What is Community Choice Energy and Why Should You Care?

Power to the people.

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.

Community Choice Energy Flip the Switch Event in San Luis Obispo City Hall
San Luis Obispo City Council (Mayor Heidi Harmon in red), City staff, and members of the SLO Climate Coalition at the “flip the switch” event at San Luis Obispo City Hall on January 9, 2020 – photo credit San Luis Obispo Chamber of Commerce. Click here to read the article.

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.

This short video was prepared by the World Meteorological Organization in advance of the United Nations COP25 climate conference held in Madrid, Spain during December 2019.

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

U.S. Electric Power Generation and Emissions 1990-2018 Graph
Fuels Used in Electric Power Generation (TBtu) and Total Electric Power Sector CO2 Emissions – source U.S. Environmental Protection Agency.

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.

Benefits

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.

Drawbacks

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.

Summary

Community choice energy is beginning to disrupt the electricity industry. I believe this a good thing.

U.S. Map Showing Community Choice Energy States

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.

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References

  1. DRAFT Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018, Chapter 3: Energy – U.S. Environmental Protection Agency, 02/12/20
  2. 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

Resources

New Year’s Resolution – Break Up with Your Bank

It’s your money.

Is this the year that you make a New Year’s resolution to stop funding the climate crisis through your bank and then actually do it? It is for me.

In the interest of full transparency, I got a head start on my 2020 New Year’s resolution because I have already started the process of breaking up with my bank. They just don’t know it yet.

Technically, it is not just my bank because my spouse and I have joint accounts. Fortunately, my spouse is amenable to changing banks.

Yes, I am one of those people who enjoy making and accomplishing a New Year’s resolution. Most years I write a New Year’s resolution post in hopes of luring more readers into the process. Completing something you set out to do can make you feel empowered.

One year I wrote about green investing and another year I wrote about restarting a previous resolution. Last year my New Year’s resolution was to research and write about the environmental impact of sugar and determine if I wanted to do anything about my own sugar intake (I did).

This year my New Year’s resolution is to sever all ties with our current bank and put our money in a credit union where it can benefit our local community.

In this post, we will take a brief look at how “too big to fail” banks are funding the climate crisis and I will share my banking transition experience so far. Admittedly the process has not been hassle-free but I believe ditching our old bank will be worth it in the long run.

Is Your Bank Funding the Climate Crisis?

A bank is supposed to be a safe place where you deposit your paycheck so you can access your money 24/7/365 to fund your life. Banks offer loans so that you can buy a car or house, pay for things with a credit card, or run your business. Savings accounts and certificates of deposits enable to you make a bit of interest on the money you set aside for the future.

Banks provide valuable and essential services, right? Yes, they do.

However, there is a dark side, too.

What came to mind when you read that sentence? Did you think about the 2008 financial crisis and how it impacted you personally? Were you reminded of news reports about your bank engaging in unethical and perhaps even criminal behavior? Did your student loan balance flash before your eyes?

If offshore oil drilling platforms, natural gas pipelines, and coal mines did not immediately come to mind, then you are probably in the majority. A few years ago, these images would not have popped into my mind either. But now they do.

By the Numbers Big Bank Fossil Fuel Financing Infographic
Source – Rainforest Action Network. Click here to read the report (it is interesting and disturbing).

Keeping our money “safe” in a bank that is funding the climate crisis and endangering our children does not make sense to me. So, I decided to do something about it.

Bank Transition Game Plan

I am a planful kind of gal so I did some research and planning before we began our bank changeover. If you are interested, click here for a checklist that may help you with your own bank transition. Below are some of the major steps.

Think It Through

I take banking seriously and I am not advocating that you or anyone else change banks unless you want to and doing so fits in your life. I am sharing what we are doing to provide an example. Where you put your money is of course completely up to you. If you have joint accounts with one or more people, you need to get their buy-in upfront.

My unease with our bank began with learning about their unscrupulous business practices which we won’t go into here. I wanted to move to another bank but our financial life was heavily entangled with our current bank. So I did what anyone might do when faced with a daunting task, I did nothing.

What made me finally decide to spearhead our bank transition project?

Believe it or not, it was realizing that our money could be helping people and businesses in our own community if we moved it to a regional bank or credit union.

Do Your Homework

Do some research before you rush to open an account at the bank across the street from where you work or the credit union next to your grocery market.

Research activities include asking friends or coworkers where they bank, looking up financial institutions online and checking out their websites, and talking with the new account representatives for your top candidates.

We had decided we wanted to put our money in a regional bank or credit union so that is where I focused my online research. I narrowed it down to a few financial institutions and then I visited their branches to talk with the people in new accounts. I asked them about their services, fees, ATM network, who they loan money to, and how they support the local community.

My spouse agreed to go with the credit union that I felt would best meet our needs. One of the things I like about credit unions is that they are nonprofits owned by their members so there are no shareholders looking to make money off of using our money.

Get Started
Coffee Cup, Pen, Piece of Paper with Begin Saying on Wood Table Top
Photo – iStock/marekuliasz.

The time required to set up new accounts will be somewhat proportional to how many accounts you have at your old bank and how many new accounts you want to set up. If you have a credit card account and/or use online bill pay, the overall process will be more complex.

At our old bank, we have checking, money market, and savings accounts. We also have a Visa credit card account and I use online bill pay almost exclusively to pay bills and transfer money. Most of our bills are available directly through the online bill pay portal so unraveling this was one of the reasons I had delayed changing banks.

To get started we went to the credit union’s main branch and met with a member services representative.

We had filled out a small stack of forms at home. At the credit union, the member services rep asked a few more questions and then entered all the information into the credit union system while we waited. The rep was friendly and nice but this process was still mind-numbingly boring and more time consuming than I had anticipated.

We paid $5 to become members of the credit union and opened a share account (savings) and a checking account with minimal amounts.

I selected the most basic and inexpensive checks. Unfortunately, when the checks came in the mail, our name was spelled wrong. So we had to go back and repeat some of the previous steps. The credit union sent replacement checks at no charge.

Our new ATM/debit cards came in the mail but activating them required speaking with a member services rep at the call center.

Go at Your Own Pace

Once you have set up an account(s) with your new financial institution, you can decide whether you want to go close out your old account(s) immediately or do it in multiple steps.

I decided to take a phased approach for several reasons.

  • My spouse just turned in a direct deposit change form so I am waiting for the first paycheck to arrive in our checking account at the credit union.
  • Applying for a new Visa card is a separate process that we have not done yet.
  • Stopping online bill pay at the old bank and starting it at the credit union needs to be done carefully because I do not want to end up with unpaid bills or late fees. So far I have set up an online account.

Will it take me a month or several months to complete all the tasks on my checklist? I do not know but I am looking forward to the day I can walk into our old bank, close all of our accounts, and walk out with a cashier’s check. I also intend to send a letter to the CEO of the bank explaining why we are no longer customers.

Birdlike Links Flying to Freedom Through Hole in Chain Link Fence
Photo – iStock/Eoneren.

So what do you think? Are you ready to break up with your bank? If you are, thank you. Soon you will no longer be part of the climate crisis funding machine. My children, your children, and everyone else’s children are relying on us to do whatever is necessary to keep Earth beautiful and habitable now and in the future.

If you do not want to change banks or are not ready to do it yet, that is okay. Check out the resources section below for other New Year’s resolution ideas or come up with your own.

Happy New Year!

Featured Image at Top: A tiny black oil drum sits on top of a bank credit card – photo credit iStock/porcorex.

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New Year’s Resolution Posts

Resources