Best Practice Guide

Local Governments

Procurement Policy

Community Choice Aggregation

With funding from the California Energy Commission's Public Interest Energy Research program, the Local Government Commission has worked with Navigant Consulting, Inc. to assist twelve California communities in their investigation of Community Choice Aggregation (CCA) feasibility. They are:

  • Berkeley
  • Beverly Hills
  • Emeryville
  • Los Angeles County
  • Marin County
  • Oakland
  • Pleasanton
  • Richmond
  • San Diego County
  • San Marcos
  • Vallejo
  • West Hollywood

What is Community Choice Aggregation?

Community Choice Aggregation (CCA), as defined by AB 117, permits any city, county or city and county to aggregate the electric loads of residents, businesses and municipal facilities to facilitate the purchase and sale of electrical energy. Prior to AB 117, individual customer participation in electric load aggregation programs required their positive written declaration indicating their choice to participate (opt-in programs). In contrast, CCA under AB 117 provides for aggregating customer loads within city or county boundaries, but gives each customer the opportunity to leave their community's aggregation program and still be served by the incumbent distribution utility (opt-out program). If a customer makes no negative declaration, that customer is served through the CCA program. This is a major departure from previous aggregation structures as it frees the aggregator from the need to market the program and ensures wide-scale customer participation.

The community choice aggregator must inform participating customers at least 60 days in advance of the date commencing automatic enrollment. Distribution utilities are directed to cooperate fully with any community choice aggregator in its efforts to develop their aggregation program including providing all necessary data as well as to continue to provide all metering, billing, collection, and customer service to retail customers that participate in CCA programs. Community Aggregation programs cannot begin until departing load fees are determined, and the California Public Utilities Commission (CPUC) has determined rules and protocols for implementing aggregation programs.

Source: http://www.lgc.org/cca/

Guidelines are determined by the California Public Utilities Commission (CPUC), which is now preparing materials to help assist potential CCAs develop implementation plans and complete the registration process. The CPUC also sets the Cost Responsibility Surcharge for customers who leave IOU service. This surcharge ensures that all remaining IOU customers will not pay higher rates when other customers leave IOU service and helps pay back the costs of expensive, long-term power contracts entered into during the 2000-01 energy crisis, as well as other uneconomic IOU costs.

The Cost Responsibility Surcharge is determined by comparing these uneconomic costs to the current market rates for electricity. As market rates increase, the surcharge will decrease. Most of the contracts entered into during the crisis expire by 2012.

Pubic utilities do better on costs. Historically, public utilities across the nation have been able to offer rates that are 15-20% lower than investor-owned utilities, as private financing costs are more than twice those of a CCA. Based on a pilot project funded by the California Energy Commission, CCA capital costs were about 5.5%, compared to 12.9% for IOUs.

Amalgamating multiple cities and counties. AB 117 allows groups of cities and counties to join together to establish a CCA program. This provides economies of scale for energy contracts, administration costs and when interfacing with investor-owned utilities.

A study of seven Bay Area communities investigating CCA found that if they formed one joint CCA program instead of seven individual ones, they could save an additional 34 percent. A joint CCA may also reduce variability in electric loads (fewer usage peaks and valleys), allowing for larger baseload contracts (with generally lower prices than peaking or spotmarket contracts).

Community Choice Aggregation promotes energy efficiency. Community Choice Aggregation can allow communities to choose power sources that don't require inefficient distribution over long distances. For example, using solar and wind energy produced much closer to the needed service (air conditioning, heating, lighting, etc) prevents the losses of efficiency prevalent in long distance transmission.

Source: http://www.lgc.org/cca/docs/cca_energy_factsheet.pdf