As natural disasters become more frequent and weather patterns less predictable, continuing to create and implement smart energy policies remains one of the best tools available to get to “benign outcomes.” One such policy that is quickly gaining purchase across the U.S. is Community Choice Aggregation (CCA). CCA is essentially an energy procurement model that enables communities to become the default power supplier in preference to the current default provider, which is usually the utility. This is a key step in the “think global, act local” movement and the next frontier seems inevitable: locally sourced energy.

Just last month New York became the seventh state to adopt the model, which addresses one of the key challenges facing municipalities today: creating valuable services for constituents without increasing taxes. In particular, smart energy policies like CCA that capitalize on today’s low natural gas prices and aging energy system is upon us. In recent years, states have adopted CCA as a solution for municipalities that wish to usher in a new energy paradigm—one that includes micro-grids, community-owned solar, and energy efficiency upgrades, financed inexpensively and applied intelligently without raising taxes. CCA is a key tool in delivering on that model and over five million customers across the U.S. are currently engaged through a CCA.


Central to the CCA model is its ability to provide residents with a new option of designating a local energy supplier as the source for their power. If residents do not proactively choose a supplier, they will default to whomever the municipality has chosen. Right now, when 10-15 municipalities come together and purchase energy on behalf of 100,000 homes for three years, this provides great economic value because many buyers under one umbrella exert market clout.

However, this is merely the visible portion of the CCA value iceberg. Natural gas prices are low and the price municipalities negotiate for electricity today is quite advantageous as a result. For example, a fixed price negotiated today could provide sustained value by locking in a market rate when prices are low. This creates potential economic value because communities would hold an option to gain from rising gas prices. Most CCA programs actually offer tax relief that elected officials pass along to their constituents. State energy markets are structured in a way that when you buy electricity competitively, the sales tax on certain portions of the bill comes off, but when you buy from the utility, you pay sales tax on the entire bill.

This opportunity coincides with some remarkable trends, providing good backwind for CCAs. For example, resilience challenges are generating more opportunities to actually inject cash into local economies, just as the cost of infrastructure is dropping. This is especially pertinent today because of the number of reported power outages across the U.S. increased between 2000 and 2014. There’s nothing ambiguous about it. Weather related outages are becoming a greater threat to the economy and energy infrastructure is less effective than it once was.

Multi-stakeholder micro-grids hold the promise to provide dependable electricity service for businesses, public services and homeowners to stay powered and operable, during a blackout. This undertaking has inspired regulators to expand earnings opportunities that come from adjusting consumption on short notice. And of course, micro-grids aren’t a substitute for the central grid. However, micro-grids are showing promise to reduce the amount utilities need to invest in power infrastructure over the foreseeable future. Further, a more decentralized grid safeguards communities in the face of unpredictable weather and can mitigate expensive energy peaks. Community-owned solar is now all the rage with cutting edge regulators. It’s particularly valuable in tandem with CCA and micro-grids and builds upon net metering. It provides substantial value with its all-inclusive, reduced prices for delivery charges, which the utility assesses for providing the poles, wires, and wire maintenance. Moreover, a customer can install a community solar system, and sell the benefits of that system to his neighbor down the road. CCA allows that value to be simply mixed in with the total renewable supply costs. Furthermore, local solar generation has the unique capability of improving the efficiency and power quality on the grid.

The triple play of Community Choice, micro-grid development, and community-owned solar is a coup for regulators and community leaders, achieving goals that local policymakers aim to encourage, such as local economic development, resilience, and clean energy. These policy levers add services, without raising taxes. Indeed, the positive effects of Community Choice Aggregation are manifold: small businesses can thrive without any tax increases, communities are engaged, and there is a virtuous cycle as local communities gain payment and savings for smart energy choices.

Energy conscious mayors are taking notice. There are now proven policy tools that offer immediate value for communities and empower communities locally to finance a distributed, next-generation energy system that is resilient, affordable, and clean.

Gordon is co-chair of Sustainable Westchester and CEO of Joule Assets, Inc. the leading finance provider for the energy efficiency and demand response industries.