Finance committee forwards Santa Barbara Clean Energy rate policy changes to council after staff outlines $14 million shortfall

The Santa Barbara City Finance Committee voted unanimously Feb. 11 to forward to the City Council a staff recommendation to maintain Santa Barbara Clean Energy’s (SBCE) current generation rates rather than follow recent Southern California Edison (SCE) reductions, and to use reserves and targeted cost cuts to narrow a projected fiscal-year 2026 deficit.

SBCE Sustainability and Resilience Director A'Lelia Parenteau told the committee the program faces a roughly $14 million projected deficit in FY 2026 under its current rate-setting formula after two recent SCE rate reductions (one in October 2024 and another in January 2025). Parenteau said staff recommends holding SBCE’s generation rates steady — allowing a premium up to 3.6 cents per kilowatt-hour over SCE for the SBCE 100% green product — combined with $3 million from rate-stability reserves and $5 million in cost reductions to reduce the FY 2026 shortfall to about $3 million.

The recommendation would preserve SBCE’s Green Start product at parity with SCE’s base rate and keep the program’s default 100% green product priced at a fixed premium rather than moving down with SCE’s recent cuts. Parenteau told the committee SBCE has sufficient reserves to cover the proposed approach in FY 2026 but that doing nothing would deplete the program’s reserves and leave it vulnerable to future shortfalls.

Why it matters: SBCE is the city’s community choice aggregation program that has operated since 2021. Its rate-setting formula ties SBCE prices to SCE’s base rate; when Edison’s rates fall, SBCE’s revenues can fall while SBCE’s forward power procurement contracts remain fixed. Parenteau said that…