Community choice energy helped California pivot to green and mostly lower-cost energy. But then Colorado has a lot of energy balls in the air.
by Allen Best
A concept called community choice energy, or CCE, has worked reasonably well for California as it has pivoted its energy system from fossil fuels during the last 20 years. Might it also still be of value in Colorado?
A 2021 state law, HB 21-1269, requires the Public Utilities Commission to investigate the answers. A report is due state legislators by mid-December.
CCE’s – also called community choice aggregation – would give communities currently served by Colorado’s two monopoly electrical utilities, Xcel Energy and Black Hills Energy, the authority to secure energy from independent suppliers. That means competition. Can that sharpen everyone’s game?
On June 13, PUC commissioners heard from four speakers, three from California.
California authorized the concept in 2002. Renewable energy prices then were high and selection was limited. It took until 2009 before the first systems were launched.
“It takes a long time, if done well,” said Dawn Weisz, chief executive of Marin Clean Energy, or MCE, a not-for-profit energy provider serving 500,000 customers in the Bay Area.
Community choice energy systems can expedite transition to non-carbon sources. But Colorado is briskly moving down that path for electrical generation.
Weisz also emphasized potential cost savings.
“When you are looking at cost savings all the time, you become good at finding those transactions that maximize customer savings while delivering the end result that you want,” said Weisz.
Lower costs are not a given, though.
Lately, community choice has come out more expensive than Southern California Edison, reported Tony Foster, business operations manager for Long Beach Energy, a municipal utility. He said Long Beach has chosen to stay with the monopoly.
Questions posed by PUC commissioners were perhaps revealing.
John Gavan pointed out that Colorado is hurrying to join a wholesale market, with utilities mandated to do this by 2030. At least some utility executives think it will happen sooner. Would taking on this new concept on top of the other shifts “be madness or something you would recommend entertaining?”
Suzanne Casazza, from the California utilities commission, advised that it’s an “all-hands-on-deck exercise” but did not openly say it was too much.
Erik O’Shaughnessy, a consultant with expertise in markets has worked for the National Renewable Energy Laboratory and various other national laboratories, agreed that it’s a lot to take on at once. “I don’t know which comes first, the chicken or the egg,” he said.
Eric Blank, the commission chairman, asked the same question from a different vantage. He pointed to the nearly $10 billion that Xcel Energy – the utility that would be most affected by the introduction of community choice energy – expects to spend in the next eight years as it closes coal plants and adds renewables and new transmission.
“How do we do this without undercutting our investments in this transition?” Blank wanted to know.
O’Shaughnessy agreed that benefits of community choice energy/aggregation laws will be less in states with already high renewable portfolio targets, although he again stressed that it “seems that utilities will move faster.”
Larry Miloshevich, a Lafayette resident who provided input on the bill that requires this study, said the speakers offered evidence on the value of competition in the energy transition.
“While the utilities can surely decarbonize quickly if we pay them enough, what’s needed is to decarbonize quickly and at the lowest cost, which is just naturally driven by competition,” he wrote in an e-mail. “
“Competition benefits not just community choice customers but investor-owned customers, too, as the IOUs must then try harder to stay relevant and prove to communities than they can meet their needs better than a community choice energy could.
“This consideration of CCE begs the question of why we even still allow monopolies when electricity generation has been a thriving competitive business for several decades now.”
What about the regional energy markets, either an RTO or an ISO, as mentioned by Gavan?
Miloshevich said he believes it would be advantageous to develop them simultaneously, “so that each can be designed with the other in mind from the beginning.”
The concept “could be implemented in Colorado right now, even without a wholesale market, based upon existing Federal Energy Regulatory Commission rules that require non-discriminatory access to the transmission system (FERC Order 888) and bilateral contracts between buyers and sellers, which is how our electricity system works right now.”
Colorado’s 29 municipal utilities, he adds, “manage to procure their wholesale power today, so there’s no reason why a CCE could not do the same.”
The PUC will continue to take testimony in this docket before issuing a report to be submitted to legislative committees in both the Colorado House and Colorado Senate by mid-December.
That report probably should be read most keenly in Boulder, where a significant number of community members for a long time have believed that they can more deftly lead the energy transition if independent of the monopoly of Xcel Energy.
It may also have an audience in Pueblo, despite a 2020 vote that soundly defeated a proposal to break away from Black Hills.