Memorandum
Date: July 14, 2026
To: The Honorable Brad Rasmussen, Chair, Lake County Board of Supervisors
From: Susan Parker, County Administrative Officer
Benjamin Rickelman, Deputy County Administrative Officer
Subject: 1:00 P.M. - Consideration of Ad Hoc Energy Policy Committee Recommendation to Pause Consideration of Community Choice Aggregator Membership Due to Potential Changes in the Power Charge Indifference Adjustment
Executive Summary:
1. The Ad Hoc Energy Policy Committee recommends the Board direct staff to issue a Request for Proposals for a County Energy Element with a companion Energy Policy developed in-house to secure community benefits from energy projects.
2. The Committee recommends continuing introductory meetings with potential energy developers and stakeholders ahead of any formal permitting application, with the understanding these meetings in no way replace existing Community Development Department permitting processes.
3. The Committee recommends pausing consideration of Community Choice Aggregator membership until the Third Appellate case and the CPUC’s Track 3 rulemaking are resolved, likely in 2027, at which point it will revisit the matter.
Background:
The Committee recommends the County develop two complementary tools for managing energy development. The first is an Energy Element, an optional element of the County General Plan (Government Code § 65303) that would govern where energy development goes. An Energy Element can establish overlay zones where energy projects are encouraged, incorporate a community visioning process, build in protections for scenic, agricultural, and Tribal areas, and integrate with County zoning so both the community and developers have predictability. Several California counties offer instructive models, including Imperial County’s Renewable Energy and Transmission Element, San Bernardino County’s Renewable Energy and Conservation Element, and Kern County’s system of by-right zoning paired with a standing community benefits program. Preparing an Energy Element is consultant-led work, and the Committee recommends the Board authorize the issuance of a Request for Proposals (RFP), financed from economic development funds.
The companion tool is an Energy Policy, a Board policy governing how the County secures community benefits when an energy project comes forward. Where the Energy Element addresses where projects should go, the Energy Policy addresses how the County negotiates: it would establish community-benefit terms, provide a repeatable template for negotiated development agreements, and be structured to remain defensible against a legal challenge that it operates as an unauthorized tax. Unlike the Energy Element, the Energy Policy can be developed in-house without a consultant.
On the project side, the Morgan Valley Wind Farm is the only energy project to have filed a permitting application with the County to date, though several entities are performing due diligence and may proceed to formal local and State permitting. The Committee has held high-level, introductory meetings, only, with potential energy developers. These meetings build relationships and County leverage ahead of any application and help to surface potential community concerns at an early stage. That groundwork matters because, for example, under AB 205, large projects (solar and wind of 50 megawatts or more, storage of 200 megawatt-hours or more, and geothermal of 50 megawatts or more) can opt into exclusive permitting at the California Energy Commission and bypass local entitlement entirely. Even then, the CEC must find that the project includes a community-benefits agreement and delivers a net-positive benefit to the host community, so early County engagement strengthens Lake County’s position under either permitting path.
The Power Charge Indifference Adjustment (PCIA) is a charge that PG&E collects from customers who leave PG&E’s generation service for a Community Choice Aggregator (CCA). Set annually by the California Public Utilities Commission (CPUC), it repays the utility for the long-term power contracts and generation it committed to before those customers departed, so that neither the customers who leave nor the customers who stay are made better or worse off by the other’s choice. Because Lake County is in PG&E territory, if the County joined a CCA its residents would pay the PCIA on their bills, and the size and predictability of that charge directly affect whatever savings a CCA could deliver.
In recent years the PCIA has become both larger and far less predictable. Between 2024 and 2026 the charge swung dramatically in size and even in direction, and the CPUC concluded that part of the volatility came from the formula itself, finding in 2025 that a key benchmark was flawed and vulnerable to manipulation. The CPUC opened a formal rulemaking (an Order Instituting Rulemaking, or OIR) to fix the methodology, and its first decision, Decision 25-06-049, issued in June 2025, rewrote a core piece of the calculation and pushed the 2026 charge sharply higher. A higher and more volatile PCIA narrows the savings a CCA can offer, so any savings projection for a Lake County CCA would need to be tested against an elevated and moving charge rather than the more favorable figures of recent years.
That decision is now being challenged in court. The California Community Choice Association (CalCCA), which represents the state’s CCAs, argues that the CPUC unlawfully applied the new methodology retroactively to rates that had already been set. After the CPUC denied its request for rehearing, CalCCA filed a petition with the Third Appellate District in December 2025 asking the court to reverse the decision. The timing of a resolution is uncertain: the court could decline to hear the case within a few months, but if it takes the case up, a full decision more realistically arrives sometime in 2027, with possible review by the California Supreme Court extending it further.
Meanwhile, the largest changes may still be ahead. The CPUC’s rulemaking is structured in
tracks, and Track 3, which is just getting underway, is intended to address the broader structural questions about how the PCIA is calculated and how costs are shared between utility and CCA customers. It has been described as the most consequential PCIA proceeding since the CPUC’s 2017 overhaul, with the utilities pushing for narrow fixes while the CCAs seek access to the confidential utility cost data that drives the calculation. Track 3 could reshape the entire cost framework, meaning the PCIA exposure of any CCA Lake County joins could look materially different a year or two from now, in either direction.
Taken together, an elevated 2026 PCIA, an active appeal unlikely to resolve before 2027, and a structural rulemaking just beginning mean the financial case for joining a CCA cannot be evaluated with confidence today. Both the Third Appellate case and the Track 3 OIR could be resolved in 2027, at which point the County would have substantially more confidence in the financial implications for its residents of joining a CCA. Pausing consideration until those outcomes are known and having the Ad Hoc Energy Policy Committee revisit the matter at that time, should provide significantly more confidence in providing a recommendation for membership.
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Recommended Action:
1. Authorize the issuance of a Request for Proposals for a County Energy Element, financed from economic development funds, with the companion Energy Policy to be developed in-house.
2. Direct the Ad Hoc Energy Policy Committee to continue holding introductory meetings with potential energy developers and stakeholders ahead of any formal application, with the understanding these meetings in no way replace existing Community Development Department permitting processes.
3. Pause consideration of joining a Community Choice Aggregator until the Third Appellate case is resolved and the Track 3 OIR is issued, at which point the Ad Hoc Energy Policy Committee reconsiders the matter and provides a recommendation.