More and more, local governments across the US are considering government-controlled Community Choice Aggregation (CCA) programs that compete to provide energy to local ratepayers. Some local governments are turning to CCA’s to accomplish the ambitious goals set by many regional climate action plans.
To date, the results have been a mix of success and failure.
The CCA movement began in Massachusetts in 1997 and has since been authorized in several more states across the U.S. After initial and almost universal excitement among climate activists, the jury is still out on whether CCA’s truly accomplish their promise of lower emissions for lower prices.
At Clear the Air, we ask the question, why are some cities and counties saying yes… while others say no? We take a deeper look in chronological order at seven local governments that have explored CCA’s to try and better understand how CCAs are working for those that have implemented them, and why some cities in California are beginning to fight its implementation.
1. Marin County, CA
Background: Marin Clean Energy
In 2008, Marin Clean Energy (MCE) in Marin County, California was the first program in the Golden State to create a CCA. Soon after, in February 2010, the Marin Energy Authority board reached an agreement with Shell Energy North America to supply it with the necessary power.
MCE now has 50 contracts with various suppliers, and currently gets 53% of its power from mostly existing renewable sources. Overall, 75% of MCE’s supply comes from mostly existing zero‐emission sources and it aims to go carbon‐free by 2025. MCE also offers a 100% renewable energy option, but in 2016 less than 2.6% of their sales were to customers that chose the 100% renewable option. Less than 6% of MCE’s energy sales in 2016 came from new renewable resources that were constructed in response to MCE’s energy procurement. In other words, about 94% of MCE's purchased energy comes from pre-existing renewable resources. How is this helping us protect the Environment?
Critics argue that, while Marin Clean Energy is providing options for customers, their close relationship with Shell Energy damages their reputation as a true clean-energy provider and that the energy MCE provides customers is not as green as claimed. Questions have also been raised about whether MCE is actually reducing GHG emissions.
Marin Clean Energy’s 50% renewable plan offers customers a similarly priced clean energy plan as PG&E, while the 100% renewable plan is four to eight percent more expensive for consumers, not including the fee that must be paid to ensure non-CCA customers are not required to pay costs that were incurred to benefit CCA customers. The California Public Utilities Commission (CPUC) decides the methodology for determining this fee under a statutory structure that is intended to ensure fairness for all customers.
The question remains, with their relationship with Shell Energy and after consideration of its procurement strategy, is the “clean energy” provided by MCE truly clean and is it truly reducing emissions?
2. Boulder, CO
Status: Approved. Former Mayor Now Regrets Decision.
In 2010, the city of Boulder, Colorado decided to pursue government control over their energy and create its own municipal utility. It was ambitious and according to the city’s former mayor, Will Toor, probably a mistake.
“To me, the lesson is to try and be very strategic in the way you approach this. Rather than saying, corporations are bad, and we need local control,” ask, “What is it we are trying to achieve? And how do we use the leverage we have in this muni process to achieve that in the fastest possible way?”
The utility, Xcel, has demonstrated that it is happy to close coal plants and scale-up renewables, causing some to question whether the effort to form a municipal utility to reduce emissions is worth the expense and risk. Mayor Toor thinks that this effort to create a municipal electric utility may actually be slowing Boulder’s climate progress.
Mayor Toor stated, “We’re up against some pretty powerful enemies in the climate fight. Electric utilities don’t need to be one of them. They can make money by closing their dirty old plants and replacing them with renewables and cleaner energy.”
3. Chicago, IL
Status: Approved, but No Longer a CCA
In 2013, Chicago became the largest city to have the local government purchase energy on the open market in search of better deals for its residents. Two years later, the city was back getting its power from the local utility.
The issue? As legacy utility contracts expired and it was able to gain access to lower market prices, the utility ComEd's price ended up being lower than CCA prices and it became apparent that is was not worth the additional time, expense and potential risk to continue the program.
"It is just one tool in the toolbox. You don't necessarily want to use it if you can't beat the ComEd price," David Kolata, Executive Director of the Citizens Utility Board, said. "And it's increasingly difficult to beat the ComEd price."
4. Lancaster, CA
Status: Approved CCA
Lancaster Choice Energy (LCE) was formed in 2014 and launched on May 1st, 2015 for all municipal accounts. As of the end of 2016, however, the Lancaster CCA had not procured any energy from renewable generation facilities that were newly constructed to serve the Lancaster CCA. Their “Smart Choice” Energy Power Mix, which is their 100% renewable option, is coming from 100% wind energy, which was built before the CCA was even formed.
Unfortunately, through the end of 2016 (the latest period for which data is available), the Lancaster CCA had not achieved any real and additional GHG emission reductions on behalf of its customers.
5. Pomona, CA
Status: Rejected CCA
At their meeting in mid-December 2017, the Pomona City Council rejected a proposal to join the Clean Power Alliance (formerly Los Angeles Community Choice Energy), a community choice aggregation program.
Why did the city decide that now wasn’t the right time? “We’ve had no community input,” Mayor Tim Sandoval said. He also said he’d like to have heard from residents before making a decision.
During the council’s discussion of the topic, Mayor Sandoval said this is a matter that requires a larger community conversation. “Just because we didn’t vote for LACCE today doesn’t mean we can’t join later,” Sandoval said after the vote.
6. Redondo Beach, CA
Status: Initially Rejected, now Approved CCA
Redondo Beach’s City Council voted 3-2 at its final meeting of 2017 to join the Clean Power Alliance (L.A. County CCA), however, a few days later, Mayor Bill Brand vetoed the decision citing that the risk was not worth the reward, given the projected cost savings to be a single-digit percentage. He also identified potential exit fees of more than $1 million.
“While I am a strong proponent of renewable energy and support the aggressive goal setting that has put California at the forefront of implementation of new technologies… I am concerned about exposing Redondo Beach to an unnecessary financial risk associated with joining this particular Joint Powers Authority at this time,” explained Mayor Brand about his veto.
After six city council meetings, the Redondo Beach City Council overcame Mayor Brand’s veto and joined the Clean Power Alliance. It is still unclear if those savings will actually be realized, or whether costs might increase for ratepayers, leaving council members with enduring second thoughts. Should the city decide to return to Southern California Edison (SCE), they can opt out of the CCA, and pay substantial exit fees.
7. San Luis Obispo, CA
Status: Rejected CCA
On January 22, San Luis Obispo County Supervisors voted to dismiss a feasibility study on the establishment of a Community Choice Energy program. SLO Clean Energy was voted down 3-2 by County Supervisors, with the winning majority stressing the undeniable financial risk and referencing a recent feasibility study that showed the program to be “economically infeasible.”
Another rationale for the decision was that CCA’s represent the “government control of energy.” County Supervisor Debbie Arnold said, "The conclusion is I'm not convinced that having government-run electricity is really beneficial to my constituents," Supervisor Arnold said.