Community Choice Aggregation

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Community Choice Aggregation, abbreviated CCA, also known as Community Choice Energy (CCE), municipal aggregation, governmental aggregation, electricity aggregation, and community aggregation, is an alternative to the investor owned utility energy supply system in which local entities in the United States aggregate the buying power of individual customers within a defined jurisdiction in order to secure alternative energy supply contracts.[1] The CCA chooses the power generation source on behalf of the consumers. By aggregating purchasing power, they are able to create large contracts with generators, something individual buyers may be unable to do. The main goals of CCAs have been to either lower costs for consumers or to allow consumers greater control of their energy mix, mainly by offering "greener" generation portfolios than local utilities. Currently CCAS are possible in the United States states of Massachusetts, Ohio, California, Illinois, New Jersey, New York, and Rhode Island, and served nearly 5% of Americans in over 1300 municipalities as of 2014.[2]

How CCAs Function in Electricity Distribution[edit]

Figure 1: How CCAs interact with utilities and consumers[3]

CCAs are local, not-for-profit, public agencies that take on the decision-making role about sources of energy for electricity generation. Once established, CCAs become the default service provider for the power mix delivered to customers. In a CCA service territory, the incumbent utility continues to own and maintain the transmission and distribution infrastructure, metering, and billing. In some states, CCAs may be considered de facto public utilities of a new form that aggregate regional energy demand and negotiate with competitive suppliers and developers, rather than the traditional utility business model based on monopolizing energy supply.

Significance[edit]

CCAs have set a number of national green power and climate protection records while reducing power bills, a rare combination that has won National Renewable Energy Laboratory (NREL) and Environmental Protection Agency (EPA) recognition for achieving significantly higher renewable energy portfolios while maintaining rates that are competitive with conventional fossil and nuclear-based utility power. Several major U.S. population centers under CCA have switched to energy portfolios that are an order of magnitude greener than local utilities or other direct access providers, but charge no premium above utility or direct access rates. CCAs are therefore already conspicuous leaders in green power innovation, receiving U.S. Environmental Protection Agency’s “green power leadership awards” for achievements in renewable energy (MCE Clean Energy; Oak Park, IL, Cincinnati, OH). Newer CCAs in California like Sonoma Clean Power and San Francisco's CleanPowerSF are increasingly focused on using the policy as a platform for financing and integrating a transition to local renewable energy sources rather than grid power.[4]

Policy Basis for CCAs[edit]

In the US, CCAs are permitted in seven states: Massachusetts, Ohio, California, Illinois, New Jersey, New York, and Rhode Island,[5][6] but are only present in the first six.[5] States must first pass legislation allowing for the formation of CCAs before an aggregate can form. Currently, only states with electric deregulation have passed such legislation.[5] This is a natural progression as electricity deregulation separates the functions of electricity generation from transmission and distribution allowing consumers to choose their electricity generator. This separation then allows for CCAs to choose the electricity generation mix on behalf of consumers without having to establish the infrastructure to move electricity. However, only 17 states and the District of Columbia have deregulated markets.[7] The remaining 33 states are considered regulated, where utilities retain a monopoly on generation, transmission, and distribution of electric power.[7]

Legal Authorization for Community Choice Aggregation[8]
State Year Authorizing Legislation Authorizing Legislation Name
Massachusetts 1997 M.G.L. ch.93A §1 Utility Restructuring Act of 1997
Ohio 2001 Local Ballot Measure N/A
California 2002 Assembly Bill 117 N/A
Illinois 2002 (residential) 220 ILCS 5/Art. XVI Electric Service Customer Choice and Rate Relief Law of 1997
New Jersey 2003 Assembly Bill 2165 Government Energy Aggregation Act of 2003
New York 2016 PSC Case 14-M-0224 Order Authorizing Framework for Community Choice Aggregation Opt-Out Program
Rhode Island 1996 RIPUC No. 8124 Utility Restructuring Act of 1996

Early days[edit]

In Massachusetts, where the nation's first CCA bill (Senate 447, Montigny) was first drafted by Massachusetts senate energy committee director Paul Douglas Fenn in 1995[9] and enacted in 1997,[10] the locales of Cape Cod and Martha's Vineyard formed the Cape Light Compact and successfully lobbied for passage of the seminal CCA legislation. Two of the Cape Light Compact founders, Falmouth Selectman Matthew Patrick and Barnstable County Commissioner Rob O'Leary, were subsequently elected to the Massachusetts House of Representatives and Senate respectively. Between 1995 and 2000, Fenn formed the American Local Power Project and worked with Patrick to draft and pass similar laws in Ohio, New Jersey, and other states.[11]

Former FERC Commissioner Nora Brownell has called Community Choice Aggregations “the only great exceptions to the failure of electric deregulation in the U.S.” With every CCA yet formed still in operation and charging ratepayers less per kilowatt hour than their Investor-Owned-Utilities, CCAs have proven to be reliable and capable of delivering greener power at competitive prices. Ohio’s Office of the Consumer’s Council has said that CCA is “the greatest success story” in Ohio’s competitive market, and new legislation to re-regulate utility rates in Ohio will preserve CCA even if other forms of competition are eliminated. In Massachusetts, the success of the Cape Light Compact has led to the formation of new CCAs used in towns such as Marlborough, Massachusetts.

Massachusetts[edit]

The nation's first CCA, the Cape Light Compact, currently serves 200,000 customers, running aggressive and transparent energy efficiency programs and installing solar installations on Cape Cod schools, fire stations and libraries.[12]

Many other towns and cities have now formed CCAs or are working to complete the initial process.

Ohio[edit]

In Ohio, the nation's largest CCA was formed shortly after 1999 when the state legislature adopted a CCA law - the Northeast Ohio Public Energy Council (NOPEC), made up of approximately 500,000 customers in 138 cities and towns across eight counties, procured a power supply contract that switched electric generation fuel supply from a mix of coal and nuclear power to a mix of natural gas and a small percentage of renewably powered electricity, announcing a 70% air pollution reduction in the region's power mix. The contract also included solar photovoltaic demonstration projects in each of the eight counties. NOPEC's contracting process was led by Scott Ridley, an energy consultant who had worked with Fenn to develop Community Choice Aggregation in Massachusetts and was a consultant for the Cape Light Compact.

California[edit]

Overview[edit]

In 2002, California State Legislature passed Assembly Bill 117, enabling CCA.[13] The Bill allowed CCAs, and mandated that customers be automatically enrolled in their local CCA, with an option to opt out. The law also makes the clarification that, in California, CCAs are by legal definition not utilities, and are legally defined in California law as electric service providers.[2]

In the early days of the California energy crisis, Paul Fenn, the Massachusetts Senate Energy Committee director who conducted the legal research and drafting of the original CCA legislation, formed Local Power Inc. and drafted new CCA legislation for California.[14] In a campaign organized by Local Power, the City and County of San Francisco led Oakland, Berkeley, Marin County, and a group of Los Angeles municipalities in adopting resolutions asking for a state CCA law in response to the failure of California's deregulated electricity market. Fenn's bill was sponsored by then Assembly Member Carole Migden (D-San Francisco) in 2001, and the bill became law (AB117) in September, 2002.[15]

CCA formation in California was delayed by initial political opposition by the state's investor-owned utilities. In June 2010, Pacific Gas & Electric sponsored a proposition, Proposition 16, to make it more difficult for local entities to form either municipal utilities or CCAs by requiring a two-thirds vote of the electorate rather than a simple majority, for a public agency to enter the retail power business.[16] Although PG&E contributed over $46 million in an effort to pass the initiative (Prop 16's opponents, led by Local Power Inc. and The Utility Reform Network,[17] had access to less than $100,000),[18][19] Proposition 16 was defeated.

San Francisco adopted a CCA Ordinance drafted by Fenn (86-04, Tom Ammiano) in 2004, creating a CCA program to build 360 Megawatts (MW) of solar, green distributed generation, wind generation, and energy efficiency and demand response to serve San Francisco ratepayers using solar bonds.[20] Specifically, the ordinance combined the power purchasing authority of CCA with a revenue bond authority also developed by Fenn to expand the power of CCA, known as the H Bond Authority (San Francisco Charter Section 9.107.8, Ammiano), to allow the CCA to finance new green power infrastructure, worth approximately $1 Billion. In 2007 the City adopted a detailed CCA Plan also written primarily by Fenn (Ordinance 447-07, Ammiano and Mirkarimi), which established a 51% Renewable Portfolio Standard by 2017 for San Francisco.[21] Over the following decade, Sonoma and San Francisco worked with Fenn's company, Local Power Inc. on program designs focused on achieving energy localization through renewables and energy efficiency.[22]

Inspired by Climate Protection efforts, CCA has spread to cities throughout the Bay Area and the state. In 2007, 40 California local governments were in the process of exploring CCA, virtually all of them seeking to double, triple or quadruple the green power levels (Renewable Portfolio Standard, or "RPS) of the state's three Investor-Owned Utilities.

In April, 2014, Assemblymember Steve Bradford (D-Gardena) introduced legislation (AB 2145) that would sharply limit the ability of CCAs to enroll customers. CCA advocates and a broad coalition of local governments, business, and environmental organization rose up in opposition and defeated AB 2145.[23] AB 2145 passed in the California Assembly but died in the Senate on August 30, 2014 when the Senate's legislative session was ended without it coming up for a vote.[24] Regulators hold a hearing in 2017.[25][26]

Marin Clean Energy[edit]

Marin County launched California's first CCA program, Marin Clean Energy, on May 7, 2010, offering 50%-100% renewable energy at competitive prices. Marin Clean Energy (MCE) now serves approximately 255,000 customers in Marin County, Napa County and the cities of Benicia, El Cerrito, Lafayette, San Pablo, Richmond, American Canyon, Calistoga, Lafayette, Napa, St. Helena, Walnut Creek, Yountville, Concord, Danville, Martinez, Moraga, Oakley, Pinole, Pittsburg, and San Ramon.

As California's first CCA program, MCE is charting the course for a new, highly innovative approach to electricity service in the Bay Area. The organization's mission is to reduce energy-related greenhouse gas emissions by expanding access to affordable, renewable energy and energy efficiency programs while creating local economic and workforce benefits.

Sonoma Clean Power[edit]

The Sonoma County-based Center for Climate Protection formally introduced the idea of pursuing CCA in Sonoma County in the 2008 Community Climate Action Plan.[27] In 2011, the Sonoma County Water Agency funded the production of a feasibility study to study the question. The feasibility study was favorable and after much public review and the formation of a Joint Powers Authority to administer the agency, Sonoma Clean Power launched service on May 1, 2014[28] offering power that is both greener and more locally sourced, at a lower cost than incumbent utility PG&E.[29][30] The County and all eight eligible cities in the county eventually joined. This includes Cloverdale, Cotati, Petaluma, Rohnert Park, Santa Rosa, Sebastopol, Sonoma, and Windsor.[31]

In 2016 Mendocino County voted to join Sonoma Clean Power and the Sonoma Clean Power governing board voted to accept Mendocino County and the cities of Fort Bragg, Willits, and Point Arena into the Joint Powers Authority.

Silicon Valley Clean Energy[edit]

Silicon Valley Clean Energy (SVCE) launched its operation on April 3, 2017 by providing 100% GHG free electricity to 12 Silicon Valley communities, including Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, Mountain View, Saratoga, Sunnyvale and unincorporated County of Santa Clara. https://www.svcleanenergy.org/about-us

Lancaster Choice Energy[edit]

Lancaster Choice Energy (LCE) began providing renewable power to municipal accounts in May 2015 with broad public enrollment beginning in October. So far[when?] the city of Lancaster, California has offset almost 70% of its peak load (147 Megawatts) with renewable sources of energy. Lancaster aims to become the first net-zero city in the U.S., Lancaster is determined to generate more clean energy than it consumes, along with several private-sector partners. The City has established new rules for building more efficient, sustainable structures.[32]

As of the end of its first full year of operations in 2016 Lancaster Choice Energy had 55,000 accounts in the City of Lancaster. LCE customers receive a minimum of 36% renewable energy through the standard Clear Choice product, with many opting up to 100% renewable Smart Choice. In addition, LCE’s first solar energy plant is now live. Built by sPower, the plant provides 10 MW of power produced in Lancaster directly for Lancaster residents and is enough to power approximately 1,800 homes.[33]

Peninsula Clean Energy

Peninsula Clean Energy (PCE) (https://www.peninsulacleanenergy.com/) was formed in February 2016 by unanimous votes of the County of San Mateo and all 20 incorporated cities and towns in the County.[34] It began supplying power to customers in the Fall of 2016 and is currently the largest community choice energy program in California.[35]

As of June 2017 it was offering its customers a baseline product that is both cleaner (at least 50% renewable and 75% greenhouse gas free) and at a lower cost than the incumbent utility, PG&E.[36] As of June 2017 it was also offering its customers a 100% renewable product that was significantly less expensive than PG&E’s 100% renewable product.

East Bay Community Energy[edit]

East Bay Community Energy, also abbreviated EBCE, ebce.org, was formed in October 2016 by Alameda County and the cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Oakland, Piedmont, San Leandro, and Union City.[37] East Bay Community Energy plans to begin providing electricity in June 2018 for commercial and municipal customers and November 2018 for residential customers.[38]

As of April 2018, EBCE plans to offer customers two energy services. Their Bright Choice service intends to use approximately the same amount of clean energy sources as Pacific Gas and Electric Company (PG&E) but it costs less. Their Brilliant 100 option service is greener and uses more renewable energy than PG&E electricity at the same price. A third service is planned to be launched in November 2018 and hopes to use 100& renewable energy and offered at a cost just above the PG&E rate.[39]

California Community Choice Association[edit]

In 2016 the six existing Community Choice agencies: MCE Clean Energy, Sonoma Clean Power, Lancaster Choice Energy, CleanPowerSF, Peninsula Clean Energy, and Silicon Valley Clean Energy formed a 501(c)(6) non-profit trade association, the California Community Choice Association, Cal-CCA. Cal-CCA held its first meeting in San Francisco on October 20, 2016.

According to the Clean Power Exchange, a project of the Center for Climate Protection that tracks Community Choice expansion in California, by the close of 2016, 26 of the 58 counties in California either had operating CCAs, were on schedule to launch service, or were at some earlier stage of evaluation. Over 300 cities are similarly engaged in operational or emerging CCAs.[40]

San Jose Clean Energy[edit]

On May 16, 2017 San Jose City council approved the creation of San Jose Clean Energy, making San Jose the largest city in California to adopt a CCA.[41]

Monterey Bay Community Power[edit]

Monterey Bay Community Power (MBCP) procures carbon-free electricity for Monterey, San Benito, and Santa Cruz Counties, including all cities except Del Rey Oaks and King City which chose not to participate. MBCP began serving commercial customers in March 2018, with residential service beginning July 2018. MBCP matches PG&E rates and by default offers a 3% rebate on generation charges. MBCP is the only multi-county CCA in California, and it is geographically the largest. https://www.mbcommunitypower.org/

Emerging CCAs in California[edit]

Multiple cities across the state of California are considering the implementation of Community Choice aggregation programs across their districts, and many will begin to launch their program in 2018. [42] California has many cities who are anticipated to launch CCAs in 2018, this includes Los Angeles County, Placer County, and Alameda County. There are also other cities who are exploring and in the process of implementing CCA, this includes San Diego County, Fresno County, and San Luis Obispo County.

Illinois[edit]

The state of Illinois adopted a CCA law in 2009, which has led to an increase of communities providing electricity services to over 2/3 of the state's population as of 2014, including the city of Chicago, whose mayor Rahm Emanuel is focusing the program on reducing coal power production and increasing renewable energy.[43]

As of October 2013, 671 Illinois cities and towns (representing 80% of the state's residential electricity market) have utilized CCA.[44]

By the end of 2013, 91 local governments in Illinois (representing 1.7 million state residents) used the state's 2009 CCA law to purchase 100% renewable electricity for their communities.[45]

New Jersey[edit]

New Jersey adopted a CCA law in 2003, but did not see active formation of aggregations until 2013, when Bergen County, Passaic County, and fifteen other cities and counties started CCA programs, focused on both lowering electric bills and in some cases greening their power supply, or both.[46]

New York[edit]

The New York State Public Service Commission (PSC) has identified CCA as consistent with the stated goals of the regulatory reform "Reforming the Energy Vision” (REV),[47] and has stated that local energy planning helps municipalities benefit from distributed energy resources enabled by REV.[48] CCA legislation had been filed in the New York State Assembly in February 2014,[49] followed by Governor Andrew Cuomo's order directing the PSC to implement CCA directly under its own authority in December 2014.[50]

In December 2014, non-profit organization Sustainable Westchester submitted a petition to the PSC on behalf of its member municipalities to implement a CCA demonstration program in Westchester County.[51] The PSC granted the Order on February 26, 2015 authorizing Sustainable Westchester to put out an RFP and award contracts for both electric and natural gas supply for residents and small businesses within municipalities in the county that pass a resolution to join the CCA: "The Sustainable Westchester pilot is expected to provide valuable experience on CCA design and outcomes that, in addition to the many comments in that proceeding, will assist the Commission in making a determination on statewide implementation of CCA."[52]

The program launched in 2015, becoming the first operational CCA in New York State.[53] Similar local CCA organizing efforts are underway in Ulster County, Sullivan County, Hudson Highlands, and other communities.[54]

Rhode Island[edit]

The Utility Restructuring Act of 1996 deregulated the utility market within Rhode Island, allowing consumers to choose their electricity generation supplier and CCAs to form.[55] While this act allowed for the creation of CCAs, there are currently no residential or small business CCAs available for private consumers to join. The only CCA option is for municipal facilities.

Rhode Island Energy Aggregation Program (REAP)

The Reap program “is operated by the Rhode Island League of Cities & Towns and serves 36 of Rhode Island’s 39 municipalities and four school districts”.[6] The Reap program facilitated the purchase of electricity by the municipal entity by submitting requests for proposals, reviewing bids from approved electricity generators, and selecting companies that they believe will be the ideal provider for each municipality. The program reported in 2012 it had achieved cost savings of 20-30% over the standard offer.[6]

Advantages and Disadvantages[edit]

There are advantages and disadvantages associated with the implementation of Community Choice Aggregation across different localities. CCA provides benefits like providing a customer choice, reduced energy costs, renewable energy, and environmental benefits. [56]

By providing customer choice, customers have the ability to be enrolled in CCA or maintain their current utility provider. Customers are automatically enrolled in the program but they can choose to opt out of it. CCAs reduce energy costs, lowering rates for customers. This also increases the use of affordable renewable energy, provided through wind, solar, and geothermal steam. This provides environmental benefits for communities because it reduces natural gas consumption and greenhouse gas emissions.[57]

There are also disadvantages associated with the implementation of CCAs. Potential issues associated with the implementation include political and financial obstacles. CCAs can encounter groups lobbying against its implementation, setbacks from IOUs, exit fees, and even disadvantages associated with the opt out choices.

On the political level, local government can be opposed by groups and organizations. An example of this is when the IOU Pacific Gas and Electric Company opposed the creation of CCA by supporting California Proposition 16 in 2010, which would make it difficult for California to implement CCAs across the state.[58] Another utility provider who took action was San Diego Gas & Electric who attempted to stop local government from implementing Community choice aggregation programs. SDG&E created a separate entity, Sempra Energy, that would allow them to lobby against CCAs in San Diego County. [59]

Other issues that can arise from the development of community choice aggregation include the development of exit fees, specifically in the state of California. This is an issue for CCAs in the state of California because it allows Investor-owned utility (IOU) to raise prices through a Power Charge Indifference Adjustment (PCIA) [60], [61] making it more expensive for customers to join CCA programs because there will be a fee to customers when they choose to stop using bundled services provided by their utility provider and start using a CCA program. The main issues revolving PCIA is the transparency of the program, accountability of the agencies, and proper valuation of costs associated with the exit fees. Exit fees are put on CCA users to compensate for the cost that would be put on those remaining with IOU services.[62]

Costs such as the exit fees and increased rates can be a disadvantage as CCAs can raise prices for customers. Rate setters and local officials can set CCA prices which can be a disadvantage if local government acts on their own self-interest or if local government lacks the knowledge to make decisions about CCA and prices in their localities. [63] The choice to opt out can be a benefit for customer choice but it can also be a risk for CCA programs because if there are many customers choosing to opt out of the services, this can result in financial instability among the CCA. [64]

References[edit]

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External links[edit]