Community Choice Aggregation: A Legislative Path to Energy Freedom

Community Choice Aggregation is an energy freedom program that permits a community to directly access the competitive market to procure power from the energy supplier they choose. This is in contrast to much of Colorado’s current situation in which a monopoly utility (in Boulder this is Xcel) is granted exclusive rights as a region’s energy supplier by the state. The benefits of a free energy market are many; competitive markets can lead to lower rates, the ability to choose sustainably generated power, and the ability to invest in local solutions which create jobs and keeps money in the local economy. CEA endorses policies for energy freedom, and fortunately, local legislators and non-profits like Energy Freedom Colorado are working to make a path to energy freedom for Colorado.

To give you a better understanding of how it works, let’s begin with the power grid. The three main components of a power grid are energy generation, transmission (of electricity over long distances from power plants to local substations), and distribution (of electricity from a substation to the consumer). Community choice aggregation (CCA) is a cooperation between municipal utilities and investor-owned utilities (IOU) in which the municipal CCA purchases power independently, but the transmission, distribution, and customer interface are maintained by the local IOU as shown below. CCAs served about 3.3 million people in 2016 and are growing rapidly in the eight states where they have been legalized, allowing municipalities in these states to choose their power sources in a way that reflects the values of their community, which include factors like cost, environmental impact, and supporting local energy businesses.

Graphic from National Renewable Energy Labs website

To implement CCA in Colorado, our legislature would need to enact CCA legislation, and the Public Utility Commission (PUC) would need to adopt corresponding rules and regulations. Several structural aspects of Colorado’s electricity grid could make this process more complicated than it has been for other states. For example, most states with CCA had already restructured their IOU to make separate companies for power generation and delivery, which simplifies the process of transitioning to municipally controlled power generation. Further, Colorado is not part of a Regional Transmission Organization (RTO), which is an independent, non-profit operator of a large, integrated transmission grid. Instead, each region’s transmission lines are controlled by the local utility, which complicates the task of transporting power from the generation site across a number of independently owned transmission systems to the municipality. Despite the challenges, we can overcome these obstacles and make the change. If you would like to learn more or help move Colorado forward, here are some links for you:

For general background information:
NREL: https://www.nrel.gov/state-local-tribal/blog/posts/community-choice-aggregation-cca-helping-communities-reach-renewable-energy-goals.html
LEAN: http://leanenergyus.org/cca-by-state/
EPA: https://www.epa.gov/greenpower/community-choice-aggregation

For Colorado specific information and/or to get involved in Colorado’s policy efforts:
EFC: http://energyfreedomco.org/

Reflecting on Sierra Club’s ‘Building a Carbon Free Grid’ Conference

This month, I had the opportunity to represent Clean Energy Action at the Sierra Club’s ‘Building a Carbon Free Grid’ conference in New Orleans, where hundreds of lawyers, energy economists, policy experts and organizers convened to strategize over the technical and movement-building requirements to achieving a just transition away from fossil-fuel powered electricity system towards one that is powered by renewable energy.  Over the course of three inspiring, information-rich days, dozens of panelists provided a broad survey of the work that is being done across America to facilitate the transition to a renewably-powered future; the grassroots campaigns, the economic analyses and the legal battles. Since the conference, a few realizations have been solidified in my mind and they’re mostly good news:

  1. The movement for energy democracy is alive and well.

Perhaps the most inspiring takeaway is the realization that the fight for energy democracy is alive and well and the fight is taking place across the United States from California and Colorado to Mississippi and Philadelphia.  Take for example the work of Soulardarity, a non-profit in Highlands Park, Michigan that is combatting energy poverty by installing community-owned solar powered street lights after their utility, DTE Energy removed over 1000 streetlights from the community to cut costs.  Or consider the work of One Voice, a non-profit from Jackson, Mississippi that is educating and empowering historically disadvantaged community members to run for leadership positions within Mississippi’s rural electric cooperative utilities that provide electricity to 50% of the state’s population.  These are just two examples among many of organizations that are harnessing the opportunity to regenerate economic and political power amidst the transition towards a clean, affordable, flexible energy system.

  1. Clean energy portfolios are a cost-effective and technically-feasible alternative to natural gas generation.

A second huge take away from the Building a Carbon Free Grid conference is the understanding that as coal-fired power plants are retired across the country, utilities need not rush to build new natural gas plants.  Rather we can replace coal-fired generation capacity with clean energy portfolios and expect similar or cheaper electricity rates, lower emissions and similar or better grid-reliability services compared to natural gas-fired electricity generation.  Consider findings from a report by Rocky Mountain Institute titled ‘The Economics of Clean Energy Portfolios,’ which demonstrates that our vision for a 100% clean energy system is the least cost option AND it is technically feasible, today.  The report features 4 real-life case studies of utilities across the country that are considering their options for building new electricity generation, showing that in each case, building out clean energy portfolios would be cost-competitive, equally reliable and allow utilities to circumvent ill-advised investments in natural gas plants that may become stranded assets sooner than we expect.

  1.  There are multiple paths towards a clean energy future.

The last key takeaway, and perhaps a launching point for further discussion, is the realization that multiple paths exist towards the destination of 100% clean energy — paths that differ in notable ways.  Some paths prioritize policies that regenerate political and economic power within communities most-impacted by climate change. Others define success more narrowly as the integration of large amounts of renewables + storage as quickly as possible by whatever means available.  As society moves towards a carbon-free grid we would do well to explore all possible paths that exist and weigh the respective benefits and drawbacks of each. Key questions that will help communities assess their options are: ‘Who will foot the bill for bad investments in coal and natural gas?’;  ‘who will own the solar panels,wind turbines, storage devices or even the local grid when they are built?’; ‘who will determine how our energy dollars are being invested?’; ‘how will the eventual savings realized from making the switch to RE + storage and microgrids be passed onto average citizens?’.  

These questions are especially crucial to Coloradans, Xcel Energy having recently announced its plan to replace 2 of its coal-fired power plants with record low-cost wind, solar and storage.  Though Xcel’s announcement comes as good news to the folks at Clean Energy Action that have led a grassroots movement of citizen-advocates for over a decade to move Xcel away from imprudent fossil fuel investment towards renewables, the challenge for CEA and other just transition advocates will be to ensure that consumers are not forced to foot the bill for Xcel Energy’s stranded fossil fuel assets.  This challenge will continue to rear its head for years to come as the plummeting cost of clean energy threatens the financial viability of Xcel’s remaining fleet of coal and natural gas plants. (Sign up for Clean Energy Action’s newsletter to stay abreast of efforts to ensure that Xcel Energy replaces its remaining coal plants with renewables in a manner that is just for ratepayers.)

Overall, the Building a Carbon Free Grid Conference was inspiring and refreshing —  I am now certain that we will win this fight. We are already winning across the country at the state and local level thanks to the many individuals and organizations that have dedicated their lives to the vital work of transforming our energy system.

Bourbon Street, New Orleans

What We Are Watching: Atmospheric Trust Doctrine in the 9th Circuit

Three judges in the 9th Circuit are poised to rule on the leading question in environmental litigation: the legal right to a livable climate. 

Unlike the early decades of U.S. climate action, which focused on legislation and federal agencies, environmental advocates in recent years have increasingly had to rely on states and the courts to demand progress. The 2005 court ruling in Massachusetts v. EPA recognized that sea level rise injures coastal states and required the EPA to regulate greenhouse gasses as pollutants. More recently, cities like New York and Boulder filed suit against Exxon Mobil for their role in the climate crisis. In 2015, youth petitioners brought what may become the flagship climate case of our time against the President and government of the United States. Juliana v. United States alleges that government inaction is denying young people their right to an inhabitable planet. Juliana relies on a long history of public trust doctrine that requires the state to responsibly manage resources held in trust for the public, and advances a new field of “atmospheric trust” litigation. Colorado-based youth climate organization and CEA ally Earth Guardians is a lead plaintiff in the case. 

Thus far, the government has filed numerous procedural challenges seeking to have the District Court throw out the case, or for higher courts to intervene. The case has cleared most of these procedural roadblocks, and the higher courts, although expressing some skepticism about its overall viability, have allowed the case to proceed. 

Most recently, the government filed an appeal to the 9th Circuit to review the plaintiffs’ standing to bring a case. The question of standing often determines the fate of environmental litigation. For example, one of the key hurdles states cleared in Massachusetts v. EPA  was the lack of direct injury due to the small amount of state-owned land that would be affected (the Supreme Court ultimately found that climate change represented a sufficient threat to state sovereignty to give them a claim to injury). In this case, the question of standing challenges the core of atmospheric trust doctrine as the basis for a legal claim. Oral arguments were heard on June 4th

Now the nation and the world waits to see whether the 9th Circuit will allow the case to proceed to trial by affirming Judge Aiken’s conclusion that the youth of this country have a cognizable legal right to a climate capable of sustaining human life.

Further reading: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2954661

Natural Gas—How Much Longer for Low-Cost Natural Gas?

Clean Energy Action has long specialized in questions related to long-term coal supply, issuing detailed reports in 2009 (“Coal Cheap and Abundant: Or Is It”)  and 2013 (Warning: Faulty Reporting of US Coal Reserves.”).

The trends noted in the CEA reports of increasing production cost and declining profit margins in the coal sector combined with high levels of debt have indeed led to dramatic reductions in coal production and coal company bankruptcies, as predicted.

Now, as claims of “cheap and abundant” natural gas arise, the question becomes, how much longer for natural gas reserves. While Clean Energy Action has not taken as hard a look at fossil methane (aka “natural” gas) reserve questions, we would like to point our readers to a few resources.

For background information and  academic reviews of the pros and cons of shale gas production see “Cornucopia or curse? Reviewing the costs and benefits of shale gas hydraulic fracturing (fracking))” by Benjamin Sovacol at the Vermont Law School or the article Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States (Full articles require purchase.) A free BBC discussion of fracking can be found here.

For a detailed assessment of projections of fossil methane “reserves” available as a result of fracking, see “Shale Reality Check” by David Hughes. Hughes notes that production often declines quickly from shale gas reservoirs—often 70-90% in the first three years–
and that to maintain production new wells must be continually drilled. If drilling investment lags, then production will fall off and investment can lag when the most economically viable “sweet spots” are exhausted.

After a detailed analysis of drilling records for all major shale plays, Hughes concludes that estimates of future production (such as those by the US Energy Information Administration) are “highly to extremely optimistic.”

For a detailed assessment of US Energy Information Administration projections that have underestimated renewable energy additions and overestimated fossil fuel production, see this 2016 Clean Energy Action report by Molly May.

Another key source for assessing claims of “cheap and abundant” natural gas is the petroleum geologist, Art Berman who has asserted that the days of cheap natural gas are over.  Berman notes that only the Marcellus and core Utica plays broke even in 2016. There is a decline in production, and it will be challenging to turn around. Berman believes that the days of abundant and cheap natural gas are gone, and the United States can expect to see prices rise as supply drops. The figure below shows the prices of shale gas from January 2016-January 2017 as presented by Art Berman.

While no one can predict the future of natural gas production and prices with certainty, we do know that reliance on fossil methane is problematic because it is a known contributor to climate change that is 86 times more powerful than carbon dioxide over a 20 year horizon as detailed in this Scientific American article.

Moreover, there is good reason to believe that natural gas will become increasingly  less essential for the production of electricity as it is already being outcompeted by renewable energy sources as pointed out in 2018 reports by the Rocky Mountain Institute and the Union of Concerned Scientists.  RMI has observed the price decease of renewable energy sources and energy storage systems by significant amounts and expects them to fall by 40% in the next 20 years. Within the next 10–20 years, it will likely be less expensive to build entirely new renewable energy portfolios that can perform the same grid services as a gas plant than it will be to run existing gas plants. Union of Concerned Scientists (UCS) also sees the risks of investing in shale gas since fossil fuel prices are subject to price volatility, while renewable energy sources are not. As pointed out by RMI and UCS, excessive reliance on fossil methane in the coming years could lead to more stranded assets in the decades to come.

As Clean Energy Action has long noted, non-renewable resources do not renew and for reasons of both climate and price, it is time to rapidly reduce our reliance on all fossil fuels, including fossil methane (aka “natural gas.”)

Thank You For An Amazing Colorado Gives Day!


Thank You To Everyone Who Donated To CEA!

Your support helped raise enough money to allow us to continue to lead the way in addressing climate change and accelerate the transition to the post-fossil fuel world.

 

Our work has never been more vital, and because of yours and others’ generous donations we will continue to help shape Colorado’s energy future.

Thank you again, your gift is helping to make a better environment for the next generations.

Accelerating the transition from fossil fuels to a clean energy economy