City of LB Power Authority could accelerate port wind power development

Southern California Edison comment on AJOT article “City of LB Power Authority could accelerate port wind power development” and rebuttal

I [Robert Laffoon-Villegas] work at Southern California Edison in our Corporate Communications / Media Relations department.

I have some concerns regarding the article published on July 27: City of LB Power Authority could accelerate port wind power development [written by Stas Margaronis see below].

I have several concerns regarding the article – but the first is that you discuss our company at length and did not provide us an opportunity to provide information for your article- leaving out needed balance and nuance into what is a complicated topic. Nor did you provide an opportunity to discuss our efforts to green the grid and to work extensively with the Port of Long Beach.

Two sections are of particular concern (because I believe they are simply inaccurate) that should be addressed and I am providing some information below to see if you would include online in your piece to bring factual clarity and balance to the piece.

• The CCA allows a locality to make power purchase agreements with developers that avoid the higher dividend-based costs of investor utilities, such as Southern California Edison and Pacific Gas and Electric, who pass on these additional costs into utility rates paid by consumers.

• Southern CA Edison - While Southern California Edison is “technically neutral,” Sandidge says, the CCA poses a major threat to the utility’s revenue base: Long Beach is the second largest city in Los Angeles County and contains the Port of Long Beach, the second biggest port in the United States, and Long Beach Airport. Sandidge says that the existing investor utility system has become a barrier to renewable energy development because the demands of profits to reward shareholders do not encourage the level of investment necessary to replace fossil fuel sources of power, including at the Port.

The reality is that SCE purchases most of the power we provide to our customers and provide that purchased power without any mark-up. In our state, by law, SCE doesn’t make money for procuring energy on behalf of its customers. So, to say that a CA investor owned utility is passing dividend based costs to customers in our procurement is simply incorrect.

SCE is permitted to earn a regulated profit for the delivery portion of its business. When a CCA forms or expands, SCE continues to provide those same transmission and distribution services (poles, wires, transformers) and other services, such as public purpose programs, and reliability procurement for all the customers in its service area, including all CCA customers.

Customers of a CCA continue to have an SCE meter and receive a bill from SCE, and the power charge from the CCA will be on that same SCE bill. The SCE bill will be separated into energy charges from the CCA for the energy a customer uses, and for the distribution, transmission and customer services they receive from SCE.

The formation or growth of CCAs does not impact the number of customers SCE serves or the profits allowed by regulators in our state. The formation of a CCA does not in fact “pose[s] a major threat to the utility’s revenue base” that is simply incorrect. We have no incentive to be a hindrance to renewable energy developments and have in fact done a great amount of work greening the grid through our procurements including significant renewables and energy storage procurement – as well as working extensively with the Port on its Green efforts.

Appreciate your attention to this matter and we would welcome the opportunity to discuss our efforts in the clean energy space further.

Rebuttal by Stas Margaronis on Southern California Edison comments on “City of LB Power Authority could accelerate port wind power development” article.

A Southern California Edison spokesman has challenged the veracity of assertions made by Long Beach public power advocate Clay Sandidge in a recent AJOT report. Sandidge charged that the investor-owned utility supports a higher utility rate regime than non-investor Community Choice Aggregators (CCAs) and makes insufficient investments in renewable energy including at the Port of Long Beach.

In an email sent to AJOT, Robert Laffoon-Villegas, Corporate Communications, Southern California Edison stated that two sections of the AJOT interview with Sandidge were of “particular concern.”

He cited the following:

The CCA allows a locality to make power purchase agreements with developers that avoid the higher dividend-based costs of investor utilities, such as Southern California Edison and Pacific Gas and Electric, who pass on these additional costs into utility rates paid by consumers.

Southern CA Edison - While Southern California Edison is “technically neutral,” Sandidge says, the CCA poses a major threat to the utility’s revenue base: Long Beach is the second largest city in Los Angeles County and contains the Port of Long Beach, the second biggest port in the United States, and Long Beach Airport. Sandidge says that the existing investor utility system has become a barrier to renewable energy development because the demands of profits to reward shareholders do not encourage the level of investment necessary to replace fossil fuel sources of power, including at the Port.

Villegas countered that: “The reality is that SCE purchases most of the power we provide to our customers and provide that purchased power without any mark-up. In our state, by law, SCE doesn’t make money for procuring energy on behalf of its customers. So, to say that a CA investor owned utility is passing dividend based costs to customers in our procurement is simply incorrect… SCE is permitted to earn a regulated profit for the delivery portion of its business. When a CCA forms or expands, SCE continues to provide those same transmission and distribution services (poles, wires, transformers) and other services, such as public purpose programs, and reliability procurement for all the customers in its service area, including all CCA customers.

Villegas also denied assertions by Sandidge that Southern California Edison believes the CCAs pose a threat to SCE’s profitability: “The formation or growth of CCAs does not impact the number of customers SCE serves or the profits allowed by regulators in our state. The formation of a CCA does not in fact “pose[s] a major threat to the utility’s revenue base” that is simply incorrect. We have no incentive to be a hindrance to renewable energy developments and have in fact done a great amount of work greening the grid through our procurements including significant renewables and energy storage procurement – as well as working extensively with the Port on its Green efforts.”

In a response to SCE’s criticism, Sandidge told AJOT: “I stand by what I said, and how they interpret it is out of context and skewed through their IOU (investor-owned utility) lenses. SCE contracts PPA’s (Power Purchase Agreements) at an average of 3 and a half to 4 cents a kWh. A Long Beach CCA could contract with developers at a higher rate and still accelerate the path to 100% renewable energy putting the revenue back into the community for projects in Long Beach.”