SOME CEA CUSTOMERS COULD SAVE 8% ON ELECTRICITY COMPARED TO SDG&E RATES

North County residents eye benefits in joining Clean Energy Alliance

The reasons are complicated and it could be just a one-year blip, but residential customers of the Clean Energy Alliance who live in Carlsbad, Del Mar and Solana Beach can expect to pay monthly electric bills that will be, on average, about 8 percent less than what San Diego Gas & Electric charges.

The Clean Energy Alliance is one of the 25 community choice aggregation programs, or CCAs, that have sprung up across the state in recent years that purchases the electricity generation for the residents and businesses in their respective municipalities. The programs were created by the California Legislature in 2002 to encourage the growth of renewable energy and offer competition to traditional investor-owned utilities like SDG&E.

The Clean Energy Alliance is one of the smaller CCAs in the state, serving about 59,000 customer accounts in Carlsbad, Del Mar and Solana Beach since 2021. In April, the cities of Escondido and San Marcos will be added, bringing the group’s customer base to 120,000.

The alliance, known as CEA for short, looks to achieve at least a 2 percent cost savings for power generation compared to SDG&E.

The CEA’s board, on a 7-0 vote Thursday, approved a new rate structure for 2023 that will go into effect Wednesday. The board voted to raise its rates for power generation 36 percent, to an average of 15 cents per kilowatt-hour for residential customers, with CEA staff pointing to unexpected costs related to last September’s extreme heat wave and higher prices in general in current energy markets.

Despite the rate increase, CEA officials say their customers will save money compared to what they would pay for SDG&E.

Once utility delivery charges are added to the cost of generation, the difference between the overall monthly bill of a typical CEA customer versus a typical SDG&E bill usually hovers between plus or minus a couple of percentage points.

But this year, there could be a wider spread, at least for existing customers.

Staff estimates that compared with SDG&E, customers in Carlsbad and Del Mar consuming 413 kilowatt-hours of electricity will save 8.7 percent, or $20.02, on their monthly bills in 2023. And custom

ers in Solana Beach should expect 7.8 percent savings, or $17.91, on their monthly bills in comparison with SDG&E.

However, CEA’s new customers in Escondido and San Marcos will see a total monthly bill savings of just 0.52 percent, or $1.21, compared with SDG&E.

The numbers are based on customers enrolled in CEA’s default pricing plan (called Clean Impact Plus)

that touts power from energy sources that are 75 percent carbon-free).

Why the big boost in savings for Carlsbad, Del Mar and Solana Beach? And why won’t the incoming customers in Escondido and San Marcos receive similar discounts?

Here’s where it gets complicated.

Once a CCA is created, the California Public Utilities Commission requires CCA customers to pay a fee to their utility provider (in this case, SDG&E) on their utility bills each month. The

CCAs often to refer to the charge as an exit fee, but SDG&E prefers to call it by its formal name, the Power Charge Indifference Adjustment, or PCIA.

The fee is assessed each month to offset the costs the utility in a given region has spent over the years on things like building power plants and developing renewable energy projects — all done with the approval and/or direction of the California Public Utilities Commission.

The fee is charged on a per kilowatt-hour basis, and

customers can see the amount they’re charged by looking at their monthly bill, under the listing PCIA.

Calculating the PCIA involves a complex methodology that includes multiple factors, including the current market value of those energy resources under contract. On top of that, the amount of the PCIA is assigned a “vintage year” that corresponds to when a given community leaves its incumbent utility to join a CCA.

So what happened this year at the Clean Energy Alliance? Compared with 2022, the exit fees dropped steeply.

Carlsbad and Del Mar have an assigned PCIA vintage year of 2020. Last year, residential customers in Carlsbad and Del Mar who consumed 413 kWh paid exit and franchise fees that averaged $16.69 per month. But this year, those fees cratered to just 41 cents.

Solana Beach’s PCIA vintage year is 2017. Last year, a residential customer on the default plan in that particular vintage paid an average of $9.83 per month for exit and franchise fees. This year, the figure has dropped to $2.52 per month.

What caused the exit fees to drop this year?

“In general, the PCIA

moves inversely to the energy market,” said Barbara Boswell, CEO of the Clean Energy Alliance. “We’re in a current environment where we’ve been seeing rising electricity costs and the energy market has been going up. When the price of energy is going up, that means that SDG&E can get a better value when they are selling those contracts on the market and that drives down the exit fee.”

But that’s not the case for CEA’s new customers in Escondido and San Marcos.

Their PCIA vintage year is 2022, and the combination of exit and franchise fees comes to $19.23 per month.

Why so high? Boswell said the exit fee that Escondido and San Marcos must pay to SDG&E includes a supplemental charge.

In June of last year, SDG&E announced it would decrease generation rates for the remainder of 2022.

At the time, the utility said the move was based on its estimates for what it would cost to procure sufficient generation for the rest of 2022. But San Diego Community Power, the other CCA in the region, and CEA complained, accusing SDG&E of trying to undercut them on price.

The move resulted in an under-collection of money from SDG&E ratepayers. The utility plans to recoup the difference through its 2023 rates.

But since CEA customers in Escondido and San Marcos no longer get their power generation from SDG&E, the utility will get compensated through a higher PCIA this year.

“SDG&E is saying, wait a minute, even though those customers are leaving (SDG&E and going to CEA), they owe money from last year,” Boswell said. “So their exit fee includes a supplemental charge to reimburse SDG&E ... That’s why the exit fees for Escondido and San Marcos are so much higher than Carlsbad, Del Mar and Solana Beach.”

In the meantime, CEA customers in Carlsbad, Del Mar and Solana Beach can enjoy having monthly bills in 2023 that are roughly 8 percent lower than SDG&E’s.

But Boswell said margins that high in succeeding years are not likely.

“I think that’s an anomaly,” she said. “If you look historically at CCAs across the state, it’s generally closer to 2 to 3 percent. I think what’s happening here is just a result of today’s market.”