Reduced Power Use Impacts RCEA Budget

Humboldt County’s decrease in energy use is a financial challenge for the Redwood Coast Energy Authority (RCEA), whose power sales revenues are under what the agency forecasted and budgeted for.

Short term and long term financial scenarios were presented to the authority’s board of directors at its May 22 meeting.

A trend of reduced revenue has RCEA reconsidering something it’s explored in the past – having nearby counties join its customer base.

Short of that, supply and demand dynamics are kicking in and reduced energy demand will lead to lower customer rates.

But that means less revenue, as explained by RCEA Planning and Finance Director Lori Biondini.

“Overall, the energy we’re delivering and has been paid for has been down,” she said. “We have lower revenues because we have a decreased load and we also have, probably, a drop in rates.”

Summarizing levels of expenses and income, Biondini added, “costs are a little bit up and retail revenues are a lot down.”

The imbalance is expected to be more striking in the 2026 to 2027 fiscal year, when the RCEA’s budget is projected to dip into the negative.

Power Resources Director Richard Engel noted that the current fiscal year’s financial scenario is actually improved from last year but is “down pretty significantly” compared to the previous financial report in February.

That’s due to a reduction in RCEA’s number of customer accounts, Engel continued.

From late 2022 to late 2024, the agency’s number of residential and non-residential accounts dropped by about 2.5 percent.

It’s not because people are “opting out” of RCEA, Engel said.

“It’s not that our market share slice of the pie is shrinking, it’s that the whole pie is shrinking,” He continued. “It’s just that the number of electric accounts in Humboldt County overall, that we could potentially have, is going down.”

The decrease in power use is greater than the decrease in accounts would suggest.

“It does seem like the loss of customer accounts might have been tilted towards larger customers,” Engel said. “The actual load decrease over that same two-year period was more on the order of 12 percent.”

And that reflects the condition of the county’s economy, particularly its former economic linchpin.

The drop is noticeable in Arcata, where a utility users tax was first approved by voters in 2016. The tax amount increases sharply on those whose energy use goes 600 percent over a baseline threshold and Engel said RCEA’s “high user tax revenue” dropped fairly quickly, from hundreds of accounts to about two dozen.

Some high energy users, such as Sun Valley Floral Farms, have gone out of business, which Engel described as “a chunk to lose.”

Another emerging factor is related to recent federal government changes, with termination of commercial leases for some federal offices.

The most energy-intensive future project on Humboldt’s radar is the Nordic Aquafarms indoor fish farm but as noted by Engel, “Their timeline for actually building out their facility is being pushed out by probably several years so we can’t really expect that to come in and make up for lost load too soon.”

RCEA is a Community Choice Aggregation (CCA) agency. CCA programs allow local government agencies to buy power and sell it to local customers.

Some CCA agencies are seeking to expand their customer bases.

“What we’ve seen as the changer now is existing CCAs expanding into neighboring counties,” Engel said.

That’s been considered in the past by RCEA and with limited revenue now and into the future, it could become more likely.

Boardmember and County Supervisor Natalie Arroyo said she’s “interested in hearing more about that” as it’s “strategic” to do so in the context of the revenue drop.