Riding the Rising CCA Wave

San Diego is the latest major city to offer Community Choice Aggregation. So far, seven states have authorized the alternative to investor-owned utilities.

Reflecting a nationwide trend, San Diego is now the largest city in California and one of the largest in the U.S. to offer commercial and residential customers the option to purchase clean, competitively priced power through a Community Choice Aggregation (CCA) agency instead of an investor-owned utility.

Mayor Kevin Faulconer said the decision, which came after three years of research and analysis, will be a big step toward implementing the city’s Climate Action Plan and reaching its goal of 100 percent renewable energy use by 2035. “I want San Diego to lead this region into a cleaner future. This gives consumers a real choice, lowers energy costs for all San Diegans, and keeps our city on the cutting edge of environmental protection,” Faulconer said in a prepared statement.

The city will begin forming a joint-powers entity to take over the responsibility of purchasing power for businesses and residents that opt in. Officials estimate that ratepayers who choose to participate will see their energy costs cut by 5 percent or more. The Joint Powers Authority (JPA) would procure the electricity and operate the CCA with an eye toward encouraging other cities and government agencies in the San Diego region to join. The mayor’s office said that a regional approach would give the CCA greater negotiating and buying power and create efficiencies in operations and services.

Creating the CCA will require several years.  Milestones will include forming the JPA, selecting a board of directors, hiring staff and developing an implementation plan , which must be approved by the California Public Utilities Commission before operations can begin. The CCA would likely start phasing in customers by 2021. Customers could retain the option of staying with San Diego Gas and Electric Co. Those that join the CCA will have to pay monthly exit fees to SDG&E, which still transmit the electricity.

While it is the largest California city to go the CCA route, San Diego will become one of more than 160 cities, towns and counties in the state that procure electricity through the model. There are 19 such programs in the state now.  Other states that authorize CCA procurement are Ohio, New Jersey, New York, Rhode Island, Illinois and Massachusetts.

Peninsula Clean Energy (PCE) in San Mateo County, Calif.—the state’s fifth CCA—launched two years ago and began enrolling customers in April 2017. Marin County was the first, starting in 2010, followed by Sonoma County, San Francisco and the city of Lancaster. PCE’s CEO, Jan Pepper, said that the company’s program was the first to roll out to an entire county. Its JPA includes all 20 of San Mateo’s cities and towns. Customers save about $17 million a year in energy costs through PCE.

The Facebook Factor

She said PCE has 290,000 accounts and most are residential. But commercial and industrial customers are using 63 percent of the electricity generated, compared to 37 percent of the residential customers. Facebook is among PCE’s large corporate customers and is the biggest one to enroll in ECO100, which procures 100 percent of its electricity from renewable sources and is 100 percent greenhouse gas-emissions free. It is priced slightly higher than ECOplus, which is what most customers are enrolled in and procures 50 percent of its electricity from renewable sources and is currently 85 percent greenhouse gas-emissions free. ECOplus rates are priced 5 percent less than the utility, PG&E, while ECO100 is about 2 to 3 percent higher than PG&E rates. By 2021, Pepper said ECOplus will be 50 percent renewable and 100 percent greenhouse-gas free.

In early October, PCE broke ground on a 200-megawatt solar facility in Merced County, California’s largest solar installation built exclusively for a CCA  PCE has an exclusive 25-year power purchase agreement with Wright Solar Park LLC to buy the solar facility’s electricity. When completed in 2019, it will produce enough electricity to power more than 100,000 San Mateo County homes each year.

“The Wright Solar project moves us toward our goal of providing all customers with 100 percent renewable power by 2025,” Pepper said. “This long-term contract locks in the price we pay for electricity, which helps ensure that our rates will remain low.”

PCE, which has a long-term power purchase agreement with PG&E, uses a mix of renewable energy sources now, including some hydro from Northern California, wind farms in Solano County, Altamont Pass and Palm Springs, and some solar from Santa Barbara County. Pepper said they are aiming to sign another long-term contract for a 100-megawatt solar installation in 2020. They are using some battery storage, but conducting additional analysis before moving forward.

“We’re really excited about what we’ve done so far and we’re really trying to move the needle in terms of local energy,” Pepper said. “It’s really important to me and to our board to show that you can be 100 percent renewable and still have a viable economy.”

In Southern California, Lancaster Choice Energy has about 45,800 residential customers and nearly 5,800 commercial and business customers. Rates for its Clear Choice customers are about 3 percent lower than Southern California Edison. About 38 percent of the Clear Choice energy comes from renewable sources while Smart Choice uses 100 percent renewable sourced energy.

The majority of the renewable energy comes from wind and solar sources including the 10-megawatt Western Antelope Dry Ranch solar plant that became operational in December 2016. It produces enough renewable energy to power more than 1,800 homes in Lancaster and is part of the $1.6 billion that its partner, SPower, an independent energy producer, has invested in the city to help it achieve its Zero Net Energy goals.

New York’s CCA

On the East Coast, New York’s first CCA—Westchester Power—is also using solar to meet its renewable energy goals. Westchester Power, which has so far enrolled 22 of Westchester County’s 45 municipalities in its CCA, teamed up in April with Sustainable Westchester Inc., Ampion and Sunlight General Capital to install the county’s first community solar array. Dan Welsh, Westchester Power program director, said the 147-megawatt installation is fully subscribed and they are talking with another developer about a second installation.

The CCA was launched in March 2016 by Sustainable Westchester, a nonprofit organization that has 42 of the 45 county municipalities and Westchester County government among its members. The county, located in the suburbs north of New York City, is split between two utilities: Consolidated Edison (ConEd) in the southern portion and New York State Electric & Gas (NYSEG) in the northern communities. Westchester Power contracts with Constellation Energy Group, a division of Exelon Corp. and competitive supplier of power, natural gas and energy products and services across the U.S., to supply fixed-rate electricity to its customers.

Welsh reported that two more municipalities have signed on and will be part of Westchester Power by Jan. 1, with several more deals in the works. The majority of municipalities took the Green Supply choice, which is electricity supplied fully by renewable sources and matched by renewable energy certificates. In New York, the biggest form of renewable energy comes from hydropower, but wind and solar are growing rapidly.

Of the approximately 110,000 customers, about 93 percent are residential and the remainder are small businesses, he said. But he hopes that larger companies or corporations that may have been procuring their power from energy service companies (ESCOs) may look at the CCA’s success and decide to join.

“We have a couple of years under our belt. They know CCA is for real and has delivered on its promises,” Welsh said.