We often take for granted the complex systems that deliver electricity to our homes and businesses. While turning on a light may take only the simple action of flipping a switch, communities across the country are choosing better ways to get that power –– for their citizens, economies, and the environment. Community Choice Aggregation (CCA) is an increasingly attractive way to source cleaner electricity, and states like New Hampshire are beginning to see the benefits of these programs.
Through CCA, local governments can leverage collective buying power to purchase electricity on behalf of their citizens, with autonomy over where the power comes from. This opens up options to more sourcing from renewable energy sources, often much cleaner than from the regional utility company. This progress is really important for New Hampshire, a state that has otherwise fallen behind in passing climate policy.
What is Community Choice Aggregation?
In 1997, Massachusetts became the first state to allow CCA as an alternative method of sourcing electricity. In short, CCAs allow local governments to procure electricity on behalf of their residents, often from cleaner sources or at a reduced cost. The collective buying power or “aggregation” of the customers that agree to join allows their city to engage in wholesale electricity purchasing, the same way that the Investor Owned Utility (IOU) would in a deregulated market.
Often, CCAs are created because residents want options for renewable energy, but their current utility company doesn’t offer them. In some areas, fossil fuels are the cheapest option for electricity generation and utility companies don’t have incentives to buy from cleaner sources; but when customers participate in a CCA, they buy electricity from their local government, and the existing utility company is responsible for delivering it the same as before.
Community Power in New Hampshire
In February 2021, Hanover and Lebanon became the first two municipalities in New Hampshire to offer Community Choice Aggregation for their consumer electricity needs. CCAs are sometimes referred to as Community Power because local control of electricity systems provide greater benefits to the community. After a 2019 law made CCAs possible in New Hampshire, a number of localized government entities throughout the state created the Community Power Coalition New Hampshire. The goal of the Community Power Coalition is to provide localized power options and decrease the state’s reliance on fossil fuels.
New Hampshire is the latest to join other nine states that currently have CCA programs. After the 2019 law that allows CCAs in New Hampshire, several towns, cities, and counties joined together to form the Community Power Coalition of New Hampshire (CPCNH). Henry Herndon, a volunteer from CPCNH told Climate XChange, “The mission of CPCNH is to foster resilient New Hampshire communities by empowering them to realize their energy goals through civic engagement, public education, and technical assistance.” In February of 2021, Lebanon and Hanover became the first two municipalities to officially join CPCNH and will offer the option of CCA to their residents.
Where Does Our Electricity Come From?
In communities without CCAs, when most people in the United States turn on their lights, electricity comes from large Investor Owned Utilities (IOUs). These companies are owned by shareholders and are largely responsible for all aspects of power generation and distribution in their region. Depending on where someone lives, their IOU may act as a monopoly, and in most areas, there is one power company that owns the power plants, the lines that carry electricity, and the meters on the houses where it’s delivered.
In some ways, this makes a lot of sense. Imagine if there were two or three power companies in a city. Those other companies would each need their own poles and lines, both above ground and underground. The logistics of the intersecting infrastructure would get complicated, and for this reason IOUs operate as a semi-public entity. These companies are privately owned, but are often heavily regulated to protect consumers.
For example, IOUs are required to provide electricity at the lowest possible cost to consumers. This stops monopolistic power companies from charging unfair prices for electricity, but it also means there are few incentives for innovation in technology and efficiency. IOUs only profit from additions to infrastructure, so it makes sense that their priorities are expanding and maintaining the towers, poles, and lines that they already have.
Depending on where you live, your state’s electricity industry may be a regulated monopoly, or an unbundled system of distributors (electric companies) and generators (power plants). In these unbundled or “deregulated” markets, utility companies buy electricity from power plants and are responsible for delivering it to their consumers. In states with a deregulated market, there are more options for sourcing electricity, but there are often regulations at the distribution level –– cities don’t want multiple distribution companies with their own infrastructure.
This system of vertically integrated monopolies has become largely obsolete in the 21st century. It was designed to get electricity to homes as quickly as possible, but leaves a lot of room for improvement.
What are the Benefits of Community Choice Aggregation?
Herndon told Climate XChange, “Community power is a mechanism to transform New Hampshire’s energy infrastructure and do so in a way that empowers cities, towns, and communities to take control of their energy system.” This transformation offers a lot of benefits for communities in ways that Investor Owned Utilities don’t.
Possibly the most important advantage is that CCAs give communities ownership over their energy. After President Trump announced that America would back out of the Paris Climate Agreement, cities around the US took up the mantle and committed to their own emissions reduction goals. Cities that have CCAs can choose to buy energy from cleaner sources, they are therefore more likely to meet these often ambitious goals. CCAs can help decrease a community’s reliance on fossil fuels by offering customers greater autonomy over their energy consumption and creating local opportunities for renewable energy development.
In areas with CCAs, all energy decisions benefit the community as opposed to the Investor Owned Utility. CCAs introduce competition into local energy markets, which is important for renewable energy innovation. Herndon says that in New Hampshire, “There are also opportunities to develop new local renewables that are directly beneficial to that community, and otherwise modernize the electric grid through more intelligent energy storage, electric vehicle charging, and rooftop solar which can all play a role in a community’s community power plan.”
Another benefit that makes CCAs appealing to consumers across the political spectrum is that their energy costs may decrease as a result of the collective buying power. Local governments may buy the energy on their own, or they may turn to organizations like CPCNH, which manages their member’s energy portfolio in a similar way that a financial advisor might manage an investment portfolio. CPNH acts as an energy market expert that buys electricity, while maintaining a diverse portfolio of sources to protect its members from market fluctuations. This allows municipalities in New Hampshire to offer CCA programs without the added administrative cost of running it on their own. CCAs also exist alongside other utilities, which solves the problem of multiple utility companies needing additional infrastructure.
What Challenges do CCAs Face?
Community Choice Aggregation is not without flaws and New Hampshire’s program has faced its own challenges to get the program to where it is today. A big hurdle for communities that want CCA is it often requires legislation passed at the state level. This alone can be prohibitive in states that don’t typically pass progressive energy policy. To make things more difficult, CCA bills often face pushback from the utility companies that would soon have competition. Herndon says that the only major opposition that they face is from the IOUs and their lobbyists in the state’s House of Representatives. New Hampshire HB 315 is a bill that was originally introduced by IOU lobbyists as a way to weaken the 2019 community power law, but was recently rewritten by community power advocates and now has bipartisan support.
Another example of CCAs being challenged came from California in 2010, where Pacific Gas & Electric (PG&E) introduced a ballot initiative that would require communities to vote to adopt CCA. California passed legislation in 2002 that allows municipalities to create CCAs without a public vote and PG&E introduced this measure to limit the likelihood that local governments would be able to establish community power programs. The ballot initiative, Proposition 16, ultimately lost and California now has more than 20 CCA programs.
Can I Get CCA Where I Live?
If you’re looking to set up CCA in your community, the first step is to see if your state allows community power programs. There are currently only nine states that have legislation allowing CCAs, but we might soon see progress in Arizona, Colorado, Connecticut, and Maryland where lawmakers are actively exploring the possibility. If your state already has a CCA law, check to see if your local government has a program already in place. Depending on your state, you may be automatically signed up or may need to opt in to the program.
For states or communities that don’t have CCA, Herndon recommends a grassroots approach. “All it takes is a couple of interested volunteers and citizens to start up a committee and work with their local elected officials to get the program running,” he told Climate XChange.
If your state needs to pass CCA legislation, reach out to your representatives to let them know. Community Choice Aggregation programs are created on behalf of the communities they serve, and a show of strong support is the first step in passing this legislation.
