- Nov 4, 2020 11:51 pm GMT
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:
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?
And what’s happening with COVID-19?
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:
This article is republished from the July 2020 issue of Strategies, AESP’s exclusive magazine for members. To receive Strategies, please consider joining AESP.