Achieving Equity With Community Choice Aggregation: Four Recommendations
- Alicia Zhang Research Assistant, ISE
Community Choice Aggregation programs can help achieve energy justice, as long as they are structured to champion energy democracy and community benefits.
The BLM movement, COVID-19 pandemic, and the Texas blackouts have heightened our awareness of energy justice. Energy justice involves affordable and accessible clean energy as well as diverse participation in decisions regarding energy development, the distribution of energy security, and climate change. Additionally, energy justice considers how decisions might affect individuals and the environment both now and in the future.
While investor-owned utilities (IOUs) typically dominate the electric system, new purchasing structures are opening opportunities to achieve energy justice, such as Community Choice Aggregation (CCA). CCA, also known as municipal aggregation, is a program that allows local entities to procure power on behalf of their residents, businesses, and municipal accounts from a supplier of their choice while still using their existing utility provider for transmission and distribution services.
These entities, usually local governments, aggregate the buying power of individual customers to secure large energy supply contracts that allow both greater control of their energy mix (i.e., a ‘greener’ generation portfolio with more energy sourced from renewable energy generators) as well as lower rate costs for customers. As of August 2021, only ten states permit the formation of CCAs: Massachusetts, Ohio, Virginia, California, Rhode Island, New Jersey, Illinois, New York, New Hampshire, and Maryland.
States in the USA with authorized CCA legislation
In these states, the local government must hold public hearings and pass a law authorizing the CCA. Participation in these hearings is open to all residents, businesses, and municipal sites in the jurisdiction and is always voluntary.
Certainly, CCAs provide greater equity opportunities than traditional IOUs. But what are these opportunities, and are they being optimized? Working with Boston University Lecturer Rick Reibstein in his course “Research for Environmental Organizations and Agencies,” I examined potential energy justice implications in CCA programs using Boston’s recently established Community Choice Electricity (CCE) program as a case study. I interviewed eight people who either were: 1) involved in the design and implementation of the CCE or 2) a member of a local environmental non-profit and/or grassroots organization.
Based on the interviews and supporting research, CCAs that focus on community benefits beyond the financial and environmental benefits of lowered electricity rates and reduced carbon emissions, respectively, hold promising potential for an equitable energy structure. The following are some recommendations gleaned from the interviews that may help communities to implement programs that have a higher chance of being equitable:
1. Further democratization of the CCA process. CCA programs must emphasize community participation, engagement, and outreach at all stages of CCA design and implementation.
Residents, especially low-income, minority, and non-English speaking communities, have many misconceptions about CCA. Most community members do not have a clear sense of how the electricity market operates or fully understand the concept of Renewable Energy Certificates (RECs), which are tradable energy commodities that also serve as an accounting method to track energy from renewable sources. Thus, residents often fail to understand what energy aggregation means, i.e., aggregating purchasing power, which translates to misunderstandings and confusion about the concept and benefits of CCAs and RECs.
Educational outreach is needed to make sure residents understand the financial and environmental benefits of buying power as part of a CCA as compared to continuing to buy it as an individual household from their current electricity supplier. Educational materials, whether pamphlets, informational letters, webinars, or town meetings, should be specific to the target communities in the manner that they present educational materials. Information should be presented in all languages spoken by the municipalities’ communities as well as American Sign Language (ASL) for verbally presented information. Webinars or town meetings should be held at various times of the day for greater accessibility.
Community education, engagement, and empowerment should occur at every point in the CCA design and implementation process to ensure community members are able to fully engage at any time. Some CCAs may no longer engage in public outreach after the design phase, but public involvement should be continuous.
2. In states with a deregulated electricity market, the CCA must be active to ward off competitive suppliers who prey on low-income and minority households.
In addition to community engagement, the state should prosecute competitive suppliers who often conduct illegal activities. As the Massachusetts Attorney General’s Office reports state, third-party competitive electricity suppliers are failing to provide cheap energy and often enroll customers using deceptive practices, such as imitating legitimate utility providers, offering lower rates at first but then raising them later, and having strict binding contracts. Many predatory actions by competitive electricity suppliers are illegal, such as unauthorized switching of energy suppliers or “slamming.” Although the deregulated electricity market can provide financial benefits to large enterprises, supplier choice provides opportunities for competitive electricity suppliers to prey on unaware or uninformed individuals who believe they are receiving a good or “green” deal. Particularly, competitive suppliers target low-income, English as a Second Language, and elderly communities.
Education and support will prevent vulnerable groups from falling victim to competitive electricity suppliers. State efforts should also be more vigilant and attentive to such activities using existing law.
3. Implement a decentralized renewable energy model.
Many CCAs use a contractor who purchases energy, including electricity from renewable sources, from the market. CCAs can manage their access to the power market by buying power directly from the wholesale market or directly engaging in contracts from renewable energy. Such contracts may provide greater control over their electricity portfolio mix, be long-term, and produce lower rates as well. Net electricity revenues can remain in the community to expand services, invest in new assets, build reserves, or reduce rates; also, a CCA can set aside a specific percentage of the program’s funds to benefit low-income communities historically left behind by energy investments and/or develop programs and technical assistance only available to low-income customers.
While CCA programs should continue to seek opportunities to lower rates, especially for higher renewable energy options, to ensure the program is competitive against for-profit utilities CCAs can and should prioritize the development of local renewable resources that promote local union jobs and community ownership. This control would spur equitable economic development and increased resilience, especially in low-income communities, communities of color, and frontline communities who are most impacted by climate change.
In addition, CCAs should prioritize reduced energy consumption through energy efficiency programs. Local distributed energy resources can optimize the electricity system, provide stability, and help achieve net-zero energy.
4. CCAs within a state would benefit from forming a coalition, run by a non-profit entity, to foster both negotiating power and greater market share.
A CCA coalition can also use its resources to bring CCAs to communities that do not currently provide them. Communities tend to aggregate one at a time by the decision of the community; CCAs are complicated and communities may not have the resources to establish their own programs or conduct public engagement. Additionally, complicated regulatory entity oversight (such as a Department of Public Utilities) creates legal or political barriers that must be navigated. Low-income and marginalized communities are usually less likely to organize or advocate for community programs for various reasons, including low self-determination as a result of systemic and historical barriers, lack of English language comprehension, distrust in the government, and time and financial constraints.
To ensure that all communities in every state and across the nation can access clean energy through municipal aggregation programs, existing CCAs should educate, engage, and empower disadvantaged communities to establish their own programs, ensuring that energy programs like CCA do not only benefit wealthy communities. Each state could have a nonprofit entity that helps communities establish CCAs, represents the state’s CCAs before the regulatory body, and could even buy power on behalf of all CCAs, boosting their purchasing power.
This aggregation of representation would allow CCAs to hold even greater market power and greater negotiating power. Aggregated CCAs may be aligned under common goals to maximize community benefits, such as greenhouse gas reduction, economic development, good clean energy jobs, rate stability, social equity, local ownership and control of energy, and other community benefit goals.
If CCAs only provide traditional bulk procurement strategies to the individual consumer, they may be limiting their benefits to a higher renewable energy portfolio and lower rates. CCAs can do so much more. CCAs can and should also focus on energy democracy and community benefits. Guided by principles of social justice and equity, clean energy jobs, workforce development, and community resilience alongside affordable energy services and sustainability, these CCAs could contribute to equitable regional economies while helping cities transition to zero-carbon economies.
Alicia Zhang is a Research Assistant at the Boston University Institute for Sustainable Energy and a Ph.D. student in Boston University’s Department of Earth & Environment.
The opinions expressed herein are those of the author and do not necessarily represent the views of the Boston University Institute for Sustainable Energy.