By: Paul Fenn, Founder and President of Local Power Inc.
New York has embarked on a major energy reform that will change the way electricity is produced, distributed, and priced in the state. The effort, called ‘Reforming the Energy Vision’ (REV) has the potential to scale up the use of local renewable energy resources and widely deploy energy efficiency technologies, reduce energy bills, and give customers greater control over their energy use.
New York’s REV effort would change the longstanding utility business model that relies on a one-way, centralized power grid delivering electricity to customers, most of it generated by aging, polluting power plants. Under this model, the environmentally-conscious customer has little say over how her energy is produced.
Community choice a key part of REV effort
A key component of New York’s REV effort is a process called Community Choice Aggregation (CCA). CCA authorizes whole communities, by a vote of the local city council, to stop using power from the incumbent utility and instead purchase power in bulk from competitive electricity suppliers – as well as develop local renewable resources such as community or rooftop solar energy.
By allowing communities to opt-out of using utility power without penalty, customers have greater control over where their power comes from, often resulting in lower electricity rates, cleaner energy from local, distributed resources, and a more efficient system.
As part of the state’s energy reform, Governor Andrew Cuomo last year called for the development of CCA programs that would allow municipal governments to procure electricity for the community. The governor and state regulators embraced CCA programs for their ability to “support the deployment of renewable generation, energy efficiency programs, home energy management, and other distributed energy resources.” Leading the process is New York Public Service Commission Chair and former smart grid expert, Audrey Zibelman.
CCA programs exist throughout country
While New York is the first state in the country to call for CCA programs as a framework for distributed energy resource development, CCA programs already serve millions of customers throughout the country. With aboutfive percent of Americans in 1,300 cities across America already enrolled in a CCA program, this model is poised to transform American electricity.
The first CCA program was launched in Massachusetts in 1997, and early models in Ohio, Illinois, and New Jersey focused on purchasing power in bulk from non-utility energy providers. That model has evolved, and current CCA programs – particularly in California and New York – are now focused on developing locally-generated renewable energy and energy efficiency technologies. This has had the knock-on effect of creating local green jobs and boosting the local economy.
San Francisco CCA to localize city power supply
California’s electricity supply shortage in the early 2000s led decision-makers in the state to view CCA programs as a clean energy game changer. One such CCA program in San Francisco, called CleanPowerSF, is in the process of localizing the entire city's energy supply. Other Bay Area CCAs in Sonoma County and Marin County have launched local power-oriented services, with Alameda, Los Angeles, San Diego, Napa, San Mateo, Santa Clara, Santa Cruz, and Monterey counties all following suit.
Analysis from the CleanPowerSF program shows that after issuing $1 billion in solar bonds to finance the CCA program, San Francisco can permanently reduce the community’s total electricity use by up to 50 percent in a five-year period.
It’s not only about going green, but eliminating grid dependency and waste. The resulting revenue surplus of hundreds of millions of dollars could be invested in developing more local renewable energy. Through CleanPowerSF, customers will pay the same amount or less for electricity from day one.
In both New York and California, the expansion of CCA programs will depend on political commitment. Earlier this year, San Francisco Mayor Ed Lee joined a chorus of local progressives calling for CleanPowerSF to use local power development to create thousands of local green jobs. But before CleanPowerSF launches next January, the Board of Supervisors must first authorize the issuance of revenue bonds to finance it: watch out for this vote.
CCA turns on its head the one-size-fits-all, top-down utility model, for a decentralized, “bottom-up,” locally-controlled system focused on reducing waste and reinvesting savings back into the community.
Like all platforms for implementing change, the success of CCA programs will depend upon cities like San Francisco and states like New York whose leaders are committed to tackling climate change and making communities more resilient in the face of extreme weather events. And these leaders know that communities are an integral part of the effort.
Paul Fenn is the Founder and President of Local Power Inc. which launched the nation’s CCA movement in the mid-1990s.
This post originally appeared on our Energy Exchange blog.