Community Choice Aggregation (CCA) from the film “The Future of Energy: Lateral Power to the People” January 2015
Aggre-what? We know—it’s a wonky name for a relatively simple concept called group purchasing: in this case, electricity. In dictionary speak, Community Choice Aggregation1 allows local governments and some special districts to pool (or aggregate) their electricity load in order to purchase and/or develop power on behalf of their residents, businesses, and municipal accounts.2Established by law in six states thus far, CCA is an energy supply model that works in partnership with the region’s existing utility, which continues to deliver power, maintain the grid, provide consolidated billing and other customer services.
Through CCA, local governments and their constituents are achieving a powerful range of objectives:
Energy aggregation can be done on an opt-in or opt-out basis (depending on state statute), but the most common and successful programs are opt-out. This means that customers are automatically enrolled after a successful public referendum at the local level, as in Illinois and Ohio; or, enrolled when their local elected representatives (city council or county board) vote to form or join a CCA program, as in California. The opt-in approach is voluntary but participation rates are traditionally very low which reduces the value of group purchasing and makes it harder for local programs to achieve economic viability. Opt-out aggregation achieves the necessary market scale for effective group purchasing, but allows a customer to switch back to utility service at any time.5 Either way, customers always have the choice to stay or go.
Non-profit municipal utilities, or munis, provide highly reliable electricity supply at rates averaging 15 to 20 percent below the rates of traditional investor-owned utilities. Like munis, CCAs offer cost efficiencies, flexibility, and local control. But unlike munis, they do not face the capital-intensive and open-ended challenge of valuing, purchasing, and maintaining expensive utility infrastructure. CCA offers a “hybrid” approach that exists between the investor-owned (often monopoly) utility and a municipal (or member coop) utility. CCA reaps the benefits of controlling power supply and generation without the financial drag of purchasing and maintaining sometimes antiquated utility infrastructure. In this way, it is a great option for municipalities who want control over their power supply but don’t want the financial and operational burdens of owning their own utility.
Because CCA is revenue-based—not government subsidized—CCA programs are self-supporting from an existing revenue stream. That is, the electricity rates that consumers pay to a retail electric supplier or an investor-owned utility are bundled and redirected to support the group purchase of electricity through a local CCA program.
In restructured (or “retail”) states, there is a defined functional separation between energy generation and energy distribution. In this scenario, the partner/distribution role of the incumbent utility is well established and retail supply competition already exists. In these states, the utility is a ready and willing partner for aggregated communities. The retail energy suppliers understand the market value of group purchasing and compete at the municipal rather than “door to door” sales level to win supply contracts.
In partially restructured or un-restructured states (“wholesale” markets) where utilities hold monopoly positions, the reaction to CCA has been less than supportive. After all, a CCA disrupts their monopoly control of the power supply market. It’s important to note, however, that bundled utility customers are not adversely impacted and the utilities themselves are “made whole” on departing load through a mechanism called cost recovery surcharges (or exit fees). In both models (retail and wholesale), the utility retains ownership and management of the transmission and distribution infrastructure, and all power delivery, line repair, billing, and customer service functions remain with the existing utility.
Nexamp announced the completion of construction at its first community solar project, the 2.3-MW “Nexamp Peak” at Jiminy Peak Mountain Resort, the largest ski and snowboard resort in southern New England. Covering 12 acres near the base of the resort, the project is the largest community solar project in the northeast. Local community solar subscribers joined officials from Jiminy Peak and Nexamp for a ceremonial “flip the switch” celebration at Nexamp Peak. Commercial operation of the project will commence in the coming weeks, upon final approval from the local electric utility.
Combined with Jiminy Peak’s existing 1.5-MW wind turbine, 75-kW cogeneration unit, and extensive conservation efforts, this new solar array will enable the resort to offset 90% of its energy needs from local renewable resources, making Jiminy Peak one of the greenest four-season resorts in the nation.
“It’s important to us that we operate our resort as good neighbors and good stewards of the environment, which is why we’ve worked so hard to leverage as many renewable energy sources as we can,” said Tyler Fairbank, CEO of Jiminy Peak Mountain Resort. “We were thrilled to partner with Nexamp on both of these fronts to add solar energy into the mix in such a way that the neighboring community can benefit from the facility, too.”
Over 100 local residents will directly benefit from the project through Nexamp’s Solarize My Bill community solar program. Participants will pay a 15% discounted rate for the value of the electricity generated by their share of the Nexamp-owned solar project, which will be applied directly to their existing electricity bills.
“This project marks a tremendous milestone for us,” said Zaid Ashai, CEO of Nexamp. “Massachusetts has an opportunity to be a national leader in solar energy, and its residents and businesses are more aware than ever of the potential for clean solar power to lower their utility costs. Nexamp’s fully-integrated project development capabilities, combined with our Solarize My Bill community solar program’s unparalleled savings, ensure that we will remain a key piece of the energy transformation within the Commonwealth and beyond.”
PG&E argues that Community Choice customers need to pay their “fair share”
San Rafael, CA – PG&E recently proposed that Marin Clean Energy (MCE) and Sonoma Clean Power customers should pay even more “exit” fees than they already do to the Pacific Gas and Electric Company (PG&E) every month. The proposed increase ranges from 44% to 127% depending upon customer class, and forces residential customers, including low-income, to pay the highest rates associated with these fees.
The California Public Utilities Commission (CPUC) currently authorizes PG&E to impose exit fees on customers who choose to buy their electric generation from local providers like MCE or Sonoma Clean Power. Although these fees are always included in cost comparisons, they reduce the savings that MCE and Sonoma Clean Power customers receive and increase the cost of choosing a local provider.
PG&E’s exit fee, called the Power Charge Indifference Adjustment (PCIA), is billed monthly, based on usage, and charged to customers who choose to buy energy from another provider. When a customer makes this choice, PG&E sells the excess electricity that they bought for that customer. Depending on the market conditions, PG&E may earn or lose money when they sell the power. PG&E has accumulated more than $1 billion from earning money on the market when selling this excess power. However, if PG&E doesn’t earn money through the sale of the excess power, the PCIA fee is applied. This covers any losses incurred by PG&E, forcing the customer to bear this burden and pay for energy that they will never use.
Along with their request to increase the exit fees, PG&E also requested to close the account with over $1 billion. When asked how the money would be used, PG&E indicated that it “simply goes away.”
“What PG&E is proposing is outrageous. They’ve collected $1 billion from selling excess power on the market but when they aren’t able to make a profit, they collect from our customers to avoid pulling funds from their billion dollar stockpile,” said Dawn Weisz, CEO of Marin Clean Energy. “Those profits should be applied against any losses, so that the homes, schools, non-profits and businesses in our communities are not burdened further.”
This year, MCE estimates that its customers will be forced to pay PG&E $19.3 million in PCIA fees. Should the CPUC approve PG&E’s proposed increase, MCE customers are projected to pay $30.6 million to PG&E, in 2016 alone, and residential customers, including low or fixed-income customers, will be forced to pay more than half of it ($16.3 million). PG&E is the only California utility to impose these fees on low-income customers.
MCE is protesting the proposed surge in the PCIA fee and calling attention to PG&E’s attempt to close the $1 billion account of ratepayer funds. The CPUC is scheduled to make its determination on the PCIA increase in December 2015.
MCE Director of Public Affairs
Key Issues, Opportunities and Challenges
CCA Management Models
An increasingly prominent part of the CCA discussion these days is how CCA programs should be managed and by whom. A central part of the conversation focuses on proposals by California Clean Power (CCP), which has been meeting with elected officials in many jurisdictions. In the proposals that have been public, CCP agrees to manage all aspects of the program, assume market risk and provide fixed payments in trade for all program revenues. These terms are appealing to some jurisdictions, especially those that do not have expertise or easy access to capital.
LEAN Energy and others have urged local officials to make sure they get good analysis before they make any decisions to assure program sustainability and head off misunderstandings about risks, costs and relative responsibilities of this new, fully outsourced model. The County of San Mateo recently commissioned an analyses of the model as part of their technical study; the analysis points out both benefits and potential risks of the model. In addition, students at Stanford University recently studied the issue, using the city of Los Altos as a test subject. The presentation slides provide an overview of their presentation.
Many communities in California find it difficult to handle the start-up costs of CCA implementation, even though these costs are recoverable soon after program launch. LEAN has re-engaged the California Infrastructure Bank and help may be on the way!
The California Infrastructure and Economic Development Bank (iBank), a state agency, is eager to work with local communities–especially those with struggling economies–to determine whether they qualify for subsidized loans or credit guarantees for CCA start-up costs.
This is great news for municipalities concerned about financing. Contact Kim Malcolm at LEAN Energy for more information.
Wastewater Utility Finding
A California Appellate Court has just found that a city’s wastewater utility payments to the city for shared infrastructure and employee time was not an improper transfer of funds and did not violate Proposition 218. This has implications for CCAs that may share infrastructure with cities or counties (such as the model underway in Lancaster, CA), or purchase goods and services from them. Read more here.
San Francisco CCA Referendum
The IBEW Local 1245 is sponsoring legislation in San Francisco that would prohibit CCAs from referring to any energy resources as “green” unless they are “Bucket 1” renewables products or power from the City’s Hetch Hetchy hydro-electric project. The initiative has until July 6th to garner enough signatures for the ballot.
The IBEW’s press release states a concern over the proposed contract with Shell Energy North America (SENA) and the use of unbundled RECs to improve the green attributes of portfolios. Unsurprisingly, the measure does not require similar disclosures by Pacific Gas and Electric Company, although PG&E also purchases RECs and energy supplies from SENA. Because of historic purchases, PG&E is also able to classify some of its unbundled RECs as satisfying “Bucket 1” resource requirements, when by today’s standards they would be “Bucket 3.”
Some are predicting this local initiative is a warm-up for a statewide ballot measure.
Regulatory and Legislative Happenings
At the CPUC… LEAN Energy, along with CCAs from Marin, Sonoma and Lancaster met in recent weeks with CPUC Commissioners Michael Picker, Liane Randolph and Michael Florio; the meetings with Commissioners Peterman and Sandoval are upcoming. We provided an overview of CCA activity around the state with a message that CCA is no longer a “local experiment” but a valuable — and so far very successful -tool for local governments to meet Climate Action Plan goals without subsidies from local taxes, all of which serve the Governor’s energy policy objectives. A similar meeting with key staff at the Governors Office was also productive in sharing that message and yielded several good ideas and follow up opportunities. We plan to meet with other public officials in the coming month with this important message.
Things move slowly at the CPUC but here are some updates:
At the California Legislature:
If you would like more information or want to join our regulatory and legislative alliances, please contact Kim Malcolm firstname.lastname@example.org
By Richard Halstead, Marin Independent Journal
Marin Clean Energy officials are highlighting the joint power authority’s efforts to stimulate the creation of local renewable energy projects and local jobs as the authority celebrates its fifth year and the opening of its new San Rafael headquarters.
“Survival of the agency is no longer at issue,” said Marin County Supervisor Damon Connolly, a Marin Clean Energy board member. “The debate has changed; now it’s about continuing to meet goals and benchmarks that we set for ourselves.”
Marin Clean Energy is the first successful attempt in California to launch a new, public model for providing electricity to residents. It was founded to jump-start the use of renewable energy sources by stimulating demand; it offers customers the opportunity to buy electricity that is supplied by 50 to 100 percent renewable sources. It competes with Pacific Gas and Electric Co. as a retailer of electricity, but PG&E continues to maintain power lines and other electrical power infrastructure.
Marin Clean Energy serves about 137,500 customers in Marin County, the city of Richmond and the unincorporated areas of Napa County. It is adding the cities of San Pablo, Benicia and El Cerrito and expects to have a total of about 165,000 members by the end of this month.
Marin Supervisor Kate Sears, who heads Marin Clean Energy’s board of directors, said “we are extremely proud to announce that 10 new local projects will be providing service for our customers.”
Sears said that since Marin Clean Energy began serving customers it has generated more than 2,400 California jobs. She said Marin Clean Energy’s new solar projects will create more than 750,000 union work hours in just 12 months.
Rep. Jared Huffman, D-San Rafael, said, “I’m especially excited about the new clean energy production that is now under construction here locally. That has always been one of the better parts of the promise of Marin Clean Energy, and it’s happening now.”
The agency has its naysayers, however. Jim Phelps of Novato, who has worked as a consultant to the electric and petrochemical industries, and the International Brotherhood of Electrical Workers Local 1245, which represents PG&E’s electrical workers, have hammered MCE for its use of renewable energy certificates, typically referred to as RECs. RECs are tradable commodities that certify that 1 megawatt-hour of electricity has been generated from an eligible renewable energy resource.
Critics of the use of RECs assert that they are priced too low to effectively stimulate the creation of new, renewable energy production. Marin Clean Energy and others who use RECs acknowledge their shortcomings but say they are currently the only game in town.
Projects announced Thursday will produce about 63,000 megawatt hours per year, sufficient energy to meet the average electricity consumption of about 10,400 Marin Clean Energy residential customers, said Jamie Tuckey, a Marin Clean Energy spokeswoman.
In most cases, Marin Clean Energy has encouraged development of the projects by agreeing to purchase a certain amount of electricity at a specified price over the next 20 to 25 years. The largest project, 30,000 megawatt hours per year, is being financed by Waste Management and will convert landfill gas at Redwood Landfill in Novato to energy. The project is scheduled to begin generating energy this year and the contract is for 20 years.
The second-largest project, 19,800 megawatt hours per year, is slated to go online this year on land in Richmond that Marin Clean Energy will lease from Chevron. Marin Clean Energy is investing $125,000 from its local renewable development fund to help cover predevelopment costs for this project. Marin Clean Energy has an agreement to purchase the project from developer Stion in its seventh year.
Four of the projects will be in Novato, and one will be in Larkspur. The Larkspur project, 600 megawatt hours per year, will be a rooftop solar project.
Connolly said that since Marin Clean Energy began serving customers it has doubled the amount of renewable energy purchased for homes and businesses in its region, reduced greenhouse emissions by 59,421 tons, sourced green power from more than 30 California suppliers and saved customers more than $5.9 million in energy supply costs last year alone.
Marin Clean Energy, which has 23 full-time employees, celebrated its service anniversary with a party at its new headquarters at 1125 Tamalpais Ave. in San Rafael. It has moved from a 2,188-square-foot space to offices with 10,710 square feet. The meeting room in the new headquarters is named after former Marin County Supervisor Charles McGlashan, one of Marin Clean Energy’s founders who died of a sudden heart attack in 2011.
Connolly said Marin Clean Energy would not exist today if not for McGlashan’s “passionate dedication and leadership.”
Assembly Bill 2145, the proposed law aimed at crushing Community Choice Energy programs in California, is officially dead. When Senator Steinberg brought down the gavel this morning at 3:00 a.m. with no vote from legislators for AB 2145, the bill died. The bill’s author, Assemblyman Steven Bradford, was unable to find a colleague to manage his bill on the senate side.
The victory over extremely powerful corporate forces in Sacramento resulted from the uprising of governments, businesses, and clean energy advocates from San Diego to Del Norte County. A statewide coalition, Californians for Energy Choice, fought the bill to the bitter end.
Community Choice energy is the most powerful tool to rapidly reduce greenhouse gas emissions at the local level. Large utilities have repeatedly tried to stop it. Pacific Gas & Electric spent nearly $50 million in 2010 pushing Proposition 16 that would have ended Community Choice in California. Voters roundly defeated this statewide ballot measure.
The Climate Protection Campaign played a central role in raising awareness and educating the public about the perils of AB 2145, which originally would have turned Community Choice law on its head and made the large corporate utilities the default service providers in the State.
“Regarding Community Choice, you know you are on to something good when the corporate utilities spend hundreds of thousands of dollars to try to stop it, said Ann Hancock, Executive Director of the Climate Protection Campaign. She added, “We recognized immediately the serious threat that AB 2145 posed, so we acted, and it has paid off. We are now very eager to continue helping to develop clean energy Community Choice programs across the State.”
More information: www.no2145.org
Contact: Woody Hastings, 310-968-2757,woody@
Ann Hancock, 415-298-1224, ann@
By Janis Mara
On a 7-0 vote, the commission approved the permit for a solar installation proposed by Crawford Cooley and Beverly Potter on their property, a former rock quarry in an isolated area just outside Novato. Nine people, including representatives of Sustainable Novato, the Marin Conservation League and a local union, spoke in favor of the project, and an Audubon Society representative voiced concerns but did not directly oppose the project.
The project encompasses 4,272 solar panels up to 6.5 feet high on 11.5 acres of the 952-acre quarry. The $6 million project will generate 1.98 megawatts of electricity, delivered to Marin Clean Energy via nearby power lines. The site, which is not visible from the road, is west of the city of Novato, east of Stafford Lake and about a mile north of Novato Boulevard.
The quarry was once mined for serpentine rock, which contains asbestos. Quarry operations shut down in 1990.
“I’m ecstatic,” said Roy Phillips, president of San Rafael-based REP Energy. Phillips will own and build the solar installation along with San Rafael-based Danlin Solar, leasing the land from Cooley and Potter.
“This shows that we can work together with environmental protection groups as a team to site successful solar projects,” Phillips said. Last year, a project in which Phillips was involved, a solar farm at Green Point Nursery that could have powered 200 Marin homes, was killed by the Marin Board of Supervisors amid a storm of protest from neighbors who said the panels would be unsightly.
“This is truly the ideal site,” Phillips said. “We can use this project as a model.”
The commissioners granted the permit with the conditions that chemicals not be used in cleaning the panels and that the equipment be removed and recycled when the project is decommissioned.
“If we’re going to do it, this is the time,” said Commissioner Don Dickenson.
Representatives of Marin Clean Energy testified that the project would become part of “Sol Shares,” which offers residents the chance to purchase 100 percent solar energy from a local solar farm in the company’s service area.
“Now local people can own a little piece of this project,” Phillips said.
Commissioner Peter Theran initially questioned whether the facility conformed to portions of the county’s general plan seeking to protect scenic views.
“I am a fellow hiker. I don’t think the countywide plan or design review guidelines mean we can’t see something. I don’t think a solar installation has an adverse effect (on views),” said Commissioner Katherine Crecelius.
“I want sustainable energy. I would like my daughter and her kids to have a place to live in generations to come,” said Valentin Beltran of Novato.
“We do support sustainable energy,” said Barbara Salzman of the Audubon Society. “We are concerned that the environmental impacts be addressed.” Salzman suggested that “it should be a condition of the permit that no chemicals be used in washing the panels,” and commissioners did add such a condition.
“We’re all proud of Marin’s landscape. We need to make sure that landscape can evolve to meet the shifting needs of the planet,” said Bill Carney of Sustainable San Rafael. “I am on the committee working to develop a solar ordinance for the county. We should not use that process as a fig leaf to avoid projects like these,” Carney said, referring to arguments made by some that decisions on projects should be deferred until an ordinance is in place.
“Climate change is not waiting,” Carney said. “We need to act.”