What is Community Choice in Energy? How Does It Work?

windWhy Do We Need Community Choice Aggregation?

If you are already more than aware of the perils of climate change and the contribution to climate change resulting from NM’s choice of coal, nuclear and gas as 90% of our energy portfolio. And if you already understand the nefarious role that PNM plays in impeding sensible development of renewable energy, you can skip down to the piece on Community Aggregation because if you have had enough of PNM and want to skip to a solution that cuts them out of our energy choices, skip on.

You may have heard (and experienced) that 2016 broke average global temperature records to date, and that the warmer-than-average winter has meant little snow. This warming trend in the recent temperature data is projected to continue and have significant impacts on water quality and quantity. University of New Mexico climate scientists led by Dr. David Gutzler predict that there will be steadily decreasing stream flows in the Rio Grande basin and increasing aridity throughout New Mexico and the Southwestern border region. This will exacerbate the inevitable drought conditions and increase the likelihood of wild fires. Climate change is already harming New Mexico’s economy, public health, and culture and our most vulnerable communities are experiencing disproportionate consequences.

We know that the burning of fossil fuels is the single greatest cause of climate change.

You may also have heard that national, local and regional governments across the world are celebrating their recent transition to 100% renewable energy.

  • Oregon is leading the country with a new law to close all coal-fired energy.
  • Burlington, VT is now running on 100% renewables,
  • The entire country of Portugal ran for four consecutive days on 100% renewables this summer.
  • San Jose, San Diego, and Rochester (Minnesota) have resolved to meet that 100% renewable goal and are taking bold action to meet it.

A post-election survey from Nov 10-13, 2016 by the Conservative Energy Network found 86% of ALL voters and even 75% of Trump voters “support taking action to accelerate the development and use of clean energy in the United States”. Why not here where the vast majority of New Mexicans support the use of renewable energy, with solar and wind enjoying strong support across the race, age, and political spectrum? The two things standing in our way are political will and an influential, self-serving, coddled energy corporation, PNM. And the two are definitely related.

Public Service Company of New Mexico, PNM, is not a “public” company. It is a private corporation that must serve the fiduciary interests of its shareholders. It does. The New Mexico Public Regulation Corporation was formed in part to regulate electric utilities, including PNM, on behalf of the public because they are monopolies and its natural allegiance is to make money for its shareholders.

coal pollutionToday’s energy mix with PNM is 80% coal and nuclear (60% coal and 20% nuclear) and PNM’s plan in 2018 is to reduce the coal by 10% and increase the nuclear by the same amount. These resources are not only dangerous for the obvious climate, economic, and health reasons, but because these resources will persist for decades and prevent renewables from being adopted in any significant way. We can’t afford renewable energy tokenism – time is running out.

Even with solar and wind now competitively priced, most cities and counties lack access to clean energy options and still cannot choose to purchase clean energy because the monopoly energy system can effectively keep renewables out. Why does PNM choose coal and nuclear when solar is cheaper? For a couple of reasons:

  1. Profit – when PNM spends more money they make more money (this is opposite than in the competitive market, where the less a business spends the more it keeps for profit).
  2. Return on Assets – investing in 50 year old coal plants and 28 year old nuclear plant makes PNM more money than shiny new wind turbines and solar panels that are often guaranteed in terms of maintenance and price. This is true because those older traditional energy plants require lots of capital expenditures just to keep the behemoths running (i.e., things break) and pollution controls are required. PNM makes a return on assets from these large capital expenditures, the costs which comes out of our pockets.
  3. Temporary Avoidance of Decommissioning & Reclamation Costs – if PNM continues to supply the public with energy from these coal and nuclear plants then this crop of PNM Executives will have moved on or retired before the bill for clean-up costs come due. Experts and some states are really worried that the clean-up costs will be of such magnitude that the companies will be unable to cover these costs and the public will be stuck with the toxic mess. Essentially PNM wants to kick the can down the road and offload clean-up cost risks onto the public.

We might win small victories, here and there, within the constraints of the current regulatory system but in general we cannot align our energy preference with our energy system because 80% coal and nuclear meets PNM shareholder quarterly targets. In fact, PNM filed their Renewable Energy filing on June 1st, and told the PRC that they did not need any more renewables on the system, 9% is just fine for them.\

What is Community Choice Aggregation?

wind

Before we describe the remarkable power of Community Choice Aggregation, you need to understand that the only way we can achieve this option in NM is through a bill passing the Roundhouse and being signed by the Governor, i.e. 2019 is our target. After reading this, if you are compelled to want to make CCA the law of our state and to make it possible for Santa Fe, Albuquerque and other NM states to make the switch to 100% renewables, write to paul@retakeourdemocracy.org as Retake will be working with New Energy Economy, 350.org and others to make a focused and very intense lobbying effort in 2019. And that work begins now as we need make a compelling case, not just within our progressive bubble, but in Farmington, Las Cruces, Gallup and other less progressive parts of the state.

So, what can we do? Community Choice Aggregation (“CCA”) has been adopted by six states and has had the greatest impact on renewable energy penetration of any policy solution out there. CCA allows a community through its city or county authority to produce or purchase (or both) electric services for its residents. The municipality then makes its choice, aligned with its values through a local decision-making process as to what energy mix it wants. Cost savings and renewable energy choices can be achieved through the aggregation of customer energy need, allowing the municipality to negotiate bulk purchasing rates and energy sources. As noted above, CCA requires a statewide network of support to pass state legislation that would create the shift we need.

The following graph makes it very clear what the different means are of a jurisdiction obtaining energy. CCAs are a hybrid between municipal utilities and standard investor-owned utilities (IOU), as depicted in Figure 1. Typically, utilities (whether investor-owned or municipal) are responsible for purchasing and distributing power, grid maintenance, and customer service. This is the situation in much of New Mexico just substitute PNM for IOU. In this scenario, when we turn on our lights, we have no choice about the mix of energy used to power our homes. Under a CCA program, the CCA, which is administered by the local government, purchases the power from a wide range of energy providers, while the incumbent IOU maintains the grid and provides customer service. Because the local government is involved in some of the standard utility functions, the CCA could be considered a middle ground between an IOU and a municipal utility. While it would be nice to free ourselves entirely from PNM, building a statewide energy transmission system is a very long-term and expensive project. The CCA short-cuts that entirely.

Figure 1. Community Choice Aggregation Structure

Investor Owned vs CCA vs Municipal Utility

But let’s be clear, PNM is not just going to sit back and agree to the loss of probably 90% of its source of profits. For all the reasons outlined above, PNM benefits from making our energy choices for us. So that is where the battle begins. The most important piece is political will. But as is described below, that will is being found throughout the country.

There are currently 17 million people in communities that either has, is launching or exploring, CCA in California. 60% of the total eligible population will potentially be served by CCA by 2020. Pacific Gas and Electric Co., the state’s largest utility monopoly with 5.4 million electricity customers, has 370,000 CCA customers in its territory. That number could increase rapidly because San Francisco recently adopted CCA, and is already providing 7,400 commercial customers with an energy demand of 30 megawatts and expects to add 20 MW — enough to serve up to 48,000 residential customers – in 2016. San Francisco is offering two options to customers, 35 percent renewable energy and a gas, as well as a 100 percent renewable choice. These are impressive numbers that actually move the needle on climate, create a hedge against rising electricity rates, and create jobs in a clean energy economy.

In addition to the ability for municipalities to purchase wholesale renewables, the CCA option can drive further solar rooftop adoption and offer attractive financing for larger-scale local installations. These are other measures that municipalities can undertake to ensure consumer protection and significant renewable penetration.

Without access to the energy market, most towns and cities cannot meet their climate reduction targets and sustainability goals in a timely and cost-efficient manner. This is a big lift, no question, but this is the kind of policy mechanism that can bridge grassroots activism and needed legislative decision-making. Community aggregation is a proven strategy will enhance consumer choice, local control, expansion of renewable energy portfolios, local economic development, and faster progress toward achieving a community’s environmental goals. Community aggregation will enable us to transform New Mexico from an energy colony to a model of energy democracy. Together we can create the energy solutions we need.

To be part of this movement please visit NewEnergyEconomy.org and sign up for their email and get on their list and/or write to me directly at paul@retakeourdemocracy.org.

We can do this. We can cut PNM out of the equation and show the country what is possible when values drive climate decisions, instead of profit.

For more information on how other states are implementing CCA, click on the name of a State to learn more about its Community Choice programs.

California

Illinois

Massachusetts

New Jersey

New York

Ohio

Rhode Island