What is Community Choice Aggregation (CCA)?
Most people don’t give much thought to how the lights turn on every day. We want to watch Netflix, we know the utility manages the grid to power the TV, and we pay a modest monthly price. It seems simple, but there’s a whole lot going on behind the scenes.
Utilities are tasked with delivering electricity reliably, affordably, and now, cleanly to all of the customers in their territories, which can comprise tens of millions of people.
Governments bestow special monopoly privileges upon utilities so that we only have one set of poles and wires on our streets. That’s why we’ve never had an option besides paying the utility companies for our energy.
However, that’s now changing with something called Community Choice Aggregation… it’s not at all a sexy or intuitive name so people instead say CCAs.
The Rise of CCA’s
CCAs are nonprofits that municipalities can create and they come in all different forms. People living within the CCA territory can decide if they want to opt-in or remain a utility customer.
CCAs have the sovereignty to purchase energy generated from sources of their choosing. They can also use the revenue from their rate-payers to fund programs beneficial to their communities, such as energy efficiency initiatives and rooftop solar projects.
But to avoid redundant investment in poles and wires, and because nobody wants to see more of those eyesores across the sky, CCAs work with utilities to use existing infrastructure for transmission and distribution of energy, like so:
Here’s how the responsibilities for CCAs and utilities align and differ:
Given the municipal nature of CCAs, the leaders often don’t have backgrounds in the energy industry and therefore hire third-parties to manage the various critical utility functions to balance energy generated, demanded, and delivered.
Pros and Cons of Community Choice Aggregation
Pros
- Cleaner Energy — Because CCAs have the freedom to procure their own energy for a large number of people, they can sign onto and potentially catalyze renewable energy generation projects. Here’s a comparison of a handful of CCA’s with their respective utility big brothers in Northern and Southern California:
- Lower Customer Rates — Unburdening themselves from paying large salaries and bonuses tied to stock performance, CCAs can offer lower electricity rates. They also have the benefit of declining costs of energy whereas utilities may already be locked into long-term contracts with higher rates. CCAs can also provide better net metering incentives for their customers with rooftop solar who send excess energy back to the grid.
- Local Control — Because CCAs focus on smaller territories and are managed by elected municipal leaders, they can better serve the interests of their community members with alacrity. Knowing the community allows CCAs to make effective decisions and energy investments that serve community preferences.
Cons
- Lack of Expertise — Municipal leaders without expertise in energy markets have a steep learning curve to climb. Managing the energy business of a territory, albeit smaller than a utility, is complex. Utilities have amassed myriad learnings over the years that are now embedded in those institutions.
- Financial Risk — Utilities have tremendous assets that can be used as collateral for financial backing. Without this, CCAs may have issues securing insurance as climate disasters become more frequent and destructive. Additionally, newly formed CCAs could have difficulty weathering financial storms.
The Growth of CCA’s
“I find that not all CCAs are created equal,” said Michael Picker , President of the California Public Utilities Commission.
CCAs have been growing in popularity and all trends point to continued growth. Here is the amount of electricity managed by CCAs in California over the past decade:
And here is that electricity load overlaid with the declining load of California utilities:
Originally published at https://cleantechrising.com on April 6, 2020.
