Redefining Disadvantaged Communities

Daly City.  Photo by Daniel Hoherd, Flickr Creative Commons

Deidre Sanders, PhD
Director of Government and Community Affairs


California is a highly diverse state, with some of the wealthiest communities in the country.  At the same time, California also has the highest level of poverty in the nation, according to the California Budget and Policy Center.

This disparity has helped feed a misperception that community choice energy (CCE) programs serve only affluent customers in coastal communities, rather than the diverse households and communities that make up California.

In fact, the areas CCEs serve are reflective of the range found in the whole state. The problem comes from looking just at income levels, rather than the cost of living. While incomes may be higher in some CCE areas, so too are housing and other expenses.

Moreover, while California’s social programs can help low-income households throughout the state, actual living standards of moderate-income households in more expensive areas may appear indistinguishable from those of low-income households in less expensive areas.

As policymakers seek to support California’s impoverished residents, they should look to the California Poverty Measure (CPM), developed by the Stanford Center on Poverty and Inequality (CPI) and the Public Policy Institute of California (PPIC).

The CPM takes into account living expenses and low-income program benefits, in addition to income.  It reveals that actual poverty in comparatively more affluent areas is higher than census data indicates.

A TALE OF TWO CITIES

To show this effect, we can compare Daly City, just south of San Francisco in San Mateo County, with Fresno, in the Central Valley. San Mateo County is served by Peninsula Clean Energy, while Fresno does not have a CCE provider yet.

The statewide estimated median income for a family of four in 2018 was $67,169. County income levels in San Mateo County were more than twice that of Fresno County, $105,667 versus $48,730.

But this is only income levels – it doesn’t reflect the cost of living or variation within the county.

The median Daly City family makes about $86,000 per year, but may spend $3000 a month on average for a two-bedroom apartment, or 42 percent of their gross income – well over half of their take-home pay. Meanwhile, a city of Fresno family  earning $45,000 per year may spend $1000 per month for a similar apartment, or 27 percent of their gross income.

Applying the California Poverty Measure, to adjust for the cost of living and additional income from social programs, the actual percentage of people living in poverty in these communities is 17 percent for San Mateo County and 20 percent for Fresno County, even though median San Mateo incomes are almost twice as high.  Using the official federal poverty measurement, only 8 percent of San Mateo County residents live in poverty compared to 26 percent in Fresno County. As the CPM reveals, the poverty levels are actually much closer.

The story is largely the same with other CCEs.  East Bay Community Energy, serving Alameda County, has census tracts with median household incomes ranging from $230,000 to $16,500.   MCE Clean Energy, founded in relatively affluent Marin County, now serves large parts of Contra Costa County. Their census tract household incomes range from $250,000 in Tiburon to $25,000 in Richmond.

A MORE PERVASIVE PROBLEM

While the misperception of CCE customers is a concern, there are bigger problems with how we define poverty in California, with real implications for financially struggling families.

Many state policies and programs define “disadvantaged communities” and households based solely on income levels, rather than also considering living costs. California’s vast differences in income and cost of living means that state programs do not consider some people who need their help.

Some of these policies directly affect CCE customers. California has made an extraordinary effort to ensure that disadvantaged communities benefit from actions to promote clean energy and fight climate change.  Numerous policies and programs direct funds toward such communities, helping clean up polluted neighborhoods and create local jobs.

The most notable policy is the California Climate Investment Fund created by AB 32, which directs cap and trade revenues to a wide variety of climate issues. The program has funded $8 billion of projects since 2013.

At least 35 percent of these investments are made in disadvantaged and low-income communities, identified in part by the California Environmental Justice Screening Tool, known as CalEnviroScreen.

CalEnviroScreen ranks communities based on environmental features and exposures, combined with demographic data. This is very important in remedying the unequal environmental burdens that low-income communities may endure. Still, the tool measures poverty based simply on the Federal Poverty Level, a single nationwide value. So while “Housing Burden” is a factor, it is unclear to what degree it is weighted to influence “Poverty.” Moreover, very low-income communities may score low in the ranking if they do not have comparatively high environmental burdens or features.

Looking again at Fresno and Daly City, we see that much of Fresno ranks in the top 10 percent of CalEnviroScreen scores.  Daly City is farther down, closer to the 50th percentile.

 

CalEnviroScreen Scores for Fresno (left) and Daly City (right).  Source: Office of Environmental Health Hazard Assessment (OEHHA).

An additional problem with CalEnviroScreen is that it identifies environmentally impacted disadvantaged communities, rather than disadvantaged communities in general.  This means that programs designed to address socioeconomic disadvantage may be directed to communities that have comparatively more environmental concerns and less socioeconomic disadvantage (e.g., “poverty”).  This can occur both in comparatively more impoverished Central Valley and Coastal communities when ranked with communities with significant environmental burdens.

And within identified environmental impacts, CalEnviroScreen rankings do not explain why communities are priorities. Communities that score high due to pesticide use, for example, may be prioritized for electric vehicle chargers, creating a mismatch between community needs and remedies.

NEW MEASURES NEEDED TO SERVE ALL OUR COMMUNITIES

For our efforts to succeed in California’s diverse population and landscape, we need a better approach based on more accurate perceptions of what it means to live in poverty.  In sum, there are two problems with how we define disadvantaged communities, both in perception and in program designs.

First, income is not the sole predictor of poverty due to high living costs in urban/coastal/resort areas.  Second, income disparity can be masked in areas that have comfortable median incomes. As a result there are households truly living in poverty that cannot benefit from programs intended to help them because they do not fit the operating definitions of “poverty.”

Redefining how we identify disadvantaged communities and households will not only help us better serve all those struggling financially, but it will also help us develop better strategies to slow and reduce displacement of those living in poverty or near poverty from high cost regions.  CCEs are looking to new tools to help us equitably serve all our communities. We are also looking to partner with other entities in the state to help us do so.

Deidre Sanders is Director of Government and Community Affairs for East Bay Community Energy.

EBCE Goes On Tour to Meet the Community

Though EBCE started service to all residential customers in November, and to commercial, industrial, and public customers five months earlier, many customers are still learning about the switchover from PG&E to EBCE.

To let people know about the switch, EBCE is doing intensive outreach and education through a combination of advertising and events, in multiple languages.

“EBCE was formed by community to serve the community,” says Annie Henderson, Vice President of Marketing and Account Services.  “We want to be certain we are reaching people in their own language and in ways that are accessible so they can understand the benefits of the transition to EBCE.”

START SPREADING THE NEWS

Since July, EBCE has undertaken a multi-pronged outreach campaign of advertising, events, and mailings.

EBCE has used print and digital advertising, social media, and billboards and bus signs, earning a total of 34,854,055 impressions to date.  Over two million letters and postcards were mailed out to customers and brochures are being put in public places like libraries.

In-person meetings have been a priority, underscoring EBCE’s status as a member of the community.  EBCE staff have hosted or participated in 65 events so far, in all 11 cities that EBCE serves. The “Understanding Your Bill Tour” kicked off in January, with sessions hosted in coffee shops and libraries.

Some of the events have focused on specific sets of customers, including seniors and low-income households, and people who speak Spanish and Chinese. The Oakland Chinatown Lunar New Year Festival was a good chance to reach the Chinese community, while an event hosted with the Unity Council helped reach Hispanic seniors.  (Some presentations are being professionally video recorded and will be available at EBCE.org.)

STICKING AROUND

One big unknown with the CCA concept in general was whether customers would stay with their new community provider or opt out and go back to their utility.  So far, so good, says Henderson.

“The retention rate is high, about 97 percent across the county,” she says. “We had anticipated that as customers started seeing the EBCE charges on their bill that we would see a spike in opt-outs, but it has been low. It is following trends other CCAs have seen.”

It is true that some customers are surprised by the changes on their bill, she says, and initially upset to see what they thought were new charges. Part of that may be due to the fact that EBCE service coincided with the onset of winter, when energy use rises due to cold weather and long nights. Some customers blamed higher bills on the transition, rather than on the season.

Seasonal increases could be due to higher heating demands – either more electricity that pushes customers into a more expensive tier or additional natural gas consumption, which EBCE doesn’t sell. For those using more electricity while on the Bright Choice electric rate, they are still paying less than if they were with PG&E.

The in-person meetings are helping address their concerns.  “They have a lot of questions and are appreciative that we are there,” says Henderson.  “They may come in frustrated but they are very receptive that we are meeting them in their community and making ourselves available.”

While customer awareness is increasing, outreach is a never-ending task.  EBCE will start serving the first phase of solar net-metering customers in April (on terms that are more generous than what PG&E offers), with notification mailers going out in February.  

And there is a busy calendar of outreach events coming up, including Earth Day in April, Bike to Work Day in May, and the Alameda County Fair in June. Upcoming events are listed on the EBCE website, and can be tracked by following EBCE on Facebook, Twitter, and Instagram.

Faces of EBCE: Kelly Birdwell Brezovec

EBCE started service to half a million East Bay residential customers last fall, but for some the change didn’t sink in until they saw their utility bills.  The calls and emails started coming in, and EBCE was ready to respond.

“The questions we get most often are ‘who are you, and why is EBCE on my bill?’” says Kelly Birdwell Brezovec, Customer Care Manager.

Kelly is part of a customer service team that is reaching out to customers across the county, through the “Understanding Your Bill Tour” and other strategies. (See “EBCE Goes On Tour to Meet the Community” in this issue of the newsletter.)

THE PERSONAL TOUCH

Kelly comes to EBCE after long stints in customer care at PG&E and Alameda Municipal Power.  

At PG&E she managed commercial customers and third-party natural gas suppliers known as core transport agents. She was at PG&E during the horrific San Bruno pipeline explosion in 2010, where eight people were killed and 38 homes destroyed.  She was one of many customer care representatives assigned to be a personal contact for people affected by the disaster. It was a formative experience.

“San Bruno was the hardest kind of customer service I’ve ever done,” she says.  “It was a deeper level of empathy than one usually needs to have in the energy industry. That experience helped me understand the importance of customer connections.”

She moved on to Alameda Municipal Power, the city-owned utility, where she managed energy efficiency and green power programs. She was originally drawn to the energy world to address the environmental impacts of utilities, after receiving an MBA in sustainability from the Presidio Graduate School.

“I wanted to get back to energy efficiency and sustainability issues,” she says of the move.  She also loved the smaller size and community connections at Alameda, which serves only about 35,000 customer accounts.

“That’s a nice thing about a small utility, and it’s the same at EBCE,” she says. “Customers can easily talk to someone at the organization to get answers to their questions. Many customers were delighted and surprised to get a real person on the phone to help them understand the difference between an LED and a compact fluorescent light bulb.”

“You don’t get that level of service from an organization that is not so community-minded.”

She finds the same dynamic at EBCE, even with the larger customer base. “We are working directly with residential customers on understanding their bills,” she says. “We have at least two customers a week who come into the office. We review their bill one-on-one and answer all of their questions about EBCE.”

Customer service at EBCE gets a big boost from a call center operated by the Sacramento Municipal Utility District (SMUD).  SMUD handles a number of “back office” tasks for EBCE, tapping their decades of public power experience. “The customer service team gets the idea of community-owned energy and local control and they are helping our customers understand it,” Brezovec says.

CLEARING UP CONFUSION

While some customers have been confused about their bills, leading to an increase in opt-out rates, Kelly thinks that is a temporary condition.  She thinks the main problem is that the residential switchover from PG&E in November coincided with the onset of winter.

“People use more energy in the winter, which results in a higher bill,” she points out. “They then blamed that higher bill on EBCE, not on the amount of energy they used.”

“I think the number of opt-outs will level off in next two or three months, as things warm up and bills get smaller,” she says.

This underscores that a big part of customer care is educating customers about energy.  

“I saw a study published in the mid-2000s showing that customers spend an average of six minutes a year thinking about their electricity bill,” she says. “So we are always looking for the best way to explain the overall savings that comes from being an EBCE customer, our generation charges, PG&E’s delivery and how they are related.”

“Alameda County residents and business owners are more aware of climate change than most people and care about helping the planet,” she says. “As a community energy provider, we work with city officials and local groups to educate the public about the importance of clean energy as a tool to fight global warming.”

Big Data Means More Efficient, More Effective Service

Thanks to the massive investment in smart electric meters made by the state over the last decade, utilities collect a steady and granular stream of consumption data from customers.  EBCE is no exception, receiving data from 500,000 residential meters on an hourly basis and 50,000 commercial and industrial meters every 15 minutes.

That adds up to over 6 billion data points per year.  Add to that the previous four years of data acquired from PG&E, and it already amounts to 3.3 terabytes of data.  “Companies like Facebook sneeze at that amount of data – they collect more than 6 times as much every hour,” says Taj Ait-Laoussine, Vice-President for Technology & Analytics.  “But it is a lot.”

That data is collected for EBCE by PG&E and is used primarily for billing, especially as more customers move to time-dependent rates.  But it can do so much more.

WORKING THE NUMBERS

To put that data to work, EBCE has created a data analytics platform that is unique among CCAs in California.  It consists of a set of analytical tools built on a cloud-based platform that help with load forecasting, customer management, rate design, program marketing, and accounting.

EBCE staff are able to access the data to tackle any number of problems. The most basic application (or “use case” in business jargon) is understanding EBCE customers. “We can track enrollments, opt-outs, opt-ups by kWh, view the load profile of certain customer types, or track the number of CARE customers across our jurisdictions, for example,” Taj says.  “General slicing and dicing of the data.”

The next use case is “shadow reporting,” where EBCE runs reports to double-check the transactions that come from PG&E and that go through third party vendors. EBCE can run its own reports to ensure that the correct billing transactions have been posted and to ensure that its settlement with the Independent System Operator (CAISO) lines up with the data it acquires.

The third, and probably most important application so far, is forecasting load and revenues. Based on past behaviors, the tools can model load for the system as a whole, for certain regions, or for certain types of customers.  

“We look at 25 distinct rate classes, then model each month, weekday and hour separately —  50,400 different dimensions in all,” says Taj. “Then, for each customer, we determine the relative weight that represents them on all of those dimensions. So we can now predict, for example, the energy consumption for all residential net metering customers in Fremont on a Tuesday in August at 3:00 pm.”

That is useful for estimating future load and revenues, but also for creating a short term summary of recent and upcoming load patterns, which is given to the Scheduling Coordinator every day.  The Coordinator schedules power purchases and deliveries through CAISO. Better visibility enables more accurate scheduling, and less need for expensive last-minute purchases. Before the data platform was set up, there was a gap in accessing that data. Now it happens in real time.

CUSTOMER FOCUSED

The data is also is useful for marketing, such as identifying and signing up individual customers for energy efficiency programs. “We can correlate consumption to weather on an hourly basis,” explains Taj.  “Customers with high correlations must be using a lot of air conditioning or electric heat, so they are good candidates for energy efficiency help.”

Better visibility helps EBCE design programs tailored to customer needs and to reach them more cost-effectively.  “We can spend less money on programs and get better engagement,” Taj says.

The platform can quickly generate detailed reports to customers on request, which is especially attractive to large commercial and industrial customers seeking ways to cut costs.

And it can enable new programs, like the 2018 demand response pilot where EBCE tested the potential for large customers to cut demand in response to price signals.

“Basically, it allows us to be more efficient, to do things faster and with less resources,” says Taj.  “It will result in greater customer retention and customer satisfaction.”

 

In the News

PG&E BANKRUPTCY MAY NOT AFFECT COMMUNITY CHOICE POWERRon McNicoll, The Independent, January 24, 2019

PG&E’s bankruptcy is likely to have “no meaningful impact on our program,” according to EBCE CEO Nick Chaset.  The CalCCA said that CCA’s are “closely monitoring any developments related to PG&E’s financial situation and are in the process of evaluating potential impacts on CCA customers and operations.”

HERE’S HOW LOCAL GOVERNMENTS ARE REPLACING CALIFORNIA’S BIGGEST UTILITIESSammy Roth, LA Times, January 25, 2019

CCAs have emerged as the primary buyers of renewable energy.  Clean Power Alliance is preparing to launch service to than one million homes and businesses across the Southland, including 29 cities and unincorporated areas in Los Angeles and Ventura counties.

MARIN ENERGY AGGREGATOR COULD BENEFIT FROM PG&E BANKRUPTCYRichard Halstead, Marin Independent Journal, January 27, 2019

Dawn Weisz of MCE, Shawn Marshall of LEAN US, and Severin Borenstein of UC Berkeley speculate about the impact of the PG&E bankruptcy on CCAs.

CALIFORNIA’S BIGGEST UTILITIES ARE LOSING THEIR MONOPOLIES. IS THAT A GOOD THING?Sammy Roth, LA Times, February 7, 2019

San Diego Gas & Electric has proposed that California should have a centralized power buyer that would allow the utility to offload any electricity-sales customers who aren’t served by a CCA.

BILL CONFUSION LEADS MANY TO DROP GREEN ENERGY SUPPLIER DESPITE CHEAPER RATESJulie Watts, KPIX (CBS Bay Area), February 9, 2019

Confusing bills, colder weather and chatter on social media have many in Livermore blaming their new green energy supplier for higher bills. That has prompted some to switch back to PG&E even though East Bay Community Energy is cheaper.

TEN THINGS TO KNOW ABOUT CCAs IN CALIFORNIAEQ Research, February 13, 2019

Consulting firm EQ Research runs down the top ten things to know about CCAs in California, including a focus on local development, lower costs, and their bankability in signing contracts.

BUSTING THE MYTH THAT CCAs DON’T SIGN LONG-TERM RENEWABLE ENERGY CONTRACTSNick Chaset, Guest content for Greentech Media, February 25, 2019

In a guest commentary for Greentech Media, EBCE CEO dispels the myth that CCAs are not contracting for new renewables. New data shows that CCAs have actually been busy contracting for over 2,000 megawatts of new renewable energy — with more to come.

East Bay Community Energy saves Alameda County Customers $3M in First 6 Months of Service

Alameda County, CA (February 7, 2019) – East Bay Community Energy (EBCE) is the new electricity provider for most of Alameda County, including Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, Union City as well as unincorporated areas of the county. EBCE’s standard service, called Bright Choice, costs 1.5% less than what is charged by PG&E. Scott Haggerty, Alameda County District 1 Supervisor and Chair of the Board, explains, “EBCE customers on the standard Bright Choice service, save money on their electricity bills each month compared to what they would have paid to PG&E even after factoring in PG&E’s Power Charge Indifference Adjustment exit fee. As a result, customers in Alameda County have saved nearly $3 million since EBCE service began in June 2018.”

EBCE serves more than 550,000 accounts across the county, which represent a population of nearly 1.4 million people. Residents were automatically enrolled in the service based on local city councils voting to join the EBCE program.

The PG&E bill can be confusing, and many residents may think they are being double charged or that their bill has increased. EBCE’s charge is a new item on PG&E bills, but it replaces what PG&E would have charged customers for generation service.  On the PG&E portion of the bill, residents will still see electric “Transmission” and “Distribution” delivery charges from PG&E, which have always been a part of the bill. They will also see a “Generation Credit” from PG&E for not buying their electricity and a “Power Charge Indifference Adjustment (PCIA),” or exit fee, from PG&E. On the EBCE portion of the bill, residents will see “Generation Charges” for the cleaner electricity procured by EBCE. EBCE has factored in the PCIA charge into its rate so that EBCE’s generation charges plus the PCIA fee are still lower than with PG&E.

If residents are finding that their most recent bill seems high, they should be aware that during the winter months it is common for energy usage to increase due to heating needs. Therefore, when comparing bills, it is important to consider the season and additional usage. In addition, residents should review the electric and natural gas portions of their bill separately. If they have gas heating, then their natural gas bill may be higher than it was in the warmer months.

EBCE has a sample bill online at ebce.org/residential-billing-page/ with instructions on how customers can compare EBCE charges to what they would have paid with PG&E. Here’s the quick math:

  1. Write down the “Generation Credit” from the PG&E Delivery portion of your bill. That’s what PG&E would have charged you for generation service.
  2. Now, calculate what you actually paid for generation service. Write down the Power Charge Indifference Adjustment and Franchise Fee (on the PG&E Delivery portion) amounts, and the Net Charges from the EBCE Generation page of your bill. Add those three items together.
  3. Compare the Generation Credit (what you would have paid) to the sum of the three EBCE-related charges (what you actually paid).

For customers on Bright Choice, the Generation Credit is greater than EBCE-related charges, showing the money you saved. For customers on Brilliant 100 (sourced from 100% carbon-free power including hydropower), the two numbers are equal. For customers on Renewable 100 (sourced from 100% renewable energy from wind and solar), the EBCE-related charges are a bit higher (1¢ per kilowatt-hour).

Customers are encouraged to contact EBCE with questions by calling 1-833-699-EBCE (3223) – customers can speak with a live representative from 7 AM to 7 PM Monday through Friday. For more information about EBCE, visit ebce.org.

About EBCE

EBCE is the local electricity provider created by the votes of 11 City Councils and the County of Alameda Board of Supervisors to provide low cost, cleaner power to our community. Launching to residential customers in November 2018, EBCE became joined 19 other Community Choice Energy programs across operating across California. Monthly board meetings are open to the public, and the list of Board Directors can be found at ebce.org/ebce-board-of-directors/.

EBCE Media Contact

Annie Henderson
ahenderson@ebce.org
510-640-9681