Community bulk power can bring cleaner, cheaper power to more Americans

Global warming is undoubtedly the greatest test of our time, for Americans as for everyone else around the world. Addressing this enormous challenge will require innovation across multiple fields – not just in developing and deploying cleaner and more efficient energy technologies, but also in public policies, to promote reduction of greenhouse gas emissions in creative ways.

In this light, some U.S. communities are exploring promising new mechanisms to secure cheaper, cleaner electricity for their residents. Cities in some states are developing ways to bundle or “aggregate” their residents together as a group to buy electricity in bulk, giving the cities more negotiating leverage with power companies to secure electricity at lower rates. These community bulk power programs are popping up in different forms in different states.

One form, called Community Choice Aggregations (CCAs), began to appear in the 1990s and 2000s as states deregulated their electricity markets. CCAs are now legally authorized in nine states: California, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Virginia.

Once city authorities authorize CCAs, their residents typically become members (unless they choose to opt out of the program). The cities then use the CCAs to secure electricity from different suppliers, even as they continue to use their existing incumbent utility for electricity transmission and distribution. CCAs have not only negotiated rate discounts of up to 15-20% for their members, but also have in many cases been able to secure more renewable power than they could otherwise get from their default utility. This can help these cities to cut their greenhouse gas emissions, a vital step in reaching city, state and national emissions reduction goals.

This mechanism of community bulk power puts control over electricity purchases firmly into local hands. Where states have legalized them, CCAs are making a difference for their communities. By 2017, there were about 750 CCAs in the country – and while they only accounted for about 1% of all U.S. retail power sales, they were and are benefiting their members by obtaining cheaper power rates and buying more green power. In some cases CCAs are already using or are planning to use their leverage to negotiate investments in on-site solar power systems and other benefits for their members. Some CCAs even offer energy efficiency programs or energy education programs to their members.

But what about the 41 states where CCAs aren’t yet legal? In these states, cities and counties are seeking, and in some places finding, other community bulk power options. In Texas, for example, where most of the electricity market is deregulated, Public Utility Commission rules allow communities to create an aggregation in order to purchase electricity. A city in Texas could register itself as an aggregator, or it could register another body, such as a non-profit corporation owned by the city, which would then contract with a local Retail Electricity Provider (REP) to administer a bulk purchasing program.

So even though Texas doesn’t allow formal CCAs, cities such as Houston and Dallas could form community bulk purchasing aggregations that could help them buy cheaper, cleaner power for their residents. Such a step would move these cities closer to meeting their ambitious climate action plans to reduce their contributions to global warming.

One of our affiliate organizations, Environment Texas, is now starting to talk to cities and counties in the state about adopting the community bulk purchasing model. These discussions hopefully will bear fruit in creating programs that propel Texas further toward a clean energy future.

The prospect of other states across the country adopting similar models for power purchasing holds real promise. American cities will need creative, versatile local policy approaches like this, in parallel with federal and state efforts to cut greenhouse gas emissions, if the United States is to reach net-zero carbon emissions by 2050. Such U.S. leadership will be essential in moving the entire world toward a carbon-free future that can avert the worst impacts of global warming and leave a healthy planet to our children and grandchildren.

Texas wind farm. Photo courtesy of PIXERATTI via Pixabay.