MONDAY’S STUDY: A Community’s Energy

Community Choice Energy; An alternative to electric monopolies enables communities to center people and planet

John Farrell, February 20, 2020 (Institute for Local Self-Reliance)

Executive Summary

More communities than ever want to exercise control over their energy systems. In 2016, Americans collectively spent $360 billion buying electricity. Most of the revenue accrued to the benefit of increasingly-large, investor-owned utilities. Inspired by the individuals who put solar on their roofs, cities, counties, and states want the option to take charge and more widely share the financial and economic benefits of the clean energy transition. It’s why an increasing number of states have allowed community choice energy.

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A Growing Power

Enabled by law in nine states, numerous cities are exercising their right to purchase energy on behalf of millions of electricity customers. Community choice simplifies the more widely available tool of a utility takeover by allowing communities to make energy supply decisions without buying the poles and wires of the existing electric utility. The following chart illustrates the market share of community choice programs by state (New Hampshire is not shown, since its policy was adopted in July 2019).

In three states, in particular, community choice is growing rapidly. In California, for example, the share of sales to electricity customers rose from 5 percent to 18 percent in the last year alone. In New York, nearly fifty municipalities have joined community choice programs in the past year. In Massachusetts, 150 communities have joined since 2015.

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Going Deeper

While many community choice programs have modest ambitions to lower energy costs through economies of scale, a growing number of programs have expanded their scope to include:

Facilitating ambitious energy efficiency programs

Accelerating adoption of renewable energy Investing in local renewable energy projects

Prioritizing local economic development Incorporating more community governance

Integrating with city energy, economic development, and environmental planning

Helping low-income residents access economic opportunities

For example, the following chart shows that many community choice programs offer 100% renewable electricity by default or as an option.

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California Exceptionalism

In no state have community choice programs shown more ambition than in California, a complement to their rapid and expansive growth. This report explores several factors leading to California’s exceptional choice agencies and several ways they continue to push the limits of public power, including:

Struggling with incumbent monopoly utilities at the legislature, the regulatory commission, and on the ballot for the right to community choice.

Building larger aggregations of communities than in most other states, and then banding together in a statewide trade organization.

Signing long-term contracts enabling the construction of new renewable energy resources.

Advancing planning and energy management by integrating with city zoning, permitting, and other local authority.

Sparking a regulatory revolution to accommodate the likely shift of a majority of electric customers to community choice by the end of 2020…

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Conclusion

Community choice can accommodate the growing public demand for energy democracy. Already, nine states enable community choice. Already, several hundred communities enjoy its benefits.

Part of its power is in its evolution. Initially driven by a desire to lower energy costs by providing communities market power, communities have realized that ownership over their energy system unlocks much more than purchasing power. Community choice agencies have accelerated development of renewable energy, integrated its purchase with local jobs and economic development, leveraged their power to pursue ambitious climate goals, and more fully cemented the power of cities to manage wide swaths of the local economy in the pursuit of sustainable economic development.

The power of the public can’t be understated. Community choice mimics the buying power of private companies like Costco or consumer preferences like organic food. But by centering the power of energy decision making in cities, community choice allows energy system planning to integrate with community planning, economic development, housing, and (electric) transportation. In short, it enables energy democracy.

The hunger for public power and economic democracy is growing, and community choice allows communities to tap their strength in managing the energy system for the benefit of all…

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