A Community Choice Aggregation (CCA) company founded to source power for multiple cities in Southern California’s Riverside County has filed for bankruptcy because of increased costs and decreased revenue during the COVID-19 pandemic.
Western Community Energy (WCE) is a Joint Powers Authority (JPA) consisting of the cities of Eastvale, Hemet, Jurupa Valley, Norco, Perris and Wildomar. The JPA was formed last year to develop a CCA program and purchase energy on behalf of residents and businesses as a “low cost alternative” to Southern California Edison (SCE) electricity.
The company’s board of directors declared a “financial emergency” and authorized its legal counsel to file for Chapter 9 bankruptcy protection on May 24th. In a press release, WCE reported that “several external factors” have impacted the company’s financial position since the program ended in April 2020, at the start of the COVID pandemic.
Last August, California experienced “an unprecedented heat event” that, according to the WCE, resulted in significantly higher electricity demands and an increase in energy costs.
“Although WCE had secured 90 percent of its electricity needs for the summer of 2020, the heat storm prematurely exhausted the forecast supplies,” the statement said. “In the 2020 summer season, the unexpectedly warm weather resulted in additional energy costs of $ 12 million.”
In addition, a tightening of the state requirements for the adequacy of resources has led to a scarcity of the market, “which significantly increases the costs of compliance with the regulations”.
WCE said it lost revenue because many customers failed to pay their bills during the COVID-19 pandemic under a mandate from Governor Gavin Newsom. SCE also blamed Newsom for its mandate “that no customers should be disconnected for non-payment of their electricity bills during the pandemic”. The contract was implemented by the California Public Utilities Commission (CPUC).
“Last year, outages averaged ten times higher than pre-pandemic industry standards and cost WCE millions of dollars in additional cost,” WCE explained.
WCE Chairman Todd Rigby said the ongoing impact of the pandemic “severely limited the organization’s ability to move forward” and forced the company to take bankruptcy measures.
“Chapter 9 Protection gives us the opportunity to restructure the organization and reorganize our finances. We look forward to working with our lawmakers, the governor and other parties to find a way forward for WCE, ”Rigby said in a news release.
WCE assured its customers that there will be no service disruptions due to the bankruptcy and said they will keep them informed of the restructuring of their debt.