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California Cities Embrace ‘Community-Choice Electricity’

February 3, 2020

Officials in Irvine, California are inviting four other Orange County municipalities to join their city in a comprehensive government-run electric power management scheme known as a community choice aggregation or community choice energy.

Officials in Irvine, California are inviting four other Orange County municipalities to join their city in a comprehensive government-run electric power management scheme known as a community choice aggregation (CCA), also referred to as community choice energy.

In December 2019, the City Council of Irvine invited the neighboring cities of Costa Mesa, Huntington Beach, Newport Beach, and Tustin to form a CCA. The proposed CCA would give participating governments the lead role in purchasing electricity for their communities, determining rates people would pay, and designating incentives or setting requirements for green energy provision.

Southern California Edison would continue to deliver electricity, through a partnership with the CCA, and would be responsible for erecting and maintaining powerlines and other infrastructure as well as billing customers.

The city plans to submit its plan soon to the California Public Utilities Commission (CPUC). CPUC exercises oversight over CCAs and their interactions with utilities and must approve any CCA plan.

CCAs Trending

Marin County, just north of San Francisco, established California’s first CCA in 2010. There are now 19 such government-run community electric power aggregators in the state.

Laguna Beach completed a CCA feasibility study in 2018, concluding the city could save itself and its residents between 4 percent and 6 percent on their electric bills through a CCA managing electric power provision. After considering a CPUC ruling on how investor-owned utilities can recoup costs from customers leaving their system, the estimated savings fell below 2 percent, and for now Laguna Beach has chosen not to move forward in establishing a CCA or joining another community’s.

Taking the opposite tack, the San Diego City Council voted in September to create a CCA with the nearby cities of Chula Vista, Encinitas, Imperial Beach, and La Mesa. Scheduled to begin operating in 2020, the San Diego area initiative will be the second largest CCA in California, after the Clean Power Alliance in the Los Angeles area.

San Diego Mayor Kevin Faulconer (D) pushed the CCA initiative, saying the ability it would give the region to specify green energy production is essential if the city is to reach its Climate Action Plan goal of deriving 100 percent of its power from renewable energy by 2035.

‘Risks and Consequences’

Cities adopting CCAs may be getting in over their heads, warn critics such as Bill Roper, a member of the San Diego Strategic Roundtable business group. Cities may not fully understand the risks of managing the electric power supply, and ultimately can cost their residents money, Roper wrote in a letter to council members ahead of the vote.

“Successfully establishing a new, multi-jurisdictional, quasi-government agency to enter a non-core competitive business area requires much more due diligence than is evident in this instance,” Roper wrote. “The rush to join those who have formed CCAs should not supersede a more complete understanding of … risks and consequences.”

CCAs are often not as “green” as those pushing the schemes portray them, says Wendy Lack, chairman of the Alliance of Contra Costa Taxpayers (ACCT).

“Most electricity is made from fossil fuels because it’s cheap, reliable, and efficient,” writes Lack on the ACCT’s website. “Wind and solar power are intermittent, so fossil fuels are needed to ensure 24/7 power.

“In fact, generating more wind and solar energy actually increases demand for fossil fuels,” writes Lack. “CCAs often buy renewable energy credits to ‘greenwash’ fossil fuel energy. … Buy ‘renewable energy credits’ and, like water into wine, relabel fossil fuel energy as green.”

Consumers Pay More

Contrary to public officials’ promises, CCAs often charge residents more for electric power than the utilities they replaced, Lack says. For instance, Sonoma County’s CCA “all renewable” plan costs residents $11 per month on average more than if they bought power from Pacific Gas & Electric (PG&E).

“Marin Clean Energy (MCE) has been operational since 2010,” writes Lack. “MCE offers three options, all of which cost more, on average, than PG&E.

“MCE estimates its customers pay a monthly average of $4 to $32 more than PG&E, with the ‘cleanest’ energy options the most expensive,” writes Lack. “Procurement contracts are non-cancellable and can span 30-40 years into the future, [meaning] cities that join CCAs are on the hook for large, long-term financial obligations.”

CCAs inevitably lead to cronyism, warns Lack.

“Proponents of CCAs also seek to increase the use of renewable energy sources,” writes Lack. “Critics observe that the growth of CCAs offers financial and political gain to consultants, employees, renewable energy companies, public officials, and others who profit from their proliferation, all at taxpayer expense.”

Reliability Threatened

The growth of CCAs is exacerbating California’s high energy prices and increasing electric power unreliability, says Craig Rucker, president of the Committee for a Constructive Tomorrow (CFACT).

“The greater the number of California jurisdictions forming CCAs, the more they will expose themselves to dependence on intermittent wind and solar power,” said Rucker. “This may be compatible with arbitrarily set renewable energy goals, but it is incompatible with providing their communities with baseline power necessary to meet demand.

“California already has sky-high electricity prices and a shaky grid, and CCAs only make things worse,” Rucker said.

Bonner R. Cohen, Ph.D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with CFACT.

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org