A New Form of Public Power - Community Choice Energy Aggregation (CCA)

By Dan Lieberman

The employee handbook at East Bay Community Energy (EBCE) – a Community Choice Energy Aggregation (CCA) in Northern California -- contains a policy requiring that each employee spends at least two hours each year staffing a public event. By representing EBCE at farmers markets, street fairs or food festivals, and interacting directly with the public, each employee gets a sense of what’s on the minds of customers.

Attending events allows us to explain our business model as a CCA: a local government agency that buys and/or generates all of the power for its jurisdiction. Two years ago we became the default supplier of electricity for all customers (residential, business, municipal) in most of Alameda County (Oakland, Berkeley, Fremont, etc.). Customers are allowed to “opt out” and return to the incumbent utility (in this case, Pacific Gas & Electric) if they wish; although the CCA’s value proposition features lower rates, more renewable energy, and programs that complement what the utility offers.

As a staff of East Bay Community Energy, when I engage with customers, what strikes me the most is they have a hard time believing that:
1.    The CCA’s rates are lower than those of the utility.
2.    That the law would allow us to “take over” the utility’s service without the customer’s explicit permission.
3.    That having a government agency involved in the energy business can improve things.

More than once, a customer has said what I’m saying simply cannot be true - there must be a catch. Let me explain how CCAs work, in the context of so much skepticism, and share how these agencies have a place in the energy ecosystem.

What are Community Choice Energy Aggregation agencies?

The first CCA appeared in the late 1990s in Massachusetts, during the deregulation of retail energy markets. According to Local Energy Aggregation Network, there are now nine states that allow CCAs to form: California, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island, and Virginia. Market growth was modest until recently when the cost of renewable energy sources, particularly wind and solar power, dropped to the point of being cost-competitive. Now in California alone, there are 170 cities with CCAs, serving over 10 million customers, and are forecast to serve about half of California by next year. Among other things, CCAs help California cities to meet their Climate Action Plans without imposing cost.

Aren’t They Just Middlemen?

When CCAs typically launch, they need to rely on existing power plants to serve their customers. Take EBCE for example – in 2018 when EBCE launched, we went from serving no customers, to serving over half a million, including many large industrial customers and hundred of thousands of homes, over a course of a few months. At first EBCE had to buy and re-sell power. But within the first year, EBCE contracted for over 550 megawatts (MW) of new solar and wind, as well as over 150 MW of battery storage.

Collectively, CCAs in California have contracted for over 3,000 MW of wind and solar, and over 240 MW of battery storage. CCAs are a major force behind new renewable energy development in California. Because CCAs are community-oriented agencies, they put a premium on local projects that bring local jobs. At EBCE, we are building 50 MW of wind within our county.

MCE Clean Energy - California’s first Community Choice Aggregation program that provides renewable energy to more than 1 million users in four Bay Area counties: Napa, Marin, Contra Costa, and Solano –  has a large portfolio of renewable energy projects built in the communities they serve.

Won’t this Bankrupt the Utilities?

CCAs provide generation service. They partner with utilities, who deliver the power and provide billing and other services - and they continue to charge for those services. Generation service is mainly a pass-through cost for investor-owned utilities (IOUs) in California by design. Decades ago, regulators de-coupled profits from sales in order to remove the profit motive to sell more power. So CCAs are taking over the unprofitable portion of their business. In California, there are several protections to ensure that IOUs are not financially harmed by CCAs. First, CCAs pay a fee to the IOUs for billing services. Second, IOUs charge CCA customers a monthly “Power Charge Indifference Adjustment” that ensures that any above-market costs utilities incur related to departing load are recuperated.

But with those new fees, are the customers really saving money?

CCAs in California are collectively saving customers millions of dollars each year based on lower rates alone. EBCE saved its customers over $8 million in 2019 through lower rates. California's CCAs are run by nonprofit local agencies that take a long-term view of the market, investing in projects that will deliver clean, low-cost energy over decades. In other CCA markets, such as Illinois, they may not have such a structure, and supply deals tend to be based on short-term supply arrangements that make it difficult to finance large renewable energy projects.

And what happens to Time-of-Use Rates, Low-Income Discounts, and other tariff-related details?

CCAs typically offer the exact same rate schedules as IOUs. EBCE customers’ time-of-use (TOU) schedules are the same as PG&E’s. Those on a low-income program with PG&E, will find that it automatically ports over to EBCE service. Tiered rates remain tiered, medical baseline discount applies. CCAs tend to have generous net metering incentives because their mission includes supporting renewable energy.

And what’s happening with COVID-19?

As CCAs are local public agencies, there is an extra emphasis on assisting communities. Shelter-in-place has created some cost-reduction opportunities such as limiting outreach activities at events, and at EBCE, we’re reallocating those funds toward $1.5 million in COVID-19 relief efforts.

Another CCA, Peninsula Clean Energy in San Mateo County, is giving a $100 bill credit to every customer that is on low-income rates.

And what about energy efficiency and other programs?

Because CCA dollars are not state regulated (rates are set by a Board of Directors composed of local elected officials), there is a greater opportunity for innovation.

California CCA customers continue to pay into the Public Goods Charge, so they are eligible for all IOU programs. So they can receive rebates, incentives, bill assistance, energy check-ups, etc. With those basics covered, CCAs can use excess revenues on programs. Because CCAs are local agencies, they can tailor programs to local conditions, such as weather, housing stock, income levels, wildfire threat, etc.

Fremont Fire Chief Curtis Jacobson speaks at an energy resilience program launch event, held jointly by three California CCAs and a municipal utility, in the first solar microgrid fire station in the U.S.

Seated (L-R): Margaret Abe-Koga, Chair of SVCE Board and Mountain View Vice Mayor; Jeff Aalfs, Chair of PCE Board and Portola Valley Vice Mayor; Dan Kalb, Chair of EBCE Board and Oakland Councilmember; Teresa O'Neill, City Councilmember, City of Santa Clara.

CCA energy programs run the gamut, and tend to reflect local priorities. Here are a few examples in our region:

•    Sonoma Clean Power (SCP) serves rural wine country, and has focused programs on electrifying transportation. Their Gridsavvy Community program offers a free smart electric vehicle (EV) charger for homes, and participants can then earn $5 per month for connecting the charger to their demand response program. SCP also offers $700 incentive for heat pump water heaters, and $50 instant rebate on smart thermostats. These are all paid for through excess revenue (which SCP accumulates while charging customers lower rates than PG&E), and are additional to PG&E programs.

•    Peninsula Clean Energy (PCE) serves San Mateo County, nestled between San Francisco and Silicon Valley. PCE’s DriveForward Electric Program is taking the unique approach of making it easier for low-income residents to purchase a used EV by providing a vehicle incentive up to $4,000. Additionally, PCE is investing $12 million in public EV charging infrastructure over the next four years.

•    MCE Clean Energy was the first CCA in California. MCE has gone deep into energy efficiency programs, and currently offers residents a free smart thermostat or a $3,500 EV rebate. Multi-family buildings can get a free energy assessment or multi-EV charging rebates, and commercial customers can access programs and rebates for LED lighting, heating, ventilation and air conditioning (HVAC), refrigeration, and controls.

•    East Bay Community Energy (EBCE) serves Alameda County, which notably includes Oakland, Berkeley, and Fremont. This summer, EBCE is launching a program that will allow customers to borrow induction cooktops from their local city hall, to give customers the chance to try-before-they-buy. EBCE is launching an incentive for electric heat pump water heaters. And EBCE worked with PCE, Silicon Valley Clean Energy, and Silicon Valley Power to issue a Request for Proposals for a battery resilience program. This summer, EBCE will launch a program that will reduce the cost of installing battery storage by purchasing Resource Adequacy (RA) from the systems. By paying customers to install more battery storage, the customer’s home will be more resilient during outages. And the program will help EBCE meet our RA obligations.

As the energy and utility industry continues to evolve to allow customers greater choice, access to clean energy and lower electric bills, CCA is a viable business model that delivers renewables-generation services at lower rates, community-centric customer programs and services, while also providing greater local input on critical decisions around electricity.

Dan Lieberman is Director of Marketing at East Bay Community Energy. He has been in the renewable energy industry for over two decades.

This article is republished from the July 2020 issue of Strategies, AESP’s exclusive magazine for members. To receive Strategies, please consider joining AESP.