Electricity Markets

California PUC approves requirements for CCAs

With the number of community choice aggregation programs rising sharply in California, state regulators recently set new requirements designed to ensure that there is not an excess procurement of resources by the incumbent utilities.

The requirements approved February 8 by the California Public Utilities Commission establish filing deadlines for CCA implementation plans so they align with the PUC’s resource adequacy program.

“This is an important and necessary action, because community choice aggregators are now part of the landscape in California – by next year they will serve about 20 percent of California’s load,” PUC Commissioner Liane Randolph said. “Our actions today ensure that community choice aggregators can form and expand in a timely and expeditious manner, that remaining utility customers do not shoulder costs for customers who depart, and that double-procurement does not occur.”

Through CCAs, California allows cities and counties within the investor-owned utility service territories to provide electric service within their boundaries. CCAs such as CleanPower S.F., covering San Francisco, Marin Clean Energy and Sonoma Clean Power Authority focus on providing renewable energy.

When a CCA starts, investor-owned utility customers within the CCA area are automatically enrolled into the program and must opt out to stay with their incumbent utility.

CCAs accounted for 0.5 percent of California’s regulated load in 2014 but could jump to 15 percent this year based on implementation plans filed at the PUC. In the same period, IOU load could fall from 89.6 percent to 76.7 percent, according to the PUC.

Ten pending CCAs filed implementation plans with the PUC before December 8 and won’t be affected by the new requirements. The CCAs include ones covering Los Angeles County, San Jose and the East Bay, which covers Alameda County and includes Oakland, San Leandro and Freemont.

The resolution approved by the PUC aims to ensure that CCAs’ resource procurement plans are incorporated into the PUC’s annual resource adequacy process when the programs start up or expand, which commission staff contends will help avoid cost-shifting to bundled customers.

The resource adequacy program is designed to make sure that load-serving entities have enough power supplies to meet their customers’ needs. Prior to this resolution, CCAs were required to submit a load forecast by mid-April for the following calendar year, and the CCA would then be responsible for procuring sufficient resources for that load. But if a CCA formed later in the year and did not submit the forecast by the deadline, then the utility would have procured resources for the load that would be served by the CCA. The cost of that excess resource procurement would then be passed on to the utility’s remaining customers.

The new rules require CCAs that want to serve load next year to file implementation plans by March 1. PUC staff committed to finishing their review of the plans within 45 days so that CCAs can be certified before the resource adequacy year-ahead forecast deadline in April. Under the resource adequacy program, LSEs are required to submit load forecasts using their best estimates of future customers and their loads.

Waivers are available to programs that want to start serving customers next year but do not file an implementation plan by the deadline. Under the two waiver options, the CCA must either reach an agreement with their IOU to resolve resource adequacy and cost responsibilities, or have the PUC resolve resource adequacy cost responsibility issues between the program and the utility, according to commission staff.

A recent article in Public Power Magazine notes that as of 2017, seven states have adopted some form of community choice aggregation, although the entities take on different meaning from state to state. Community choice, also called municipal or community aggregation, has been adopted into law in California, Illinois, Massachusetts, New Jersey, New York, Ohio, and Rhode Island.

In California, several public power utilities and entities are moving to provide services to CCAs.

In September 2017, SMUD said that it had been selected to negotiate a services agreement to provide Valley Clean Energy Alliance, a new community choice aggregation joint powers agency, with technical and energy services, data management/call center services, wholesale energy services, credit support services and up to five years of business operations support.

Meanwhile, California-based East Bay Community Energy, recently selected the Northern California Power Agency to provide wholesale energy services.

In November, NCPA said that it will be providing a variety of wholesale energy services to California’s Pioneer Community Energy.

Meanwhile, the New York Public Service Commission on Jan. 18 approved a community choice aggregation program that will allow five municipalities in upstate New York to make bulk purchases of electricity and natural gas for their residents and small businesses.

The American Public Power Association recently initiated a new category of membership for community choice aggregation programs.