Community Choice Aggregation - Frequently Asked Questions

What is Comunity Choice Energy?
Under San Francisco's Community Choice Energy (CCE) plan, the city and county of San Francisco will take over the role of purchasing electricity for its residents. PG&E will still take care of billing and distributing the power, but the City will choose where the power comes from. Therefore, city ratepayers can be certain we're getting our electricity from the cleanest possible sources and the City can more easily build its own renewable generation. To provide this power, the City will contract with a new Energy Service Provider (ESP).

Why is it necessary to move forward quickly?
PG&E is currently lining up long-term contracts to provide power to its customers. If the City does not get a plan to the state and make it clear that we intend to stop buying power from PG&E, we could get locked into those contracts and face higher exit costs when we do move forward with Community Choice. PG & E is already at the table; we must be there also to avoid being stuck with a high exit fee.

Is Community Choice Energy secure?
Yes! Under the Community Choice Energy plan, the ESP is committed to delivering the power at promised rates for the duration of the contract. As part of that contract the ESP is required to post a bond that would cover the City's costs of returning to PG&E if the ESP defaults. So, if it is not able to deliver the power it has promised, if it goes bankrupt or simply can't do the job, the city is protected. In short, all of the risk is borne by the ESP.

Is Community Choice Energy Affordable
Yes! Community Choice Energy calls for the City's new Electricity Service Provider to "meet or beat" PG&E's rates. Recent studies of Community Choice by independent consultants RW Beck and Navigant confirm that cities can get 40-50% of their electricity from renewables under Community Choice with no rate increase. What's more, consider the cost of staying with PG&E. The big energy companies' ambition is for California to get the electricity it will need in the future from Liquefied Natural Gas (LNG), brought by ship from overseas. One LNG storage terminal, built on the California coast, costs $5 billion to build. And LNG, imported from places like Russia, Indonesia, and Iran, will be subject to price fluctuations and supply disruptions due to natural disasters and geopolitical instability. Sound familiar? We're already dependent on foreign oil to run our cars. Do we really want to depend on foreign LNG to keep the lights on?

How does this affect me, the normal ratepayer?
Not too noticeably. Your bill will still come from PG&E. Your rates will not go up because the new energy provider is required to provide rates equal to or less than current rates. In fact rates will probably go down over time as we start to see the benefits of generating our own local renewable power. If you don't want to participate, you can opt out.

Has this been done successfully before?
Yes! Community Choice is currently enjoying great success in Ohio and Massachusetts. New Jersey and Rhode Island, like California, have recently passed legislation approving CCA, but have not yet implemented it, although a group of Rhode Island cities have already aggregated their municipal loads. o Community Choice in Ohio, in particular, has been extremely successful. The Aggregator in the Cleveland area, NOPEC, currently serves around 500,000 customers in more than 100 Ohio cities and towns. Their Energy Service Provider, Green Mountain Energy, provides an electricity portfolio, mostly from natural gas and renewables, that generates 68% less greenhouse gas emissions than the mostly coal and nuclear power they were getting before. And their rates are lower too! o In Massachusetts, the Cape Light Compact (CLC) currently serves about 50,000 customers. CLC customers pay about 7.1 cents/kwh for electricity, approximately 0.2 cents cheaper than the local utility rates. Starting in 2005, CLC customers can elect to pay 8.9 cents/kwh for power that comes from 100% renewable sources. Look at your PG&E bill. That's much less than you pay. (http://www.capelightcompact.org) Data: MA (http://www.electricityforum.com/news/mar03/massratehike.html) o In Rhode Island: "Since its inception in July, 1999, REAP has saved its thirty-six member cities and towns over $6 million in their costs for electricity and has become the most successful municipal aggregation program in the nation!" (http://www.rileague.org/site/rieap/)

Will Community Choice Energy help with efforts to Municipalize?
Community Choice is a big step towards municipalization. It gives the City control over half of the system (electricity generation and purchasing) without needing to go to the ballot. If the City ever decided to take over the other half (PG&E's distribution lines) while it was still under contract with an ESP, it would simply continue to buy power from the ESP and deliver it over the newly acquired lines. Once the contract expired, the City would have the option of continuing to use an ESP, or it could take over the power purchasing itself. Municipalization is not going to happen quickly. Even if a public power ballot initiative passed next year, the City would spend a minimum of five years in court battling with PG&E before it actually took possession of the wires system. Most likely the contract will have expired by the time we are actually able to municipalize. Finally, Community Choice Energy will build up to 51% city owned generation -- that IS public power.

What if some of the city's big customers opt out?
In other Community Choice cities, some big customers have opted out and the program has still been very successful. Plus, in the case of SF, it is unlikely that many businesses will opt out because under the CCE plan, rates are guaranteed to be more stable, and guaranteed to be no higher than current PG&E rates. Businesses hate uncertainty; this plan gives them a degree of certainty PG&E can't offer which will attract them to stay.

What happens if there aren't any bids for the contracts?
The City could abandon the plan and stay with PG&E, or it could rewrite the Request for Proposals (RFP) in an attempt to attract ESPs to bid. We don't expect this to happen. Representatives of various California ESPs have indicated that they are likely to bid. As the plan is finalized and more details become clear, the City will be able to get more feedback from potential suppliers that will help it to avoid putting out an unattractive RFP.

Is this feasible?
YES! Building 51% renewable energy for San Francisco by 2017 is ambitious but doable. Solar manufacturers, wind developers, and energy service providers have been trying to enter the energy market for years. They are eager to get started. Furthermore, a large investment in renewable generation will create economies of scale for technologies like solar that will bring prices down.

Does every electricity customer participate?
Once a Community Choice plan is adopted and a service provider chosen, San Francisco residents will have 60 days prior to the date the program starts to opt out and remain with PG&E. Once the program is underway, customers who have not opted out will be automatically switched to CCE, but will have an additional 60 days to opt out at no charge. After that, you can still opt out, but the city can charge an exit fee. The benefits of Community Choice should attract ratepayers to stay.

Do long-term cost savings come back to ratepayers?
No. Ratepayers are guaranteed stable prices no higher than PG&E's - and cleaner air. The City ends up owning all of the renewable generation that gets built. The ESP bears all the risk; they can hardly be expected to do so if they can't recover some of the savings as profit.

How is Community Choice Energy good for San Francisco and its residents?
Community Choice gives the City the opportunity to get more of its electricity from renewable sources, reducing air pollution that causes respiratory problems and global warming. Building a local and regional renewable energy supply owned by the City, as called for in the CCE plan, will attract manufacturers to the Bay Area-- creating good jobs and boosting the local economy. It will also create a secure, reliable local supply of energy, the costs of which will only decrease with time. The City of San Francisco, acting as a negotiator on behalf of SF electricity customers, protects us from the rate spikes and black outs that we have experienced with PG & E. The Board of Supervisors is responsive to the needs of San Francisco residents -- unlike PG&E, whose bottom line is its shareholders.