Community Choice Energy vs. Public Power vs. Regulated vs. Green Tags!

Community Choice v. Green Pricing - Green pricing schemes allow ratepayers to opt in to an alternative green electricity provider that usually costs more money than their current electricity. Community Choice operates with an "opt out" structure, in which ratepayers are given a window of opportunity - and several notices in the mail - to choose not to join the aggregation. Once the aggregation has gone into effect they are automatically included in the community purchase. Since SF's CCA is designed to meet or beat PG&E's rates and to move to 51% green energy, there is no consumer benefit of opting to stay with PG&E.

Community Choice v. Public Power - Community Choice allows local governments, or coalitions of governments and small public utilities, to achieve lower rates and cleaner energy for their customers. Unlike public power, community choice does not require that cities take over financial or managerial responsibility for generating or transmitting electricity. Instead, the city acts as a broker for all ratepayers and evaluates bids based on the ratepayer's communal values.

Many public power advocates support CCA as a dramatic step towards their goal of complete public ownership of electricity. As CCA co-sponsor Supervisor Ammiano put it, "Yes, we should have public power, but after spending two draining losses at the ballot, one by 500 votes, I think people wanted to regroup and rethink before we go to the ballot again, because we're always going to be outspent [by the utility company PG&E]... It's not so much either or, as much as a step towards. Community aggregation does establish a certain amount of local control that does not exist now, and it could have an effect on rates and improve service. It could also be a launching pad toward public power.... as we're doing this, we're educating people and we're also getting a handle on what public power is."

Other people advocate for CCA as a goal in and of itself. Such advocates note that public power agencies as a whole are not more environmentally friendly than privately owned utilities. CCA policy expert Paul Fenn explains, "I'm very aware of the fact that there are leaders [in municipalized power], and [public] power is cheaper because it is nonprofit, but if you look across the board, public power agencies are not cleaner [for the environment]. It's very disappointing, but we should not ignore the fact that they are not. Over the course of working on this for fifteen years, my conclusion is the reason that they're not is that they own debt, and their debt is in the generation, distribution, and transmission of fuel contracts, so that they need to sell energy to continue." Full public power typically saddles cities with huge debts that create an incentive for them to maintain electricity sales in order to generate revenue. Community Choice results in a significant scale shift in the construction of renewable energy generation and allows cities to reduce its purchases from the grid without losing revenue streams. Community choice leaves cities debt-free and moves communities to greener energy infrastructure, while a healthy debate about the need for public power can continue to develop.

Community Choice v. State Regulated System: In a traditional state-regulated system, the Governor appoints Public Utilities Commissioners who set rates and make portfolio decisions. If green products are offered, they are sold at a premium to a small minority of customers. Investor-owned corporate monopolies own the wires and power plants, read meters, do the billing, run state or federal-mandated programs and even "own" the customers. All the corporation's costs are automatically paid by customers. The utility receives a guaranteed rate of return based on a fixed percentage of their operating costs. The more power consumed, the greater its profits. If such a monopoly utility makes bad investments, the customers must pay.

Community Choice v. A Deregulated System: In a deregulated system, there is little or no state regulation of rates nor environmental safeguards. Unregulated corporate power plant owners sell power to private power marketers, who resell it to predominantly large corporate customers. Unregulated power companies are not guaranteed a rate of return from their customers if they make bad decisions. But they have the ability to gouge ratepayers with sudden rate increases in a climate of weak federal wholesale regulation.

Community Choice V. All: Under Community Choice Aggregation, municipalities and regions aggregate their individual customers' demand into a unit and bid out the community's electricity service to competing electricity suppliers under state regulatory oversight. Rates are not regulated but are fixed under a contract. The city council has primary control over what kind of energy the community will purchase, deciding upon the community's desired mix of resources, and selecting the new service provider. A local city council, with the help of consultants and existing city staff, prepares a plan and administers a competitive bidding process. Those companies who bid for the contract are called Electric Service Providers. The ESP that wins the contract commits to deliver power to the Aggregation, from stipulated kinds of sources, at the rate the community requires. Thus, Community Choice Aggregators play a brokering role with competitive suppliers on behalf of their constituents. Rates are insured by the Electric Service Provider, and consumers have the option to opt out. A typical Community Choice contract lasts five to ten years. In other parts of the country, Community Choice Aggregators have converted their communities to cleaner and more renewable power sources, and have dramatically improved local energy efficiency programs and reduced their electric bills at the same time!