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Community Choice Aggregation



Following Local Power Inc.’s lead, municipalities are increasingly choosing CCA specifically as a powerful vehicle to reduce greenhouse gas emissions, create local economic development and green jobs, or improve local energy resilience. This is possible because CCA is enabled and facilitated by state laws under which communities may break away from their monopoly electricity supplier and negotiate with energy wholesalers, and sometimes brokers, and local renewable energy developers and energy efficiency installers. As of 2014, CCA laws cover 25% of U.S. annual electricity demand in seven states, with 1300 municipalities (rapidly growing) already serving one in twenty Americans (5%). CCA is widely recognized for achieving the highest levels of green power at the lowest prices in the United States, and has already saved Amerian residents and businesses in the billions of dollars on their energy bills.

Definition of CCA

CCAs are statutorily authorized retail electricity choice programs administered by municipalities, which aggregate the demand of all customers within their jurisdictional boundaries, enrolling customers on an opt-out basis (2014 U.S. avg. opt-out is 15%), in order to leverage the negotiation of contracts with retail or wholesale energy providers, as well as energy efficiency installers and renewable energy developers, variously and with differing local rules and regulatory conditions according to state CCA laws and other state-defined retail energy utility industry regulatory structures. Some CCAs also aggregate community gas service for heating. CCAs form in order to control energy sourcing locally, lower and stabilize rates, green their power supplies, and in some cases to make and repay investments in accelerated and expanded energy efficiency measures, and/or develop local renewable energy and energy efficiency projects.

The Story of CCA

Paul Fenn, founder and president of Local Power Inc., drafted both the nation's original version of CCA legislation, in Massachusetts, and its most advanced and powerful form in California. Local Power also developed original solar finance authority legislation approved at the municipal level to offer bond financing to customer-owned renewables and efficiency. Originally designing CCA for a retail market in which municipalities would hire brokers to procure cheaper or greener power from wholesale suppliers, Fenn redesigned the policy for his home state California and won sponsorship of new "wholesale" CCA legislation, which was adopted during California's energy crisis in 2002. Writing and organizing support for Massachusetts' landmark CCA as a Climate Protection policy platform, he was disappointed with the "superficial" outcome of CCA in Massachusetts and Ohio in the late 1990's, in which CCAs narrowly focused on short-term discounts for small customers (saving on average 5-15%), ultimately delaying action on energy localization. In this early period, CCA had proven the superior economics of CCA over deregulation, but not changed the basic business model.

The new "wholesale" form of CCA for California put municipal programs into an "operational" role with CCA implementation. Based on his earlier experience, Paul Fenn saw that rather than merely hiring a broker or wholesaler, California CCAs could handle and control more components of the energy service to make a longer-term approach to energy procurement possible. They could hire one or more contractors for transmission scheduling, resource adequacy, data management and back office operators in addition to procurement planning, offering energy efficiency products and supervising renewable energy development.

But getting California CCA to focus on localization required a new building block as well. Local Power focused in California particularly on financing local renewables and efficiency. Local Power founders Paul Fenn drafted, and Julia Peters led the successful campaign for, San Francisco’s voter approved "Solar Bonds" in 2001 to augment his earlier law so that CCAs could not merely purchase grid power but finance and install customer-owned local renewables and energy efficiency. The Proposition H Bond, Solar Bond, was passed by voters in 2001.

The next ten years witnessed the progressive marriage of Solar Bonds with CCA into a whole new model for energy - "CCA 2.0." This led to the formation by Paul Fenn and Julia Peters of Local Power Inc.. There was a need to demonstrate by creating business models and solutions in law and regulation to empower the local municipal authority to finance construction and operation of renewable distributed energy resources. To achieve localization with CCA, Local Power began to work directly for local governments to lay out, step by step, a path to recentering the production of power on the city and its population - and recentering the business model away from sales and around regional demand reduction.

Starting in 2002, Local Power went into the details of making localization possible by developing the policy and program design paths to implement local "build-outs" by CCAs as consultant to municipalities. Local Power Inc. won favorable state rules and data access from the California Public Utilities Commission to pursue CCA 2.0, and worked with leading CCAs including San Francisco, Sonoma County and emerging CCAs in California and other states to make CCA 2.0 a reality. Both regions are now pursuing ambitious programs designed specifically for localization of renewbles and accelerated, scaled demand and carbon reduction.

Today, because of the leading development of the policy by Paul Fenn and the design work of Local Power, California CCAs are localizing their energy supplies using our innovations, such as contracting for local renewable projects, innovative strategies for energy efficiency, and customer ownership with on-bill financing arrangements. LPI continues to advocate and develop this bolder, scaled, accelerated and enduring approach to CCA and has won a significant following for its approach in the process, with more and more CCAs defining their purpose in terms of the benefits of physical localization: green jobs, substantial and permanent greenhouse gas reductions, and customer ownership. Local Power drafted CCA 2.0 legislation for New York State in 2014, and has been working with state regulators since Governor Cuomo subsequently issued an executive order authorizing CCA as a new platform for Distributed Energy Resources..

The Detailed Work of Real Localization

Growing nationwide interest in CCA is increasingly focused on physical localization in order to create more "real" benefits than greener energy supply or cheaper rates, such as local economic development, green jobs, and enduring greenhouse gas reductions, and even the Marin Energy Authority, which initially resisted this path, has adopted it as of 2014, and the same year three other CCAs had received Green Community awards from the Environmental Protection Agency.

When Local Power Inc. shifted its focus to implementation in early 2000s, intervening with California Public Utilities Commission in 2004, and winning regulatory approval of full data access for CCAs to create models for energy localization, the company was as a result retained by Sonoma County to collect and analyze one of the first detailed Big Data releases in the United States of customer energy data including every meter read for those cities and counties investigating CCA for five years into the past. Between 2011 and 2013 Local Power completed its "ultimate CCA 2.0" program design for the City of San Francisco's CleanPowerSF program, preparing a business plan for the City to issue $1B in Solar Bonds to build a 25% localized energy system in five years, purchasing 100% renewable energy while maintaining rate parity with PG&E, and generating a $600M surplus in the tenth year of service. As CCA has grown from just a few municipalities to over a thousand municipalities including big cities like Chicago and Cincinnati, Local Power has acted as Research & Development arm of the CCA movement, using CCA access to end-user data to create regional energy localization cost and financial models, and to prepare local governments like Sonoma County and San Francisco for their "soft landing" to implement city and countywide energy localizations and greenhouse gas reductions at rate parity or lower rates than the incumbent utility.

Today, 5% of the U.S. population is under CCA service for electricity in 1300 municipalities, including well-known population centers like City of Chicago, Cincinnati, Cape Cod, Sonoma County as well as hundreds of less known small towns and rural counties. CCA formation by municipal ordinance or local election is allowed and provided for under state laws governing 25% of the U.S. electricity market.

 Wikipedia Article about Community Choice Aggregation Wikipedia

 Wikipedia Article about Solar Bonds in Wikipedia

 Article about Paul Fenn's CCA Strategy in Fast Company Magazine (2010)

 Local Power staff article on Community Choice paradigm shift reprinted from Natural Gas & Electricity (Wileys, 2008).







 
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