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Economic Development Research Group Blog

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Community Choice Aggregation: Moving from just Cheaper Electricity to Greener Electricity (that’s getting cheaper too)

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In 2018, communities in six states are leveraging their buying power for electric supply through Community Choice Aggregations (CCAs). What’s new in this 20 year phenomenon is electric supply bids increasingly include renewable components at the same or lower rates than utility basic service rates.

EDR Group is working in community aggregations from Massachusetts to California.  We are currently reviewing the Clean Energy programs operated by Massachusetts’ Metropolitan Area Planning Council (MAPC), including their work in fostering CCAs. The Massachusetts experience shows how the markets are responding to more abundant and cheaper local renewable electricity supply.

A 1997, Massachusetts electric deregulation statute enabled communities to aggregate their electric demand and usage and seek bids from competing electricity generators. Procuring electricity for entire communities or groups of communities increases buying power, leading to lower electric supply rates for all types of customers in the aggregation.  The Cape Light Compact was the first such group that aggregated electric purchases for 21 communities on Cape Cod. The Cape Light aggregation continues today, with a greatly expanded menu of energy activities. At this writing, Massachusetts has approved CCA’s in 115 additional communities. On the community side, the state ensures that residents are well informed about CCAs and that individual customers can easily opt out of the aggregation. On the procurement side, careful vetting of power purchase brokers and suppliers provides communities with reliable assistance throughout the aggregation process.

Why do communities choose CCAs?

Saving money continues to be the strongest motivator but that no longer always means that offering a portion of electric supply as locally-generated  green energy will increase consumers’ bills.  As green sources of electricity have proliferated, the cost of generation from green sources has decreased.  In Massachusetts, electric suppliers now offer CCAs ‘standard’ green rates that are lower than the utility basic generation rate, usually with  5% renewable content.  Some communities have opted for a higher ‘standard’ renewable rate, such as Brookline’s 25% renewable content, which is estimated to increase customer costs by about $2/month compared to the basic utility rate.  And finally, some communities offer a 100% renewable rate, with a premium of several dollars/month. Adoption of 100% rates is expected to be slow in a state with high electricity costs. But as local (in-state) renewable generation increases, 100% renewable option costs may decline and participation increase. This is something to be watched and analyzed.

CCA impacts on the environment and economy.

At the community level, as climate change is becoming a more evident reality, motivations for purchasing electric supply with higher renewable content are turning more to decreasing emissions from fossil fuels, as well as supporting jobs and the local renewable industry.  Since most CCA’s are relatively recent, their effects on Greenhouse Gas emissions are still not well documented, but substantial GHG reduction impacts are expected. 

CCAs are affecting electricity markets as well, sometimes in unexpected ways.  In California, the rapid growth of CCA’s bidding for supply with substantial renewable content is one important factor in investor-owned utilities’ decisions to reduce or eliminate procurement of renewable resources for utility generation.  California continues to be on track to meet overall renewable and carbon reduction goals but CA electric market is in turmoil.

EDR continues to follow and analyze CCA developments in the six deregulated states that currently permit CCAs. However, there are seven additional states that have deregulated electric and gas markets or electric markets only; some of those may initiate or encourage green CCAs.

Click Here for more information on EDR Group's prior work on CCAs.

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