Community Choice Aggregation Puts Communities in Control of Their Electricity

Keep your eyes and ears open for Community Choice Aggregation, already a major player for consumer energy choice in California and spreading rapidly. In the post below, 2018 UCS Schneider Fellow Rebecca Behrens explains how CCAs work, where CCAs are forming, and what you should be on the look-out for as more communities get involved.

It’s late summer, which means ice cream season is coming to an end. A coworker and I have made it a habit of exploring the (many) ice cream shops around our office each week, and for something as simple as ice cream, it’s amazing how many choices we have. I can choose what ice cream I want based on price, proximity, flavor, or even the company’s business practices.

This got me thinking: if I have so many choices for something as simple as ice cream, what about bigger choices in my life—like where my electricity comes from? Like most of the US, I’m served by one utility. If I don’t like the way they’re sourcing electricity or setting rates, I have limited options.

But that story has been changing, in part due to the growth in Community Choice Aggregation (“CCA”). CCAs offer an alternative to traditional utilities and are designed to give communities a voice in where their electricity comes from. In California, many CCAs are striving to provide their customers with more renewable energy at lower costs than traditional utilities. Let’s break down the what, when, where, how and why of this new body.

What are CCAs?

Community Choice Aggregation allows local governments to purchase electricity on behalf of their residents, aggregating the electricity needs of everyone in the community to increase purchasing power.

The investor-owned utility (“utility” or “IOU”) that used to supply and deliver electricity is still there, but it plays a different role. Now, the utility is just in charge of delivering the electricity through its transmission and distribution lines (the utility still owns and maintains the “poles and wires”) and billing customers. This partnership distinguishes a CCA from a municipally-owned utility, which takes over both electricity procurement and electricity delivery (aka the poles and wires).

When and where have CCAs formed?

So far, CCAs are allowed in seven states: Massachusetts, Rhode Island, New Jersey, New York, Ohio, Illinois and California. Within a state, the decision to form a CCA is up to the community and local government. California has seen the most recent growth in CCAs, so I’ll be using it as an example here, but know that CCA formation and growth looks a bit different in each state.

Most of the seven states that allow Community Choice Aggregation passed bills legalizing CCAs in the early 2000s: California passed AB 117 in 2002. However, it wasn’t until years later, in 2010, that the first CCA in California launched in Marin County.

Since 2010, the number of CCAs in California has grown significantly. In 2016, there were five CCAs serving 915,000 customers. In 2017, there were nine CCAs. By the end of 2018, there will be 20 CCAs, serving over 2.5 million customers. And more local governments are considering the option.

Even if no more CCAs launch after 2018, CCAs are expected to serve 16% of the electrical load in California in 2020. But, it’s highly likely more CCAs will launch in the coming years, which could put this number at over 50% in 2020.

How do CCAs work?

In California, once the local government votes to form a CCA, a nonprofit agency is formed to carry out its duties. The agency goes through a rigorous planning process and once the CCA is ready to launch, they line up the customers.

And who are those customers? Anybody who wants to be. CCAs are “opt-out” in California, and in most other states, meaning that the default is for customers to be automatically served by the CCA. Customers have 60 days to opt-out for free and are notified about the change four times before this deadline. After 60 days, customers can opt-out for a fee to account for the power the CCA had bought in advance for them.

And that’s it! Customers are now served by the CCA. In California, if customers were receiving discounts because of particular circumstances, they will automatically continue receiving those discounts. This includes California Alternative Rates for Energy (“CARE”), Family Electric Rate Assistance Program (“FERA”) and Medical Baseline customers. Customers with rooftop solar systems who are on a net energy metering program are automatically enrolled to continue.

In terms of electricity service, as a CCA customer, nothing else changes. Your lights stay on, your TV still works, and your freezer stays cold.

The biggest difference is that the existence of CCAs allow customers to have more of a choice in the type of electricity they receive. Not only can customers choose between being served by the utility or the CCA, but if customers are unhappy with the electricity options or rates offered by their CCA, they can provide feedback to the CCA at its board meetings, which allow for public participation in California.

CCA communities can also benefit from the reinvestment of CCA profits, given that CCAs are nonprofits. CCAs can offer additional programs beyond what the utility offers. These could look like free energy efficiency audits, rebates for electric car charging stations, incentives for low-income customers to install solar, or really any program that helps customers better manage their electricity usage.

In some cases, customers could lose access to programs run by their utility by joining a CCA, although in California, most utility programming is still available to CCA customers. In any case, it’s smart to reach out to your local CCA and ask if you’ll still be eligible for programs you rely on.

Why do CCAs matter?

In California, every CCA (so far) has chosen to provide customers with more renewable energy than the competing utility and has done so at lower rates. However, how much new renewable energy CCAs are contributing to the grid varies a lot from community to community.

The devil is in the details here: A CCA that uses mostly short-term contracts to buy renewable energy or renewable energy credits (“RECs”) is likely buying from projects that already exist. Electricity purchases from existing renewable energy projects do not increase the supply of clean electricity on the grid, and customers that used to consume electricity from those renewable projects may now be consuming electricity from a dirtier source. This is called resource shuffling. On the other hand, a CCA that uses long-term contracts is helping new renewable projects develop, which means that more clean power is being added to the grid.

If you live in an area served by a CCA, it’s up to you to make sure your CCA is sourcing electricity in a way you support and providing programming you can use. Here are some questions you can ask to see how well a CCA is doing:

1. Is the CCA providing more renewable energy than the competing utility, and are they sourcing their renewable energy from long-term contracts for energy and RECs? By buying “bundled” renewable energy through long-term contracts, CCAs can more directly support the development of additional renewable energy projects and add more clean electricity to the grid.
2. Is the CCA making use of local resources and supporting the local community? Having a sustainable workforce policy and hiring locally and from unions can help bring the broader benefits of renewable energy to a community.
3. Is the CCA leveraging grants and their revenue to provide programs designed to help customers reduce or better control their energy use? More renewable energy is just one piece of the puzzle; we need a host of solutions for a clean energy transition. Programs that invest in electric vehicle infrastructure and energy efficiency are equally important.
4. Is the CCA proactively reaching out to its community? Programming needs to be accessible, useful and reach all members of the community—especially those that historically have not received the full benefits of energy programming and renewable energy.

CCAs have the potential to empower (and quite literally power) communities. But it’s up to residents to hold their CCAs accountable and ask them to provide equitable and fair climate solutions. By staying engaged and informed, you can make sure your CCA is providing your community with the best options.

CCAs are a growing movement in California but they aren’t the only way consumers are making choices about their electricity. While not every utility or state offers choices in electricity sourcing, it is worth seeing if yours does. You may even be surprised on what your options are: home in Vermont, through my utility I can choose to buy Cow Power! What sets CCAs apart from other choices is their ability to localize decision making and let communities invest in what is best for themselves, which has made them a powerful new player at the table.