‘Greening’ the Mix through Community Choice

Kennedy, Sean

EXECUTIVE SUMMARY

Across much of the United States, the utility-based model of energy management that has dominated for over a century is facing unprecedented disruption. Community Choice Aggregation (CCA) is an energy supply model whereby local governments combine their energy loads and make the choice to purchase energy independently instead of from a utility. The model has emerged as a serious alternative to the prevailing model of energy governance in numerous states, particularly in California where CCAs are projected to account for as much as 60% of California’s electricity load by 2020 (CCP 2016). CCA allows local governments to set their own renewable energy targets and potentially deliver a greater range of renewable energy to their customers than would be provided by a traditional utility. This report assesses the potential of the CCA model to contribute to the UCLA Sustainable Los Angeles Grand Challenge goal of powering 100% of local energy and transportation needs (including all cars, trucks, buses, rail, aircraft, buildings, industry, and other sources that consume energy within County borders) with cleaner, renewable energy resources by 2050. Through a critical assessment of the CCA model as it has been applied in California, this report outlines the opportunities and benefits of this innovation in energy governance and service delivery, while also identifying some unexpected adverse consequences that the adoption of such an approach may entail. Despite broadly consistent objectives, this study finds considerable variability in the implementation of renewable energy procurement strategies among California’s three most-established CCAs. CCAs’ ability to pursue procurement objectives is found to be constrained in early years of operation by lack of credit rating, as well as challenges in balancing renewable energy targets with other potentially competing objectives such as lowering electricity rates for consumers while promoting local economic development. While immediate issues around access to capital appear to be resolved as CCAs mature, ongoing policy uncertainty regarding cost allocation between utility and CCA customers raises some serious concerns about the model’s viability in the longer term. The specific impact CCAs will have on the future development of California’s renewable energy resource potential – including the type, size and location of generation – also remains to be seen. The report serves as an empirical and theoretical basis from which policymakers across the LA region, the state and the nation can draw to ensure future renewable energy targets are met in a way that maximizes sometimes competing, social, economic, and environmental objectives.

 

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