Huge potential new demand for power, says Chadbourne staff

Deanne M. Barrowdeanne-barrow

Community choice aggregators (CCAs) could displace as much as 20% to 40% of electricity load in California. They are a new kind of off-taker of renewable power.

The utilities are bracing for the loss of so many customers and charging exit fees for customers that leave the utilities for CCAs to cover their stranded costs. There is controversy surrounding the calculation of the exit fees. CCAs must take the exit fees into account when figuring out how much they can charge customers for electricity and still have an economic proposition.

This article explains how exit fees are calculated, what issues have been raised about the current methodology and proposals for reform.

What is a CCA?

A CCA is a legal entity, usually a joint powers authority, formed by one or more counties, cities or towns for the purpose of purchasing power on behalf of the residents and businesses within their boundaries. The incumbent utility, which no longer provides the electricity, still remains responsible for transmitting and distributing the power, as well as for billing, collections and other customer services. Laws enabling this structure have been passed in California, Illinois, Massachusetts, New Jersey, New York, Ohio, and Rhode Island.

In California, CCAs are subject to the same renewable procurement targets as investor-owned utilities under the state renewable portfolio standard program. At least 50% of retail electricity sales must come from qualifying renewable sources by 2030. However, in reality, CCAs strive for even higher levels of renewables by offering customers the option to purchase electricity that has a 100% renewable energy content. The default power mix offered by IOUs is currently around 29% renewable.

The focus on renewable energy makes CCAs a significant new class of offtakers, and the power purchase agreements they sign can provide the basis for financing new projects. (For a further discussion of the financeability of PPAs with CCA offtakers, see Another Potential Offtaker: Community Choice Aggregators.)

CCAs in California

Although community choice aggregation is legislatively enabled in seven US States, California has seen the most traction. Table 1 provides an overview of operational and emerging CCA programs within the state.

There are now five operational CCA programs in California, and at least 15 more are in various stages of planning, all together covering 23 counties.

Of the planned programs, Los Angeles County and San Diego City are ones to watch. If all eligible cities participate in LA County’s program, at full enrollment it will account for approximately 40% of Southern California Edison’s total load. (SCE itself accounts for about 27% of aggregate state load.) San Diego City accounts for roughly 44% of San Diego Gas and Electric’s total load. Pacific Gas & Electric has already begun to reduce its annual procurement targets to account for existing CCAs within its service territory as well as large planned programs like the one in Alameda County. PG&E’s latest procurement plan forecasts an incremental loss of 15,444 gigawatt hours in 2017 due to CCAs, the equivalent of 21% of its 2016 load.

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