Four California community choice aggregators (CCAs) have jointly formed the California Community Choice Financing Authority (CCCFA), a joint powers agency that was created with the goal of reducing the cost of power purchases through a pre-payment structure.
Central Coast Community Energy, East Bay Community Energy, Marin Clean Energy and Silicon Valley Clean Energy are the founding members of CCCFA. CCCFA membership is open to CCAs in California that are interested in utilizing the joint powers agency for prepayment transactions.
Member agencies will be able to save 10% or more on power purchase agreements entered into under this structure, the four CCAs said.
The prepayments will allow CCAs to reduce customer costs, retain the green attributes of the renewable energy contract, and increase funding available for local programs, according to the CCAs.
Formation of CCCFA assists the member CCAs by undertaking the financing or refinancing of energy prepayments with tax-advantaged bonds. The prepay structure enables publicly owned utilities, including CCAs, to effectively leverage the difference between tax-exempt and taxable debt rates to fund the reduction in the cost of power purchases, they noted.
Prepayment transactions have been used in the United States for the last 30 years primarily for natural gas transactions. Over 90 municipal prepayment transactions totaling over $50 billion have been completed in the U.S., with over 95% of them for natural gas.
Prepayment transactions are codified in U.S. tax law and Congress enacted legislation specifically allowing for such transactions as part of the National Energy Policy Act of 2005. CCCFA will take advantage of this structure to increase the amount, and reduce the cost, of clean energy on the California grid, combating climate change and fulfilling customers' needs for non-polluting resources, the CCAs said.
Energy prepayment transaction agreements undertaken by CCCFA must be approved by the Board of Directors of the member CCA proposing the prepayment. Then the CCCFA Board will have the opportunity to fully consider the benefits, obligations, and risks of each prepayment transaction prior to approving any bond issuance. CCCFA is governed by a Board of Directors consisting of one director representing each founding CCA.
The creation of CCCFA follows the formation of California Community Power earlier this year as a way to help CCAs across the state reduce costs.
Additional information about CCCFA is available here.
The American Public Power Association has initiated a new category of membership for community choice aggregation programs.