CCAs in California focus on the rapid transition to highly renewable and/or greenhouse gas-free sources of electricity generation while keeping rates at or below what investor-owned utilities charge. California’s focus on the environmental benefits that CCAs can deliver distinguish it from other states where a focus on lower rates has been the primary driver of the growth of CCAs.
California experimented briefly with electricity deregulation in the late 1990s, but pulled back after the California electricity crisis bankrupted the state’s three large investor-owned utilities (IOUs). The state electricity market is now regulated. For residents and almost all businesses, CCAs (where they exist) are the only alternative to buying electricity from the local IOU. (CCAs are not offered in cities that operate municipal electric utilities, such as Los Angeles, Sacramento, Riverside and more than a dozen others.) Some large businesses are allowed to purchase power directly from independent electric service providers via “Direct Access,” but this program has been capped and its expansion is tightly constrained. Proposed legislation to expand Direct Access (SB 286) failed in 2016.
CCAs are opt-out programs and are established by a local ordinance voted on by the governing body of a county, city or special district (e.g. local water agency or public utility district). No public vote or referendum is required.
CCAs are set up either by a single jurisdiction (as in the cities of San Francisco, San Jose and Lancaster) or by two or more jurisdictions that create a Joint Powers Authority (JPA) to operate the CCA on their behalf. When a JPA is used, each jurisdiction, regardless of its population, usually gets one seat on the JPA’s Board of Directors. Directors are usually elected officials of participating jurisdictions, e.g., a city council member of county supervisor. Directors are appointed by the jurisdiction’s governing body.
The JPA approach is favored because it creates a legal firewall between the potential future liabilities of the JPA and the assets of its member cities and towns, although member cities may be required to provide loans or loan guarantees to enable the JPA to secure bank loans for its initial working capital.
Once a CCA has operated successfully for a period of time it is possible for it to expand geographically and add customers in other parts of the state, as Marin Clean Energy, Sonoma Clean Power and Lancaster Choice Energy have done.
Initial power supply contracts for new CCAs are typically for 5 years or less, but 15-25 year power purchase agreements (PPAs) for solar, wind and geothermal generation are common for more established CCAs. Development of local renewable energy projects is often a core goal. Most CCAs in California also offer solar net energy metering tariffs that are slightly more generous (e.g., 1 cent per kWh) than those offered by IOUs. Many also offer feed-in-tariff incentives for medium and large-scale local solar projects, energy efficiency programs, and demand response programs.
California’s first CCA, Marin Clean Energy, was launched in 2010 to serve customers in parts of Marin County. The program that was once branded as a “risky scheme” has proven to be economically viable and has expanded its service territory and its roster of programs and services.
Interest in CCAs and their environmental benefits has grown dramatically since 2014. The graphic in the upper right of this page shows the current status of programs that are operational or well on their way to becoming so. Links to CCA web sites appear in the right-hand column.
CURRENT & EMERGING ISSUES
The rapid growth in the load served by CCAs and the expected continuation of this growth pose serious challenges to the viability of the state’s three IOUs, especially San Diego Gas & Electric (SDG&E). If the City of San Diego forms a CCA it will reduce the need for more than half of SDG&E’s generation contracts, but there is no obvious way for these contracts to be terminated or transferred to the new CCA without causing serious legal or operational issues. Similar problems, though less severe, affect Pacific Gas & Electric (PG&E) and Southern California Edison (SCE).
There is not yet agreement among the various parties about which charges related to legacy IOU generation contracts and the operation of the transmission and distribution system should be “passed through” to CCA customers. For example, a non-profit organization called The Clean Coalition is working to reduce transmission access charges that it believes unfairly burden distributed generation (DG) resources such as solar PV that don’t actually use California’s transmission infrastructure but still have to help pay for it.
Another area of great concern to CCAs and their customers, as well as to the IOUs, is the “exit fees” charged to CCA and DA customers. The official name of the fee is Power Charge Indifference Adjustment (PCIA). This is a complex topic, but this article summarizes some of the issues. In mid-2017 the CPUC initiated a proceeding to take a fresh look at exit fees. The Docket Number is R.17-06-026 and the order instituting rulemaking (a 36-page PDF) is available here. Those desiring more information should search the web for more recent articles about the PCIA or contact the Government Affairs Manager at one of the CCAs listed on this page.
- Unlike the process in many other states, communities in California do not have to hold a referendum to start or join a CCA. Local elected officials authorize participation in a CCA by a simple majority vote.
- Large hydro-electric dams and nuclear power plants are not classified as eligible renewable energy technologies in California, but the electricity they produce is considered to be greenhouse gas free.
- Every CCA offers both a basic (default) electricity offering (typically 35% to 55% renewable) and also a 100% renewable option for a one to two cents more per kWh.
- Unbundled Renewable Energy Credits (RECs) are not widely used by California CCAs, though they are sometimes used during the first year or two of a new CCA’s operation before new solar or wind farms can be built to serve the CCA’s customers.
- When it began delivering electricity in April 2017, Silicon Valley Clean Energy was the first California CCA whose default offering was 100% GHG-free.
- Peninsula Clean Energy in San Mateo County is a Joint Powers Authority with 21 member agencies. Twenty cities each have a seat on the Board of Directors and the county has two seats. The proposed Los Angeles County CCA may have four times as many directors because more than 80 cities are interested in joining!
LEGISLATION (Partial List)
- AB 117 (2002) established Community Choice in California
- SB 790 (2011) was passed in response to efforts by Pacific Gas & Electric, in particular 2010’s Proposition 16, to stop the growth of CCAs. It created a code of conduct that utilities must adhere to. In essence, it prohibited utilities from marketing against CCAs except through a separate marketing division separated by a “firewall” from the other operations of the utility. The first such marketing entity was established in late 2016 by Sempra Energy, the corporate parent of San Diego Gas and Electric.
- AB 1110 (2016) established a framework for disclosing GHG emissions that will apply to CCAs.
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