Community Choice Aggregation Advances Renewable Energy

Six States Have CCA Legislation, Others May Follow

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Shawn Marshall is executive director of LEAN Energy US, the vice chair of the Marin Energy Authority, and a member of the Mill Valley, Calif., City Council. She is also a former mayor of Mill Valley.

Posted: Wednesday, April 4, 2012 1:56 pm | Updated: 4:37 pm, Wed Apr 4, 2012.

How about a power play that allows residential, commercial and industrial utility customers to not only have a major say in the rates they pay for electricity and natural gas, but also expands the use of renewable energy, reducing pollution caused by fossil fuel generation?

It’s called Community Choice Aggregation (CCA).

Currently, millions of consumers in Massachusetts, California, Ohio, New Jersey, Rhode Island and Illinois are plugged into CCAs, benefiting from cheaper electricity and a cleaner environment.

One of the driving forces behind CCA, also referred to as municipal aggregation, is Shawn Marshall, a former mayor of Mill Valley in California’s Marin County and co-founder and executive director of LEAN (Local Energy Aggregation Network) Energy US, a non-profit that exists to support the expansion of clean energy CCAs into new communities and states.

Marshall is also a founding board member and former vice chair of the Marin Energy Authority (MEA), a joint power agency that operates California’s first CCA, Marin Clean Energy. At full capacity, MEA will serve 90,000 Marin County customers with a minimum of 50 percent state-certified renewable energy. The U.S. Environmental Protection Agency has named MEA one of the top 15 renewable energy purchasers in the U.S.

Marshall will speak on Community Choice Aggregation at the Growing Sustainable Communities Conference – Western Region on May 3 in Sonoma County, Calif., co-presented by Sustainable City Network.

CCA, as defined in California by AB 117 and SB790, “permits any city, county or city and county to aggregate the electric loads of residents, businesses and municipal facilities to cover the purchase and sale of electrical energy.” CCAs are limited to the generation side of the power business, while existing utilities continue to provide transmission and distribution, line maintenance and customer billing services. Communities with co-ops or municipal utilities do not need CCAs since their power and the local community already publicly owns its delivery.

Prior to AB 117, electrical load aggregation programs were opt-in programs: customers had to declare in writing their choice to participate in them. As such, these options were largely undersubscribed, had difficulty competing against well-funded monopoly utilities, and were not able to achieve adequate market scale to fairly compete. Under CCA laws, local or regional programs to combine customer loads within city or county boundaries are opt-out: that is, customers are automatically enrolled but are given the opportunity to leave the CCA (opt-out) at any time and continue to be served by the incumbent utility.

According to Wikipedia, community choice was first enacted in Massachusetts in 1997 when the towns of Cape Cod and Martha’s Vineyard formed the Cape Light Compact. Cape Light serves about 200,000 customers, running award-winning efficiency programs and installing solar on Cape Cod schools, fire stations and libraries.

In Ohio, the nation’s largest CCA — the Northeast Ohio Public Energy Council (NOPEC) — was formed two years later. It has about 500,000 customers in 100 mostly rural towns, switched from a utility mix of coal and nuclear to a mix of natural gas and renewably powered electricity. NOPEC reported a 70 percent air pollution reduction as a result of the change in the region’s power mix.

Former Federal Regulatory Energy Commission (FERC) Commissioner Nora Brownell called the Massachusetts and Ohio CCAs “the only great exceptions to the failure of electric deregulation in the U.S.”

The failure of deregulation also led to CCA legislation in California in 2001, according to advocates. In 2004, San Francisco adopted a CCA ordinance creating a program to build 360 megawatts of solar, green distributed generation, wind generation, energy efficiency and demand response to serve city ratepayers. The goal is a 51 percent renewable portfolio by 2017 for San Francisco, and they plan to get started with a 100 percent renewable power mix for their first phase of 75,000 customers this July.

Renewable energy comes from natural resources—sunlight, wind, rain, tides and geothermal heat. About 16 percent of the world’s final energy consumption comes from renewables, reports Wikipedia, with 10 percent coming from traditional biomass mainly used for heating and about 3.5 percent from hydroelectricity.

In addition to Marin and San Francisco, CCA is beginning to catch on in the rest of the state. California also has a certified CCA in San Joaquin Valley, and CCA is under discussion or underway in another 25 cities and counties throughout northern and southern California.

An outspoken champion of CCAs, Marshall said the country’s electricity system must be transformed to meet the critical energy, economic and environmental challenges of the 21st century. That includes transmission and distribution infrastructure improvements, the meaningful integration of energy efficiency and demand response, and an aggressive shift to clean power generation, including small-scale distributed generation.

“CCA is a groundbreaking market-based tool for meeting these challenges. It allows cities and counties to pool the electricity demand of their residential, business and municipal accounts to purchase or develop power on their behalf,” Marshall said. “Whether to lower rates, increase clean power supply, or apply new revenue to local energy programs, CCA is a smart and scalable solution that is enabled at the local level.”

Marshall said she saw the value of CCA soon after Marin County implemented it. “There was an immediate impact on greenhouse gas emissions reduction because our power supply switched from an average of 15 percent renewable to a minimum of 27 percent renewable. The introduction of Marin Clean Energy also gave consumers an energy choice not otherwise available in a monopoly utility environment. It has been a significant addition in Marin County and the interest is growing.”

Marshall said Marin is moving up from a 27-percent to a 50-percent renewable share for its energy portfolio. “MCE also offers its customers a voluntary, opt-up to a 100 percent renewable product at an additional cost of only one cent per kilowatt-hour. For an average size home, that’s about $5 a month.

“There’s no question that CCA has become a critical environmental and economic policy platform, not only for Marin, but other communities as well,” she stressed.

Aggregating a customer base means a big group purchase for electricity (and/or natural gas in some states) and the ability to purchase power in the wholesale market. CCAs take control of their supply and can thus take advantage of other benefits such as, demand response programs, energy efficiency, net metering, feed-in-tariff and renewable project development. In some states, where consumers are bombarded with direct mail and/or door-to-door salesmen selling electricity through complicated contracts, aggregation is also viewed as a consumer protection measure.

Are there drawbacks?

Like everything, there are risks. One risk involves price – the possibility that utility electricity rates drop below those offered by the CCA.

“CCAs are not necessarily a panacea,” Marshall said. “There are risks that need to be mitigated. CCAs must remain price competitive. So they need the right expertise supporting them, which includes sophisticated modeling and an understanding of the energy markets. The energy business is fast moving and complex. Communities considering CCA need to do their due diligence. But there is now plenty of experience out there, established best practices, and some great local examples to draw on.”

As one of those resources, Marshall said LEAN is currently focused on CCA education, formation, and early operational success through which to build the market for CCAs and the integration of clean energy innovation through the aggregated customer base.

“Our overriding mission is to spread proven CCA models to new communities and states. LEAN also partners with energy industry and aggregation experts to sponsor state CCA networks that provide intrastate connections, best-practice resources, legislative and regulatory support, and formation advisory services,” Marshall explained.

Who will be next? According to Marshall, New York, Connecticut, Colorado and Utah could be the next states to enact CCA legislation. “In a perfect world, we’d have national legislation enabling CCA in all states; but for now, we’re advancing the movement state by state, town by town,” she said.

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