Questions About CCAs (Community Choice Aggregators) of Clean Energy

Questions About CCAs

California communities are now considering proposals to switch their electrical power to CCAs (Community Choice Aggregators) or CCEs (Community Choice Energy). The motivation is to increase the amount of renewable energy sources. The city council or government unit is allowed to vote to switch the entire area to a specific CCA for power. Residents are given a short limited time period to switch out of the CCA back to the initial power company, although few do. The initial utility still runs and bills for the power grid, and for the power as well. The previously obligations for power contracts are passed on to the CCAs through PCIA (Power Charge Indifference Adjustment) obligations.

I have a lot of questions about this whole process, and I will raise them here. Since I know little about CCAs, I present them as questions, rather than make unjustified assertions. The areas that I will cover starts with the unusualness of this process. Then the business plans and reputableness of the CCAs, and their experience. Then the contrast with the newly established clean energy plans of the present utilities. Then challengeable questions about the CCAs literature. Finally: is there any bondedness  for liability to power failures or shortages; what is the guaranteed reportability of the CCA; and what plans are there to back out of the deal if the CCA does not deliver?

Personally, I am rather shy and hesitant to offend, so I do not want to go to a city council meeting and question all aspects of CCAs in front of an audience of climate action enthusiasts. I doubt that I would get a chance to explain all of my questions anyway.

Let’s start with natural gas. The main reduction in greenhouse gases in recent years in the US has been the replacement of coal plants with cleaner combined cycle natural gas plants, which generate less than a third the CO2 as coal does for the same amount of power. The only coal power used in California is from out-of-state plants under contract to Los Angeles Department of Water and Power until 2024. Natural gas from new fracking technology is cheaper than coal and new nuclear plants, and natural gas plants have made great progress in replacing polluting coal plants.  At present, some natural gas is needed in rapidly responding peaked plants to balance the fluctuations in renewable solar and wind energy sources, and for background power.  The water pollution of fracking sites, leaky valves, some earthquake sites, and leaks from underground storage are problems that must be dealt with.

Natural gas burning does give off some NOx, but less than 10% comes from electricity and household use.  Natural gas for water heating can be replaced by rooftop solar water heating, but this is not often pushed.  As a kid, I used to help dry our clothes by hanging them on clothes lines.  Didn’t know I was saving the planet then.

I question the fairness of the political process that gives a city council or other regional entity the power to immediately change the power contracting company for an entire city, with only a limited time period for anyone to opt out. It could have operated the other way, with people allowed to voluntarily opt in as the CCAs prove their worth and business stability. That is the way that rooftop solar companies operate. That is the way that manufacturers and sellers of electric and hybrid cars have progressed.

Since CCAs have just recently started up, I don’t think that many CCAs have the record, size, and funding that would be comparable to businesses that we normally choose for suppliers or contractors. City Councils must be very careful in choosing the company that they would have be the CCA. The CCA must have a detailed and solid business plan. I would be very suspicious if any company gave political donations to council members. That must be ruled out (but, I temporarily forgot about the Citizens United Ruling). There must be periodic audits, and an oversight, complaint and revue office in the city government.

If cities separately take over power purchases, then they each have to acquire a bureaucracy of experienced employees who are knowledgeable about state and local power sources and purchasing. Since they will be in demand by many cities, they will have high salaries. The cities also will need speciality lawyers to deal with the CPUC which controls prices, and what the PCIA payments are.  Joining a large CCA gets rid of these separate bureaucracies.

If a regional conglomerate CCA is subscribed to, each city must hire representatives to the conglomerate. Smaller cities will find that they have little power compared to the larger cities or entities.

I am not an economist or business graduate, but I can’t understand where the CCA will get its valued renewable power from, and still pay the PCIA. Let’s take a simple example where a massive CCA takes half of the customers of SCE, say. The CCA is both paying for long term contracts for clean power and natural gas. Do they get to keep their part of the 40% clean power that is long term contracted with SCE, which they are paying for through the PCIA? Let’s say all of that is long term contracted. If the CCA does not get their half of the 40% clean power, then the CCA starts out with ZERO clean power, and SCE will suddenly jump to 80% clean power, using the PCIA to cover half of their clean energy costs, while using the other half to pay off the broken natural gas contracts, which they are not using, and which power will go to the CCA, and they will still have to pay for. Like I say, I am not a businessman, but this question has to be answered and settled before any city should venture forward into this swamp.

Most residents are unaware that there are clean or renewable energy plans already initiated by the major utilities. I have recently reviewed these plans for local SDGE and SCE power. The 100% solar SDGE EcoChoice plan currently has no cost to subscribers. The SCE 100% solar Green Rate Program only raises your power bill by about 15%. These are voluntary plans, not enforced ones, with companies that have delivered reliable power for as long as you have lived here. SDGE is already delivering 43% clean power, and SCE 40% clean power.

For background, the State of California Renewables Portfolio Standard requires that utilities deliver 50% renewable power by 2030.   California’s Renewable Standard is far greater than any other state.  Renewables are solar, wind, geothermal, and biopower. Clean power also adds large hydro and nuclear. SCE now adds 6% nuclear and 6% hydro, so it could deliver 62% clean energy by 2030 to standard customers. Since the demise of the San Onofre nuclear reactors, SCE has been getting 41% it’s power from out of state, and it is probably natural gas. Currently, statewide, California’s power is only half as CO2 generating as the US average. It is going to take many years for a CCA to contract for and have built clean energy plants to make up for the San Onofre loss.

Now to evaluate claims for CCAs, grouping several different ones together. SDGE points out that it cannot predict clean power rates five years in advance. The claims of CCAs that they can produce power savings costs of 2% to 5% sounds far too accurate. Even the Solano Beach CCA which starts at the end of June will not have definite rates until it starts up. Solano Beach has 12,000 residents, whereas Irvine has about 20 times as many, and requires that much more clean power. The city does not set the power rates, because the California Public Utility Commission can set the PSIA grandfathered contracts charges, and the basis for that is still being negotiated. While the claim is that the CCA provides a new competition to lower rates, once the CCA is started, you are frozen into it. The local CCE handout is planning to allow switching between them or the standard utility. In case of a power outage or a price rise, this makes the CCE financially unstable. Even the present utility clean energy plans sometimes require a one year commitment. Also, the CCA will be competing for limited clean energy sources with other CCAs, which may drive the price up.

If you somehow think that there is an advantage to having nearby energy sources, consider the cost of local land for solar plots, versus using government land in the Mojave desert. Wind sources occur only in a few specific canyons in California. It’s hard to imagine more local jobs other than rooftop solar and offshore wind power. The CCA handouts do not specify what kind of sources they mean. SCE takes power from the state grid, and out of state nuclear power and other power. It can’t be true that CCEs can get more power sources than SCE to guarantee against power outages. In fact, CCAs use the grid of the standard utilities. We only have very local power outages due to local transformer failures or downed power lines.  In fact, it is local rooftop solar power and fluctuating solar and wind power that are the challenges to grid stability. If the CCE is not to be government subsidized, hopefully the clean power sources take advantage of government subsidies. The CCE literature calls the utility companies monopolies, ignoring the fact that they are regulated by the CPUC. As large companies they can sign large contracts to fund large clean energy facilities, guaranteeing large loans for clean energy companies to build new clean energy facilities. If such purchasing power is broken up into many city CCAs, as the CCE literature likes to boast a count of, it becomes harder to fund new clean energy facilities.

Sometimes, I have to end by discussing 800 pound gorillas in the room. In California, transportation generates much more air pollution, and more CO2, than electricity generation does. The Trump EPA is not only stopping improvements in fuel economy CAFE standards from 2022 to 2025, but is threatening to remove California’s waiver to set its own standards (MAGA?). You can mail in your Congressional District Ballot TODAY to vote for a Representative who believes in climate change and will act to protect us from it.

About Dennis SILVERMAN

I am a retired Professor of Physics and Astronomy at U C Irvine. For a decade I have been active in learning about energy and the environment, and in lecturing and attending classes at the Osher Lifelong Learning Institute (OLLI) at UC Irvine.
This entry was posted in California Power Mixes, California Smog, CCA Questions, Clean Energy, Climate Change, Climate Education, Coal, Electric Power, Fossil Fuel Energy, Green Rate Plans, Mayor's Climate Action Plan, Renewable Energy, SC Edison, SDG&E, Solar Energy, Summary of Climate Topics for Southern California. Bookmark the permalink.

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