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Policy Memo: Quick Wins Are Possible Via Community Choice Aggregation For Clean Energy

A power plant in Ohio (photo by Neal Wellons via Flickr Creative Commons)

In Brief

What if a city's voters could go 100% renewable by pooling their buying power? 

They can, via a policy tool called community choice aggregation that's as underused as it is straightforward. 

The author, who's advocating for the reform in his own city, spells out how it can speed power sector decarbonization across the United States. 

The policy memos we publish distill what participants learn about stakeholders, terms and levers in the Policy module of the Financing and Deploying Clean Energy certificate program. We invite you to absorb the authors' thinking, reflect on how it clarifies issues in your own work, and consider applying or referring a colleague to join the next FDCE cohort. We're accepting applications here through March 13.

With national and international leadership on decarbonizing the economy absent, disappointing or slow, local progress on the energy transition is more important than ever. Luckily, at least in the U.S., there are tried-and-true, high-impact models for municipal and regional leadership on clean energy.

Community choice aggregation is one such model. It’s an enabling policy, currently available in at least nine states, including my home state of Ohio, that lets even the smallest cities cost-effectively transition to clean energy. It gives a municipality’s residents and businesses the chance to take advantage of cost-competitive (and, more and more, money-saving) clean energy by creating negotiating leverage that individuals could never establish on their own. And it’s badly underutilized, despite its years-long track record and how truly easy it can be for cities. 

What is Community Choice Aggregation?

Community choice aggregation, in essence, gives municipalities (and other entities, as determined by the specifics of state law) the authority to use their collective bargaining power to negotiate for better terms for energy. In Ohio, community choice aggregation has been possible since the passage of the Energy Choice Act in 1999. In the decades since, hundreds of communities have used it to negotiate more favorable terms for electricity and heating fuels.

In Ohio, at least, local governments have two options for aggregation. “Opt-in” aggregation doesn’t require voter approval but does require that each resident provide proactive consent to participate. “Opt-out” aggregation, in contrast, enrolls residents in the aggregation automatically… unless they make the effort to opt out. This model harnesses the power of positive defaults, or peoples’ tendency to do the easiest thing. But it requires a ballot initiative granting the local government authority to negotiate on the community’s behalf.

Opt-out aggregation is the most common approach in Ohio, and is by far the more effective of the two as it gives local governments far more negotiating leverage. In either case, power supply is negotiated while power transmission and distribution remain the responsibilities of the incumbent utility, ensuring service reliability.

So, why aren’t more communities using Community Choice Aggregation?

Clean power is remarkably popular in the United States, with “favorables” in polls that are almost unheard of these days. This is true across the political spectrum, but it’s particularly true among the younger generations that are coming into their home-purchasing years. A recent study found that Americans between the ages of 18 and 29 on average are willing to pay nearly $20/month more for renewable energy, while those between 30 and 44 are willing to pay more than $20/month more for renewable energy.

One would think that cities competing to attract young homebuyers – not to mention the businesses who are increasingly interested in making good on their social or environmental commitments – would bend over backward to make their communities more attractive with clean energy via community choice aggregation. But many are not. Why?

A lot of the problem comes down to awareness. For one thing, community choice aggregation is available only in a handful of states. And, even where it is possible, too few city leaders know how effectively it can achieve municipal goals, and understand how easy it can be to implement. Cities are often short-staffed or under-resourced, and aggregation may appear to be too much to take on. But that needn’t be the case.

How is Community Choice Aggregation implemented?

There are a variety of means by which cities implement their aggregations, each with its own considerations and trade-offs. Columbus, Ohio – which, not coincidentally, is now the largest American city to move to 100% clean energy – has hired a 3rd party broker to administer its recently-approved aggregation. This broker charges a small per-kWh fee that gets added to each electricity bill—and, for the broker at least, that adds up fast. To avoid such charges and save its ratepayers money, the city administration of Grove City, Ohio is running its aggregation program itself. 

But “pay a lot” or “do it yourself” are not a city’s only options. Organizations in Ohio are pioneering an "aggregation of aggregations" approach, presenting cities with opportunities to reap the benefits of community choice aggregation with negligible effort or cost.

SOPEC is a non-profit “council of government” entity established under Ohio state law that works to make clean energy aggregations as easy as possible for cities small and large. Essentially, they take on the burden of administering an aggregation – from negotiating the energy supply deal to coordinating with ratepayers – while empowering participating cities by adding them to their governing board. 

SOPEC offers rates for 100% renewable electricity that are competitive with what’s available through the local monopoly utility, and that are expected to be cheaper in the coming years, while also offering a grant program that cities can access to fund LED streetlights, home energy retrofits for fixed income seniors, fast EV chargers or rooftop solar for municipal buildings, or any other sustainability-focused project a city can dream up. And, prior to Columbus’s aggregation, it was the nation’s largest clean-energy aggregation, exerting significant negotiating power. 

Such an “aggregation of aggregations” approach makes achieving 100% clean energy – perhaps the single biggest thing a city can do about climate change – easier than many other programs that a city might offer.  

So what can you do about this?  

Recently, I’ve been speaking to the leadership of my hometown – Grandview Heights, Ohio – about our community’s opportunity to lead the future by aggregating for 100% clean energy. And, increasingly, I’ve been pointing to institutions like SOPEC as a means to do it as easily and efficiently as possible. But that’s in Ohio, where community choice aggregation is common and entities like SOPEC exist.  

If you live in one of the many states where community choice aggregation isn’t yet an option: hit the phones. Call your legislators, visit their offices, educate, advocate. Truly high-impact local action on the energy transition is all-too-possible. But the right enabling policy has to be in place.  

If you live in a state where community choice aggregation is available, educate your legislators about the SOPEC model. If that model’s possible where you live, get it going. If it’s not, find a way to make the “aggregations of aggregations” approach work.  

And if you live in Ohio, get it done.