Community Choice Aggregation: A Solution to Greening Your Energy Supply and Saving Money?
What You Should Know Before Joining
Across the country Community Choice Aggregation (CCA), which allows cities and towns to buy electricity on behalf of residents and businesses, is being utilized as a key tool to help consumers address climate change by allowing communities to serve as an energy buyer for their constituents with the goal to provide more affordable and cleaner electricity.
The trend is growing in New England where three states currently allow CCAs and others are considering legislation that would enable CCAs. For many residents who are seeking more local control over their electricity sources and want to drive renewable energy, CCAs are a great option. However, nonprofits and municipalities should take a hard look at whether it’s the right model to meet their energy management needs and sustainability goals.
The mechanism, also known as municipal aggregation, started here in New England. Massachusetts was the first state in the country, through its 1997 energy restructuring law, to enable municipal aggregation. As of today, nine other states (Ohio, Virginia, California, Rhode Island, New Jersey, Illinois, New York, New Hampshire, and Maryland) have enacted legislation to enable CCAs. Connecticut is actively investigating doing so as well. Recently, the Connecticut Public Utilities Regulatory Authority (CT PURA) issued a paper providing guidance to the General Assembly where legislation is being considered.
While state law dictates whether a community can develop a CCA, each municipality must approve their own use of the model as well. And many are doing so. In Massachusetts alone, about half of the 351 cities and towns have CCAs available or are planning to roll them out soon. There is increasing demand from residents to have access to cleaner energy sources than what’s offered from their investor-owned utility and to buy it at a cost-effective rate. While CCAs can often offer this to residents in their communities, it’s not necessarily the best arrangement for organizations like schools, hospitals, colleges, and nonprofits, which should give any CCA a thorough review before deciding to go with a CCA if one is available in their city or town.
Here’s what PowerOptions Members should know about CCAs:
First, inspect your current energy bill. Rates offered through a CCA are not always a boon for non-residential organizations with more than very small energy loads. Since they typically set CCA pricing based on residential energy use, Commercial & Industrial (C&I) customers will often see that the rates offered through a CCA aren’t significantly lower—and can in fact be higher than the basic C&I rates from their investor-owned utilities. And this holds truer for organizations on competitive electricity supply, where their price may already be lower than the utility’s.
Besides cost-savings, environmental attributes of CCAs are a huge driver for participants concerned about climate change and transitioning from fossil fuels to clean energy. CCAs have significantly increased the amount of renewable and clean energy they procure over the years. The over 4.5 million CCA customers across the country collectively bought 13.1 million MWhs of renewable energy in 2018 and that number is growing, according to the National Renewable Energy Laboratory (NREL).
For residents, entrusting community leaders to manage the energy mix in alignment with state and local clean energy goals makes sense. But for organizations that may have unique goals for carbon reduction, or a desire to go above and beyond state and local requirements, a CCA may not provide the types of renewable electricity procurement to best achieve their individual sustainability goals.
A CCA may have a lot to offer residents. However, non-profits and municipalities themselves may benefit from other competitive procurement models, such as purchasing RECs directly through their own third-party competitive electric contracts, or securing renewable electricity power purchase agreements for new renewable energy projects. The most important takeaway for organizations considering greening their energy supply through a CCA is to consider what you’re trying to achieve. Saving money while greening your energy supply can be done in several ways and should be part of a comprehensive energy and sustainability strategy based on your organization’s needs.