Boulder And The Spread Of Community Choice Utilities

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Originally published on San Diego Loves Green
by Roy L. Hales

 Boulder after a snowfall in February 2011 – Eddyl photo, courtesy Wikipedia
Boulder after a snowfall in February 2011 – Eddyl photo, courtesy Wikipedia

Boulder Colorado’s election results are being heralded as yet another “solar victory,” in a string that stretches back to the Louisiana and Idaho Public Utilities Commissions decisions earlier this year. The relevant questions on the ballot, however, pertain to Boulder’s attempt to join more than 1,300 American communities that have formed their own utility.

Question 310 would have required voter approval before the city issued bonds to pay for Xcel’s equipment and run its own utility, was defeated by a 2:1 margin (21,100 to 9,543).

Question 2E, limiting the amount the city can spent to acquire Xcel Energy Inc.’s equipment to $214 million was passed by a similar margin (18,960 to 9,534).

“This is a message that we have to change a broken system,” Mayor Matt Appelbaum told the Denver Post. “We need some local control.”

The situation in Boulder was very different from the east coast, where there have been Community Choice Agregations (CCA) since the late 1990’s. The first state to pass aggregation legislation was Massachusetts, where utilities are prohibited from profit mark-up from energy supplies. Thus it was only natural for the existing utility to enter into agreements whereby it continues to deliver power, maintain the grid, and provide customer service and billing. This system provides energy at rates averaging 15% to 20%, and in some cases up to 30% below those of most investor-owned utilities and has spread to OhioRhode IslandIllinois, and  New Jersey.

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Community Choice Aggregation (CCA) in the USA, map only lists operating CCAs. There are many more projects that have not come online. – Map by Roy L Hales

“The first CCAs were all about lowering rates for mom and pop stores and families,” said Paul Fenn, of Local Power, Inc. “They saved ‘little people‘ billions of dollars. We did something very different in California, where the move to aggregation is connected to reducing greenhouse gases and developing renewables.”

Fenn has been a leader on the West Coast for the past twenty years and, to some extent, has been involved with every Californian CCA. He was behind the “No on Prop 16” campaign, that defeated PG&E’s $67 million initiative to stop the CCA movement in 2010. (California’s three large investor owned utilities – San Diego Gas & Electric (SDG&E), Southern California Edison(SCE) and  Pacific Gas & Electric (PG&E) – have all agreed to provide services to CCA’s within their areas.) Fenn was also involved in the creation of Marin Clean Energy (MCE), during the formative years before it was launched.

Though MCE obtains most of its energy from existing sources, they have included some local power and intend to add more. They signed a 20 year power purchase agreement with the  San Raphael Airport for 972 kilowatts of rooftop solar power. That is enough energy to power 1,200 homes during energy production. Their next local project will be a 1 megawatt solar-shaded parking structure.

MCE offers customers a choice of “Light Green” (50% renewable) or, for a slightly higher price, “Deep Green (100% renewable) energy. This is at a time when PG&E’s energy is only 20% renewable and, according to their FAQ page, “ … the typical residential customer on MCE’s Light Green … service pays about $0.90 more than they would with PG&E’s regular rates.”  Richmond chose to join with MCE and its residents have been receiving energy since last July.

California Communities with a CCA project – Map by Roy L Hales

“This is a significant achievement,” Fenn said. “Marin has diversified its portfolio by using about 20 power sources, obtained hydro from a local irrigation district and has been able to supply 50% renewable at virtual parity to PG&E. They are limited as to how much they can do because they are not developing significant local renewables or efficiency. The problem with their strategy is that they procure the vast majority of their energy from existing sources instead of developing their own. Marin’s position is similar to that of a renter. They have to pay more for their energy and are also more vulnerable to market fluctuations. Energy prices are low right now because of fracking, but they will go up.”

Fenn also helped San Francisco draw up its plan for a community choice aggregation (CleanPowerSF). The challenge being that the city wanted their energy to be 100% green from day one. Under Local Power’s Business Plan, it will take a little over half a decade to develop about 1,000 sites within the city –  because the only way to be 100% green, from day one, is to purchase renewable energy credits. The city will transition to more local power. If approved, CleanPowerSF is a billion dollar project which will be financed through revenue bonds based on CCA revenues. The launch has been delayed bypolitical factors, but Fenn is confident it will proceed.

Lower Power, Inc spent three years on the model study climate action plan and a state-funded research and development partnership with the county to set the stage for SonomaCleanPower, which is expected to start providing commercial customers with energy in May 2014. Fenn says this project has the potential to localize the power supply by as much as 67% during a five year transition at rate parity with pacific Gas & Electric.

He had less to say about San Diego, where Lane Sharman and Bill Powers founded the San Diego Energy District Foundation. On September 25  the San Diego County Board of Supervisors unanimously approved funding for a CCA study within the context of their County Renewable Energy Plan, earmarking $545,000 for the planning process. Powers said they hope to have a plan drawn up by next Spring and the next step is to obtain SDG&E’s data. San Diego intends to offer both “Light Green,” which will be at least 25% renewable energy at inception and increased to 50% by 2020, and “Deep Green” (100% renewable) content.

Paul Fenn, Founder & President, Local Power Inc.

Paul Fenn was retained by the City of Boulder, when it decided to develop a municipal utility. Colorado does not have the necessary legislation for a CCAs. As Xcel was not willing to cooperate in the development of more local renewable energy and energy efficiency, Fenn’ suggested the obvious solution was to not renew the utilities contract and form a municipal utility with a new business model focused on localization and demand reduction.

“The vote in Boulder was essentially a referendum on Xcel’s energy policies,” said Meghan Nutting, a Colorado resident and Director of Policy and Electricity Markets at SolarCity. “Xcel wanted to continue to control Boulder’s energy supply mix but the people of Boulder said No. They want more local control over the energy they are using and they want to employ more renewable energy sources. This vote is an indication that Coloradans know last century’s fossil fuel status quo and a centralized monopoly doesn’t work for a 21st Century Colorado.”

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