Unbundling the CCA
A first attempt to understaning that they are, their claims, and whether they'll deliver.
I. The Mashup
A few years ago a clip went viral on Youtube showing a composite of clips of several dozen local news stations saying roughtly the same messaging.
The controversy was the consistancy in the messaging among the hundreds of local news stations across the country. Nearly every anchor from dozens of local news stations across the country, read nearly identical scripts about the issue of “fake news." The mashup was later featured on Last Week Tonight With John Oliver, PBS NewsHour, and even traditional Corporate Press outlets such as CNN, and the NY Times.
Or consider the more recent incident of several politicians and other people more, ahem important than you, who wrote almost identical messages on their Twitter accounts when they all contracted COVID-19?
GLF takes no position on the incidents above but only brings them up to ask the reader to ponder on a similar pattern. This one concerns so-called Community Choice Aggregators or CCAs, particularly in California.
CCAs will be defined in detail later in the piece so hold tight.
Starting with their logos: (click image to expand)
The logos largely contain the same wording, power and energy aside, the words “clean,” “community,” and “choice,” are prominent.
A famous George Orwell quote comes to mind as these words have almost lost their meaning these days:
Many political words are similarly abused. The word fascism now no meaning except in so far as it signifies ‘something not desirable’. The words democracy, socialism, freedom, patriotic, realistic, justice have each of them several different meanings which cannot be reconciled with one another. In the case of a word like democracy, not only is there no agreed definition, but the attempt to make one is resisted from all sides. It is almost universally felt that when we call a country democratic we are praising it: consequently the defenders of every kind of regime claim that it is a democracy, and fear that they might have to stop using that word if it were tied down to any one meaning. Words of this kind are often used in a consciously dishonest way. That is, the person who uses them has his own private definition, but allows his hearer to think he means something quite different.
Or put differently taking the use of each of these words individually:
The logo color schemes consist mostly of green, yellow, or blue with a heavy emphasis on light bulbs (ironically type of bulb that are banned in many areas for their energy inefficiency) or some sort of sun on a field or landscape scene. The use of certain colors, at least according to graphic designers, invoke certain emotions. Some of this could be pseudoscience of course, but comparing the most commonly used logos in the CCAs above does seem to show something.
Now peruse their websites (click on any of their logos in this link).
Many of the layouts are nearly identical: logo at the top, search function and hamburger menu button at the top right hand corner with some pretty picture with some green cliches in the body. (Each image will enlarge when clicked/tapped)
Everything above should raise red flags alone without even knowing that a CCA is.
But we need to back up a second.
Just what are CCAs?
II. CCAs Defined Attempt I
Getting a defintion of a CCA from any of the dozens of CCAs will result in a gobbeldygookey mess filled with Orwellian propaganda terms designed to capture emotions over logic with ofuscation as to how the entire grid works as a whole. The same results are likely if one were to consult the average Corporate Press source. These are some of the reasons there is so much confusion over the things.
Nearly every single website for CA’s mosaic of CCAs use almost identical terminology and graphics to describe how they work too.
It works something like this:
[CCA] buys electricity renewable resources (followed by a pretty icon or photo of the sun, solar panels, wind turbine, and a battery)
[Legacy Electric Utility] delivers power and maintains the grid, (pretty icon shown with an icon of transmission lines).
YOU receive cleaner power, local control, and competitive rates (pretty icon with distribtion lones , buildings, and an EV)
So we asked ChatGPT, since it’s all the rage, to explain CCAs using the prompt “Explain California Community Choice Aggregators using an analogy a layperson can understand.”
It returned the following:
Community Choice Aggregation (CCA) is a program that allows Californian communities to buy electricity from sources other than their local utility company.
To help explain this concept using an analogy, let's imagine that you're shopping for groceries at a supermarket. Normally, you would buy all of your food from that one store, but with Community Choice Aggregation, you have the option to buy some of your groceries from other stores too.
Just like how you can choose to buy your produce from a farmer's market or your meat from a butcher, a CCA allows communities to choose where they get their electricity from. They can choose to purchase it from a variety of sources, including renewable energy sources like solar and wind power.
However, just like how you still need to go to the supermarket for some items, the local utility company still plays a role in delivering the electricity to your home or business, regardless of where it was generated.
In summary, California Community Choice Aggregators give communities more control over where they get their electricity from, much like how you have more choices in where you buy your groceries.
ChatGPT gives a decent one-sentence definition but the analogy it provides breaks down quickly unless one is talking about living in a geographical area with just one grocery store (they do exist).
We’ll get back to CCAs and where ChatGPT went wrong, but first we need to cover the rest of the grid in general which will hopefully help provide better context for CCAs.
III. A Non-Technical Summary of “The Grid”
It’s likely safe to say that few people think too much about plugging in an appliance, turning one on, or flipping a switch. Electricity is just there when one needs it. It’s nearly indistinguishable from magic.
While things appear mostly the same for nearly all electric power customers across the nation, there are some devils in the details depending on the structure of the utility. Please note that what follows below is US-centric and immensity more complicated but even just skimming the following will make the reader more knowledgeable about this particular aspect of the electric grid than most people who comment on it - especially bureaucrats, activists, and journalists.
Prior to 2000, the majority of electrical utilities were what are known as vertically integrated, meaning the same entity owned the generation (power plants), transmission lines, substations, and distribution lines all the way to meter installed at one’s home or business. The utility having complete control of their entire electricty supply chain typically meant they were responsible for reliable generation. After all, if they’re not producing electricity, then the end users aren’t buying it.
It’s still this way in large parts of the country. Even California has a handfull of them - all owned by local governments. The two most well known one are Los Angeles Department of Water and Power (LADWP) and Sacramento Municipal Utility District (SMUD). These utilities generally understand their system very well since they own and operate the entire system. They also typically keep backup generation plants on standby for seasonal or unexpected maintenence also known as excess capacity.
After 2000, around 2/3rds of the US changed over to the Regional Transmission Organization and/or Independent System Operator (RTO/ISO) scheme under the guise of deregulation. The idea was to follow more or less the deregulation of the long distance telephone carriers. Utilities are still permitted to own each aspect of their supply chain but in terms of electricity generation and transmission they have to compete with others in the area. The utility has to both buy electricity on the generation market and sell anything from their own generator on said market.
With that said, these utilities under the RTO/ISO system appear to the untrained eye to still be integrated as if they were verticially integrated utilities. Investor-owned utilities (IOUs) such as Southern California Edison, Pacific Gas and Electric, or San Diego Gas and Electric own generation facilities (PG&E owns Diablo Canyon, SDG&E’s parent company, Sempra owns gas and solar plants) transmission lines, and the final distrbution lines. In industry lingo these are known as “merchant generators.”
Merchant generators have their hands in the pot so to speak of nearly the entire electricity supply chain as they own power plants, and transmission and distribution lines. These are less common/powerful in California as that state’s regulators required these utilities sell off much of theese assets in the late 1990s and early 2000s but that’s getting into the weeds. Regulations also require that each department with in these utilities operate compete seperately from each other. Regardless, they’re supposed to sell their generation onto the same market as any other generator. In other words, Pacific Gas and Electric, who owns Diablo Canyon Nuclear Generation Station, cannot sell that generated power directly to PG&E customers. With the market, it’s quite possible that a PG&E customer may still receive electrons from Diablo Canyon however.
The market runs on centralized auctions where the generators sell at a price per MWh. There are real-time, and day-ahead auctions, often in five or ten minute intervals. It is the RTO or ISO who conducts these auctions. In an ideal market, the auction would match generators providing energy with the lowest price to the buyer, the utility, who ultimately passes it down to the customer via the transmission system (owned by various entities but controlled in almost an air traffic control style by the RTO/ISO) and finally onto the customer via the utilitiy’s own distribution system (these are the neighborhood poles and wires). Utilities can still get energy directly from a generation source via a Power Purchase Agreement (PPA) which they often use to protect from price shocks incurred in the auction market.
But in practice the market contains distortions. Both renewable energy mandates requiring X% of electricity to be from those sources and the subsidies given to these sources distort the market. Playing “favorites” for one generation source but also introducing an artificially decreased energy price thanks to the subsidies. This led to a break down of the Austrailian grid in 2022 as discussed by Meredith Angwin and somewhat by Doomberg. On top of this, renewable sources are heavily dependent on the weather, which does not always match up to the actual demand. They are not able to provide ample baseload generation either despite such being needed. Baseload power sources can sometimes get outbid by the renewable generators too. Owners of these baseload sources often lose money on these assets due to the unfair competition and the breakdown of the generators which aren’t always designed for sudden starts and stops to make up for when renewables fail. Merchant generators have been alleged to have cut back on the maintence of their power lines to cover the money lost too explaining in large part the cause of several destrictive fires in California over the years.
Prices for the customer in not just California’s ISO market but in other RTO/ISO markets across the US have increased as electricity has become less reliable and even dirier energy sources going against demands for cleaner energy.
We hope we’ve covered the “big picture” but for a better understanding, please read Shorting The Grid (reviewed previously on this site) by Meredith Angwin. Her book should be required reading for anyone wishing to step into the debates and controversies surrounding the electrical grid. And while owning but having not read past the first few chapters, GLF would also recommend California Burning: The Fall of Pacific Gas and Electric--and What It Means for America's Power Grid by Katherine Blunt which is very California and PG&E-specific but contains (so far) enough valuable context and lessons that can be applied across the United States.
That brings us back to CCAs.
IV. CCAs Defined Attempt II
CCAs very slightly by state but they’re supposed to be an alternative to the traditional utilities. CCAs aren’t not merchant generators nor are they distribution-only utilities (utilities that own the local poles and wires but buy electricity on the market and sell to customers). They typically buy energy on the same markets and sell them to the final customer using transmission and distribution lines owned by other entities. Some CCAs, at least in California also own generation sources - typically small scale solar farms too. CCAs can also enter into PPAs with generator sources just as IOUs can.
The IOUs are still around, both because they still own and operate much of the assets including most of the transmission and distribution system but also because they still have customers. Two of the major IOUs, Pacific Gas and Electric, and San Diego Gas and Electric also, as their name indicates, provides natural gas service as well. But also the customers of CCAs typically sill receive the same bill from the existing IOU but the main difference is the generation portion of the electric bill is what gets paid to the CCA.
CCAs are supposed to be non-profit organizations too governed by a board of directors with a focus on local control as opposed to the IOUs most of which are headquartered in CA but are publicly-traded companies on the stock market who can be run by individuals not local to these communities. Contrary to the name, non-profits are still supposed to make a profit in order to stay afloat with the caveat that profits must be reinvested back into the organization as opposed to being paid out in dividends with publicly traded companies. A more in-depth discussion on what profits are and why they’re not the dirty word many are duped into believing is here.
CCAs are typically based in smaller geographical areas relative to the IOUs too. Many are focused on just one city (SF) or a handful of regional cities and towns (San Diego County, Orange County). They have a board of directors which typically compose of local residents, often of elected officials. CCAs maintain a small fleet of paid staff as well. With all this, CCAs can market themselves as being a locally-owned, “for the people by the people” type entity and ones that theoretically creates local jobs. Or as this Georgetown Environmental Law Review piece puts it: Power to the People. Very original (rolls eyes)
All of this easily satisfies the “community” aspect, but what about the other claims?
CCAs commonly market the idea of “choice.” We think this is mostly a fiction with few upsides, so it will be discussed later.
CCAs also market themselves as being able to provide both cleaner and cheaper power for their customers over the traditional IOU. This is because they are heavily selective on what they choose for their generation sources. One CCA, Marin Clean Electricity engaged in the usual greenwashing trick of purchasing Renewable Energy Credits, which are. tradeable assets not tracked directly to renewable energy production. Think of them as a feel-good religious indulgence. Searches on the varying websites of the CCA’s and their umbrella organization’s website returns no results for anything resulting RECs so it’s tough to say whether they’re still used or even allowed anymore.
V. Debunking the Fiction (with loads of personal opinion)
The Executive leadership and Board of Directors in CA CCAs often compose entirely of elected officials. That leaves most every day regular people off such positions as the political machine in the state is a powerful one. That said, locals can get onto the Community Advisory Committees or similar groups or become staff members but these positions are likely like any other government grift in the state. If certain connections don’t exist, then the food on the table must come from somewhere else. This hardly makes it “community” or “for the people” as California governments are rife with rent-seeking parasitic special interests. Any Californian who thinks the modern governments in the state and nearly anything they touch (including these CCAs) are really working for them are either part of the machine or are ignorant of simple facts. For those in other states - most others don’t fare too well either.
The “choice” aspect is nonsense too. Customers are typically automatically enrolled into the CCA by default, having to go through a process to jump back out. They still get a bill from their legacy utility with their charges such as the transmission and distribution costs so they still have no “choice” there.
Nicole Capretz, the executive director of the subversively and systemically racist1 group too busy gazing at their own pseudo-academic and energy-illiterate navels aka Climate Action Campaign have not only played a key role in the creation of the San Diego area CCA, San Diego Community Power, but she had this to say about the so-called “choice.”
Perhaps this is why some of the other CCAs in the state contain the word, “authority?”
If customers elect to jump back out and pay everything to their local IOU as before, they’re still paying the taxes that partially fund the CCAs and fund the entire salary of the bureaucrats running them too.
In 2018, before the City of San Diego and several surrounding cities decided to form a CCA, several authors argued in an opinion piece in Voice of San Diego that a CCA would shift costs to areas not under CCA control as the legacy utility, SDG&E would need to recoup costs. This is a claim that hasn’t been proven or disproven yet but California bureaucrats and the programs they impose have a long track record of doing just that.
's excellent article California's Energy War on the Poor dig deep into this issue.All of this breaks apart ChatGPT’s grocery store analogy.
Some “choice” does result in the different energy packages CCAs tend to offer though.
The choices are immensely vague using confusing jargon with nonsense claims that should be considered to be flat out misleading. San Diego Community Power (SDCP) for example has the “PowerOn” tier which is marketed as being “a significant emissions saver-it's 50% renewable plus 5% greenhouse gas free” and “Power100” sold as “our most effective tool to help you reduce your carbon footprint-100% renewable and 100% carbon-free!” The continue by boasting that the “Power100” tier, “allows you to virtually eliminate your greenhouse gas production from electricity use.”
Just what exactly is the difference between “renewable” and “greenhouse gas free” energy? Aren’t renewables supposed to be (in the magical world of fiat) by definition free of emitting greenhouse gases?
What about cleaner and cheaper energy? Renewable proponents often argue renewable energy provides both but leave out (long story short) the details of the entire supply chain of that energy source (*cough*, mining, *cough*, recycling, *cough* GHG payback) but also the what amount to flat out accounting scams such as LCOE which fail to capture the complete cost of renewables. Failure to take in account these resources lack of energy density, reliability on the weather, and fiat money subsidies to make them price competitive are all left out as well.
However, so far, some CCAs have offered lower rates than legacy IOUs. The San Diego Union Tribune reported with the gleeful statist-brownosing headline “San Diego's government-run utility promises better rates than SDG&E in 2023” that the local area’s CCA customers would pay a whopping $2 less per month than SDG&E.
Clearly progress. (roll eyes)
In the short term, customers in CCA areas are unlikely to see much of a savings on their entire energy bills, especially if they have natural gas service to their properties. But even without, this winter’s surge in natural gas prices led to more expensive electricity costs as well.
Continued emphasis on renewables on California’s grid will likely continue the system’s decline in reliability lead to price increases in the future too.
VI. Closing the Switch
CCAs have the right amount of everything wrong with typical CA governance and energy policies. They add more bureaucrats to the machine and less reliable energy at a greater cost whether that cost is temporarily hidden now or will be soon seen by customers. This is likely the case too in other states where CCAs exist as well. CA’s CCAs seem to also completely leave nuclear energy out of the mix, which makes sense since most of them formed when it was assumed that Diablo Canyon would close. California’s energy activsits also lean heavily anti- nuclear. For all thee flaws the IOUs have and even the legacy vertically integrated model had, CCAs in next to no way serve as viable alternatives to one’s wallet, for general electricity reliability or for climate change mitigation.
The oddly consistent messaging and use of the same terminology across all their websites is pointing out something suspiciously awkward too.
In an upcoming post, we’ll discuss the closest electricity market to one with choice in the US: Texas.
I opted out of Marin Clean Energy, California’s first CCA because I understood the grift. They were partnered with Shell energy trading who ran a Enron like scheme to enrich themselves and share the crumbs with the county government. Here’s how it worked. The utilities had been forced by regulators to sign high priced contracts with wind and solar producers, for as much as 20 cents per kWh, which resulted in a huge oversupply, and caused prices in the short term markets to drop to near zero on sunny days. MCE/Shell would buy exclusively in the short term market at ridiculously low prices then sell to retail customers at a slight discount. They’d buy for 1 cent and resell for 19 cents and claim a 1 cent discount over PG&E’s price. I do t know where the money went, and it was hundreds of millions. I suspect Shell did OK, the county government made some money, and the people who got screwed were, well, everybody else.
Word spread quickly to other politicians, probably with the help of Shell’s sales people, and CCAs formed everywhere. The rush probably killed the golden goose, but it was too late. Can’t put it back in the box.
California now has dozens of unregulated utilities that can charge whatever they want and disregard grid operating rules. The regulators have tried to compensate PG&E for their losses, to head off a third bankruptcy. I’m betting on #3 within 18 months.
Wow. I knew purchasing energy by utilities when renewables aren’t generating power was expensive and potentially unreliable, but rent-seeking CCA’s would seem to capture all the green they want without concern for either. Great racket. Thank you for digging-in here and eloquently sharing.