Community choice aggregation (CCA) is a cumbersome name for a very promising new way to supply our energy needs.

By “aggregating” consumer buying power to purchase electricity on the wholesale market, CCAs create an alternative to a utility company monopoly that can negotiate with competitive suppliers and developers to obtain better prices and a higher percentage of renewables.

Nearly 5 percent of Americans in over 1,300 municipalities now buy energy in this way, including several jurisdictions in California.
 
CCAs offer a number of benefits: cheaper rates, a “greener” power grid, opportunities to source electricity locally, and the ability to create a stable, long-term power supply system that remains under local control rather than being operated for the benefit of long distance investors.

It’s also a very safe investment for local governments, since there’s typically a 20 to 30 percent spread or “margin” between the wholesale and retail price of electric power.

After providing for a 5 percent rate decrease and allocating another 5 percent to run the program, 10 to 20 percent is left to build up a reserve fund, develop new local renewable power sources, and subsidize energy efficiency projects in new and existing buildings. Such a substantial margin allows startup costs to be repaid very quickly, and reserves accumulate at a rate several times higher than the original investment.

To cite one nearby example, Sonoma Clean Power’s initial investment of $2 million was paid off after less than a year’s operation, and annual profits of $12 million are now flowing into the system. Furthermore, if several local governments collaborate to operate a CCA under a joint powers authority (JPA), any debt liability is backed entirely by anticipated revenues, with zero risk to the general fund.
 
The possibility of a CCA coming to Lake County is an exciting prospect with many potential advantages, but it’s also a decision that has to be approached carefully, after weighing all the alternatives and conducting a detailed independent feasibility study.

That’s particularly true because the county is now considering a proposal that does not follow the model that has proven successful elsewhere.

Instead, a private for-profit company called California Clean Power (CCP) is proposing a “turn key” operation by which they would pay upfront costs and guarantee minor savings to ratepayers and a more substantial payment to county government in exchange for future profits, none of which will necessarily be devoted to accumulating reserves, developing local renewable power sources, or financing energy efficiency.

In effect, Lake County would have a choice between two monopoly utility companies, without the public option that was the intent of the 2002 legislation that enabled CCAs in California.
 
A great many questions arise.
 
Where will the money go? Assuming the usual 20 percent opt out rate of customers who prefer to stay with PG&E, and a 20 percent margin (a minimum), the CCA can expect $6 million or more in net annual revenues after paying for power on the wholesale market.

After deducting operational costs of $300,000 and a $750,000 rate reduction, and making a “guaranteed” payment of $2 million to the county general fund, almost $3 million will be left – money that will enrich outside investors instead of staying within the CCA for the benefit of local consumers.
 
As a corollary, why should ratepayers be offered a mere 2 percent savings (instead of the 5 percent that is usual elsewhere) while more than twice that amount is presented to local government? This is after all the ratepayers money.
 
Is this proposal even legal? Two specific points seem to be very shaky. California Public Utilities Commission legal counsel and other experts have unanimously held that all ratepayer money  (including return on investment) has to stay within the CCA: it is not available for payments to the general fund, much less to be siphoned off as profit.

Transfer of ratepayer money to county coffers may also be impermissible under Proposition 26 since it could be considered a tax requiring voter approval. CCP’s proposal to “guarantee” these payments makes their legality especially problematic.
 
What about public oversight and transparency? Under the draft agreement, all revenues would go to CCP, with no apparent obligation on their part to provide an accounting, or for the county to conduct an audit.

In contrast, all other operating programs in California have public finances. CPUC requirements for a CCA require “due process” and “disclosure,” which may be difficult to achieve when finances are not scrutinized by the local government that authorized CCA formation.
 
What about risk? Investors can protect themselves from a downturn by pocketing short term profits, declaring bankruptcy, and switching customers back to PG&E, but the contract does not appear to promise ordinary risk management practices such as building significant operational reserves, establishing public fiscal oversight, and emphasizing long-term procurement.

And since formation of a JPA is not proposed, the county general fund might be at risk for program liabilities – even though the county will have no operational control or oversight.
 
What is “green” about this proposal? CPP proposes no greenhouse gas emission reduction targets beyond those legally required of PG&E, thus abandoning the significant potential environmental benefits a community choice system can offer.
 
And finally, what’s the hurry? This proposal was put forward with very little public notice or participation. A 10-year contract is proposed, involving many millions of dollars of ratepayer money.

CCP’s insistence that the county make a decision in 30 days, take it or leave it, resembles the sales tactics used by time-share operators, and reliance on a feasibility study conducted by the company, without independent verification by county staff or an impartial third party consultant, also raises a red flag.

Also worrisome was the declaration at the May 26 Board of Supervisors meeting that the county would approve the contract on June 16 unless "someone else who can provide the same exact services comes forward,” since it is by no means clear that these “same exact services” provide the greatest public benefit.

A different contractual model (for example that offered by public benefit company Community Choice Partners), formation of a JPA between the county and the cities of Lakeport and Clearlake, formation of a JPA with the counties of Humboldt and Mendocino, or joining the ongoing operations of Sonoma Clean Power are all options worth considering.
 
It’s time for the Board of Supervisors to step back, draw breath, and exercise the due diligence that the citizenry deserves – before handing over millions of dollars of our money.
 
These subjects have been agendized for further consideration at 9:15 a.m. Tuesday, June 16, at the Lake County Courthouse in Lakeport (255 N. Forbes).

Please come to the meeting to share your concerns with the board, or if that’s not possible, contact your supervisor ahead of time. You can leave a voice mail for any of them by calling 263-2368 or send an email to: This email address is being protected from spambots. You need JavaScript enabled to view it. , This email address is being protected from spambots. You need JavaScript enabled to view it. , This email address is being protected from spambots. You need JavaScript enabled to view it. , This email address is being protected from spambots. You need JavaScript enabled to view it. and This email address is being protected from spambots. You need JavaScript enabled to view it. .

Victoria Brandon lives in Lower Lake, Calif.