receipt of the implementation plan. When plan is approved, PUC shall designate earliest possible effective date for implementation of CCA program. Once CCA established, CCA purchases the electricity which is distributed by the local private utility over its system. All customer billings and relations are handled by the utility. Customer billing rates are established by CCA.

Efforts to Establish CCA in Marin County Marin County along with its 11 cities and towns are cooperating in the possible establishment of a CCA pursuant to a JPA. Marin County along with its 11 cities and towns are cooperating in the possible establishment of a CCA pursuant to a JPA. County has taken the lead in this effort which began in Feasibility study and risk analysis prepared. Local Government Task Force made up of local elected and appointed officials from each local agency serve on Task Force. County has taken the lead in this effort which began in Feasibility study and risk analysis prepared. Local Government Task Force made up of local elected and appointed officials from each local agency serve on Task Force. Business plan prepared in Peer review by electrical energy expert completed in March Business plan prepared in Peer review by electrical energy expert completed in March 2008.

Efforts to Establish CCA in Marin County Briefings of local governing boards taking place Spring Public hearing and adoption of CCA ordinance planned for Fall of 2008 by each local agency planning to join the JPA. Briefings of local governing boards taking place Spring Public hearing and adoption of CCA ordinance planned for Fall of 2008 by each local agency planning to join the JPA. If 50% of electrical load approves forming CCA JPA, an implementation plan will be submitted to PUC for approval. CCA may become operational in If 50% of electrical load approves forming CCA JPA, an implementation plan will be submitted to PUC for approval. CCA may become operational in 2009.

Key Terms of JPA Governing Board made up of elected officials from each member agency. Governing Board made up of elected officials from each member agency. Voting by Board of Directors will be based on a two tier system: Voting by Board of Directors will be based on a two tier system:  Decisions must be approved by a simple majority of the Directors, and  Following the achievement of a simple majority, those Directors voting in the affirmative must constitute over 50% of a weighted voting percentage based upon each member’s past electricity use.

Key Terms of JPA Technical Advisory Board of local experts will be established. Technical Advisory Board of local experts will be established. A Rate Setting Board will make customer rate recommendations to Governing Board for final approval. A Rate Setting Board will make customer rate recommendations to Governing Board for final approval. Daily operations of JPA will be conducted by outside entity experienced in utility operations and purchase of natural resources pursuant to a management contract. JPA staffing will be limited. Daily operations of JPA will be conducted by outside entity experienced in utility operations and purchase of natural resources pursuant to a management contract. JPA staffing will be limited.

  Promote purchase of renewable sources of electricity.   Current power content of local private utility consists of only 12% renewable sources. Natural gas makes up 49% of power content. State law will require an increase to at least 20% renewable sources.   CCA will offer customers two options: Light Green Program that will provide over 50% green energy by 2014 at customer rates equivalent to local utility, and 100% Green Program at rates that will be between $8-10 per month more expensive. Surveys indicate that about 60% of the Marin customers will choose the 100% Green Program. Objectives of Marin CCA

  Draft business plan includes a green energy mix of 30% wind, 25% solar, 23% biomass and 22% geothermal.   Initially, electricity will be purchased from third party electricity suppliers, but over time an increasing percentage of the green energy will be supplied by CCA owned sources (primarily wind and biomass).   Establish more stable electricity rates for customers due to less reliance on unstable natural gas prices and ability to use public financing to purchase electricity at a lower cost of money than a private utility can obtain. Objectives of Marin CCA