MEETING DATE: 2/7/2017
DEPARTMENT: RESOURCE MANAGEMENT AGENCY
DEPT HEAD/DIRECTOR: Brent Barnes
AGENDA ITEM PREPARER: Adam Goldstone
SBC DEPT FILE NUMBER: 105
SUBJECT:
RESOURCE MANAGEMENT AGENCY - B. BARNES
Adopt a Resolution approving the Joint Powers Agreement establishing the Monterey Bay Community Power (MBCP) Authority, authorizing the Board of Supervisors to execute the agreement on behalf of the County of San Benito, and adopting California Environmental Quality Act (CEQA) exemption findings; introduce an Ordinance authorizing the implementation of a Community Choice Aggregation program in the County of San Benito;
direct staff to move forward on discussions and participation for San Benito County’s share of the credit guarantee; and,
appoint two representatives of the Board of Supervisors to serve as primary and alternate members on the newly formed Monterey Bay Community Power Board of Directors.
SBC FILE NUMBER: 105
RESOLUTION NUMBER: 2017-6
AGENDA SECTION:
REGULAR AGENDA
BACKGROUND/SUMMARY:
Beginning in 2013, Monterey Bay Community Power (MBCP) was formed as a region-wide collaborative partnership comprised of all 21 local governments within the greater Monterey Bay area, including the Counties of Santa Cruz, Monterey, and San Benito and all 18 cities located within those counties. This collaborative partnership was created to examine the potential for a community choice energy (CCE) program in the Monterey Bay region.
The goals of MBCP are to reduce greenhouse gas emissions, and provide electric power and other forms of energy to customers at competitive prices in the Monterey, Santa Cruz and San Benito County region. In addition, the program seeks to reduce energy consumption, stimulate the local economy by creating local jobs and promote long-term electric rate stability and reliability for the residents of the tri-county area.
A Project Development Advisory Committee (PDAC) comprised of multiple jurisdictions and stakeholders was formed in early 2014 to provide guidance and make key recommendations in the early planning phases of the CCE initiative. Between 2014 and 2016, twenty-six meetings were held by the PDAC allowing for the exchange of ideas and input from participating jurisdictions, stakeholder groups, and interested citizens. In 2014, $404,846 was raised by the Santa Cruz County Project Team to conduct a Phase I Technical Feasibility Study which analyzed the benefits and risks associated with creating a local CCE program. A full copy of the report can be found at www.montereybaycca.com. In summary, the study found that “MBCP would be operationally viable under a relatively broad range of resource planning scenarios, demonstrating the potential for customer savings as well as reduced electric sector GHG emissions throughout the region.”
In May and June 2016, the PDAC hosted three special study sessions for county and city elected officials and executive staff for review and discussion of the technical study. Discussion included options regarding power supply, governance, start-up financing and Agency management. In July and August 2016, ad hoc subcommittee meetings focused on JPA governance (i.e. elements of the JPA Agreement) and Agency financing were held for executive staff to discuss issues, timing and approach. The result of this work was the Monterey Bay Community Power Resolution of Intent which was issued in late September, 2016. This resolution allowed interested jurisdictions to affirm their desire to continue and participate in additional governance and financing discussions for the proposed Monterey Bay Community Power Joint Powers Authority (JPA).
Proposed Governance Structure of MBCP:
The Monterey Bay Community Power JPA will be composed of jurisdictions within the Monterey, Santa Cruz and San Benito counties that have adopted a JPA Resolution and the required CCE Ordinance by February 28, 2017. The JPA will be formed in April 2017 and will begin providing electrical service to customers in Spring 2018. The governing board structure will include a Policy Board composed of elected officials who will provide guidance/approval in the areas of strategic planning and goal setting, passage of Agency budget and customer rates, and large capital expenditures outside the typical power procurement required to provide electrical service. It will also include a separate Operations Board composed of senior executive staff who will provide oversight and support to the Chief Executive Officer on matters pertaining to the provision of electrical service to customers in the region, focusing on the routine, day-to-day operations of the Agency.
The JPA governing Board will consist of 11 seats, allocated by population size as outlined below. Shared board seats will be determined through the Mayors and Councilmembers’ city selection process in their respective counties, with a term of two years. Directors may be reappointed and serve multiple terms.
Five jurisdictions with 50,000+ population will have a permanent seat on the Board. Pending passage of aforementioned JPA Resolution and CCE Ordinance, these are: 1) Santa Cruz County, 2) Monterey County, and the cities of 3) Salinas, 4) Watsonville and 5) Santa Cruz. Additionally, the County of San Benito will have a permanent seat on the Board in recognition of the large geographical area it represents. The remaining five shared/rotating seats will be allocated as follows:
• 1 seat for Santa Cruz County small cities (Scotts Valley and Capitola)
• 3 seats for Monterey County small cities, shared within each region:
o Peninsula Cities (Monterey, Carmel, Pacific Grove);
o Coastal Cities (Marina, Sand City, Del Rey Oaks, Seaside);
o Salinas Valley Cities (Gonzales, Greenfield, King City, Soledad);
• 1 seat for San Benito County small cities (San Juan Bautista and Hollister)
Agency Financing:
In order to move forward with Agency and program implementation, MBCP will need between $2M-$3M to pay for start up costs and an additional $10M-$15M to cover power supply contracting and early operational/working capital needs. In December, Santa Cruz County, on behalf of MBCP issued a banking and credit services RFP seeking a third party lender(s) for both the start up capital and line of credit that will be needed later. The bid deadline for those services is February 1, 2017 and MBCP hopes to have its financing in place by April or May, 2017.
Financial participation for MBCP members is proposed to be a credit guarantee to support the pre-revenue start up loan of up to $3 million. The credit guarantee obligation will be distributed on a per-seat basis and will take the form of a letter of credit, cash collateral or interagency agreement. In the example of an 11-member Board, each seat on the board would be allocated 1/11 (9.1%) of the credit guarantee burden. Shared seat members would divide the credit guarantee among the cities in their respective groupings in order to arrive at the level of credit support that will be required by a third-party lender. The final amount of this loan (and credit guarantee requirement) will be confirmed once ordinances are passed and loan offers have been received.
Next Steps:
To move forward, the County will be required to adopt a Resolution approving the Joint Powers Agreement establishing the Monterey Bay Community Power (MBCP) Authority, authorizing the Board of Supervisors to execute the agreement on behalf of the County of San Benito, and adopting California Environmental Quality Act (CEQA) exemption findings; introduce and conduct a first reading of an Ordinance authorizing the implementation of a Community Choice Aggregation program in the County of San Benito; direct staff to work with the Santa Cruz County planning team on the credit guarantee requirements; and appoint representative and alternate members from the Board of Supervisors to the Policy Board of Directors by February 28, 2017. Counties and Cities that adopt resolutions and ordinances will be invited to attend MBCP’s inaugural Board meeting in late April, 2017.
BUDGETED:
No