BUSINESS

L.A. County creates a lower-cost alternative for Southern California Edison customers

Southern California Edison customers in Los Angeles County soon will have an alternative way to get their electricity — from a new government-run utility promising lower bills and easier access to clean-energy options.

The county Board of Supervisors on Tuesday unanimously approved the public energy program, which they say will help reduce power bills by as much as 5% below what customers pay Edison. Residents and businesses will have the choice to stay with Edison or join the county’s utility.

“It’s an alternative to Southern California Edison,” said Supervisor Sheila Kuehl, who helped lead the effort.

“Individual residences, individual businesses, every single person can join,” Kuehl said in an interview

Kuehl said an important feature of the new option is that the public energy program will get much of its power from green sources, and provide it to customers at a lower cost.

Other than their bill totals, customers are unlikely to notice a difference. Electricity will still be delivered by Edison over its existing power lines. Edison will also continue to read the meters and send the bills.

But the county utility will buy the electricity from the market or under contract. The county can choose as much green energy as it wants and even build solar projects in the future.

In the last few years, more communities have been considering such community choice aggregation programs, also known as CCAs. Los Angeles County began studying the concept about two years ago, and its program has the potential to become the state’s largest.

L.A. County’s utility plan is part of a broad reshaping of the electric utility industry similar to what happened in telecommunications: a shift from centralized, universal service in which Ma Bell handled all aspects of the business, including maintaining telephone lines, to multiple players that provide many kinds of service on many devices. As technology redefined the role of the phone company, so it is with electric companies.

For consumers, it means more options. But with more competition from public utilities, Edison and other investor-owned utilities will have to revisit the structure of their business model.

“They will have to change,” said Mark Cooper, senior research fellow at the Institute for Energy and the Environment at Vermont Law School. “The old system was in place for over 100 years.”

At Tuesday’s meeting, Supervisor Mark Ridley-Thomas called the utility plan “a game changer.”

“It will allow us to buy and create new sources of green energy while leaving more money in ratepayers’ wallets,” he said.

Initially, as many as 500,000 residences and 200,000 businesses in unincorporated cities throughout the county will be eligible to join the county-run operation. Incorporated cities such as Long Beach and Torrance require approval by elected officials before their residents can participate.

The county decision does not affect customers of existing municipal utilities such as the Los Angeles Department of Water and Power, Pasadena Water and Power and Burbank Water and Power.

Southern California Edison said its “position is neutral” on such power programs.

For the last five years, state law has forbidden utility companies from publicly criticizing the energy programs.

But the state’s two other investor-owned utilities — Pacific Gas & Electric Co. and San Diego Gas & Electric Co. — have raised questions about the efficiency and economics of public energy programs. They have urged more study before wider adoption takes place.

How the utility will work

Governments from Southern California to Humboldt County in the north have been adopting the public energy alternative as consumers face higher electric bills and the state pushes for clean energy over centralized, fossil-fuel power plants.

Under the CCA model, cities and counties become responsible for their customers’ power as well as setting rates and establishing customer programs.

The L.A. County utility, to be governed by the Los Angeles Community Choice Energy Authority, is expected to start providing electricity next year. Customers who switch to it will be able to choose whether they want power from solar, wind or another clean energy source. Those decisions by customers will influence how much green energy — and what kind — the county invests in.

The utility will start out buying electricity under contract from generators, but the plan also allows it to develop community-based solar generation, such as installing solar panels on top of warehouses.

The supervisors approved initial funding of $10 million — $2 million for administrative costs and $8 million to buy power.

By the end of three-year phase-in of the program, revenue is expected to reach $1.2 billion, according to the report to the county. But the CCA, as a local government entity, is not allowed to profit from customer rates.

In 2002, the state passed legislation allowing public energy programs to operate as a way to give electricity customers more choice. Few cities and counties had taken advantage until recently.

Falling solar power prices are driving the renewed focus on CCAs. Public energy programs can take advantage of the low cost by building large community solar energy systems that not only provide power to their customers but also feed the electric grid.

Eight CCAs now serve customers in California, with seven more set to launch this year.

In Southern California, Lancaster established its program in 2015 and Apple Valley in San Bernardino County began its effort April 1.

Jason Caudle, Lancaster’s deputy city manager, said the city turned two years ago to community energy because “it allowed the city to take more of an active role to secure green power and more cost-effective power for our customers.”

Now, 94% of the city’s possible customer accounts — about 50,000 customers total — are part of the public energy program, he said. Power bills have gotten lower, Caudle said, with the program collectively saving $1.9 million, or 4.5% for the average customer.

Some customers were supportive of Edison and chose to stay with the utility, Caudle said, but “we don’t have any complaints about being members of the CCA.”

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ivan.penn@latimes.com

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UPDATES:

6:30 p.m.: This article was updated additional analysis and comments from Supervisor Mark Ridley-Thomas

This article was originally published at 2 p.m.

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