By Jason Fordney

REDONDO BEACH, Calif. — The rapid growth of community choice aggregators in California has sparked criticism that they are “boutique” green energy options catering to wealthier communities such as the San Francisco Bay Area.

But Jessica Tovar, organizer of the Local Clean Energy Alliance of the Bay Area, told Infocast’s California Energy Summit last week she was inspired to pursue a CCA because she grew up in an East Los Angeles neighborhood with fossil fuel generating plants and other industrial facilities that affected the health of herself and family members. Her group sees its role as “addressing climate change, advancing social and racial justice, and building sustainable and resilient communities.”

“Our current energy structure is problematic,” Tovar said. “We affect the entire world based on our energy choices.” Tovar said CCAs allow communities to make the best choices regarding their energy, which she referred to as “energy democracy.” Her CCA’s goal is to reduce consumption, and integrate local generation and new, cleaner technology.

Through CCAs, “we can win economic and environmental justice in our communities,” she said.

Redondo Beach Council Member Christian Horvath said he was seeking lower rates and green power when he ran for office, a campaign based partially on the intent to join or create a CCA. A lot of people aren’t familiar with how CCAs work, but “to me it was a path forward for moving into renewables” and local distributed energy, he said.

The council eventually joined Los Angeles Community Choice Energy (now merged into Clean Power Alliance of Southern California), founded in spring of 2017 by the Los Angeles County Board of Supervisors. The initiative required educating the community about the increased choice a CCA offers and overriding a mayoral veto, he said.

“A lot of people down here just aren’t familiar with what a CCA is or what that means,” Horvath said. “The concerns on the other side didn’t make a whole lot of sense to me. To me, it was the responsible thing to do.”

The CCA concept largely sat dormant after the legislature approved their creation in 2002, but their growth has spiked dramatically in the last five years. Investor-owned utilities say they could lose up to 85% of their loads to CCAs within a decade. But that expansion doesn’t come without growing pains.

“It’s a challenge every day,” said Ted Bardacke, executive director of the Clean Power Alliance. He said the growing number of CCAs is a comfort, adding that creating a CCA requires building a brand, allowing customers to take a larger role in their consumption and gaining consumers’ trust to co-manage their energy usage. It is also vital to build strong management teams with experience in the energy sector, he said.

“One of the things that keeps us going is the business model seems to work,” Bardacke said.

CCAs were bolstered by news earlier this month that Moody’s assigned a first-time Baa2 issuer rating to Marin Clean Energy, reflecting the strength of the CCA’s business model.

“That’s a big step, to actually have a CCA in California with a credit rating,” which shows the market is maturing, Bardacke said. He noted that some in the industry doubt whether local officials have the expertise needed handle electricity procurement (“We hear that a lot down at the [California Public Utilities Commission].”), but community-owned electricity organizations are nothing new. About 25% of California’s load is served by municipal or publicly owned utilities run by elected officials.

“They tend to have very good reliability and pretty darn low rates,” Bardacke said. “There is a model out there in California that has worked for over 100 years of municipal utilities and public power.”

One issue that could impede CCA growth: Beginning in 2021, state law will mandate that CCAs meet 65% of their renewable requirements through long-term contracts of at least 10 years. The longer terms will require more scrutiny of CCA credit ratings and the transition to a direct customer relationship with power suppliers is a major shift compared with how procurement has been done by traditional utilities.

“I think it’s still an ongoing discussion” around CCA credit ratings and finances, said Cathy DeFalco, executive director of Lancaster Choice Energy. “I think both parties have to have a little bit of flexibility” regarding contracts with suppliers, she said, adding that “as CCAs mature … we get more history and people become more comfortable.”

The discussion got testy when it turned to the IOUs’ request last month that the CPUC restructure the Power Charge Indifference Adjustment (PCIA) for customers departing for CCAs, a mechanism designed to prevent utilities from shouldering all the costs for legacy procurements. The IOUs noted that areas served by CCAs are wealthier than average. (See California Utilities Propose New CCA Rules.)

When Marin Clean Energy Director of Power Resources Greg Brehm said “there is cooperation in the works” on the indifference adjustment, Independent Energy Producers Association CEO Jan Smutny-Jones repeated a refrain that utilities are holding hundreds of millions of dollars in renewable energy contracts signed years ago when renewables were much more expensive, and that the departure of customers to CCAs have left remaining utility customers with the stranded costs. Smutny-Jones and a representative from Pacific Gas and Electric last summer raised the alarm with the State Legislature over the legacy contracts. (See California CCAs Spur Worry of Regulatory Crisis.)

“We expect to receive full payment for those contracts,” Smutny-Jones said.

Brehm replied that “there is no expectation that those contracts will be discounted in any way.”

“I’ll take that to the bank,” Smutny-Jones said with a skeptical tone, drawing laughter from attendees.