Community choice energy programs in California and other states are helping our country shift away from fossil fuels to clean renewable energy.
Are you thinking something like “That sounds great but what the heck is community choice energy?” If you are, you have plenty of company so do not worry about it.
I only learned about community choice energy because I chanced upon the SLO Climate Coalition when I was looking for a group promoting clean renewable energy where I live in San Luis Obispo County, CA. When I met them in October 2018, they and their predecessor group SLO Clean Energy had been working for years to bring community choice energy to the cities and unincorporated areas in our county.
Because of their efforts and the efforts of many other people this initiative is succeeding. On January 9, 2020, San Luis Obispo and Morro Bay became the first cities in San Luis Obispo County to begin receiving electricity through a community choice energy program provided by Monterey Bay Community Power. Other cities will be joining next year and hopefully, the County will get on board, too.
Through my work with the SLO Climate Coalition, I have had the opportunity to learn about community choice energy and became interested in researching the topic on my own.
This post is intended to serve as an introduction to community choice energy and will hopefully spark your interest in advocating for a program where you live and/or opting to stay in it if your community already has one.
First, let’s talk about electricity generation and greenhouse gas emissions.
Electricity Generation and Greenhouse Gas Emissions
Global warming is being caused by excess greenhouse gases like carbon dioxide (CO2) and methane (CH4) building up in Earth’s atmosphere overwhelming the planet’s ability to deal with it. Most scientists agree that humans need to stop burning fossil fuels such as coal, petroleum, and natural gas or the climate crisis will continue to worsen endangering our very existence.
How do greenhouse gas emissions from electricity generation fit in the overall picture?
The process of generating electricity is the largest stationary source of CO2 emissions in the United States. In 2018, this represented 33% of all CO2 emissions sources across the country. 1
In a 2019 report, the U.S. National Renewable Energy Laboratory concluded that community choice energy providers could reshape U.S. electricity markets and increase customer demand for renewable energy. 2
Community Choice Energy 101
The U.S. federal government has some involvement in regulating electricity markets but states are largely responsible for what happens within their own borders.
States have the authority to pass legislation authorizing community choice energy programs. As of this writing, nine states have passed such legislation including California, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island, and Virginia.
Community choice energy legislation allows communities to choose who they purchase electricity from instead of being required to buy it from investor-owned utilities (IOUs) that are beholden to their shareholders.
How does it Work?
A city, county, or some combination of cities and counties may form an organization called a community choice aggregator (CCA). A CCA is a local or regional not-for-profit public agency that assumes the responsibility for procuring electricity on behalf of all customers in its jurisdiction.
The reason they are called aggregators is that they pool (aggregate) the electricity demand for their customer base and then procure electricity to meet that demand from one or more sources of their choosing. The electrons purchased are fed into the electric grid so as a customer you are not necessarily receiving your electricity from the source selected by your CCA.
At this time, CCAs only purchase electricity. They form partnerships with IOUs who continue to provide transmission, distribution, meter reading, billing, maintenance, and outage response services.
Where I live, the City of San Luis Obispo and the City of Morro Bay opted to join Monterey Bay Community Power an existing CCA that was already serving several counties on the California Central Coast.
Our house is in the unincorporated part of San Luis Obispo County so PG&E is still our electricity provider. However, we have a rooftop solar panel system on our home so we generate most of our own power. During the day we send our excess electricity to the grid and at night we draw electricity from it.
For me, it is a tossup as to which is the best benefit of community choice energy.
Local control of electricity procurement decisions enables CCAs to offer their customers choices. Most CCAs procure a mix of electricity from both renewable and nonrenewable sources and allow their customers to choose a mix that meets their budget and desire to support renewable energy (or not).
Unlike IOUs, CCAs do not have investors looking to profit from their investments. This enables CCA’s to offer competitive rates that are often lower than the IOUs. In addition, revenue surpluses are used to fund community programs versus lining the pockets of shareholders. These programs can range from funding rooftop solar panels for low-income families, to adding electric vehicle charging stations around town, to awarding grants to local nonprofits.
Many CCAs are focused on procuring electricity from carbon-free renewable sources like hydroelectric, wind and solar which spurs investment in these technologies and helps transition the U.S. off fossil fuel-powered electricity.
CCAs are already embracing the Green New Deal creating jobs and investing locally and working on helping their communities become more just and resilient.
Avid community choice energy advocates sometimes gloss over potential drawbacks but I think it is important to cover them, too.
Adding more buying entities to an already complex system does not necessarily promote cooperation and could take attention away from the critical work that needs to be done modernizing, securing, and making our electric grid more resilient.
IOUs have a lot of money and expertise available to keep on top of electricity-related legislation and to lobby government agency representatives and elected officials. CCAs may or may not have the funds and staff necessary to keep up and to effectively influence legislation. Recently, there has been a rash of mostly worrisome community choice energy-related legislation making its way through the California legislature.
Most CCAs are new and do not have a long-term financial standing with creditors possibly making them more vulnerable to changing electricity market conditions or unexpected problems.
For instance, of the seven states with active CCAs, California is the only state with a regulated electricity market. California CCAs are required to pay “exit” fees to compensate IOUs for their sunken investment costs and long-term contracts. The determination of these fees called the power charge indifference adjustment (PCIA) is a contentious and recurring process with little transparency. If these fees continue to escalate as they have been, it could endanger the financial viability of existing CCAs and preclude others from even forming.
Community choice energy is beginning to disrupt the electricity industry. I believe this a good thing.
We need a massive and systematic change in the way we power our lives and businesses in the United States. Perhaps community choice energy can provide a lever to break the status quo and accelerate our transition to clean renewable energy.
Disruption can be frightening, too. I worry that while communities focus on local choice and control that the big picture may not receive the attention it needs and that further fragmentation of the electricity market may have unintended consequences.
However, as far as I am concerned, the need to change far outweighs the problems and roadblocks we are sure to encounter along the way.
By learning about and advocating for community choice energy where we live, you and I can be part of a clean renewable energy future for everyone.
Featured Image at Top
Four people are holding icons representing a solar panel, sun, wind turbine, light bulb, water drop, and battery – photo credit iStock/Rawpixel.
- Amity and Prosperity – Book Review
- A Tale of Three Public Meetings
- Green New Deal for the 21st Century
- Implications of U.S. Leaving the Paris Climate Agreement
- It is Your Community, Go to a Public Meeting
- Rooftop Solar Panels are Worth It and this is Why
- What the Heck is Fracking?
- Why You Should Read Your Energy Bills – Electric
- Why You Should Read Your Energy Bills – Natural Gas
- Wind Energy and the Environment
- DRAFT Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018, Chapter 3: Energy – U.S. Environmental Protection Agency, 02/12/20
- Community Choice Aggregation: Challenges, Opportunities, and Impacts on Renewable Energy Markets – by Eric O’Shaughnessy, Jenny Heeter, Julien Gattaciecca, Jenny Sauer, Kelly Trumbull, and Emily Chen – U.S. National Renewable Energy Laboratory, 02/2020
- California Alliance for Community Energy
- California Community Choice Association (CalCCA)
- California to Hike Fees for Community Choice Aggregators, Direct Access Providers – by Jeff St. John, Green Tech Media, 10/11/18
- Clean Power Exchange
- Climate change: Another year of record gas emissions, warns UN meteorological agency – press conference, World Meteorological Organization, 11/25/19
- Community Power May Give Biz More Competitive Energy Prices in NH, Other States – Environment + Energy Leader, 10/01/19
- Diverse Coalition Expressed Overwhelming Support for Maryland’s Community Choice Energy Legislation at Today’s Hearing – by Jorja Rose, Food & Water Watch 02/13/20
- Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018 – U.S. Environmental Protection Agency (available for public comment)
- Energy and the environment explained: Greenhouse gases and the climate – U.S. Energy Information Administration
- Local Energy Aggregation Network
- Power to the People: Community Choice Aggregation in California – by Dani Brooks, Georgetown Environmental Law Review, 01/16/20
- Saratoga Springs approves community electricity law – by Stephen Williams, The Daily Gazette, 02/06/20
- SV Clean Energy Grants $75,000 to Nonprofits for Community Engagement – press release, Silicon Valley Clean Energy, 11/19/18
- The 2020 Community Power Scorecard – by John Farrell, CleanTechnica, 02/10/20
- The Causes of Climate Change – U.S. National Aeronautics and Space Administration