Understanding the Community Choice Aggregation (CCA) Program
The following document was written by Joel Gingold who, in addition to being Croton United’s Treasurer, has worked in the electric power industry for over 50 years. For most of his career he was a consultant to the international electric power industry and government agencies in North and South America, Eastern and Western Europe, and Asia.
Last summer, because so many residents seemed to be uninformed about the Community Choice Aggregation (CCA) program we prepared the following analysis of what the potential savings might be for an individual electric customer of Con Edison.
Under CCA, all Croton residents who are ConEd electric customers would have been automatically transferred to an Energy Service Company (ESCO), selected through competitive bidding by Sustainable Westchester, unless the individual customer opted out of the program. The ESCO would then have provided power to all participating customers. The objective was to realize savings from the rates charged by ConEd.
There is also a “green” option under which any customer willing to pay a yet undefined premium for all-renewable power (wind, solar, hydro, etc.), could “opt-up” to such a supply. At present, Con Ed, and all ESCO’s, are required to provide a minimum of 22% of their power from renewable sources. Under Governor Cuomo’s proposed energy plan, this will increase to 50% renewables by 2030.
If you have a recent ConEd bill available, it will help in understanding how you might (or might not) benefit from CCA. An actual customer’s Con Ed bill is presented here as an example.
The unit of commerce in electricity sales is the kilowatt-hour (kwh). You are charged principally by the number of kwh you use each month. Usage varies month to month. In general, it is greatest in the summer when air conditioners are in operation and lowest in the spring and fall.
In the example, this customer used 666 kwh in the 30 day period covered by the bill (see highlight A in the image above). The total charges are $159.98 or about 24¢/kwh (see highlight B). The charges are made up of several parts.
The first is the cost of generation of the electricity, the supply charges. This is the only portion of your bill that will be affected by CCA. In the example, they amount to $53.43 or about 8¢/kwh, one-third of the total costs (see highlight C).
The other principal charges are the delivery charges that include all of ConEd’s administrative costs, the costs of operating and maintaining the transmission and distribution (T&D) system that delivers electricity to your home or business and various mandated surcharges and fees. These costs will not be affected by CCA. In the example, the delivery charges are $101.89 or about 15.3 ¢/kwh (see highlight D).
The balance of the bill consists of sales taxes of 3% or $4.66 (0.7¢/kwh). The sales tax will not apply to the ESCO supply charges under CCA.
So what kind of savings might accrue to this customer under CCA? We will not know that for sure until an ESCO has been selected and a contract negotiated, but Sustainable Westchester has projected savings of about 10% on the supply portion of the bill, which amounts to a saving of about 3% on the total bill.
If this were the case, the customer in our example would save 0.8¢/kwh (remember the savings only apply to the supply portion of the bill) or a total of $5.33 for the month. However, Sustainable Westchester will receive a fee of 0.1¢/kwh for administering the program, or about 67¢ in our example. That will reduce the total monthly savings to $4.66.
Thus, the yearly savings would probably be in the range of $50-70 depending on how much power this customer uses. The benefits that you might receive will be based on your specific electric usage and may be greater or less than the amount in the example.
The most likely CCA charge will be a discount from the average Con Ed supply charges over the previous twelve-month period. Con Ed’s charges vary over the year as demand fluctuates, generally highest in the summer and lowest in the spring and fall. That means that CCA customers would probably realize savings from Con Ed charges in the summer months, but could very well be paying more than the Con Ed charges in some months during the spring and fall. Depending on the CCA discount and the actual Con Ed charges in the future, customers may or may not realize significant savings, and there is a possibility that they may actually pay higher than Con Ed rates, on average, for the year.
We hope that you have found this information useful. If you have any questions, please email us and we will do our best to answer them.
More information on CCA is available on Sustainable Westchester’s web site here.
In 2013, the Massachusetts Metropolitan Area Planning Council, in cooperation with the City of Medford and Grid Smart Energy, sponsored a study by Tufts University to assess the performance of seven CCA’s that had been operating in Massachusetts for the previous several years. It generally recommends CCAs, but cautions that significant cost savings cannot be the primary motivation to join one, as savings in these programs was modest and unpredictable. That study is available here.
In addition, Consumer Reports published an informative article on using ESCO’s a couple of years ago. Read it here.