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January 29, 2007

KRCD SELECTS CITIGROUP AS ENERGY PROVIDER TO NEW REGIONAL ENERGY PROGRAM State's first Community Choice Implementation Plan Submitted

Fresno, CA – An innovative energy program is one step closer to becoming a reality with the announcement by the Kings River Conservation District (KRCD) of the selection of Citigroup to supply energy to the San Joaquin Valley Power Authority’s (Authority) Community Choice program and with the submission of the State’s first Community Choice Implementation Plan on Monday (January 29).

“Citigroup brings to the table a highly qualified team backed by the largest financial services firm in the world,” said Orth. “KRCD is pleased that Citigroup has become our partner in making Community Choice a success.” As a pre-eminent fortune 500 financial services company, Citigroup maintains the highest ratings of any domestic bank with extensive experience in managing significant energy portfolios.

KRCD is negotiating a term sheet with Citigroup to supply energy to future Community Choice customers and to meet the program’s objectives. “Citigroup has demonstrated their commitment to the objectives of Community Choice of providing a reliable, affordable energy supply,” stated Dave Orth, KRCD’s General Manager and the Authority’s program manager.

KRCD’s selection of Citigroup resulted from a competitive bid process that started in September 2006 when KRCD issued a Request for Bid. The final bids were evaluated on five criteria set forth in the bid including: pricing, financial viability, operational experience, reliability and environmental attributes of proposed power supply, and an understanding of program requirements

Citigroup was selected based primarily on price advantage, demonstrated understanding of the program, and expressed commitment to the success of the program. “They were able to commit to a pricing structure that would ensure costs were predictable and stable which is critical to the success of Community Choice,” stated Orth.

Citigroup will provide initial power to the program through a contract with KRCD. Once KRCD’s Community Power Plant begins operations at the end of 2010, it will be integrated into the program’s energy portfolio. KRCD is proposing to develop, construct and operate a 500-megawatt, base-load, natural gas-fired power plant. KRCD is currently conducting pre-permitting activities for the Community Power Plant. The plant is being sited south of the Parlier Wastewater Treatment Plant on Bethel Avenue between Manning and Dinuba Avenues.

KRCD also submitted on behalf of the Authority the first Community Choice Implementation Plan in the State. The implementation plan will address all of the requirements set forth by the California Public Utilities Commission (CPUC) and Assembly Bill 117, the law enacting Community Choice Aggregation, including organizational structure, program implementation, resource plan, rate setting and participant rights and responsibilities.

There will be four phases to Community Choice implementation. During Phase 1, the program will serve the participating municipalities’ own electrical loads. Phase 2 will incorporate large commercial and industrial customers. Phase 3 will add medium commercial accounts, and Phase 4 will include all remaining accounts including residents and small businesses. It is anticipated that all customers will be phased into the program by late 2008.

The Authority will provide policy direction in implementation and management of the Community Choice program, including the setting of electrical generation rates for customers. Transmission and distribution rates will still be set by the investor-owned utilities, PG&E and SCE. The Authority’s rates have been conservatively projected to result in a 5 percent savings on generation costs. The region’s cumulative savings over a 20-year period are estimated at over $780 million.

California Assembly Bill 117, passed in 2002, allows cities and counties to combine the electrical loads of their constituents for bulk electricity purchases. An opt-out structure is provided for customers that choose to continue buying power directly from the investor-owned utility. For customers participating in a Community Choice program, the local utility company will continue to deliver the electricity purchased by the regional Community Choice program through its wires and will also continue to provide meter reading, billing and customer services.

The Authority was formed in November 2006 to develop and conduct electricity-related programs for the region. For the last several years representatives from the Authority’s founding members have been working together with KRCD to develop an innovative energy program, Community Choice, which will reduce costs, increase energy reliability and bring additional renewable energy resources to valley residents and businesses. Community Choice is an opportunity to participate in the planning and development of the region’s energy future.

For more information about the Authority’s Community Choice program, visit www.communitychoice.info. To download the implementation plan, please use the following direct link: http://www.communitychoice.info/_pdf/Implementation_Plan.pdf. Please note that the file size is 32 megabytes and may take a few minutes to download.

San Joaquin Valley Power Authority Member Agency List: Kings County, cities of Clovis, Corcoran, Dinuba, Fresno, Kerman, Kingsburg, Lemoore, Hanford, Parlier, Reedley, Selma, and Sanger.

The Kings River Conservation District is a public agency that serves agricultural, business, and community residents within 1.2 million acres in portions of Fresno, Kings and Tulare counties since 1951. KRCD is a leading resource management agency in the areas of water, power and the environment for the Kings River service area. For more information about KRCD, visit www.krcd.org.

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