PRESS RELEASE: Western Community Energy Files for Chapter 9 Bankruptcy Protection to Restructure Organization’s Financial Obligations

State mandates related to COVID-19 and increasing power costs due to state renewable energy requirements cause WCE to seek Chapter 9 Bankruptcy protection and reorganize finances.

FOR IMMEDIATE RELEASE: May 24, 2021

RIVERSIDE, California – On Monday, the Western Community Energy (WCE) Board of Directors approved a resolution declaring a fiscal emergency and authorized its legal counsel to move forward with the filing of a Chapter 9 Bankruptcy petition to allow for the restructuring of WCE’s financial obligations.  Several external contributing factors have impacted WCE’s financial situation since the program was implemented at the beginning of the COVID-19 Pandemic in April 2020.

In August 2020, California experienced an unprecedented heat event, which resulted in substantially higher power needs and a spike in the cost of energy.  Although WCE had secured 90% of its electricity needs for the summer of 2020, the heat storm exhausted the projected supplies prematurely.  An additional $12 million in energy costs were incurred throughout the 2020 summer season due to the unanticipated warm weather.  Additionally, a tightening of the requirements of the State of California for Resource Adequacy (RA) created a shortage in the market, significantly increasing the cost of regulatory compliance. 

Additionally, the Governor of California issued an order during the COVID-19 Pandemic, implemented by the California Public Utilities Commission, mandating that no customers could be disconnected due to non-payment of their utility bills.  Over the last year, delinquencies average ten times higher than pre-Pandemic industry standards and have cost WCE millions of dollars in added cost burden.

“The ongoing impacts of COVID-19 severely limited the organization’s options moving forward and forced today’s action,” said Todd Rigby, Chairperson of WCE.  “Chapter 9 protection gives us the opportunity to restructure the organization and reorganize our finances.  We look forward to working with our legislators, the Governor, and other parties to identify a pathway forward for WCE.”

Customers of WCE will not experience any service disruptions as a result of today’s actions and WCE will continue to keep customers updated as more information becomes available.

WCE has engaged the law firm of Weiland Golden Goodrich, LLP, to help the organization through the Chapter 9 process.  Goodrich specializes in bankruptcy proceedings and has a combined 135 years of experience in managing Chapter 9 petitions.

The Chapter 9 petition has been filed with the Federal Bankruptcy Court for the Central District of California.  Following the filing, WCE will proceed through the bankruptcy process to work with potential lenders, creditors and regulators to adjust WCE debt and operations and protect the interests of its customers.  The process is estimated to take approximately six months.

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About Western Community Energy

Western Community Energy (WCE) is a joint powers authority, consisting of the Cities of Eastvale, Hemet, Jurupa Valley, Norco, Perris, and Wildomar, and was formed for the purpose of developing a Community Choice Aggregation (CCA) Program that purchases energy on behalf of its residents and businesses to offer a cost competitive alternative to electricity rates. A CCA provides the community choices when it comes to energy mixes and programs, while providing local control over rate setting. For more information, please visit westerncommunityenergy.com.

Work to form WCE began in 2016, with the development of a Feasibility Study that examined the viability of moving forward with a CCA by looking at the energy markets and the costs associated with purchasing power on behalf of its customers. As a result of the findings that a CCA would be feasible, WCE was formed as a new program.

WCE aims to provide its customers:

  • Competitive, often lower, electricity rates
  • A cleaner, more efficient energy supply
  • Consumer choice, consumer protection, and local control over rate setting and programs
  • Local jobs creation and local power resiliency
  • Opportunities to develop future complementary energy programs such as net energy metering, energy efficiency retrofits, distributed rooftop and community solar, electric vehicle incentives and demand response technologies
  • New renewable power development

 

About Community Choice Aggregation (CCA) Programs

A CCA is a model that allows communities to aggregate its power and then purchase to meet the needs of its community, offering an alternative choice in the market—often the only alternative to sourcing power from the investor owned utility (IOU). CCAs can provide the communities they serve with competitively priced, clean energy choices while reinvesting revenues into projects and programs that support the local economy.

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FREQUENTLY ASKED QUESTIONS

Please see below Frequently Asked Questions for more information.  Customers can also contact Elisa Laurel at (951) 206-4498 or elaurel@wrcog.us for more information.

What is Chapter 9 Bankruptcy and why did WCE file for it?

A: Chapter 9 Bankruptcy gives municipalities the ability to restructure and examine opportunities to move forward and continue providing service to their constituents.

This decision was made based on multiple factors including last summer’s unprecedented heat wave which depleted supplies and drove up costs, along with rising energy costs due to state renewable energy requirements, and the Governor’s COVID-19 mandate that no customers could be disconnected due to non-payment of their utility bills. Over the last year, delinquencies averaged ten times higher than pre-Pandemic industry standards and have cost WCE millions of dollars in added cost burdens. Based on these factors, Chapter 9 Bankruptcy was the best option for WCE to restructure its finances.

How will the Chapter 9 Bankruptcy impact WCE customers?

A: WCE customers will not experience any service interruptions as a result of the Chapter 9 Bankruptcy filing. WCE will update customers throughout the Chapter 9 Bankruptcy process.

How will WCE keep customers updated?

A: WCE will continue to keep customers updated as information becomes available. Customers can also visit the WCE website for updated information or call the WCE customer service number at (866) 356-4175.