The Morning Report
Get the news and information you need to take on the day.
Just as Uber and Airbnb have given people choices in transportation and lodging, community choice aggregation programs give people choices in their electricity supply. A CCA means the government, rather than a company, will be in charge of buying power.
But community choice aggregation programs offer much more than just choice. As its name implies, CCA is community-oriented. All aspects of the program’s operation are determined by the community, and its primary goal is to benefit that community.
Arguments about these government energy programs are often dominated by price, because it is one simple number. But just as there are many factors to consider besides price when paying for transportation or lodging, there are many benefits of a community choice aggregation program besides price that are important.
A CCA makes decisions in open, public meetings, and residents are welcome to contribute to the decision-making process. Typical issues that come up at these meetings include the energy options the CCA should provide, setting rates and choosing incentive programs. Rarely will utility companies provide this information, even to shareholders.
A CCA board is elected by the public, and so the decisions made must reflect public sentiment. For example, California CCA programs in other parts of the state all offer multiple options for clean power. Although these programs are often criticized as “government-controlled,” they actually give residents much more influence over decisions than a corporation does.
A utility may change its rates several times a year without warning, but a government-run power program can only change its rates once per year. CCA rates are changed in public meetings, so not only are there are no surprise changes, but residents have a voice in the changes.
As in any business, price settings are subject to many pressures. A CCA, though, has an advantage in that it is a nonprofit and has no shareholders to pay.
Like any business, a CCA must be financially prudent and set its rates to build a comfortable operating reserve. Once this reserve is built, disposition of extra CCA revenue is ultimately a community decision. For example, some existing CCAs have offered rebates for electric vehicles, while others have discounted home-efficiency improvements. While utilities are beholden to their stockholders, a government-run energy program is beholden to its residents.
CCA revenues stay within the community – they are not distributed to shareholders.
Since it’s an advantage to have elected officials backing your business, utilities are not reticent about contributing both directly and indirectly to politicians. This is not an issue with a CCA, since it’s a government program.
Utilities have a sweetheart deal: For any investment in infrastructure, they are guaranteed a handsome return of 10.5 percent a year. So of course they like to build big projects like power plants or gas pipelines – whether we need them or not. Ratepayers are stuck footing those bills. A CCA, meanwhile, will have little infrastructure.
CCA finances are completely isolated from city finances, which means that its expenses do not compete with fixing that pothole on your street.
While a CCA program provides many community benefits, the path to building one is far from easy. Perhaps the biggest impediment is opposition from vested interests.
Just as the taxi and hotel lobbies oppose competition from Uber and Airbnb, utilities oppose competition from CCAs. After all, when you are a monopoly, the appearance of even a single competitor is a big disruption.
So utilities have a well-worn playbook on how to fight attempts to form alternative energy suppliers.
The one thing San Diegans will hear during the utility company’s campaign against CCAs is that it’s too risky and costly. Then there is the commissioning of “independent” reports.
As cities in Sempra’s territory get closer to making firm CCA decisions, expect considerable escalation of efforts on both sides. Be critical. Be skeptical. Don’t let the well-heeled utility company’s campaign dissuade you from learning more about the benefits of CCA programs yourself.
Jim Wang is an environmental commissioner with the city of Encinitas, and serves on that city’s CCA subcommittee.