Council Dips Toe into CCA Debate

By Dan Jamieson

The HB City Council on August 5, 2019, approved a motion to proceed with a request for proposal for a community choice energy feasibility study.

Under state law, cities and counties can set up “community choice aggregators,” or CCAs, to buy electric power for residents. Currently there are 19 CCAs operating in California, serving 4 million customers, with more set to launch next year. CCAs are intended to promote competition in the monopoly power business.

The Council voted 6 to 1 to approve the study, which will analyze detailed electricity usage in HB. Discussion at the meeting centered around whether CCAs really lower power costs. The Council asked for evidence of ratepayer savings at the time any feasibility contract comes up for approval.

A study this year by UCLA researchers and the National Renewable Energy Laboratory found that existing CCA rates range from 0.1 percent to 2.1 percent lower than investor-owned utilities like SCE.

SCE provides rate comparisons here, and it looks like existing CCAs set prices just slightly lower than SCE.

CCAs are also promoted as offering more opportunities to increase renewable energy usage and generate revenue for the CCA (i.e., a city, county or a combination of user regions).

Aside from questioning cost savings, though, skeptics wonder whether additional renewable sources are really bolstered by CCAs, and whether local governments should even be in the power procurement business.

Meanwhile, the California Public Utilities Commission, the state regulator, is still working through the regulatory process . A big concern is what happens if a CCA gets into financial difficulty, and who would be the electrical provider of last resort in such a scenario.

The UCLA paper notes that when CCAs launch, they have no credit rating and must buy power under short-term contracts at prices that let them undersell existing utilities. (Transmission is through the existing grid, via a fee paid to the utility company.) Reliance on short-term contracts “reduces long-term visibility for statewide energy procurement and capacity planning,” the paper says, and also, presumably, exposes CCAs to potential spikes in short-term rates.


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