Municipal electric aggregation


Municipal electric aggregation is big news. CEG’s Leo Wiegman, as Executive Director of Sustainable Westchester Inc, has been deeply involved in the creation of the Westchester Power Program. In May 2016, over 110,000 electric customers in the County will enjoy low, fixed rate supply costs. Even bigger news is that over 70,000 customers in 13 cities, towns and villages will be buying 100% renewable energy supply through this program for 2 plus years as of May 2016. This group volume creates over a half million megawatt-hours a year of market demand for non-fossil, non-nuclear, 100% renewable energy supply!!

“Community choice aggregation (CCA) is an energy procurement model that allows local governments to pool, or aggregate, the electric load of their residents, businesses and institutions in order to purchase electricity on their behalf.”
—Shawn Marshall, Vice Chair, Marin Energy Authority (CA)

Municipal electric aggregation, a/k/a community choice aggregation is arriving in New York! A recent Public Service Commission order authorizes local governments to pursue community choice for both electric and natural gas supply.  David Gahl of the Pace Energy and Climate Center has a good summary here.

“CCA is not a liberal or conservative thing—It’s a business tool that reflects the values of the region.” —D. Orth, Kings River Conservation District (Fresno CA)

What if communities could lower electricity costs, increase the local supply of cleaner energy sources, stimulate local economic growth, and create local good jobs through new local generation assets?

Under the New York PSC order, Westchester municipalities will be enabled to aggregate their residents and small businesses into one large buying group for electricity and natural gas. Costs would be fixed at rates less than the utility has been charging over the previous six months, resulting in savings of millions of dollars for Westchester energy consumers.

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What is community choice aggregation?

In states where electricity is deregulated and semi-deregulated, community choice aggregation (CCA) provides municipalities with access to the wholesale power market to meet their desired electricity supply portfolio, while still having the existing utility provide delivery and billing services.

Community choice aggregation is a market-based energy solution that is revenue supported and not reliant on taxpayer subsidies.

Community choice aggregation (CCA) is a procurement framework that allows municipalities to procure and produce electricity to meet the collective load of their local residents and businesses.

This concept is also called “community energy aggregation” (CEA). Residents in such communities automatically become customers of the system. Businesses may opt in if they find it in their interest to do so.

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The reasons municipalities pursue CCAs include:

  • lower electricity costs,
  • greater reliance on a renewable energy supply,
  • reduced greenhouse gas emissions, and
  • economic growth and job creation through the development of local generation assets.

Where is CCA being used?

As of early 2015, seven states–California, Illinois, Massachusetts, New Jersey, New York, Ohio, and Rhode Island–have adopted laws that enable local governments to band together to pursue joint energy supply and demand solutions using a CCA approach. The table below indicates the year each state enabled CCA and offers some program highlights.

California (2002) CA: The Local Energy Aggregation Network reports California has very robust activity since the 2002 enabling legislation.  California counties, like Marin, using CCA have been able to increase renewable energy to 27% of supply, way ahead of expectation and the state standard of 20%. The Marin Energy Authority began with pilot program for 14,000 customers in 2010, expanding to 95,000 residential and commercial customers in 2012.
Illinois (2009) Illinois has 15 cities issuing requests for proposals for energy supply that meets their criteria for price and clean energy sources with nearly 300 more cities voting on CCA in March 2012. The Illinois cities already using CCA have achieved 25% savings over the prior rates. See for example, the success of the Village of Oak Park Illinois.
Massachusetts (1999) Massachusetts has the longest-running CCA and was the first state to adopt aggregation legislation. Taking a regional approach, 21 towns collaborate in the Cape Light Compact,launched in 1997. The Cape Light Compact CCA is partnering on an 18.2MW new solar installation and serves nearly 200,000 customers to negotiate lower electric rates. They achieved an average 6% rate savings for the default supply, with a small premium for 100% green power option.
New Jersey (1999) New Jersey’s law used an “opt in” default position that others could learn from.  The major lesson is that an “opt in” approach (in which participants must actively opt into the program) leads to very low participation and that an “opt out” approach is much better at securing adequate participation. New Jersey does not yet have an active program.
Ohio (2000) Ohio has the nation’s largest CCA program, NOPEC, covering 9 northeastern counties and serving almost 500,000 customers, saving $127 million for customers since 2000. As of late 2011, Cincinnati and a surge of 53 other cities are in the process of forming CCAs, after a banner day for aggregation referenda at the ballot box in November 2011.
Rhode Island (1999) Rhode Island has 95% of its cities and towns aggregating their buying power to find better, cleaner power for their municipal operations and facility loads. Known as REAP (Rhode Island Energy Aggregation Program) and run as part of the RI League of Cities & Towns, the program serves 37 of the state’s 39 municipalities. REAP has been able to negotiate consistently better rates with suppliers than were available through the state’s Standard Offer or Basic Service rate. REAP has provided its member cities and towns with electricity savings of $28 million since its beginning in 1999.

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How does CCA work?

CCA works easiest in states that have deregulated electricity markets, such as New York. While the details vary from state to state, according to the Local Energy Aggregation Network, “Community Choice Aggregation (CCA) allows local governments to negotiate the purchasing and development of power and energy-related programs on behalf of their communities. Energy generation revenues go to the new local agency, while all transmission and distribution lines, repairs, billing and customer service functions and associated revenue remain with the existing utility. Once the CCA is established by vote, customers are automatically enrolled, but are free to remain with their existing utility service by “opting out” of the CCA at any time.”

Across all the states that have established CCA programs, we find the following common features:

  • CCA is enabled by state legislation.
  • CCA is an “opt out” program, meaning all local end-users are automatically enrolled, yet may opt out.
  • Local governments are the decision-makers regarding electricity supply and local program optimization (local renewable generation, feed in tariffs, local job creation).
  • Utilities remain as the delivery and billing partner.
  • Existing state regulations and environmental mandates apply, such as renewable portfolio standards, greenhouse gas reductions.
  • CCA programs are not funded by taxpayers. CCA  programs are entirely funded by the existing end-users of the electricity

More information

A lot has happened since this 2009 report  from The New Rules Project and The Institute for Local Self-Reliance, but it is a good primer.

The USEPA’s Green Power Partnership works closely with CCA communities, in particular through its Clean Energy Collaborative Procurement Initiative.

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