We’re often asked “What do you look for when considering CCA in a new state?” “Where does it work best?” The truth is, there’s no single answer nor is it always a straight path to CCA adoption. Why? Because regulatory frameworks, electric power markets and policies/politics are very different around the country.
Let’s start with some basic context. At the 50,000 foot level, the US operates within 10 electric power markets and 3 regulatory frameworks:
- Regulated/Un-Restructured– Vertically integrated investor-owned utilities (IOUs) are the sole source provider of both electric/gas generation and transmission services. It’s a one-stop shopping monopoly model with guaranteed rates of return, centralized oversight and no market competition or customer choice. Over half of US states operate in fully regulated energy markets including WA, UT, AZ, MN and FL.
- De-regulated/Restructured – In restructured states, the utility function has been split to allow for electric (and in some cases, gas) supply to be provided by retail energy suppliers on a competitive basis. The utility gets out of the power generation business and is a “poles and wire” company providing power transmission, distribution, line maintenance and some programs. Examples of deregulated/restructured markets are TX, NY, MA and IL.
- Partially De-Regulated – These states maintain a vertically integrated utility structure but allow some customer classes, usually large commercial and industrial, to access the wholesale, competitive market to procure power for their load. Small commercial, municipal and residential accounts continue to be served on a regulated, monopoly basis by the IOU. Examples of partially de-regulated states are: CA, OR, NV, MI and PA, VA.
How Does a State Get a CCA?
CCAs are authorized at the state level in one of two ways: 1) through State legislation or 2) through regulation. Of the 8 states in which CCA currently exists, six are de-regulated (IL, OH, MA, NY, RI and NJ), two are partially de-regulated (CA and VA), and zero are in fully regulated states… although we aim to change that. Please see our “What is CCA” page for links to state statutes/enabling legislation.
What are the Considerations?
Although there are some similarities depending on which electric power market a state operates in, each state has differences including existing regulations, state energy policies, political leadership and customer base. That said, we’ve identified 5 considerations when determining where CCA might work best :
- Partially deregulated or restructured energy market
- States with aggressive renewable portfolio standards (RPS) and other clean energy goals
- Legislative or public action to explore electric competition and/or greater use of clean power (e.g. NV’s 2018 Energy Choice Initiative; Oregon’s SB 978)
- Local government interest in CCA
- Electric rates and customer dissatisfaction with incumbent utility
Several cities have indicated interest in the CCA model. Click here for LEAN’s recent presentation to AZ-ISA.