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CCA 3.0 Pathways Report FINAL DRAFT copy SUBMITTED Local Power LLC1   “CCA 3.0 - Local Pathways to Climate Equity” Commissioned by Northampton, Amherst, Pelham, MA and ……….. In Partnership with Urban Sustainability Directors Network Global Philanthropy Partnership Final Report Task 1d By Local Power LLC Primary Author: Paul Fenn Researcher: Charles Schultz Editor: Julia Peters V2 Edited December 5, 2019 Local Power LLC2 Table of Contents A. Background and Introduction………………………………………………….… 5 Historical context Deﬁning energy equity “Beneﬁts” paradigms are in ﬂux: low rates vs. low bills vs. high equity Vicious cycle of inequity CCA’s shifting paradigm CCA 1.0: simple, limited CCA 2.0: local development & lower carbon grid power CCA program risks: social inequities for consumers CCA program risks: worker inequity CCA 3.0 is an unprecedented umbrella for climate equity B. Reaching Climate Equity…………………………………………………………..15 CCA 3.0 program design Renters and low/medium income residential customer equity beneﬁts Small and medium-sized business customer equity beneﬁts Farmers and home business customer equity beneﬁts Labor and local energy businesses equity beneﬁts Public safety equity C. Description of National CCA Survey…………………………………………….19 Interviews with 35 innovative CCAs and state agencies in six U.S. CCA Markets For individual CCA case studies and stories - See Appendix A D. Analysis of National CCA Survey………………………………………………....20 CCA lack of internal capacity CCAs not engaging their customers as equity partners CCAs not using their unprecedented access to data Most green CCAs have not integrated customer and public ﬁnance CCAs neglecting municipal, local bank and private partners Very few CCA heat and hot water programs CCAs not embracing citizen participation in governance E. 3.0 Barriers…………………………………………………………………………...30 A failure to integrate “components” is a barrier to scalability The problem of carbon reduction measure sustainability: Renewable Energy Certiﬁcates The problem of carbon measure coverage: DER export tariffs DER industry problems: gaps between supply and demand Community shares State government-caused barriers and recommended regulatory/legislative actions Energy efficiency surcharge funds administration CCA 1.0’s “two middlemen” model F. Economic Analysis…………………………………………………………………47 Paradigm shift from 1.0 to 3.0 DER cost optics inﬂated by simplicity of utility business models Customer engagement and demand diversity CCA can provide the umbrella for a universal, multi-sector shares offering Local Power LLC3 G. 3.0 Commercialization Pathways and Program Design……………………50 Program design to engage diverse DER customer interest levels Renewable natural gas aggregation Administration of beneﬁts CCA customer engagement process offers tailored products Equity DER offerings engage customers in technologies through integrated products Roles of municipalities Data use in CCA 3.0 launch sequence Datasets to design and target products Data for DER site/customer selection criteria Targeting and demand integration of microgrids H. 3.0 DER Integration Technologies……………………………………………….55 Energy technology model Functionality: Non-exporting DER model Communication, enrollment and administrative platforms Operational integration: Virtual Power Plants, DER Management Systems (DERMS) and microgrids Sharing through Software as a Service and/or transactive energy platforms Electric Vehicles as storage Heating and hot water DER in a carbon-free gas service I. 3.0 Governance, Agency Structure and Program Funding……………………62 A CCA 3.0 has four operational counterparty types JPE Agencies Joint Powers Entity charter authority and program scope Inter-municipal agreement division of CCA vs. municipal roles New CCA and member municipality and JPE roles in “separate” administrative approach Focus internal capacity on DER, not power sales CCA 3.0 agency tasks under any model Legal and ﬁnance Staff funding from startup to full scale 3.0 administrative funding sources Uses of CCA adder Administration of ratepayer energy efficiency surcharge payment funds (MA, CA only) Ways to avoid energy efficiency funding requirement constraints J. 3.0 CCA Management and Internal Capacity…………………………………..67 2.0: going wholesale outside California CCA 2.0’s direct wholesale model “Full” 3.0: the wholesale equity model “Partial” 3.0: direct retail model 3.0 technical lead qualiﬁcations K. 3.0 Next Steps………………………………………………………………………71 Local next steps State next steps L. CCA 4.0: Future Expansion and Integration……………………………………73 Energy islands Automatic all-in equity Local Power LLC4 Community Choice Everything Appendix A: Case Studies and Stories……………………………………………74 Appendix B: Glossary of Terms…………………………………………………….79  Local Power LLC5 A. Background and Introduction This is a report on the boldest Green New Deal-type leadership in America today, which is being led by municipal governments, as it was also in the “old” New Deal of FDR. It is called Community Choice Aggregation (CCA). This report describes where CCAs have gone in terms of transforming the energy business, what they have achieved recently, where they are trying to go, where they see barriers, and where they actually are. CCAs are at the forefront of those confronting the 11-year time scale for a transformation of the energy sector, set by the UN secretary general in March of this year. This is about how U.S. municipalities will transform the energy system from the bottom-up, under the dedicated umbrella of CCA. Articulated over the past decade and now coming to scale on the west coast with three gigawatts of CCA-committed in state renewables, CCA is now mature and underway with some third of California’s investor-owned utility customers under service and over forecasted in the next few years. CCAs have signed long-term renewable energy contracts totaling over three gigawatts, with 19 CCAs launched in California since 2010, growing to include more than 160 towns, cities and counties with 64 having a 100 percent renewable or clean energy policy as their default energy program. A UCLA study found that “CCAs have had both direct and indirect effects that have led to increases in the clean energy sold in excess of the state’s RPS” and are now the largest driver of renewable energy growth in the state. Most CCAs are already well ahead of the California Renewable Portfolio Standards (RPS) targets, offering almost double the 33% by 2020 requirement at competitive rates. Given the launch of 10 new CCAs in 2018, the CPUC estimates that CCAs have an immediate RPS procurement need of approximately 6,900 GWh beginning in 2020. And by 2021, at least 65% of RPS procurement must come from long-term contracts. While Massachusetts CCAs have innovated, they have not come close to this level of impactfulness. However, this may be changing. All around the country, particularly in Massachusetts and New York, many CCAs with higher aspirations are focused on the urgency for climate action as their ﬁrst priority, and are increasingly recognizing the urgency of social equity. These two program criteria address both social justice concerns of community investment, and equally important, of physical C02 reduction impact. There is a recognized need to go beyond incentives and credit schemes of the current market to engage a sufficient portion of the population and to reach the volume of consumption necessary to achieve scale, acceleration, and endurance of carbon reduction: the essential criteria by which to judge climate policy. Such municipalities, focused in the northeastern CCA region, have partnered to produce this timely report. Building on 25 years of CCA development in all active markets, this paper articulates a third version of CCA, or "CCA 3.0” which adds a remaining ﬁnal layer of CCA program design that is being pursued by many CCAs in different forms, but remains to be implemented in a scaled and replicable way. From accomplishing (1) rate discounts alone to achieving rate discounts plus renewable energy credit mitigation in the late 1990s, to (2) achieving rate parity with accelerated RECs in 2010, to (3) rate parity with accelerated local renewable energy development in 2014, to (4) substantial development of in-city, in-county, regional, and in-state renewables in the past few years, the most recent wave of CCAs are focusing strategically on behind-meter technology deployments, and enlisting customers directly or through shares arrangements as investors in diverse categories such as solar, storage, energy efficiency, and demand management, known as Distributed Energy Resources (DERs). This is a leap that involves not so much generation technology as much as integration of any number of technologies, electric vehicles (EVs), heating/hot water, customer equity, solar shares, and partnership with local dedicated customer cooperatives. This is represents ashift of Local Power LLC6 renewables and energy efficiency technologies from a subsidized import-export model to a load-eliminating/avoided power cost model. This new approach is centered around moving away from the boilerplate green energy business products of deregulated energy retailers and utilities, which uniformly follow a standard formula that combines (1) grid power from Renewable Energy Certiﬁcate (REC) trading to “legally” mitigate fossil portfolios on the one hand, and (2) distribution utilities’ export-funded solar systems through the consumer DER product tariffs denominated Net Energy Metering (NEM), in which onsite power exports from randomly selected and designed (often) unused onsite renewable generation, hard-wired to shut off during grid failures. CCA 3.0 is a commercialization pathway transitioning quickly to widespread in-CCA DERs based on municipally administered sharing, and employing not NEM, which is capped due to voltage regulation issues from exporting, but rather a non-exporting distribution utility interconnect tariff, for which there are no such impacts, nor caps, nor the regulatory basis or precedent for caps: an unimpeded pathway to scaled energy localization. This project connects the recent past to the present and near future of CCA, tying together the disparate chords of CCA across the states over the past quarter century, drawing on a CCA 1.0 survey in 2010 and CCA 2.0 survey in 2016, and updating the recent achievements of CCAs based on new interviews of thirty-ﬁve leading CCAs and state regulators. Reﬂecting on the initiatives and barriers experienced by recently innovative CCAs, this report seeks to analyze CCAs dispassionately, and frankly articulate where CCAs need to look to move to the next level. Electricity, transportation, and heating (building heat/hot water) encompass some two- thirds of greenhouse gas emissions in terms of sectors. CCA 3.0 mitigates all three , focusing local program design to support customer equity shares and cooperatives, municipal partnerships and integration among municipal service platforms, project development and ﬁnancing, and enhanced customer service and engagement. This is energy democracy itself. CCA 3.0 is a national project to articulate an advanced form of Community Choice Aggregation focused on scaled, accelerated municipal, residential and local business investment in local energy resources, to (1) permanently cut carbon pollution and (2) cause energy equity, both from the ground up. The strategy outlined herein builds on over 25 years of CCA in the United States, with communities in 1500 municipalities under CCA laws adopted by Massachusetts, California, New York, Ohio, New Jersey, and Illinois, starting under the simple supply model of CCA 1.0 in the late 1990’s and achieving California’s development-oriented CCA 2.0 over the past decade. CCA 3.0 will take this to the next level: into the community, behind the meter, shared, co-invested, and under customer, cooperative and/or municipal ownership, with the municipality acting as the administrator and trusted third parties between customers and CCA products and services companies. 1. Historical context Electricity can best be understood as a “rental” model of energy under which users pay for hours of electrical capacity - the kilowatt-hour (kWh) - which reﬂects, through ﬁnancialization, the combustion of fossil fuels. The kWh created a vessel for ﬁnancing and vertically integrating the electricity industry. Today, the ultimate results of this model of consumption of energy fuels are (1) climate crisis, and (2) energy poverty: the continuing drain of each American’s scant surplus wealth to perpetuate debt service on fuel-burning machines. Local Power LLC7 During the ﬁrst few decades of the electricity industry in America in the late 19th century, the municipal initiation and ownership of local Direct Current (DC) electricity networks presented a spectacle of democratization and decentralization of energy. Indeed, the invention of the electric vehicle predates gasoline vehicles by nearly 50 years, and manufacturing by over ten. New York City’s ﬁrst taxi cab service was all electric, using easily removable lead acid batteries to refuel until the private sector stepped in to privatize and vertically integrate energy systems. The advent of Alternating Current (AC) enabled the centralization of massive, remote generating stations far from the buildings that use them, and opened the way for the vertical integration of the industry through mergers and acquisitions. In the early years of the Cold War, the electricity industry campaigned successfully against municipal utilities, staving off congressional efforts to nationalize the utilities after great holding companies collapsed in the ﬁnancial crash of 1929 (leading to the Public Utility Holding Company Act), promoting a state regulatory model that still largely prevails in this country. Utilities in effect used this regulatory system to stall the transition to economically viable renewable energy technologies for decades until the late 20th century. The automobile and oil industries similarly blocked, co-opted and shelved electric vehicle development, and the heating fuels industries resisted renewable thermal technologies and electriﬁcation despite their cost-effectiveness. In this sense the current trend toward energy decentralization is but a return from Nikola Tesla to the original energy model of Thomas Edison, driven by technological miniaturization. In spite of industry opposition, actions that included government initiatives, imports from less captive markets overseas, and activist/affluent consumer demand were sufficient to support manufacturers of small, fuel-free renewable energy technologies that can be owned by consumers (“appliances”). Meanwhile, the personal computer and telecommunications industry developed cheaper, better batteries and control systems, as well as the software, inexpensive switching technologies and ubiquitous IP network capacity for appliance interoperability without expensive utility hardware infrastructure. Today the so-called Internet of Things (IoT), whose manifestations are Virtual Power Plants (VPPs), Distributed Energy Management Systems (DERMS), and microgrids, is here to stay. These sub-platforms for commercialization pathways require only a “middleware” platform to rationalize, bundle, ﬁnance and deliver a wide array of onsite generation, storage and control technologies to all residential, business customer classes. The ultimate effect of the energy industry’s long delay of demonopolization has been to protect and repeatedly recapitalize an obsolete infrastructure against increasingly cheap and interoperable onsite energy technologies. Today, some utilities are sandbagging their increasingly untenable competitive situation by perpetuating customer captivity through the imposition of new charges, requiring approval of governor-appointed state regulatory commissions. These new charges are non-bypassable monthly bill fees and transmission and distribution charge increases,re-designs retail electricity providers, CCAs or DERs, all competitors for customers. Meanwhile, the introduction of deregulated markets at the federal and state levels in the 1990s introduced an initial degree of competition and renewable energy development, within which Community Choice Aggregation was introduced as a vehicle for customer participation in the aggregate, and has out-innovated the other models for both rate discounts and green power/energy efficiency. CCA presented a truly historic platform for an entirely new energy business model based on the mutualistic local municipal organization of energy demand, rather than merely the supply, as the foundation for design of renewable and energy efficiency resources.. By the turn of the 21st century, most energy efficiency measures were already cheaper than coal-ﬁred power. By 2010, wind power was cheaper than natural gas-ﬁred power, and in recent years even photovoltaics, the holy grail of energy technology (requiring no transmission and long-lasting with little maintenance), has dropped below a dollar per watt, making solar power cheaper in some states than grid “system” power. While transformation is now both technically Local Power LLC8 and economically feasible, the growth of these technologies in states that lack CCA laws remains behind a wall of regulatory protection on the one hand and uncompetitive, underperforming deregulated grid power/gas retailers on the other. From an historic perspective of energy, where we are now calls for rapid change, not an incremental path. Among distributed energy technologies, high tech-electricity, -transportation, and -heating are combining into interoperable generation, control and storage systems. In the transportation sector automation technologies have created an efficient platform for controlled charging. Meanwhile, in the building heat and hot water industries, where technological change has been delayed longest, IP-enabled learning thermostats and heat pump technologies are economically poised to make heating oil and natural gas heating a thing of the past. All that stands in the way now is the ability to engage as many customers as possible, sign contracts and arrange ﬁnancing. These require data analysis and a reliable planning framework. Today, the “grid” card is the last the utilities have to play against a multitude of more efficient, customer-ownable, and radically less polluting energy technologies. Created by the energy industry, it is the state regulators who have become the last line of defense for the industry’s 19th century infrastructure, protecting utilities’ revenue streams against consumer “defections” to solar, while safeguarding utility control of ratepayer surcharge funds for funding customer- owned energy efficiency measures. In the name of protecting the “average” ratepayer, in some cases regulators have authorized utilities to impose whole new categories of connection fees on owners of photovoltaic (PV) systems, and “minimum bills” that charge consumers for unconsumed power. In effect, this is a taxi on any bill savings from using PV and other renewable DER systems. With regulatory sanction, utilities punish consumers with one hand for doing the right thing in the name of protecting “their” remaining captive customers, while with the other, deﬁne solar programs paid by all ratepayers to predominantly beneﬁt affluent building owners, with renters and low income consumers implicitly excluded from participation. Unpopularity results from contradictions that both harm solar economics and make solar seem ineffective and costly. Customer access trumps market prices. As the penultimate platform for deployment of grid- connected but operationally autonomous systems within a community-wide retail energy service, CCA 3.0 could be called the “wireless” model of energy, successor to the vertically integrated utility, answering climate crisis with opposite-facing technology, and a new deal for customers. As the conventional incremental approaches to decarbonization of recent decades, such as portfolio standards, sustainability indexes and incentives, have failed to achieve carbon impacts on a scale that is commensurate with the magnitude of the problem, it is increasingly clear that, in order for rapid decarbonization to occur, this kind of planning entity is required. Moreover, traditional rate-based investment is not a sufficiently large platform for the scale of capital that is necessary to transform energy in the eleven-year time frame the United Nations Secretary General indicated on March 28, 2019, to avert “irreversible damage.” New revenues are needed, which only engaged customer investment in cost-saving measures, with a compelling return-on-investment, can provide: a virtuous cycle. Climate justice is not in this sense merely a concession to the poor, but a universal societal call for coordinated co-investment across residents, businesses and government. From this perspective, transformative climate policy is focused not merely on decarbonization of energy, but “climate equity.” It replaces centralized, polluting resources with local renewable resources, and it changes the century-long electricity business model in which energy bills amount to a life-long lien on personal wealth by an absentee-owner. It is time for a new era, in which monthly energy bill payments are repurposed into a capitalization of personal wealth: a shared investment in local and renewable energy equity. Local Power LLC9 2. Deﬁning energy equity In the U.S. electricity industry, dominated by Wall Street-traded utilities, traders and fuel extraction companies, energy bills are a key factor in social inequity because Americans pay their energy bills before every other bill, making energy utilities and suppliers the “ﬁrst lien” on a society’s wealth. In the conventional energy utility milieu, the concept of energy equity takes the form of welfare, or charity. Conventional utility service deﬁnes the “equitable treatment of customers” required by state regulation as a prohibition against charging small customers more for energy than large customers, and state mandates for utility tariffs to subsidize lower rates and/or “fuel assistance” for low-income residents. Meanwhile, all customers, including the poor, are required to pay for state DER funds on monthly bills. While ostensibly well-intentioned, conventional utility DER programs are nevertheless a fundamentally unequal and regressive treatment of the majority of energy users. Thus, while such policies represent a baseline mitigation of energy poverty in one way, they also impose new costs and deny equity to the majority in another way. It is safe to make the general statement that, when measured as a percentage of income/assets, poor consumers with subsidized rates and fuel assistance still pay more for energy than more affluent consumers. Thus, the discounted-rent model of utility “fairness” remains a bulwark of energy poverty for Americans. Moreover, the funds paid to energy companies by poor consumers represent in many cases the entirety of their scant and declining surplus wealth. As most (and increasingly more) Americans fall under this category, the provision of energy is both a fundamental cause of social inequity, and also, if transformed through customer access, an umbrella, or platform for building new social equity. 3. “Beneﬁts” paradigms are in ﬂux: low rates vs. low bills vs. high equity To understand the nature of energy equity, one must unpack commonly used criteria of consumer beneﬁts as they have been deﬁned under regulated utilities. a.Lower rates As mentioned above, the regulated utility deﬁnition of customer “beneﬁts,” broadly imitated by deregulated retail energy suppliers, is the beneﬁt of lower energy supply rates. Most energy programs focus on achieving lower rates, and regard the lowering of rates as the deﬁning consumer beneﬁt of competitive supply. However, the “supply” component of most electricity bills is only a fraction of the amount due: between a quarter and a third of an average customer’s electricity bill. Thus it is not uncommon for customers with lower rates to suffer from higher bills. Moreover, utilities have responded to deregulation by persuading many state regulators to increase the amounts charged for energy delivery (transmission and distribution), in addition to creating new volumetric surcharges. b.Higher rates, lower bills But people don’t actually pay rates: they pay bills. Where customer-owned energy technology is in play, high rates often do not correlate with high bills. For example, California is notorious for having on average the highest rates and the lowest bills in the U.S., because of energy efficiency measures that reduce consumption. Moreover, many onsite Distributed Energy Resources (DER) products involve payment of a rate premium or supply charge that results in (i) reduced ongoing net monthly bill payments, and (ii) additional, cumulative future monthly bill payments. Local Power LLC10 4. Vicious cycle of inequity - poor paying to install solar on buildings of the affluent, whose real estate value then also appreciates With some state governments ordering the utilities to create Net Energy Metering (NEM) Tariffs in the mid- to late-1990s, customers who installed solar photovoltaic arrays and other behind- meter distributed generation began to receive monthly bill credits. These tariffs suffered from extreme inequities, as non-building owners (the poor) were being made to provide funds that were primarily received by building owners (the relatively affluent). Moreover, buildings with DER installed under this equity beneﬁt program also appreciated in value faster than homes without DER, making low income homeowners suffer a secondary injury to their real estate equity. A decade or more later, some states ordered the utilities to facilitate Virtual Net Metering for multi-tenant properties for those accounts owned by the same entity, and while this improved the conditions of inequity it did not solve them. Most recently, Community Solar presented a pathway for inclusive ownership, but is everywhere stuck in pilot mode, and awaits a socially inclusive platform such as CCA to realize its potential: a.Caps present an inherently limited horizon Exporting Net Metering, Virtual Net Metering, and Feed-in-Tariff conﬁgured systems cause voltage regulation issues on distribution systems, requiring distribution upgrades that are paid for by all customers, including poor customers who don’t participate in solar programs. b.DER redlining Because of these costs, utility Net Metering caps severely limit the horizon of allowed exporting interconnect permits for DERs, resulting in a regulatory ghetto of captive energy dependency from which the poor can never escape. 5. CCA’s shifting paradigm When the U.S. electricity and natural gas industries were deregulated by the federal and many state governments in the 1980s and 1990s, beginning in Massachusetts and California, the idea of “choice” ﬁgured prominently in legislative nomenclature. Buoyed by the success of federal telecommunications industry deregulation of the early 1980s, bringing about technological innovations such as fax machines (which the phone monopolies had blocked as threats to network stability) and wireless telephone and paging networks, Democratic and Republican policymakers in D.C. and many states alike embraced the policy view that mandating energy choice would itself create competition, and that the magic of the market would deliver both technological innovation and lower energy bills for all. In this sense, energy deregulation contained the vague promise that paradigmatic transformation of energy would ultimately follow. Certain members of the Massachusetts General Court, however, were skeptical that (1) small consumers would beneﬁt, and (2) renewable energy would prosper in a deregulated market. Therefore, the Commonwealth’s 1997 electric industry restructuring act (Chapter 164, 1997), which deregulated the market, also authorized municipalities to use Community Choice Aggregation as leverage to ensure that those declared public policy goals were realized. Ohio followed, and when When California’s deregulated market fell into an historic crisis, it too adopted a CCA law (AB117, 2002) - a “second generation” CCA law for more “advanced” CCAs focused on buying greener power and developing renewable energy and installing energy efficiency locally. This was called “CCA 2.0.” Over the past quarter century, while the results of electricity and natural gas deregulation have as a rule been disappointing for both consumers and the environment, CCA has proven the “great exception.” CCA has saved small consumers billions of dollars in rates, and continues to set records for renewable energy supply levels, renewables development, and energy efficiency Local Power LLC11 innovation. However, the transformation of the energy business model among CCAs began a decade ago, and has developed dramatically in scale and scope, just in the past three years. Meanwhile, the vast majority of the 1500 or so U.S. cities under CCA in the seven states allowing it, do offer lower rates with often above-Renewable Portfolio Standard (RPS) supply portfolios, yet still present a conventional supply-side value proposition to their customers as deﬁned in terms of discounted “rates” per kilowatt hour, and a higher “green” content that is deﬁned by the dedication of a portion of program savings to the purchase of Renewable Energy Certiﬁcates (RECs). While RECs are often very cheap and make their purchasers legally green, their actual impactfulness is questionable and temporary, compared to the physical and enduring offsets, for instance, of warrantied solar arrays, heat pumps and electric vehicles. Outside of California, CCA brokers and retailers perpetuate the old utility model of recurring revenues, paid directly by margins on CCA retail energy sales volume, lacking skills and ability to lead DER-related business development, and tending to steer CCAs toward ﬁnancialized green power products suited to their business model, that reduce neither the energy consumption, nor the dependency, of their clients’ customers. The market tends not toward innovation but repetition. It is now clear that the CCAs themselves - that is to say, municipal staff and decision-makers - must be the ones to ﬁll this gap, to make 2.0 or 3.0 implementable for their communities. As CCA itself attests, public purposes must be publicly mastered: then the market will reluctantly follow. In recent years, due mostly to citizen activism centered around Climate Change, a number of CCAs have renounced the use of “unbundled” RECs by procuring renewable energy from wholesale suppliers. They accomplished this by eliminating middlemen and taking procurement in-house. In these cases, the energy business model is changing in the sense that a de-ﬁnancialization of renewables is taking place, and recognition is becoming more widespread among CCA executives and governing boards that location matters: that “local” renewables offer substantively greater ecological and economic beneﬁts than regional renewables, and regional renewables greater than renewable energy imported from afar. 6. CCA 1.0: simple, limited While the nation’s ﬁrst CCA, the Cape Light Compact in Cape Cod, Massachusetts, adopted an energy efficiency-centered business plan, the vast majority of early “1.0” CCAs focused on short-term customer rate discounts, and limited their green programs to “mitigations” by dedicating a portion of the savings to the purchase of RECs. 7. CCA 2.0: local development & lower carbon grid power In California, Bay Area CCAs led a new model of CCA focused not on rate discounts but rate stabilization. They accomplished this by shifting from the “retail” model in other states in which energy traders played the energy product integration and ﬁnancing role to a “wholesale” model in which the CCAs took control over integration and introduced power purchase agreements (PPAs) with renewable energy developers, whose projects were substituted for grid power. Requiring suppliers to “meet-or-beat” the utility’s rate with higher levels of renewable physical supply, San Francisco, Marin, and Sonoma counties successfully launched programs whose primary goal was not cheaper power with mitigation by REC procurement, but decarbonization through wholesale sourcing and new local and regional renewable energy investment. 8. CCA program risks: social inequities for consumers Local Power LLC12 While a paradigm shift has occurred in CCAs’ concept of renewable energy from mitigation to development, CCAs are just beginning to change their ideas about “equity.” Moving beyond the CCA 2.0 program design to one focused on social equity, we must recognize the ubiquitous inequity of both the conventional utility model and the more recently created policies to promote local renewable DERs. In order to avoid the risks of inequity in future, CCA programs must avoid the pitfalls or its own innovations: a.Low-income residents Low-income residents are systematically excluded from ﬁnanced DER products, and are priced out of premium renewable grid power products. b.Housing renters Renters are systematically excluded from ownership of ﬁnanced DER products, including exporting tariffs and subsidies aligned to building owners, and Property Assessed Clean Energy (PACE) ﬁnancing programs, for whose voluntary ﬁrst lien-based low-interest ﬁnancing only building owners, by deﬁnition, are eligible. c.Non-participating customers secondary harm Electricity ratepayers who do not have DERs are harmed a second time by the fact that market-sited DERs do not reform their CCA’s annual demand pattern (“load duration curve”), with “grid” beneﬁts sold to third parties, such that the CCA’s peaking- and capacity-based cost-of-service will remain unreformed, its customers facing higher future bills that disproportionately impact the poor, with or without subsidized rates. d.Energy efficiency surcharge payers Ratepayers in CCAs that do not administer the energy efficiency surcharge funds locally are harmed by higher electricity bills because the funds they are required to pay on their utility bills are not being invested in their homes and businesses or even in their community, reducing neither bills through less consumption nor their rates through load reform. e.Small residential and small-medium business consumers All customers of CCAs that separate municipal accounts outside the CCA’s aggregated load, or that do not offer service to large commercial customers in their jurisdictions, are harmed by higher energy bills that result from smaller and less balanced day/night-time load shapes. This practice is in fact very common among CCAs outside California. 9. CCA program risks: worker inequity CCAs are not just programs: they consist of municipalities whose residents and businesses are not merely consumers, but workers, entrepreneurs, taxpayers, and investors. Ensuring social equity in a CCA program is not limited to consumer equity. The multiplier effects of community wealth retention have been repeatedly demonstrated, while the U.S. trend of outsourcing services and the energy industry concentration through mergers and acquisition “mania” of recent decades, make this equity element of CCA 3.0 palpable. Unless CCAs take deliberate measures to design their 3.0 programs to engage local residents and local businesses, the result will be yet another layer of unintended energy poverty in their community: a.Local workers. Local workers can be harmed by a lack of local job training and placement leading to the creation of jobs elsewhere; b.Local entrepreneurs. Local entrepreneurs can be harmed by procurement processes that make it difficult or impossible for small and mid-size companies to participate, resulting in the award of contracts to non-local companies; c.Local investors and lenders. Local investors and lenders are harmed by non-local ﬁnancing, and local bank borrowers are harmed because the money they spend as CCA customers is being exported, and thus not being recirculated in the community. Local Power LLC13 10. CCA 3.0 is an unprecedented umbrella for climate equity CCA 2.0 has demonstrated how CCA is an umbrella for climate action. By bringing many disparate, underfunded, under-leveraged, un-scalable local municipal renewable energy programs under the integrative authority of a CCA platform, these municipalities have exponentially scaled up the impactfulness of all of those efforts. This unprecedented leverage applies even more to equity. The synergistic power of CCA to augment upscaling of climate equity may be boiled down to the following strategic advantages that are not otherwise available to municipalities, or indeed any market participants: a.Data Unlike any market participant other than the utilities themselves, CCAs have access to otherwise conﬁdential utility customer end-use meter data for all eligible consumers in their jurisdictional boundaries, and thus the ability to interpolate this data with other municipal datasets that reveal the nature of energy demand and resources within their communities. Meanwhile, municipal DER programs do not have this data any more than commercial market participants. This data is a goldmine for DER deployment, because it enables CCAs to (1) understand the nature of the aggregate CCA load in order to create a high-level cost of service model and DER integration strategy for the community based on local demand patterns, land use, infrastructure and renewable resources, and (2) because usage data enables CCAs to analyze, identify, and tailor appropriate DER technologies for each customer based on their monthly bill payments, patterns of use, forecasted energy costs, and other publicly available data sets. b.Contact Engagement of customers in energy cannot be achieved through a single point of contact, but requires sustained education, repeated offers of services, and contextualization to elicit widespread interest and enthusiasm. Consisting of municipal governments, CCAs have both their statutorily deﬁned channels of communication with their customers through opt-out notiﬁcations and to a varying degree monthly utility bill pages or line items, but also separate municipal platforms. Scheduled mailings, public notices and free media, phone calls, web sites, and media contact with residents and businesses represent major channels for DER engagement that market participants simply do not enjoy. By adding an on-bill presence to water and sewer mailings, tax mailings, and other public notice platforms, CCAs are uniquely positioned to present a “green new deal” to the community. c.Revenue The opt-out automatic enrollment mechanism deﬁnes CCA, and represents a major advantage formerly only enjoyed by monopoly utilities and municipally owned utilities: a predictable revenue stream with which planning and investments can be made. Moreover, CCAs in California have emerged in recent years as more creditworthy than the utilities themselves, and now represent over half of the entire pipeline for solar investments in the state for the next ﬁve years. d.Control Signiﬁcantly, CCAs exercise local control over rate design and rate-setting that even regulated utilities, which must seek approval for any one category of procurement under a separate regulatory proceeding, lack. Control of revenue constitutes an existential opportunity for DERs, because DERs can compete on a level playing ﬁeld on the platform of a neutral, publicly interested party which is empowered to authorize voluntary rates and fees for participating customers, who wish to acquire ownership beneﬁts or physical possession of DERs based upon monthly bill payments. e.Trust Studies of DER systems in the U.S. have identiﬁed the cost of acquiring new customers representing half or more of the cost of installed DER systems. One cause of this substantial cost is the inaccessibility of end use meter data to market participants (which CCAs, holding this data, can also help address), but a second key cause is Local Power LLC14 consumer burnout. The prevalence of aggressive marketing practices and fraud in the energy industry - both among retail energy traders and among solar ﬁnance companies - has hardened the hearts of many consumers toward green power marketers. As in the case of municipal recycling programs, municipalities have a natural role. Authentic public beneﬁt programs by CCAs have a much higher credibility in the community than commercial pitches can have, and present a unique vessel for customer engagement in DERs that do not otherwise exist in the market. As this report indicates, CCA program design should build on this precious remnant of public trust in otherwise tarnished energy markets. Local Power LLC15 B. Reaching Climate Equity At the highest level, CCA 3.0 development is best described as local investment in Distributed Energy Resources to reduce local grid demand, through the mutual effort of the community and participating customers, utilizing municipal planning, in order to provide energy equity to those deﬁned in the community as the “redlined majority:”: ●Low-, medium- and ﬁxed-income residential customers ●Public housing residential customers ●Small- to medium-sized businesses customers ●Renters and public housing residents ●Consumers without credit ●Family farms and home businesses 1. CCA 3.0 program design An energy equity-oriented program is designed on the principle of inclusivity, not merely by serving low income residents, but (1) to de-segment the local energy market so that all CCA consumers enjoy the same combined market power to deﬁne and receive 3.0 products and services, which energy markets currently offer primarily to large commercial, government, and homeowners; and (2) to replace premium based bill-increasing green energy products, principally only affordable to the affluent, with equity: bill-decreasing ownership-beneﬁt products that generate customer wealth, and therefore appeal even to the poorest customers. CCA 3.0 does not only offer but emphasize ﬁnanced DER products for renters, train and create jobs within the CCA, and actively seek to hire companies locally or in the immediate region, use local ﬁnancing, and target DER types and sites for load reform so that all members of the community can pay less in the future. CCA 3.0 is a shift from the import-export model used in utility tariffs, to a sharing and equity ﬁnancing model for the redlined majority. Virtual sharing, which is facilitated administratively through DER account credits, and the real sharing of possession, are the basic engagement keys to reach the otherwise unreached majority of electricity, gas and automobile users. 2. Renters and low/medium income residential customer equity beneﬁts The key barriers to DER ownership by low, medium and ﬁxed income Americans are (1) lack of home ownership, (2) lack of capital to invest, and (2) lack of creditworthiness to borrow. Thus, a 3.0 program design will incorporate measures (1) to provide or arrange ﬁnancing sources, (2) to ﬁll the gap through the facilitation of ﬂexible or “virtual” participation in DER equity, (3) to provide security for collection based on building occupancy, and (4) to tailor suites of “real” equity products that have shorter payback periods: a.Financing The commercial DER ﬁnancing market is designed to serve the affluent and large businesses, and PACE ﬁnancing is de facto limited to building owners. In order to arrange ﬁnancing for installations and measures that beneﬁt low income customers, CCA 3.0 programs will work with member municipalities to provide revenue bond ﬁnancing through rapidly growing “green bonds,” or else partner with local ﬁnancial institutions to ﬁll the gap. b.Universal shares offering A cornerstone of CCA equity is DER sharing. While commercially available “community shares” or “solar shares” programs, facilitated Local Power LLC16 through utility Virtual Net Metering tariffs, enable customers to purchase shares in or subscribe for bill credits from a solar array, these tariffs are capped in every state where CCA is authorized, imposing similar limits to conventional net metering described above. Moreover, as these programs are largely marketed by private, for-proﬁt, absentee-owned developers, subscription rates are incremental and therefore not particularly scalable. In contrast, a universal shares offering by CCAs have exponentially greater potential to engage customers. Unlike market participants including utilities, CCAs also enjoy independent capacity to facilitate shares arrangements for their customers through rate design and on-bill or off-bill customer-transaction platforms. c.Water/sewer billing platform security The principal on-premises or “real” DER lending barrier for most Americans, is an inadequately secure bill collection proﬁle for commercial lenders in cases of customer non-payment or change-of-occupant. As mentioned above, PACE attempted to solve this problem by creating security for public ﬁnancing that is based on a ﬁrst-priority property tax lien, but the result was (1) excluding the majority of Americans who are not property-owners, and (2) continuing legal and political challenges by mortgage lenders like Fannie Mae who object to losing ﬁrst priority in a loan default. In this regard, CCAs possess key advantages: (1) a degree of security in the form of opt-out enrollment of new occupants, (2) ancillary service contracts (e.g. Demand Response) that do not change with re-occupancy; and more signiﬁcantly, (3) the ability of CCA member municipalities to provide a separate billing platform, available for voluntary CCA customer DER ﬁnancing charges on municipal water and sewer bills. d.Modular energy efficiency product suites A key barrier to ﬁnancing on-premise or real DERs for low income residents is the long payback period associated with some energy measures. To the extent that the payback on a measure takes decades to complete, the lender’s credit risk is elevated. Thus, CCAs can develop packages of shorter-term energy efficiency measures for which any customer who pays a utility bill may be eligible for ﬁnancing. 3. Small and medium-sized business customer equity beneﬁts Smaller in number but even greater in climate impact than non-affluent residents, the other major neglected market segment for DERs is the small- to medium-scaled business customer. These are typically local businesses that depend more upon a local customer base for their success, and are the natural participants and partners in community shares programs. CCAs can effectively engage this sector by tailoring and targeting products to serve their particular energy and community participation interests: a.Owner-occupied commercial buildings as shares host sites Small and local business owners who own the buildings they occupy are natural partners for Community DER shares generation sites, for a variety of reasons: (1) they often depend upon local and even neighborhood residents for their business, and recognize the beneﬁts of community and neighborhood “partnerships” to establish customer loyalty; (2) they are often large energy users whose pattern of use is schedulable and/or predictable, making them optimal sites for DERs; (3) many have high energy tariffs and bills that show positive returns on investment by DERs; (4) they are secure off-takers of energy from the point of view of lenders; (5) their properties often contain multiple accounts in an isolable “campus” environment, creating opportunities for DERs sharing with tenants. b.Resiliency for energy-critical businesses Businesses with refrigeration, heating and cooling needs are energy-critical in the sense that they suffer losses during power outages. For this reason, DER products that enhance onsite energy security, such as Local Power LLC17 microgrids, are a critical engagement pathway to resiliency, rather than cookie-cutter NEM systems, which shut off during outages. c.Modular DERs for renters As for residential renters, DERs that commercial renters can take with them are more engaging products than building-integrated DERs that effectively belong to the owner during changes of tenancy. 4. Farmers and home business customer equity beneﬁts The following onsite DER technologies are appropriate for ﬁnancing at family farms: a.Renewable water pumping; b.Methane digesters; c.Agricultural biomass generators; d.Farm building renewable heating and hot water. 5. Labor and local energy businesses equity beneﬁts The participation of local labor and companies in CCA DER build-outs is a challenge for both CCAs and local residents as well as businesses under standard municipal procurement processes, which typically include both long sales/decision-making cycles and burdensome local contracting requirements. As a result, formal RFP processes can de facto favor larger, typically non-local companies, which in the absence of palpable incentives are less likely to hire locally. Moreover, while local community colleges and state universities often offer training courses and degrees in related ﬁelds, they often lack the resources to offer placement opportunities for their graduates. CCA 3.0 program designs can ﬁll the gap to encourage local business and labor participation. The following CCA 3.0 program designs can facilitate the employment of residents and contracting with local energy businesses: a.Local labor training and job placement Coordination with local educational institutions and labor unions to train DER installers; b.“Job order system” Administration of a pre- qualiﬁcation and job order system for DER installers and integrators; c.“Local preference point awards” in CCA solicitations Inclusion of point awards for local labor and subcontractor sourcing in CCA solicitations; East Bay Community Energy (EBCE) in California has made a special commitment to local hiring, job training and good paying jobs, adopting local job creation and customer equity goals in its Local Development Business Plan. EBCE works with local unions to develop the workforce that will be needed for wide- scale DER deployment, and have point awards for local firms who bid into their RFPs. “We have a commitment to prevailing wage, local hire, and local training. We need, for instance, to train people to do things like installing electric water heaters. We are working with training programs and unions to The Cape Light Compact and Nantucket, Massachusetts have developed “strong relationships” with local contractors who develop DER for their customers. “This alignment is financially and logistically beneficial to both parties.” -Maggie Downey, Administrator, Cape Light Compact Local Power LLC18 d. CCA RFP (Request for Proposals) points for in-county companies CCA solicitations can include a preference for bids by local companies and/or companies that commit to employ local labor, and may award points for them in bid evaluation scoring criteria. 6. Public safety equity In a grid failure event, resiliency tends to be inequitable. As the City of Boston’s recent MIT microgrid study indicated, it is the poor who are most vulnerable when utility infrastructure fails, with fewer opportunities to leave the city, stay at a hotel, or visit relatives. Lack of energy resiliency becomes, during severe ﬂooding or other extreme weather, an acute and menacing instance of inequity for the majority who have no recourse. As storm events become more powerful and frequent due to climate change, many U.S. communities are seeking opportunities to provide greater energy energy resiliency to vulnerable neighborhoods, to address their lack of escape resources, through the development of onsite energy in both the public and private sectors. In particular, microgrids are an emerging technology for providing safe areas during extreme weather events. x Local Power LLC19 C. Description of national CCA survey 1. Interviews with 35 innovative CCAs and state agencies in six U.S. CCA Markets This report builds on previous national surveys of CCA (2010) and CCA 2.0 (2016) across the states that have active programs in place, but also includes some three dozen interviews conducted with the managers of some of the nation’s most innovative 3.0-type programs, and also with state government officials about some of the barriers they have encountered. In cases where CCA managers or staff were lacking or unavailable, we interviewed and/or corresponded with CCA consultants and brokers who were involved in innovative CCA program designs and implementations. Thus, the analysis contained herein presents an update on the pathways and barriers to “advanced CCA” based on recent experience, including CEOs, staff, and consultants to the following entities: a.Massachusetts - Somerville, Nantucket, Brookline, Arlington, Melrose, Cambridge, Newton, Lowell, Cape Light Compact, Newburyport (broker), Massachusetts Clean Energy Center, Metropolitan Area Planning Council, Cape and Vineyard Electric Cooperative b.California - Redwood Coast Energy Authority (Humboldt County), Clean Power Alliance (Los Angeles County), East Bay Community Energy, Monterey Bay Community Power, Valley Clean Energy (Yolo), California Public Utilities Commission c.New York - Westchester Power, Tompkins County/Ithaca, Ulster County/Kingston, New York Public Service Commission, Brooklyn Microgrid d.Ohio - Athens / Southeast Ohio Public Energy Council, City of Cincinnati e.New Jersey - Maplewood-administered regional CCA, Montclair, Sustainable New Jersey f.Illinois - Metropolitan Mayors Caucus 2. For individual CCA case studies and stories - See Appendix A Local Power LLC20 D. Analysis of national CCA survey CCA takeaway: parts without the whole Our updated survey shows, on the one hand, an extraordinary diversiﬁcation of CCA program designs toward decarbonization, localization, DER integration, and a modicum of customer equity. On the other hand, it also shows that those CCA programs with 3.0 components appear to be permanently stuck in “pilot mode.” Our survey identiﬁed over ﬁfty innovations, but rarely more than a few at any one CCA. These ﬁndings are both encouraging in that they demonstrate the legal, technical and economic viability of many different 3.0 pathways, but discouraging in the extremely limited scale and implementation in isolation of the program components. This incapacity has less to do with technology or markets, as one might assume, and far more to do with framing, capacity and decision-making challenges for local governments. In particular, the following main factors currently limit 3.0 programs to pilot scale: (1) permanently limited program access to capacity and funding to expand program scale/ diversity; (2) insigniﬁcant customer subscription levels in 3.0 components; (3) lack of citizen participation leading to weak CCA board direction to staff; and (4) lack of municipal agency and ﬁnancing resources. 1. CCA lack of internal capacity As a rule, CCA administrative infrastructure is the primary limiting factor, not any lack of available commercialization pathways, in particular: a. CCA staff funding Outside of California, CCA programs are under-funded and have few or no staff. In California, a long-term planning-oriented wholesale model and a priori focus on physical energy transformation led to upfront funding of micro-agencies of ten to ﬁfty staff based on loans or general funds. Outside California, where CCAs have launched within the narrow mission of short-term discounts, CCA programs do not receive the priority attention of elected officials unwilling to dedicate general funds to pay for staffing of programs that offer fewer beneﬁts, have enjoyed much less air time, and are thus unknown to most voters. Under this backroom model, brokers have been the preferred parties to launch CCA programs, because no resources are required, performing initial program work unpaid, until ratepayers are charged through a bill or adder once service begins. The “cheap” launch strategy is arguably penny wise and pound foolish, committing precious program surpluses to brokers for the convenience of launching without making important governance decisions, such as funding for staff. Such CCAs often lack the ability to fund staffing years after once the program is underway, often indeﬁnitely. Thus, many CCA programs that manage tens or hundreds of millions of dollars per year have few or no staff to lead development and educate decision-makers. Moreover, while the choice of brokers to manage the launch process is merely a convenience, this pattern has tended to remain ﬁxed, The Cape Light Compact in Massachusetts claims its statutory right to administer energy efficiency public goods charge (“Part B”) funding, which totals annually ~45 million dollars. They participate in the state level planning process for the use of those funds, and are able to propose innovative programs tailored to their specific needs. Because of the costs associated with participation in the process, the potential exists for municipalities to pool their engagement efforts. Local Power LLC21 with brokers becoming the only funded advisors to non-expert staff or elected officials. A kind of intellectual captivity is discernible in frozen program designs, with brokers establishing their position collecting volumetric fees based upon the repetition of the same program design: a classic chicken-egg problem, in which the 2.0 or 3.0 outcomes never hatch. It is noteworthy that all CCA programs with 2.0 and 3.0 elements have funded staff members who drove the DER program process with decision-makers. This is a basic lesson in good governance and energy democracy. Because it is the principal cause of other internal capacity gaps, the failure of CCAs to fund the development of internal capacity, and to wean themselves from technical dependence upon brokers, must be regarded as the most obvious programmatic barrier to CCA 3.0. b. Failure to access member municipal government infrastructure and resources One of the key failings of CCAs that limit or block their 2.0- and 3.0-type aspirations is intellectual and technical siloing of energy and/or gas procurement from other municipally administered DER or utility programs. Because most of the barriers to DER development are mainly transactional, CCA member municipalities’ existing customer service, communications and billing resources, from direct mail to water/sewer bills, tax bills, and public email lists, are key commercialization pathways for engaging customers. Siloing procurement from DER programs is as typical for regional multi-town CCAs as single town CCAs. The use of brokers itself is a foundational siloing, because CCA (elected) decision- makers and any municipal staff are uninvolved in discussions with energy retailers, and thus insulated from knowledge of the factors of procurement that could be augmented by the use of other municipal resources to meet program goals. Moreover, brokers serving CCAs with 3.0- type aspirations tend not to “push” their clients to develop internal resources. This is because they are under a business model in which their turnkey self-sufficiency avoids competitive exposure, and ensures continuing recurring revenues based on minimum change, and delays or uncertainty that represents potential delays or problems with contract approvals. As a result of siloing, CCAs tend to imitate utilities, assuming they must use the same utility tariffs and communications platforms that conventional utilities employ. Thus, many CCAs mistakenly assume that because they cannot get utility or regulatory agency permission for access to utility bills or utility cooperation in billing conventions (such as consolidated billing or rate ready billing), that they cannot implement DER or equity programs which depend upon specialized customer billing. Yet, their In California, many state and local agencies agencies, like regional Air Quality Districts and the California Energy Commission, are providing millions of dollars in grants to CCAs to build out EV charging infrastructure. Monterey Bay Community Power alone claimed ~$6M for new EV infrastructure. Marin Clean Energy is offering up to 100% rebates for hardware and installation of new EV chargers at workplaces and low- income or market-rate multi-family residences. Nantucket, Massachusetts’ Energy Manager staff was funded by Green Communities Act funding. Newton, Massachusetts has installed solar arrays on twelve municipal facilities and will develop seventeen more. The process of site-selection and RFP development included extensive public input and negotiation. Local Power LLC22 own governments have control of several direct mail and billing platforms for water/sewer bills, property tax bills, and public email lists. The mistaken tendency is to assume they require conventional ﬁnancing, when municipalities enjoy revenue bond and other public ﬁnancing resources already. Typically CCAs operate for years without ever analyzing utility data sets or municipal government datasets that are key to coming up with cost-effective DER strategies. The result is a failure of CCA programs to discover their power as local democracies, and to use CCA as the unprecedented transactional umbrella that it is, to synergistically scale up what are otherwise typically under-resourced and stuck-in-pilot-phase DER deployment programs. c. Siloing of CCA staff from CCA decision-makers, due in part to a lack of citizen participation in CCA governance, and results in a lack of leadership and guidance from governing boards The politics of CCA can be challenging because the elected officials appointed to vote on CCA program changes, such as funding, resources staff authorizations, or important policy decisions, do so for programs that have been inadequately articulated in local community meetings and press. Going down the chain from brokers to staff, there is here another degree of separation between energy program managers seeking to develop DER components, and the governing board members, such as town and city councillors, whose direction is required to empower staff to innovate. Thus, another chicken-egg problem is discernible, particularly in the many cases where CCAs are launched behind the scenes. With little to no local citizen participation, public awareness is stiﬂed; and even in cases where participation is strong during launch, but declines upon launch, a vicious cycle of sorts typically ensues. Limited to internal broker/staff input, CCA governing boards that make decisions with little citizen participation tend to be very slow to accumulate knowledge and make decisions. Without apparent public interest, local media give scant attention in front page news. The programs often seem replicable of the incumbent utility, with public notices limited to announcements of contract awards, changes in rates, or perhaps mention of the percentage of RECs. A vicious cycle of civic boredom. weak policy goals, bureaucratic siloing begets an un-compelling value proposition, which in turn begets consumer disengagement. Too often, policymakers, staff and even activists who drive CCA formations have a tendency to believe that controversy is the stuff of failure - and in order to win the votes for a launch, mistakenly decide to defer “difficult” decisions that might rouse political opposition during the formation process. Unfortunately, such decisions, concerning funding and commitments of resources, deﬁning of goals or targets, or deﬁnition of thresholds, are the very discussions that Silicon Valley Clean Energy (SVCE) has launched what it calls its “Innovation Onramp” which pays applicants to develop new strategies for decarbonization of the CCA. Sonoma Clean Power in California has launched an “Early Adopter” energy efficiency program for residential and commercial customers to adopt a wide range of free measures (not including installation), from lighting to smart appliances. In exchange for these free technologies, early adopters offer the CCA the ability to track their energy uses so that more widespread programs can be tailored to real-world applications. East Bay Community Energy in California has set aside money specifically to make grants to local innovators to encourage the development of novel local solutions and firms. Local Power LLC23 engage the public. Taking a backroom consensus approach to formation, while avoiding opposition, also forfeits public support for meaningful goals. Such activists and officials miss the single critical opportunity to awaken members of the community to come to their support, and also, later, to engage as customers. The result is an empty room with no motive or clear mandate for bold climate action. A lack of democratic culture within democratic institutions must be regarded as an internal barrier to acting boldly for the climate. Because CCA outreach and marketing lack municipal communication infrastructure, the result is that there is little to no citizen awareness of CCA, or DER programs, in the very communities being aggregated. Moreover, the broker/retailer outsourcing model used by the vast majority of CCAs outside California result in a commercial rather than community “face” of the program. In contrast to California’s CCA 2.0 programs, which have dedicated web sites, do not refer inquiries to outside companies, directly handle customer service calls, and include product engagement features and account-changes, even the greenest Massachusetts CCAs feature websites are informational in nature, refer customer inquiries to brokers and account changes to energy retailers. Brokers and retailers present a spectacle that is substantively similar to other private “products” on the market, rather than the attention-getting, historic initiative that CCA must be to engage communities and achieve the kind of carbon impact that California has proven it can. 1 2. CCAs not engaging their customers as equity partners Engagement of customers is a multi-stage process that starts, as mentioned above, with engaging them as citizens. CCA programs with 3.0 goals need to articulate those goals during formation in public hearings, make meaningful statements of intent, and commit resources to demonstrate the seriousness of their resolve to a populace that is unaccustomed to innovation or meaningful climate action from their municipalities, and therefore need to be given clear notice that “something special” is happening. Unlike large centralized renewable plants, Distributed Energy Resources are installed The vast majority of CCAs run by brokers don’t even have a dedicated web page for CCA, 1 leaving this entirely to their broker: for example, New Bedford, MA: https://masscea.com/new- bedford/ ; among some of the greener MA CCAs, pages are informational, referring to broker pages which therefore top Google searches: Cambridge, MA: https://cce.somervillema.gov/ ; or Somerville, MA: https://www.cambridgema.gov/CDD/climateandenergy/ energyefficiencyandrenewableenergy/ switchingtocompetitivesupplyandgreenpowerpurchasing ; Cape Light Compact, MA, not broker-run, offers the only exception: https://www.capelightcompact.org/. Compare this to CCA 2.0 web sites, which "own" the service they offer rather than describing it: Sonoma Clean Power: https://sonomacleanpower.org/ ; Marin Clean Energy: https:// www.mcecleanenergy.org ; or Silicon Valley Clean Energy: https://www.svcleanenergy.org are typical examples. In Ohio, same case, from the very large Northeast Ohio Public Energy Council: https://www.nopec.org/ to the very small Southeast Ohio Public Energy Council: https://www.sopec-oh.gov/ . Many CCAs in California, including MBCP and EBCE, are building up substantial reserves with a view to opening up financing options for their programs in the future. That conversation often includes a discussion of bond financing. Sonoma Clean Power is investigating the use of bond financing to roll-out EV infrastructure. Lancaster Clean Energy (California) helps connect eligible customers with a variety of PACE finance firms. Different providers offer varied RE/EE financing opportunities, and the CCAs relationship to any one is not exclusive. Local Power LLC24 in people’s homes and businesses. While CCA provides an unprecedented platform for customer engagement through the opt-out automatic enrollment of customers in a community- wide energy portfolio, DERs and equity products depend upon residents and businesses knowing about an opportunity, responding affirmatively to an offer, and making commitments to pay a special rate or fee to provide ﬁnancing of the (DER) product. Apart from civic participation in governance, customer engagement is achieved through many of the other neglected resources mentioned above: a robust, CCA-administered website, inserts in municipal direct mail and billing platforms, public email lists, and the like. But customer engagement rests upon the foundation of offering customers DER products that are suited to their needs; to provide the “middleware” between commercial parties and the customer so that they can make simple choices under the umbrella of a trusted third party (the town); and a seamless interposition of this product platform upon the veneer of the customers monthly utility bill payment. Too many CCAs neglect these functions, present their programs as conventional green energy programs, and treat DERs as a mere footnote to the same old utility paradigm. 3. CCAs not using their unprecedented access to data One of the most glaring failures of CCAs regards their neglect of unprecedented, unique and privileged access to customer utility data. Though CCA laws and regulations authorize access to data that unlocks the customer base to targeted offers of DERs and provides CCAs with the ability to plan energy transitions without increasing energy bills, the vast majority of CCAs outsource management of their data to brokers or leave it to power retailers, never bothering to analyze this priceless data. Data is essential for achieving a maximum carbon reduction at the lowest possible cost, based on the annual load duration curve or “8760” hours per year proﬁle of the aggregated community. A failure to analyze this is the decarbonization equivalent to ﬂying blind, because all renewable measures look alike if they cannot be correlated and prioritized according to aggregate peak reduction, capacity requirement reduction, and load reform. CCA access to data is also the key to customer engagement, because it enables analysis of the historic and forecasted utility bill payments of each customer, which enables calculation of the per-customer forecasted return-on- investment from any proposed DER package. Data provides the basis for In Massachusetts, the Cape Light Compact’s innovative CCA program collects and manage their customers’ utility data and use it for targeted efficiency products. East Bay Clean Energy leads California in managing their own customer utility data. EBCE receives AMI data on a next-day basis, and has built a platform to provide automated cost of service projections for their customers. The also manage their own MDMS data interface with the distribution utility. This level of tracking allows, amongst other benefits, for EBCE to know how their DER programs are performing -- whether or not, for instance, DR programs have a cumulative benefit for the customer and the CCA portfolio overall. “We needed a data system capable of doing more than the options available on the market,” said Nick Chaset, CEO. EBCE initially hired SMUD, as a data management partner to helped with the MDMS interface with PG&E and accessing the AMI data on a daily basis for the previous day. EBCE has have built a data management platform in-house to help with operations. All Local Power LLC25 targeting, integrating and billing DER technologies such as storage, microgrids, and appliance automation. Moreover, data enables CCAs to dramatically reduce marketing and acquisition costs that in some states virtually doubles the cost of installed DERs. Less costly DERs make it compelling for more customers, driving scalability. Finally, CCA frees the program from high-cost outsourcing to focus consulting resources on capacity building and execution. CCA 3.0, using existing member municipality agency staff and service platforms, provides needed municipal leverage and logistical, contractual pathways for DER planning, site- and customer-acquisition costs, to minimize costly buildout delays and keep CCA rates competitive throughout the transition to a universal equity offering. In short, data is ground central of CCA 3.0 procurement planning and administration. 4. Most green CCAs have not integrated customer and public ﬁnance The siloing of CCA programs from procurement is reﬂected in the manner of municipal DER ﬁnance. Many CCA 2.0 programs have secured credit ratings from Moodys, but have limited their investment strategies to agency-owned assets, much like conventional utilities, as one executive said, “all our investments to be our customers’ investments.” Thus, neither the municipalities nor customers receive ownership beneﬁts. Financing customer equity is a core CCA 3.0 kernel for inclusive demographic scalability, penetrating the whole community’s fueling of buildings, cars and heat systems. The vast majority of CCAs have omitted customer ﬁnancing, limiting their offers to customer incentives. As to customer equity, CCA programs that offer DER products result, therefore, in inequity, because only the affluent can afford the investment capital. So once again, the poor are paying the rich to be greener. In California, CCA 2.0 has relied upon a Power Purchase Agreement (PPA) approach under which they award 20-30 year contracts to third-party ﬁnanciers to capitalize, build and own location-speciﬁc generation assets. Though in a few cases, with ownership transfer or “ﬂip” option provisions once the tax avoidance beneﬁts have been extracted by the investor. As a rule, however, equity beneﬁts like long-term ownership are not often being planned, energy Cincinnati has a web-based customer site screening and referral resource for solar installation suitability: a solar power promotion site which allows installers and developers to be connected to customers who have already provided useful information about their homes. This lowers costs for developers and increases solar uptake. SOPEC, the Southeast Ohio Public Energy Council, worked with their largest member municipality, Athens, OH, to pass a $2 per MW Carbon Tax tax that funds their DER goals -- namely development of new solar arrays on local public facilities. SOPEC is planning a customer billing rate that will fund a small energy efficiency rebate. Customers will be directed to a website portal where they can use their rebate for home energy efficiency measures, including water efficiency. SOPEC also acts as a portal to the state treasury funded Eco-link program. In New Jersey, a CCA consortium of five municipalities led by Maplewood have secured approval of a CCA bill adder to directly fund customer energy efficiency measures. Local Power LLC26 efficiency programs remain unimpressive for years, and a general mentality of selling power, not saving it, or offering customers a share in the equity, prevails. Administrative siloing is the main culprit. Even CCAs with active PACE programs among member municipalities have as a rule treated them as “separate” from the CCA program, omitting even (though with some exceptions) to offer PACE ﬁnancing to their CCA customers, or share resources and materials. In the end, most CCAs with customer equity components have left customer ﬁnance to customers themselves, or their DER installers, who naturally screen their customers for credit proﬁles. The result, again, is that poor and medium income are de facto ineligible for DERs, and all program beneﬁts continue to ﬂow from the poor majority to the affluent minority. 5. CCAs neglecting municipal, local bank and private partners At a high level, the single greatest opportunity of CCA control over revenues, rate design and rate setting is the ability to leverage investment, especially right now, when ﬁnancial institutions are pouring resources into renewable energy. CCA supplies the missing link for ﬁnancing by providing access to long-term contracts, which non-CCA municipalities, even those who have other DER programs like PACE or utility- administered energy efficiency and solar programs, simply lack. On the other hand, CCA presents an unprecedented opportunity to redevelop underutilized and under-improved public infrastructure as combined community energy development hosts/partners and onsite DER services consumer. Electrical and natural gas accounts in public buildings, and EV charger permits on sidewalks, streets and alleyways - the public rights of way - are key planning interfaces in many forms of DER, alongside distribution NOPEC, the Northeast Public Energy Council’s, Ohio’s oldest and largest CCA has created STEP (Savings Through Efficiency Program), which provides $5k- $100k 3% loans with a term of up to 10 years for small businesses to adopt measures including PV, Solar Thermal, Geothermal projects and Energy Efficiency. NOPEC also facilitates $100k- $500k fixed rate PACE loans for a wide variety of DER measures for commercial customers. "Some (California) CCAs are looking at leveraging our tax- exempt status. EV infrastructure or stand alone storage is a potential for bond ﬁnancing." -Nick Chaset, CEO, East Bay Community Energy Nantucket, Massachusetts has passed, via town meeting, a bill adder to finance solar development with a view to including storage in the future. The Cape Light Compact hires auditors to identify energy efficiency opportunities for individual customers, and local banks in conjunction with municipalities offer 0% Green communities Act financing for approved measures. Nantucket, Massachusetts requires that the RECs from a local wind turbine be sold to its CCA customers. The actual electricity is consumed on-site. Local Power LLC27 utility interconnect and interfaces. CCAs that get member municipalities to partner for development and power/gas service represent an early stage commercialization platform for DER, based on established site control, scheduled demand patterns, known energy costs, and energy budgets. They merely lack a counter-party to ﬁnance onsite DERs. Particularly for the more advanced DERs such as microgrids, municipal buildings and properties represent convenient and ﬂexible sites for shared renewable projects. Other public agencies, such as school districts and ﬁre districts and water/sewer districts, opens up important critical energy resilience applications, again including microgrids. Agencies receive the power, storage, heating and automation upgrades, and any customer may purchase shares through a monthly (depending on the state and distribution utility) rate- or fee- adjustment. Conversely, streets and sidewalks are EV charging platforms that fall under municipal jurisdiction and should be considered as natural CCA resources. Moreover, municipal franchise agreements with electrical distribution companies offer important municipal leverage in securing the sustained cooperation of distribution utilities in opening pathways to microgrids, use of metering and data for onsite solar and DERs connected to, but not ﬁnancially dependent upon, imported or exported power from the site. Thus, one of the primary failings of CCAs pursuing 2.0 has been that they have not taken advantage of their unprecedented position to leverage ﬁnancing, and local investment. Instead, largely because of their siloed approach and neglect of data analytics and modeling, they have ignored or delayed looking at ﬁnancing, often making all their major PPA decisions before thoroughly investigating ﬁnanced, non-exporting DER costs, limiting their analysis to a conventional NEM approach, based on no customer equity participation and conventional third party ﬁnancing, thus declaring their unconsidered DER model too expensive to justify compared to centralized generation: a self-fulﬁlling prophecy. Leaving all ﬁnancing to developers and absentee third-party ﬁnanciers results in absentee ownership, and blocks customer participation in equity, narrowing the value proposition to customers and perpetuating a systematic drain of community wealth. California’s Marin Energy Authority and other CCAs have developed a number of urban PV arrays. The largest by MEA, ~10MW, was built on a brownfield site in the City of Richmond, California. The Redwood Coast Power Authority (RCEA) is participating in a long-term offshore wind power project. They have issued an RFQ and received a significant response from foreign and domestic firms looking to develop 100-150MW of wind power on floating platforms in the Pacific. The ultimate disposition of the power and questions around transmission capacity remain, but the CCA intends to be an off-taker of power from this project. Monterey Bay Community Power (MBCP) issued an RFP for microgrid development in 2019. Rather than make simple investments in DER installations they are focusing the capture capacity benefits that come with being able to control and dispatch DER resources. Resiliency benefits, the nexus of low-income housing with medical and commercial & industrial facilities represent potential for success across power management, safety, and social equity goals. Local Power LLC28 Speciﬁcally, CCA 2.0 programs have failed to seek partnerships with member municipalities and local banks for DER planning, development, and ﬁnance to: a.Use municipal properties for onsite power use and community solar equity share credits to customers who have no private sector alternative in the neighborhood; b.Co-plan and co-develop EV charging, microgrids and heat and hot water districts on public properties and rights of way; c.Engage municipal ﬁnance officials among member towns to prepare municipal revenue bonds as a form of ﬁnancing, or PACE ﬁnancing, or other local public ﬁnancing according to local city charters, state and federal law, with or without voter approval, according to state and local law and policy. 6. Very few CCA heat and hot water programs Given that many CCAs are formed expressly for the purpose of reducing greenhouse gas emissions, it is perplexing that so few have used their leverage to implement natural gas aggregation for their customers, which provides a similar commercialization pathway to heating efficiency, fuel switching and carbon-free agricultural biogas injection. Ohio and New York CCA laws include opt-out enrollment of natural gas customers, and all states with CCA allow opt-in enrollment. In many states, and increasingly as some states close coal plants, greenhouse gas emissions from the natural gas combustion sector exceed emissions from the power sector. Moreover, in some states, building heating and hot water utility bills cost consumers more per month than electricity bills. Whether to reduce greenhouse gas emissions or to save consumers money, CCAs can as much as double or The Cape Light Compact in Massachusetts is the leader, but not alone in facilitating customer access to state funding for new energy efficiency measures including heat source switching. Auditors are hired to identify EE opportunities for individual customers, and local banks in conjunction with municipalities offer 0% financing for approved measures, including onsite renewable heating mini splits and solar hot water. Cincinnati has a combined CCA electricity and gas aggregation with biofuel offsets -- "100% Carbon Free" heat: a program which allows customers to purchase a biogas product for their gas use. Biogas RECs are purchased from power plants elsewhere in the state and matched to the usage of participating customers. In Humboldt County, California, the Redwood Coast Energy Authority is developing its own CCA microgrid, solar + storage, for uninterrupted back-up power on a local airport in conjunction with local medical and Coast Guard facilities. Local Power LLC29 more their climate and equity impactfulness, by taking retail natural gas consumption under management, with a variety of ways to reduce or eliminate the consumption of gas and lower bills. Due to shorter paybacks, more efficient, renewable and electric heating/AC and hot water systems present a more compelling return on investment to customers when presented in the context of reducing monthly payments, and also present a strategic alternative to batteries for onsite electrical storage resources. 7. CCAs not embracing citizen participation in governance A key failing of the vast majority of CCAs - which, in addition to lack of internal capacity must be considered as foundational to all other internal barriers - is a lack of citizen participation in CCA governance, particularly once programs are launched. There are many exceptions among the most advanced CCAs, but there is also the rule, which is deﬁned by the back-room-deal- nature of the broker/retail “two middlemen” model of CCA 1.0. CCA programs with 3.0 components typically have much higher levels of citizen participation during formation. CCA governing board members depend upon sustained, active community participation, at meetings and in voluntary committees, to learn, develop acumen, and embrace change. Achieving active participation is a two-way street, depending on activists, but also upon local officials to inspire them with a compelling idea. Years of experience demonstrate that the failure of CCA programs to expand 2.0 offerings after launch is directly related to diminished public presence at board meetings, particularly once the formation process is complete and activists falsely view their work as being done. 3.0 would change the framing to emphasize DERs and equity. In order to have support, you must lead. As a rule, CCA governing boards cannot embrace signiﬁcant initiatives without public cognizance and participation. In turn, CCA staff cannot pursue innovative programs without strong direction and support from their governing boards. In an obvious sense, important programs like this demand general cognizance and deliberation. This is not currently the rule in municipal governance, where most decisions are much smaller, in which public input is often experienced as pressure, and debates around policy decisions a meddling in technical matters. Yet CCA decisions consist of policy decisions, not technical responsibility, which is investigated by staff in negotiation with suppliers. CCA is basically Energy 101 class for the community. Substantive participation, like the volunteer committees, NGOs and activists whose leadership and donated technical assistance has produced some of the most advanced CCA programs, is not something to be avoided or diluted, but embraced, depended upon, and ultimately allowed to push the proverbial envelope. It is important to note that the most innovative CCAs have CEOs who are non-energy experts, and moreover, that the successful launches and management of the leading CCA 2.0-type programs (Maggie Downey Cape Cod, Dawn Weisz in Marin, Geof Syphers in Sonoma, Athens) resulted from non-experts leading the technical work, not energy brokers or retailers, who offer extremely simple products and have as a rule little to no knowledge of, or interest in, actual renewables or DER development, but by citizens working directly with CCA governing boards, and providing, free of charge, technical and public education assistance to staff. Virtually all advanced CCA programs, from Cambridge MA to East Bay Community Energy, have active citizen participation during formation, launch and operation. Local Power LLC30 A culture of civic participation is highlighted. As a signiﬁcant authority within the goals of a Green New Deal, CCA 3.0 is and should be a major community undertaking. It is not a program to implement behind the scenes. CCA 3.0 is energy democracy. Major changes like this cannot be implemented without signiﬁcant public engagement, both as customers and citizens. Active participation, debate, and front page news should be expected, desired and viewed as essential factors in achieving historic change. Local Power LLC31 E. 3.0 Barriers While many CCAs feel themselves limited by external barriers, and in some cases are, particularly utilities and state regulatory commissions, the profoundest barriers lie not outside but within the policies and capacities of those who manage and govern CCAs. 1. A failure to integrate “components” is a barrier to scalability While our national survey has identiﬁed over ﬁfty examples of 3.0-type innovations, only California CCA programs are achieving the scale and acceleration of impact that is required by climate change. These programs take years to implement: but programs that pursue incremental policies, or wait to implement them later, take decades, and run the serious risk of never getting to scale. The reason for this is that they have wasted the political window of formation, when public awareness is greatest, media attention most focused, and political leaders are most likely to make bold decisions. Once a program has launched, the window slowly closes, and the inertia of bureaucracy makes such bold decisions less likely to occur. California CCAs have vastly exceeded Massachusetts in renewable development, committing two gigawatts just since 2009. By comparison, Massachusetts, has committed relatively few megawatts in the 20 years since 1999. What this demonstrates is that having a program that siloes supply from the development of DER, and in particular an array of DER technologies rather than typically one, as the survey showed, will never meet the speed or scale necessary to impact the ten-year horizon of climate change. Moreover, the difference is not mere Local Power LLC32 arithmetic: it is the exponential difference between half measures and true change, between tokenistic and transformative democratic intentions. 2. The problem of carbon reduction measure sustainability: Renewable Energy Certiﬁcates Mark Twain once joked that to stop smoking was the easiest thing he ever did; he said he ought to know, for he had done it a thousand times. Renewable Energy Certiﬁcates (RECs) present a similar paradigm for quitting carbon emissions. RECs are a “rental” of Renewable Portfolio Standards (RPS) exceedance that inherently involves a customer’s premium payment above the cost of uninterrupted purchase of energy from fossil power plants. The ability of CCAs to lower the cost of power below utility and market prices enables some of them to commit savings to this premium, while their ability to retain competitive rates and pay the premium depends on their ability to maintain that cost-of-service margin. RECs ﬂoat on the surface of stormy markets. The rental approach to The City of Cambridge, Massachusetts has chosen to move away from a RECs based strategy to focus instead on new direct investment in DER development. Initially, municipal sites are prioritized because they represent that simplest development path, but they hope to expand to private sites that might host community solar arrays. In California, East Bay Clean Energy’s Demand Response pilot has graudated into a regular program. its ultimate goal is to use DER+storage to reform their peak load sufficiently to remove the need for peaking capacity from gas fired plants. Local Power LLC33 sustainability is itself unsustainable, as the bottom images below illustrate, because every contract renewal presents a potential policy crisis - a decision between being green and being economically feasible: a.Commodity electricity market price volatility Because CCAs typically procure power for two to three year periods into the future, each contract renewal presents a different market situation; and market prices are volatile. This has led some CCAs (e.g. Chicago and Oak Park, Illinois) launching with high renewable portfolios to drop their RECs at resumption, or else suspend the program entirely. b.REC market volatility The rental model also depends on REC prices, which are volatile. c.No transformation, no savings Whereas investments in fuel-free generation, localization and demand reduction cause downstream reductions in the physical cost of service (based on load duration curve, peaking and capacity requirement reform), RECs create zero impact on the CCA’s cost of service, so that being green remains merely a higher cost indeﬁnitely into the future, and often narrowly targeted to those wealthy enough to pay it as a “green premium.” Many have criticized the dubious, even fraudulent beneﬁts of purchasing out of state RECs due to market distortion. Class I RECs, Solar Renewable Energy Certiﬁcates (SRECs) and successor SMART incentive in Massachusetts (see Appendix B: Glossary), while an incremental improvement on the status quo, do not solve the fundamental problem. While Massachusetts-led NGO, the Green Consumers Alliance, improved on this approach by acting as a purchaser and retirer of Class I RECs that CCAs could purchase in shorter periods to create “additionality” on the local grid, and cause upstream economic development, it does not address any of the three issues above. In this sense the REC paradigm itself, which has lesser (unbundled, out-of-state) and greater (bundled, local) impact, presents a too-easy, too- ephemeral alternative to an actual change of business model. Like renting, it gets you there today, but not necessarily tomorrow. Real, physical investment in long-term in-town assets, in contrast, invests in a new business model. Like housing, climate solutions are better to own than to rent. 3. The problem of carbon measure coverage: DER export tariffs The performance of conventional U.S. DER incentives, while locking in much longer-term carbon impacts from installed systems, has proven incapable of impactfulness beyond a tiny affluent minority of energy users. As mentioned above, the tendency of CCAs to imitate conventional utility tariffs, or slightly improve the terms of such tariffs, has had uniformly disappointing results. Net Energy Metering (NEMs), V(Virtual)NEM and Feed in Tariffs (FITs), have failed to achieve the kinds of scale or speed of customer engagement to present a serious commercialization pathway to decarbonization for a variety of reasons: Nantucket, Massachusetts offers a rebate of up to $500 per KW for customers who adopt PV with a goal of subsidizing 10% of the installation costs. Valley Clean Energy, in Yolo County, California, is considering a strategy of developing storage to bring down the cost of resource adequacy. NEM customers could buy shares in the storage development to virtually participate in balancing the impacts of their solar PV arrays. Local Power LLC34 a.Inherently limited by utility interconnect caps and permit delays As mentioned above, NEM and related tariffs are by deﬁnition export tariffs; DER site selection is marketing- based rather than targeted to ﬁt daily usage patterns, such that the customers’ actual onsite use of installed DER capacity is not actually being used under normal conditions. Such DER amounts to very expensive grid capacity for which state regulations have required utilities to provide compensation. It is a kind of welfare program for building owners. Because distribution grids have limited capacity to absorb such power without voltage regulation measures (for which all customers, most of them poor, must pay), severe restrictions are applied to export-based interconnect permits, forming a systemic barrier to decarbonization. b.Very weak engagement of customers CCA programs with NEM, VNM and FIT programs uniformly show weak results in engaging customers, who are left to the same market participants to choose as non-CCA customers, with the same lack of data about their energy use and bill forecasts, the same lack of credit support, and the same lack of vetting of contractors and consumer protections, in an industry that is rife with fraudulent marketing practices. As a result, CCA NEM VNM and FIT programs have extremely low customer participation levels. 4. DER industry problems: gaps between supply and demand Several barriers to 3.0 lie within the condition of the DER industry itself, many of which CCAs fail to circumvent through available commercialization pathways: a.Utility dominates the customer’s relationship to energy services The most powerful barrier to DER is intellectual customer captivity by, and communication within, the utility business model. Customers’ current understanding of options comes from the electricity and heating fuels bills, and separately from a DER provider’s marketing, door-to-door salesmen, and ﬂyers, which primarily advertise homeowner appliance products, whose economic value proposition does not translate. Municipalities that provide a utility-like CCA service deﬁned by rates and green content while (in some cases) separately offering DER ownership products through separately administered programs, fail to penetrate the utility’s dominant customer relationship/paradigm, and suffer disappointing customer subscription levels in their DER offerings. Montclair, New Jersey used dedicated state funds to design a microgrid with a third-party consultant to serve critical loads with electricity and heat anchored to a local hospital and reaching out to emergency services and critical loads on adjacent sites. “Solar NEM customers impose an impact on the grid. The ramping and variability of the generation leaves the utility needing to procure resources to match the usage profile of PV. You can do it with dispatchable resources like hydro or peakers. But the holistic way would be buying storage to offset the RA cost of their PV. We have discussed the possibility of mandating those shares: one way could apply for their money back in the form of a low-interest loan to install storage onsite. Otherwise, they could buy shares in a utility-scale PV plant.” —Chris Sentieri, Consultant, East Bay Community Energy Local Power LLC35 b.Energy industry credibility CCAs that outsource their customer-facing programs suffer diminished public trust levels due to widespread mistrust and choice fatigue with energy marketers, following decades of aggressive and fraudulent energy marketing practices. Thus, in addition to being unable to evaluate the value proposition of DER products, consumers do not trust commercial pitches. CCA programs that outsource customer facing programs such as customer service and web communications themselves erect a signiﬁcant trust barrier to DER deployment; c.Credit barriers Credit access limits low- and ﬁxed-income residents from qualifying for developer-ﬁnanced DER products that confer equity to customers. d.Need for large counter-parties/off- takers to secure funding Large integrated DERs (iDERs) depend upon creditworthy parties and off-takers (to commit to purchase power or capacity) to attract investment. To the extent that developers depend upon such parties, accessible customers are limited to the most affluent consumers. e.DER site/customer acquisition cost The cost of ﬁnding willing and affluent customers whose energy rate and usage are sufficiently high for a compelling DER return on investment, is a major barrier to DER deployment, with inequitable results. f.Under-articulated DER permitting guidelines Apart from marketing costs, interconnect and municipal permit delays cause costly waiting periods and can also compromise the subsidy and tax refund windows offered by state and federal governments. g.No access to customer data Lack of data is the core cause of sky high marketing costs, because it necessitates a backward process of marketing, followed by energy audits to determine economic viability, when CCA availability data would reverse this process and enable low-cost, tailored, targeted customer offerings prior to audit and credit check. h.Unprepared municipal DER development process at launch Another barrier for DER rollouts is the failure of CCAs to partner with municipalities for development of their buildings, creating unnecessary stall at program launch when private sector site acquisition processes get started. 5. Community shares Community shares are a key missing link to overcome many of the barriers to a DER-centric 3.0 program; but conventional shares program practices can also present a new kind of barrier, and deserve special attention. At a high level, a deep penetration of community shares installations is a uniquely aligned opportunity for CCAs compared with supply utilities, because of CCAs’ unique lack of revenue Municipalities like Cape Cod, Martha’s Vineyard and Nantucket have a strong need for the resiliency benefits that virtual power plants provide. The CLC and Nantucket are in various stages of planning and developing the roll-out of storage and control DER to meet their needs, including the potential financial upside of reduced grid demand and capacity benefits. New York State’s ﬁrst CCA, Westchester Power, has a local community landﬁll sited PV generation project with hundreds of customer subscribers aiding with the project ﬁnancing, along with support from the New York Green Bank, to improve the ﬁnancing conditions for that project. Enrollment in that program began in 2019. Local Power LLC36 conﬂicts from scaled reductions in both the level of transmission and generation demand that shared renewables can provide: a.Community renewable shares can overcome many CCA barriers by allowing people in the neighborhood to virtually own the equity or future bill offset beneﬁts of any kind of DER at any location within a CCA’s service territory. b.Thus renters, people with no credit, anyone who pays an electric (or gas) bill, are eligible to elect voluntarily to pay a premium rate and receive an annual accumulation of bill offsets. Security on nonpayment, being virtual, requires no repossession or legal action, but is achievable by the retention or revocation of virtual beneﬁts. This is the key to its inclusivity as an equity platform: all customers, however poor, present acceptable risk. c.Credits could be cashed out based on a formula of lifecycle value when customers so decide or otherwise leave a CCA’s service territory. That being said, there is a wide variety of “shared renewables” programs out there, and it is critical that CCAs take the opportunity to present a program that both confers authentic equity beneﬁts and takes advantage of the rate design, ratesetting authority and other CCA resources identiﬁed in this report, such as billing, communications and trust. Inauthentic shares programs can themselves constitute a barrier to participation. Typically, shares programs offer investment equity for those than can pay upfront, and “subscription” green pricing schemes for those who cannot. Under this approach, “shares” offer ongoing bill offsets, but no accumulation of actual equity for the consumer. Trust has two levels: basic recognition and active sympathy. Municipal, local government is known to all citizens as authentic local community based, participatory organizations based on an open process, subject to meeting laws and accountable elected officials. From water and sewer to waste management and other critical public services, municipal agencies are trusted by state and federal governments as such. Whether municipalities are beloved to its residents and businesses is less important than that they are fundamentally distinguishable as institutions from private businesses. By comparison to public transparency private institutions can be opaque if not secretive, unaccountable if not fraudulent, While the vast majority of residents and businesses cannot distinguish between East Bay Community Energy explored four configurations or approaches to community solar development as a part of their robust planning investigation. Which design will prove most effective remains to be seen. California’s Sonoma Clean Power (SCP) has launched its “Grid Savvy” program that provides free EV chargers to customers who allow their CCA to use them as a part of their Demand Response plans. In addition, customers who adopt wifi connected smart thermostats or hot water heaters can participate and receive bill credits. California’s East Bay Community Energy has launched a pilot for Battery Energy Storage Demand Response (pay for performance BES- DR) which will pay customers with battery storage to discharge those batteries during peak usage events. When the cost of system power exceeds $100MW, customers who respond receive payment at $100MW. Local Power LLC37 market participants in energy markets, they can distinguish their local governments as agents of important public services and infrastructure: an appropriate administrator for an important, engagement-centered local energy transition such as this. As recognition and transparency are essential to building the trust that is a precondition for broad customer engagement of all the members of the community, apart from municipal loan administration, the other key program elements to create and reinforce trust are unsourced customer-facing operations, principally: •An in-house customer service desk, •In-house data and account management, and •Public websites. Community Choice Aggregation 3.0 depends upon a CCA agency and a member municipality to cooperate, and local development, government facilities integration, and customer loan account management. As the CCA itself is often unknown to residents and businesses, it is less recognized and trusted than their town or city government. A key move within 3.0 is centering engagement in this trusted and underutilized participatory resource. If properly designed upon an authentic local municipal loan administration platform, CCAs are uniquely positioned to calculate, forecast, enroll, and compensate customers in shares in a simple, credible, transparent manner. Any and all CCA member municipalities and customers should be eligible, through (1) shares and (2) cooperative products and applications, to enable a local capture of climate equity, investing directly in a systematic shrinking of grid energy and capacity: the most impactful carbon reduction strategy that exists: •To ensure trust of customers, the CCA will administer the shares program in-house, not outsource to a commercial shares company. •To ensure equity, the program will be a universal, standard offering to all consumers, to ensure equity •To enhance neighborhood equity, a neighborhood shares program is advised, which subscribes customers in an engaging, visible, truly local DER installation. 6. State government-caused barriers and recommended regulatory/legislative actions The following is a description of the need to change state policies by association, regulation and/or legislation. a. All CCA states: need for statewide CCA associations CCAs are poorly represented at state regulatory commissions and legislatures, due to an individualistic and piecemeal approach that depends too much on a few CCAs or municipalities that must carry the whole weight of advocacy. CCAs that individually lack the budget to pay for legal, regulatory and technical discussions are under-represented before regulators considering the number of customers they serve, despite being both public agencies and widely recognized for consumer beneﬁts and renewable energy innovation compared to retail suppliers or utilities. The ﬁrst recommendation is that CCAs organize or join a statewide NGO to represent them at state legislative and regulatory proceedings. As state energy policy is a moving target, staying abreast is important for safeguarding CCA interests, aligning efforts with approved programs, Local Power LLC38 accessing resources, and winning utility cooperation. Moreover, there is always a need for lobbying to defend and improve CCA rights. The process of regulatory involvement is more complex, requiring staff and activists to familiarize themselves with the speciﬁc rules and nomenclature used by their state utility regulatory body, so that they can effectively participate in dockets and proceedings. Cooperation between CCAs, municipalities and active citizens can pool resources and prevent duplication and/or confusion in the pursuit of common goals. Municipalities and CCAs that have more, or more developed resources and capacity lead and assist those at an earlier stage of development or activity. A central repository of regulatory knowledge also informs member CCAs of each others’ innovations, comparing notes, and friendly competitions to create the best new strategies. Finally, almost all of the documentation, from local ordinances to form CCAs, mandate goals and allow tax or other ﬁnancing mechanisms, as well as ﬁlings at the state level regulator detailing CCA plans, energy efficiency and DER-related proceedings, tracking hearing dates, and more, are publicly available and very frequently accessible online. The information needed for CCA 3.0 focused groups to ground themselves in this engagement are readily and openly available. b. States without CCA laws States without CCA laws have only municipalization as an optimal path to climate equity. While many states have aligned pathways such as PACE ﬁnancing, they lack the essential “middleware” that integrates program under an empowered municipal umbrella. Traditionally, this kind of local public control was achieved through an eminent domain process involving a taking of utility distribution systems, such as is being attempted currently by the City of Boulder’s “Boulder Energy Future” program, which after nearly ten years and voter approval has not yet accomplished acquisition of its utility company’s assets. Thus, states and municipalities that wish to pursue climate equity should adopt legislation to allow CCA. Speciﬁcally, this has been accomplished by the adoption of resolutions by municipalities, lobbying of legislatures, and the grassroots support of citizens, from climate justice to climate protection, energy independence, consumer protection, DER industry, renewables industry, and proponents of competition in the electricity and gas industries. By forming coalitions around official municipal support, CCA advocates have proven able to win approvals from local legislative delegations of those municipalities, their members in leadership positions, and ultimately the voting majority. Advocates should expect a two year effort to adopt CCA laws. Drafting of CCA legislation should not be copied from existing states, but be adapted to state laws, protocols and nomenclature. c. California i.Participation in California Public Utility (CPUC) proceedings and the legislature must be sought to clarify regulatory nonalignment and/or interference, and limit negative impacts from utility programs and rules. In the present session of the California legislature no less than six bills that may potentially harm CCAs have been introduced. In many ways, CCA has grown to incredible California has a complex and shifting EE funding environment. Similar to Massachusetts, CCAs have statutory authority to administer EE funds collected from their customers. The Marin Energy Authority has had a plan approved by the CPUC to administer $6-9m annually in these funds to finance their own EE programs for their customers. Other CCAs, avoiding the planning process involved in a larger program, having claimed smaller amounts Local Power LLC39 prominence with support of the legislature against the opposition of regulators. In recent years, the CPUC, still widely criticized for undue utility inﬂuence during multiple governors’ tenures, has approved large CCA exit fees twice (Power Cost Indifference Adjustment or PCIA), and approved a multi-billion dollar reallocation of utility generation costs to transmission, shifting costs onto CCA customers. In California there are both numerous CCA activist groups as well as a state-wide organization representing all the state’s CCAs. CalCCA takes the central coordinating role in opposing adverse regulation and legislation. Costs of staffing and operations are covered by modest contributions from CCAs and municipalities, and membership is opened up to the private sector to increase contributions. Opposition activities include regular emails informing interested individuals and groups of the relevant hearing times for each bill as they pass through committee, contact information for the legislators involved so that they can be directly contacted by their constituents, and information and talking points for those constituents to use in their activities. ii.Integration of renewable energy with energy efficiency/storage technologies disallowed within Public Goods Charge (PGC) funded programs by the CPUC - while simultaneously targeting CCAs for overloading the grid with RE. By focusing on exporting Renewable Energy installations, i.e. in-front-of-the-meter, usually ﬁeld photovoltaics (PV) on brown and greenﬁeld sites with a scale of 10-100MW, California CCAs have invited criticism from state regulators and IOUs of the grid impacts of these arrays. However, the present energy efficiency funding regimes in California preclude integration with energy efficiency and storage which would provide capacity and grid reliability beneﬁts. Establishing a DER and behind-the-meter incentive regime would stimulate deeper market penetration for renewables and efficiency, while directly enhancing grid stability. iii.Cost effectiveness Total Resource Cost (TRC) criteria for Energy Efficiency (EE) funds prevents complex/more expensive measures from being funded. Low-hanging fruit (lighting) has been picked. Total Resource Cost is one of the group of tests that California regulators use to prioritize funding for EE measures. The most cost effective energy efficiency measures, like lighting retroﬁts, are well funded, but several problems emerge from this calculus. In a bundled IDER approach, low cost measures subsidize higher cost measures - blending paybacks technologies and retroﬁts - which increases carbon reductions and potential equity beneﬁts. It is the cost effectiveness of a combined integrated asset, not the cost-effectiveness of any one component of the asset, that matters to customers. CPUC’s criteria are blind to the distinction. Staff state that, across the state energy efficiency programs, “the low-hanging fruit is picked,” and complex measures are presented as uneconomic. As noted above, it cannot under current rules be funded in conjunction with RE. iv.Investor Owned Utilities (IOUs) allowed to circumscribe the use of energy efficiency funds by CCAs (non-duplication of programs). While CCAs have broad statutory access to energy efficiency program funds collected from their customers’ bills, in practice, regulators have allowed IOUs to prevent local control of funding over measures and programs that the IOU already has in place. v.Increasing legislative attacks on CCA autonomy in Resource Adequacy (RA) procurement and rate-setting. There have been numerous attempts in the California legislature to curtail or eliminate the sovereignty of CCAs. The 2019 session is no exception, with attempts to take away rate-setting and resource adequacy procurement from CCAs and place them under the control of Local Power LLC40 the CPUC. CCA administrators have formed a statewide entity to lobby the legislature, in this case to maintain their autonomy, in addition to their own local engagement with lawmakers. c. Massachusetts vi.There is a strong need for cooperation between municipalities in engagement with the legislature and regulators with particularly focus on Department of Public Utilities (DPU) nonalignment/ interference with CCAs. vii.CCAs should engage Mass CEC together. There is a need for engagement/advocacy to expand the Mass Clean Energy Center (MassCEC) funding scale limited for multi-site IDER, for example its microgrid program, which is limited by high one-off engineering cost. The Massachusetts Clean Energy Center (MassCEC) makes nearly $30 million dollars in annual awards and grants in the energy sector. Awards can be speciﬁcally for renewable energy on municipal sites, especially where they can assist small vendors ﬁnd an early adopter for innovative technologies. For rebate programs, the installers of eligible technologies apply for the rebates on behalf of the municipality. Amounts vary by program. For solar hot water, for example, rebates can be up to $100,000. There are guidelines that the MassCEC posts to its website to inform entities hoping to take advantage of its programs on the ideal preparation for a project to receive support. viii.CCAs should combine efforts to apply to administer energy efficiency funds. Coordinated advocacy and coordinated application preparation are recommended to navigate DPU resistance to CCA administration of Public Goods Charge funds, as the recent application of Lowell for “Part B” funds were met with no response. The DPU appears to be discouraging applicants in spite of state law. ix.CCAs should combine efforts to better deﬁne protocols for CCA data access. Many of the CCA staff interviewed were unaware that monthly kWh data is available and useful for program development. Remedies should also be sought for a lack of bill access and data access. x.Mil adders for energy efficiency funding not authorized by the DPU. Attempts to use a bill adder to ﬁnance local energy efficiency have been rejected by the DPU. Communities who want to go beyond the scope of statewide EE funding have been frustrated in their attempts to access EE funds to which they are legally entitled, and obstructed from directly collecting funds to this purpose. 2 xi.The interests of CCAs are inadequately represented at the DPU and the legislature. Unlike California CCAs which have developed state-level lobbying organizations and capacity, Massachusetts CCAs do not have a comparable organization. CCAs would beneﬁt from coordination and sharing resources to protect their rights at the legislature, as well as developing and advocating for progressive changes to existing law. Project survey interview with Mark Cappadona, Colonial Power Group, Massachusetts, 2019. 2 "It took the DPU 6 months to certify our second plan. It should have a taken a month. If the DPU scrutinized the retailers like they did CCAs it would be a huge help. DPU is focused on suppliers, being run is a long-term industry insider. The agency is not interested in community leaders trying to explain to her CCA’s benefits." -MA CCA Administrator Local Power LLC41 xii.Storage and local resilience DER programs blocked by IOUs on "grid stability" grounds. Our study encountered instances where IDER implementation, in this case the deployment of hundreds of battery storage systems to CCA customers, has been disallowed by an IOU and regulators over concerns for the reliability of the IOU’s distribution system. xiii.Data access and use are under- developed. Customer usage data is handled by IOUs, brokers and suppliers, but while the data is available to them as CCAs, and the Cape Light Compact has long accessed and used this data, there has been a reticence by some CCAs interviewed to take possession of their customers usage data, leaving this to their retail supplier and/or broker. This omission severely limits a CCA’s ability to identify, engage and develop local resources. Even monthly kWh data is immensely valuable for forecasting ROIs for customers for DER products, to identify and enroll facilities for load reform and DER integration, and to tailor products that match each customer’s known energy use demand levels with DER technologies suited to their daily and seasonal schedule of energy demand. Finally, lacking such databases, CCAs lack the necessary infrastructure to actually offer customers products. Otherwise, CCA programs uniformly pursue low-impact pilot-type programs unlikely ever to have a signiﬁcant climate impact. As a matter of due diligence, a data-rich form of design and planning is employed to a cost-effective local DER development plan. CCAs in California take possession of their data as a key strategic resource and focus on using it for portfolio planning and plans to transition to a majority local DER power supply. There have been suggestions in Massachusetts, contra the precedent set in California, that it would be inappropriate for a public entity to possess the data, but it is uncontroversial that it is presently handled by private corporations. Several Massachusetts expressed concerns about CCA data access being subject to public disclosure requirements under the state's freedom of information laws to compel a municipality to disclose customer data. This is unprecedented in the history of Community Choice Aggregation in the United States currently, and is contrary to broadly practiced standards of a wide array of municipal services. d. New York xiv.With New York’s Community Distributed Generation, many CCAs are waiting for the Public Service Commission to put in place a system of consolidated billing to support opt-out distributed generation, rather than developing their programs better internally. While possible to implement without this change under existing regulation, it will have to be explored via CCA efforts and Public Service Commission (PSC) engagement. xv.Managing transactions between community shares in DER and the CCA: Sustainable Westchester has launched enrollment in its shares program for a PV installation on a local landﬁll, but they have been unable to fully integrate what is called Community Distributed Generation in New York with their CCA power "DPU is not all that helpful, even antagonistic to these (CCA) programs. I think the leadership has no idea what CCA is or does. DPU throws CCA under the bus at every opportunity. The smart meter docket went nowhere because they even claimed the cost recovery could not be spread across ratepayers because there are so many CCAs." - MA CCA Administrator Local Power LLC42 supply. Whether CCAs will have to register as Energy Service Company (ESCOs) or ﬁnd another solution is not clear. xvi.Poor access to the bill: Related to the problem above, having control over customer billing is key to ﬁnancing wide-scale DER. There is concern that tax districts will have to be created as a work-around for this problem. There is difficulty in enrolling Direct Access (DA) customers, including large Commercial and Industrial (C&I) and institutional customers (universities), which often contract for power supply with ESCOs, who are independent third-parties. Sustainable Westchester would like to enroll DA customers on an opt-in basis, but even on those terms there is a question of whether such agreements would have to be vetted by third parties under onerous PSC rules, which are unnecessary for CCAs. xvii.No Public Goods Charge: CCAs in New York may not presently assess a fee to customers to ﬁnance DER in that conventional arrangement. Attempts to apply for one have been rejected by regulators, but future applications may meet with different results. e. Ohio xviii.Limited state funds for DER and a difficult environment for community shares combined with a lack of bill access and data access are all issues to be pursued, by groups of DER focused CCAs at the Public Utilities Commission of Ohio (PUCO) and possibly the legislature. xix.Virtual Shares are difficult to implement as production credits cannot be allocated to off-site meters/customers. Attempts to create solar shares programs have been hindered by the present rules, which disallow transfer production credits generated by a solar array at one site, to the accounts of customers who would have a shares investment in that local PV installation. Novel allocation strategies have to be employed to work around existing utility constraints. xx.Bill access is limited. Unlike California and New York where CCAs have broad theoretical access to the customer bill (as yet unused by CCAs), Ohio IOUs deny CCAs the ability to add items aside from simple usage amounts and pricing. The ability, for instance, to add a bill insert to CCA customers for the purposes of DER offerings, is an important marketing channel that is not open to CCAs at present. There is added confusion because two separate entities assess distribution and generation charges, leading some customers to believe that they are being double-billed. xxi.Rogue suppliers are causing fear of alternative supply, such as CCA, through deceptive practices and pricing. This issue has come up in multiple states. Competitive suppliers who attract customers with low rates that are then increased dramatically without customer awareness is just one example of how these entities poison the well for CCAs. f. New Jersey xxii.Developing renewable energy projects to sell the power to their CCA customers is an unresolved question at the Board of Public Utilities (BPU) and will require negotiation with regulators., Microgrid studies view ﬁnancing as an open question. Lobbying for increased state support for local resiliency efforts may be required. xxiii.There is a shifting landscape for state-directed energy efficiency funding. Recent changes in state law mandate increased efficiency for IOUs, but the path to implementation is uncertain. CCAs have claimed success in increasing their bill adder to create an energy efficiency fund, in addition to what is collected to pay brokers. Local Power LLC43 xxiv.Uncertainty about allowing CCAs to sell electricity from DER directly to customers. New Jersey CCAs have tested this important question with the state regulators, the ability to develop and then directly sell the power from DER developments, and thereby remove middlemen and administrative complexity, while directly offsetting CCA customer loads. While regulators have not rejected these ideas, the question of how a CCA would take on this role has been left open. It is possible that they will have to register as an electricity supplier in New Jersey to pursue this goal. g. Illinois xxv.After an extraordinary expansion of Illinois CCAs circa 2012, a number programs have been discontinued due to ﬂuctuating rates, which led to savings that decreased or disappeared. This is the primary cause of the termination Chicago’s CCA. Similarly RECs based 100% Green CCA programs could not afford to meet that goal and provide savings. The Metropolitan Mayors Caucus reports broad interest in DER from member municipalities, but that those towns often lack the staff resources to match their desire for climate, energy efficiency savings, and resiliency beneﬁts. A lack of resources to match real interest and demand is a persistent problem for the average local government in Illinois. xxvi.The state government has been to varying degrees in ﬁnancial crisis, so the funding for programs may be provided ultimately, but uncertainty undermines activities. Local governments lack staff resources to pursue DER goals that they would like to realize and/or expand. xxvii.Poor program design for solar initiatives at the state level led to poor results in deployment of PV. A recent push for small (<2MW) residential focused installations failed to ﬁnd subscribers and shifted to green ﬁeld development. Uncertainty in state-level procurement for new renewable energy has also frustrated the bidder pool of developers. xxviii.Opaque interconnection rules frustrate and discourage renewable energy developers. As a subset of the challenge of the development environment is the difficulty and confusion around interconnection agreements between third- parties, utilities and regulators. xxix.IOUs subsidize many municipal accounts precluding traditional payback economics for DER. In Illinois, it is customary for utilities to provide power to municipal accounts for free. This means there is no ﬁnancial gain offset load on municipal accounts with DER. This arrangement often does not include ﬁre- districts, so municipal DER development can ﬁnd some accounts with attractive paybacks. 7. Energy efficiency surcharge funds administration The Massachusetts Department of Public Utilities appears unresponsive toward CCA efforts to administer funds according to state law, and has prohibited funding of 3.0 type programs. One main problem is that so few CCAs have attempted to administer the funds, and, secondly, they have not used Cape Light Compact’s resource as the leader in this arena. Massachusetts DPU policy increasingly blocks integrated resource planning and slows development of advanced energy efficiency measures, that could otherwise provide not only less consumption by consumers, but also peak aggregate demand reduction and local resiliency. As CCAs could become the majority procurement entities in the state, it is critical to address this failure. Local Power LLC44 a. Massachusetts Local Power LLC45 Local Power LLC46 i. Cape Light Compact (CLC) The CLC participates in the three year plans that are a part of the State level process for determining the use of energy efficiency funds collected from ratepayers. As a result, CLC’s energy efficiency budget dramatically increased from $5m to $40m annually. The legal and regulatory process to access the funds has become more constraining over time. Originally, the CLC simply needed an approved plan. Now the regulations mandate a three year statewide plan, required by the Green Communities Act for a CCA to collaborate with regulators to develop. CLC factors in the need one engineer and two lawyers for the process planning. CLC retained counsel which submits plans, intervenes and participates in dockets at the DPU, for a potential cost of $50-100,000 a year in legal fees. When all energy efficient 15-20k legal bill every month for EE. “We are ﬁghting EverSource right now -- we have worked with them forever and they still try to block our plans.” The CLC is a Program Administrator. There are eight IOUs and one CCA making a total of Program Administrators. The DPU also requires that the CLC do evaluations and cost-effectiveness studies if they want to do innovative programs outside what the IOUs are doing, which is costly and time consuming. CLC is presently working under the 2019-2021 plan which is focused on three sectors: Residential, Low-income, Commercial & Industrial customers. The planning for 2022-2024 begins later this year. On the third Wednesday of every month the planners meet in Boston. ii. Lowell The City of Lowell has a history of working successfully with energy efficiency ﬁrms. As they have a unique population with speciﬁc energy efficiency needs, they have a strong interest in having control of their potential Part B funds. Their approach was to authorize a third-party to help pursue those funds at the DPU. After ﬁling an application to become a Program Administrator in October of 2018, this application has not, at time of writing, even received a docket number from the DPU, much less a hearing. b. California The California Public Utilities Commission (CPUC) is deliberately blocking funding for CCA applications to administer integrated energy efficiency measures with onsite distributed renewable generation, and is shifting program funding over to a utility-administered outsourcing based upon state-deﬁned locational values. This has resulted in only two of nineteen CCAs seeking to administer programs, and only one now doing it. As CCAs, not utilities, are now procuring most of the power in California, the new rules deliberately block integrated resource planning to make possible grid enhancing development: the very lack of which is the CPUC’s main justiﬁcation for interfering with CCA control of their procurement in California’s 2019 legislative session (AB56). i. Marin Clean Energy: MCE was slow to adopt a demand-centric approach, even though energy efficiency are lowest-cost resources for consumers and represent a pure upside for CCAs, which unlike suppliers lack their transmission and fossil plants. If however, they reproduce, as Local Power LLC47 Marin did, traditional utility economics by entering into power contracts which are in essence “take or pay”; then the CCA has to take the electricity, or, if the CCA has reduced demand from energy efficiency, must still pay their suppliers for volume of contracted electricity. Recently, due to the inﬂuence of local citizen participation, MCE has expanded its focus on energy efficiency including an application to the CPUC to administer $6-9m a year of funds collected from their rate-payers to be used for programs that they have designed. They have focused on multiple family residential energy efficiency in the past, but are now turning to industrial and agricultural energy efficiency opportunities. They also have a large energy efficiency outreach staff. ii. Sonoma Clean Power: SCP followed Marin and did not face the same hurdles. They have a variety of demand focused programs including IP thermostats and appliances for homes so that they can track consumption data and improve their offerings in energy efficiency. But their reason for not pursuing funds at the CPUC reveals a paradigmatic problem in both California and Massachusetts, where obsolete regulatory requirements ill adapted to CCAs essentially block the use of the energy efficiency funds for efficiency-integrated DERs. SCP objected to the CPUC’s Total Resource Cost (TRC) test, because this test focuses money on programs that have been proven to be “cost effective”, which SCP leadership pointed out is already covered by the utility/private sector. SCP asserts the test criteria should be the opposite: PGC funds should only be spent on measures that might be cost-effective in the future, but need investment today by the CCAs that are integrating them with lower cost measures. SCP says the existing CPUC test prevents innovation: “we need to find lines of investment which will create markets in 5-7 years time instead.” 8. CCA 1.0’s “two middlemen” model A key barrier to DER development by CCAs is over- dependence on brokers and power retailers. The appeal is that brokers do the upfront program implementation work without requiring payment in advance, based on the promise of an increment on power sales once the program launches. Unfortunately, CCAs that start with brokers have continued to use the same brokers years into the service, with customers continuing to pay the brokers scarce dollars, year after year long past their usefulness. Outside of California and Cape Light Compact in Massachusetts, many CCAs have adopted a broker- centric business model under which all of the essential functions of the service are performed by outsourced contractors: a.CCA staff are often non-existent, and otherwise are limited to one to three staff; b.A broker, who is responsible for preparing required CCA documentation - in particular an implementation plan - and presents the CCA's desired products and terms to retailers, who invite supplier bids to bring back to the CCA for approval, and in some cases acts as a repository of utility data; “The use of the mil adder should be used to hire staff and develop their programs internally rather than using brokers. Brokers are doing all the work and towns want something for nothing. Towns forget their programs when they use brokers.” - MA CCA Administrator Local Power LLC48 c.A retail supplier, who undertakes the functions required for the procurement, transmission, and billing of customers; d.Wholesalers, who generate power. The CCA 1.0 model limits the CCA administrator’s role to that of a client, hiring a broker to negotiate with retailers, who provide the necessary credit, control data and utility and ISO relationships and buy from wholesalers. By way of contrast, California’s CCA 2.0 model is focused on physically local and regional development of renewables. The “direct wholesale” was part of the CCA 2.0 leap in that it broke up the functions of the two middlemen, giving CCA managers control, knowledge, and data, as well as the staffing capacity to directly implement local renewables and energy efficiency programs. The core problem is, of course, the zero-sum game of program funding. Because the “simple” CCA forfeits the marginal adder revenues needed to staff 3.0 to the broker, it both defunds the CCA administrator and deprives the CCA of the ability to participate in and guide the CCA’s procurement strategy to be focused on DERs. A recent Local Power-led University of Massachusetts study of green CCAs in the state, concluded that the use of brokers is a major barrier to the pursuit of “advanced CCA.” Broker- run programs are utterly dependent upon their brokers not only for managing the relationship with retail suppliers, but also for their understanding about energy markets, what goals are achievable (reducing sales), what resources are available (energy efficiency funding) and their possible options under CCA. Whether brokers actively deprive CCAs of the opportunity to learn about or pursue DER options, or are simply unqualiﬁed to advise them outside the narrow envelope of a service deﬁnition that beneﬁts them ﬁnancially (their source and amount of pay is based on the volume of power purchased from the retail supplier), use of brokers is clearly associated with conventional, supply-side, non-innovative CCA programs, and a tendency of programs, once formed, to stop learning and developing. As a result, the professor guiding our UMASS survey of Massachusetts CCA governing boards found that CCAs with brokers have little knowledge about the programs, yet think highly of their brokers. There was one particular instance reported from an interview in which a town administrator, who is responsible to be the official signatory of CCA implementation plans sent to the Massachusetts Department of Public Utilities for approval, did not know her town is, in fact, a CCA. In such towns, members of the public, as a result, know or understand even less. Because of the linkage between brokers and lack of CCA program funding to hire DER staff, the problem described above is among the greatest barriers to CCA 3.0.. What brokers are unprepared to do, their command of administrative funding prevents the funding of CCA staff to do it. Giving brokers the whole administrative adder fee is simply inconsistent with CCA 3.0; another arrangement is needed. It is no coincidence that Cape Light Compact, Massachusetts’ only robust CCA in terms of DER focus and success, is the only program in the Commonwealth that is not broker-run.   Local Power LLC49 F. Economic Analysis 1. Paradigm shift from 1.0 to 3.0 Apart from a shift from central generation to distributed technologies and supply to demand, the evolution or paradigm shift from 1.0 to 3.0 involves a shift in optics. One optic shift is in the deﬁnition of program beneﬁts, from narrow to broad. Another shift is in the criteria of pricing, from rates to bills. There is the optic shift of risk, from market risk to logistical and operational risk. Finally, an optic shift is required in the customer relationship, from simply not opting out, to actively stepping in to participation and investment. Whereas supply-side conventional CCAs focus on rates and supply risk, DERs produce bill savings from accelerated demand reductions and load reform. 3.0 is a transition from a narrowly deﬁned program designed to serve existing electrical accounts or “plug loads” to capture a much greater envelope of carbon emissions in a community. Whereas a “simple” CCA 1.0 can hope to impact only about one quarter of greenhouse gas emissions, a “complex” 3.0 program can impact over three quarters of all emissions. The commitment duration of carbon impact is radically enhanced by the graduation from 1.0 to 2.0. Whereas a “simple” CCA 1.0 program’s use of RECs can commit to increased levels of mitigation for the two or three years at a time, a “complex” 3.0 program can lock in commitments for 30 years or more. The horizon of DER penetration that is technically feasible in the transition from 2.0 to 3.0 is no less dramatic. Whereas a “simple” CCA 2.0 program installing exporting DER investment is limited by net metering caps to ﬁve percent of a utility’s load, depending on location, a “complex” CCA 3.0 installation of non-exporting DERs can reach into the 75% to 80% range. 3 The price volatility proﬁle of CCA is also transformed in the shift from a 1.0 program to a 2.0 or 3.0 buildout. Whereas a “simple” 1.0 program using RECs has 100% exposure to volatile market prices, and even grid-connected 2.0 programs are exposed to regulatory risk from increased transmission as well as distribution and volumetric surcharge increases, a “complex” non-exporting DER-based 3.0 program has utterly predictable future costs and prices. Finally, the actual price-points that determine the threshold between cost effective and not cost effective renewable energy for a consumer is transformed by the shift from 2.0 to 3.0. Whereas “simple” central renewable generation must compete against the cost of undelivered power on the grid, which is only 30% of the consumer’s bill, non-exporting DERs compete against the cost of delivered power at the meter, which is 100% of the customer’s bill. The following summarizes the price risk of the three CCA versions: Non-exporting systems are no longer limited by low voltage distribution systems, but the 3 quality of renewable resources, building stock and locational energy requirements. See for example, Local Power Inc., “CleanPowerSF In-City Buildout Business Case,” 2013; http:// localpower.com/CleanPowerSF.html ; also Local Power Inc.,"Sonoma County Community Climate Action Plan Energy Element,” 2008; Local Power Inc., “Sonoma County Renewable Energy Secure Communities,” 2013; and Local Power Inc., “Boulder (Colorado) Energy Future - Localization Portfolio Standard: Electricity and Natural Gas,” 2011. All are available at localpower.com. Local Power LLC50 a.Simple, high risk CCA 1.0s is 100% exposed to retail market prices, because all power and all RECs are purchased from volatile markets; b.Medium complexity, medium risk CCA 2.0s partially reduce market risk exposure, because long-term investments in ﬁxed price renewables materially reduces how much and what times wholesale power is physically required by the CCA at volatile wholesale and REC market prices. c.High complexity, lowest risk CCA 3.0s cut exposure to wholesale and retail market cost ﬂuctuations, by eliminating not only required wholesale power, but also transmission and distribution, and other non-bypassable volumetric surcharges on kwh sales. This explains the reason why CCA 2.0 programs are less likely to face rate premiums than 1.0 programs, and why 3.0 programs will have a lower market risk proﬁle than 2.0 programs: because, by their very complexity, they establish increasing protection against ever-increasing wholesale energy market volatility. 2. DER cost optics inﬂated by simplicity of utility business models “Cost optics” is a term to describe variations in price that result not from technology, installation or so-called market factors, but rather from integration factors deﬁnable by CCA program design. Among the key barriers to 3.0 are program designs that needlessly imitate conventional utility programs, based on economic blinders resulting from technical dependence upon conventional retail energy professionals, namely energy brokers and retailers. The shift to 2.0 and 3.0 inevitably involves the removal of such blinders through the modiﬁcation of program design. The key factors determining the price optics of DERs are: a.Cost to DER owner: exporting vs. non-exporting DER Exporting DER economics are based upon the payment terms of utility net metering tariffs. Non-exporting DER economics are based upon avoided consumption at the retail rate of delivered power. b.Cost to all CCA customers: market-selected vs. load shape-targeted DER Market- selected DER has an arbitrary impact on a CCA’s daily load shape and annual load duration curve, creating savings for the DER owner, but having no impact on the aggregate CCA cost-of-service and resulting rates paid by the other CCA customers. Targeted DER reforms both load shape and load duration curve, resulting in reduced aggregate community-wide peaking and capacity requirements, thus lowering the cost of service for all CCA customers into the future. c.Cost of non-exporting DER: one-off vs. multi-site development Higher engineering costs offset by lower acquisition costs make multi-site DER development signiﬁcantly less expensive than one-off projects. d.Revenue-based vs. customer investment-based Return-on-investment depends largely upon the ratio of money invested vs. borrowed. DERs ﬁnanced solely on the existing monthly bill payments will have a higher cost of energy than DERs ﬁnanced on both bill payments, and ﬁnancing payments by customers actively investing in DERs through a fee or voluntary rate adjustment. e.Private vs. public ﬁnance Depending on the customer and the time, public ﬁnance can lower the cost of capital, secure the cost of capital compared to federal tax exemptions, and increase customer participation levels, which also lower per-unit costs. Local Power LLC51 A CCA 3.0 program design that adds any or all of these elements together results in a signiﬁcantly reduced DER cost optics, both for the DER owner and for all other CCA customers cost of service and resulting rates. 3. Customer engagement and demand diversity CCA 1.0 and 2.0 engagement of customers is typically treated as a communication challenge, because customer participation is limited to (1) not opting out and sometimes (2) consenting to pay a premium for higher level of REC-mitigated grid power supply. 2.0 programs with DER components have not presented DER products or packages, but tariffs that are standardized, cookie-cutter offerings like NEM or FITs, which the customer will frequently not understand, can either take or leave in isolation, with no direction or integration by the CCA to clarify the value proposition based on customer billing history it has on hand. In 3.0, however, customer engagement depends utterly upon the active, positive participation in DER investments. Communication is necessary, but inadequate, for this program, which must appeal to a much greater diversity of proﬁles in energy needs, situations and resources. Moreover, it must use complexity to package payment schemes into a diverse array of simple, easy to understand DER products. A ﬁrst layer of ﬁnancial diversity to facilitate different kinds of customer participation, payment and collection are: (1) municipal bonds; (2) cooperatives; (3) CCA bill- or rate-adder; (4) state ﬁnancing; commercial project ﬁnance; and (5) consumer credit. A CCA 3.0 program will bundle these resources into a variety of project/product ﬁnancing options to match project proﬁles, tailored to customers’ diverse credit ratings, wealth, and preferences: a.Municipal revenue bonds or Green Bonds involve member municipalities’ or a Joint Powers Entity’s revenue bond-issuing authority. b.Cooperatives add direct investment from local residents and businesses. c.CCA bill- and rate-adders can be dedicated to pay for local shared renewables facilities. d.State ﬁnancing, such as Massachusetts’ zero interest heat loans, can be used to ﬁnance fuel switching. e.Commercial loans may be used for ﬁnancing turnkey or PPA-based local DER projects, and; f.Consumer credit may be employed to ﬁnance consumer-owned appliances and electric vehicles. A second layer of ﬁnancial diversity is DER sharing in three sectors: (1) power, (2) heat/hot water, and (3) Electric Vehicles. Power sharing assumes two forms: (1) virtual sharing, and (2) physical sharing: a.Virtual power sharing: i.In-city behind-meter sub megawatt renewables; ii.Shared savings from customer-accepted peak-targeted measures; iii.Grid-connected supply up to hundreds of megawatts depending on CCA load size and shape. b.Physical power sharing: 4 i.In-building power cooperative; ii.On-block solar power cooperative; Depending on state regulation, sites must be chosen, and sharing technologies be conﬁgured 4 in a manner that does not constitute “distribution service,” which falls under utility monopoly. Local Power LLC52 iii.In-neighborhood medium size PV .25 MW. c.EV and heat and hot water sharing and co-ops: i.Sharing of renewable transportation, including EV co-op curbside scheduled EV V2B cooperative/rental/taxis/ﬂeets; ii.Sharing of renewable heat and hot water systems, including: 1.In-building renewable heat and hot water cooperative; 2.On-block renewable heat and hot water cooperative; 3.District heat and heat loops. 4. CCA can provide the umbrella for a universal, multi-sector shares offering CCAs can take over the primary energy utility relationship with customers, and redeﬁne that relationship within an entirely new energy model. This uniquely robust umbrella itself, rather than any particular energy product or technology, is the key commercialization pathway to customer engagement. A customer data-targeted, multi-sector “push” marketing campaign on a trusted community platform can engage the whole community of participants in an inclusive, cross-sectoral transition to climate equity. A combination of virtual and real equity offerings can reach any customer through diverse sharing options. CCA program complexity will estimate a “simple” customer return on investment for offered DER products, using a similar value proposition protocol used by solar lease PPAs. 3.0 customer equity products will present simple payback metrics to enable customers to make apple-to-apple comparisons to their current and CCA-forecasted future bills, and voluntarily sign on to a voluntary rate adjustment or monthly fee based on a forecasted return on investment: a NegaWatt-hour equity rate that purchases CCA- administered equity shares from DER ﬁnancing, presenting similar cash ﬂow & cost/beneﬁt characteristics as the direct ownership of DERs. Local Power LLC53 G. 3.0 Commercialization Pathways and Program Design For nearly twenty years, environmentalists have called for a Green New Deal, presenting the image of a top-down, engineering-driven, large, federal government-sector infrastructure project to radically reduce America’s carbon footprint, and transform the domestic economy. The problem is, that in many ways, this vision is ﬂawed. Nearly a century after Roosevelt’s New Deal, the proﬁle of carbon reduction is primarily located in the private sector, not just the public sector. Its transformation involves not public works (though some of that has a role in DERs) as much as private works: a choice-driven, designed and interoperable as an aggregate resource, but inserted where people live and work, and is operated, shared, and often owned by them. It must be less civil engineering and more Geek Squad: a bottom-up modular replacement of antiquated top-down transmission grids. Decarbonization will take place primarily in the private sector, be data-driven, and result in small, local-sector infrastructure that is largely owned not by the government, but by American citizens. In other words, a Green New Deal will transform primarily the private sector if it is to have the scale of impact required by climate change. CCA was originally created as, and is, a perfectly aligned platform for transformation of the private sector through the systematic use of local public sector planning and market powers. CCA 3.0, particularly, presents a commercialization pathway for local government to administer services and equity between residents, businesses and local government energy users. The platform involves a virtuous customer/citizen engagement cycle under which the active forces of government and the active members of the community cooperate to help the passive mass of residents and businesses to choose climate equity. 1. Program design to engage diverse DER customer interest levels Customer diversity includes three basic categories of customer engagement: a.Default green Deﬁning the default product for a CCA at a minimum level of renewable supply that meets or beats the current utility rate establishes a maximum base level climate impact from the program. RECs may be used for this passive sector of the population, who neither opt-out nor choose a cheaper “alternative” lower renewable content supply product (which may be made available for customers wishing to avoid REC payments). b.Shares This is a method of extending ownership beneﬁts to customers who do not have the ability to own and use DERs in their homes and business because they do not own the building, or the building is not suitable for DERs. Irrespective of the default or alternative grid supply choice, customers may volunteer to “opt-up” by participating in DER equity through either a DER shares product,.Shares, which enable any customer to participate in any DER investment irrespective of location or credit rating, are a form of ownership under which a CCA and member municipality agree to allocate voluntary customer monthly rate/bill premium payments into a municipal loan repayment account, keeping track of the customer's accumulated equity ownership or percentage of a DER facility, and crediting the customer’s monthly bill accordingly. As a customer’s equity/ debt ratio increases, the CCA’s monthly credit to his/her bill increases, according to a CCA-forecasted return-on-investment, much as a solar PPA company would provide to a direct purchaser of PV. c.Cooperatives This is a method of facilitating both use and ﬁnancial beneﬁts from DERS in dense multi-user locations, and encouraging customer-driven innovation. Community leaders and activists who wish to actively drive the DER process by “opting-with” their neighbors to develop building-, block- or neighborhood-level cooperatives for physical Local Power LLC54 onsite DER and EV sharing, are a critical and universally neglected organic, avant garde resource to drive both the local DER development and planning process. Cooperatives are also critical for energy democracy and procedural equity to inform and invigorate CCA governing board activities and decision-making. Under a cooperative arrangement, the CCA will create a standard application process and notify customers of its program. Neighbors seeking to develop a microgrid would apply to the CCA for billing services, and to its municipality for a loan, in a manner similar to shares, but including physical sharing and use of microgrid resources, such as physical power Electric Vehicles, HVAC and hot water. d.Individually owned DERs. Finally, CCA 3.0 programs will offer ﬁnancing for individual building owners who which to both physically use and ﬁnancially beneﬁt from DERs 2. Renewable natural gas aggregation While many green CCAs have eschewed gas aggregation because of guilt by association with fossil fuels, gas aggregation represents an opportunity no less impactful than electricity aggregation to decarbonize, reduce gas demand, and convert from fossil fuels to renewable fuels. Like electricity aggregation, decarbonization is massively augmented by controlling procurement of the incumbent source. Considering the cost and greenhouse gas impacts of gas, fuel switching incentive programs are an anemic and under-achieving commercialization platform for natural gas reduction. As with electrical aggregation, scaling up investment in decarbonization depends upon diverting existing cost bill payment revenue streams to DERs. Many customers, particularly low income customers, pay their heating bill to natural gas suppliers, meaning fuel switching offerings that do not take over gas sourcing accounts, will not reach the vast majority of gas heating system users. 3. Administration of beneﬁts CCA administration of diverse DER charges and credits is a key support platform for 3.0. Logistically, administration will include the following basic transactional types: a.Customer ﬁnance, share credits and co-operative bill processing Individual customer ﬁnance, equity shares and cooperative bill credits will be administered according to signed customer ﬁnancing agreement, electronically subscribed shares agreements, and signed cooperative agreements. b.Co-operative bill processing Cooperative transactive energy management should appear as a standard service. c.Reduced aggregate community-wide cost of service Load reform beneﬁts will be monitored based on ongoing demand- and peak-related charges in grid power procurement, and will be reported both at the aggregate level indicated as a line item on each customer’s web account, for educational purposes to help customers appreciate the beneﬁt they receive whether or not they volunteer for DER participation. d.Energy efficiency funds administration Administration of energy efficiency funds line items should indicate funds paid, beneﬁts received, eligibility and subscription to receive energy efficiency measures. 4. CCA customer engagement process offers tailored products CCA customer engagement consists of a multi-stage process: Local Power LLC55 a.Contracts DER products are deﬁned by standardized ﬁnance contracts with customers. b.Data analysis/engineering Customer offers are deﬁned by analysis of aggregate and individual customer usage data. c.Mail Targeted customer offers to each customer are made in scheduled municipal mail inserts, public email, or direct mail. d.Finance Positive respondents sign ﬁnancing agreements. e.Install DER contractors are dispatched on a rolling schedule. f.Bill Customers receive web- and or snail-mail-based billing linked to DER ﬁnancing agreements. 5. Equity DER offerings engage customers in technologies through integrated products Technologies include a virtual equity shares system, microgrids, shared EVs with V2B chargers, home/business IoT appliance systems and heating and hot water systems. Products include purchase of bill credit rights, building co-operative membership, on-block EV car share with solar-plus-storage, IP appliances, and heat pumps. 6. Roles of municipalities CCA 3.0 requires the partnership and cooperation of CCA municipal governments. While the CCA itself has unique access to essential utility user data, municipalities possess unique and necessary resources for low-cost engagement and support of customer DER equity: Local Power LLC56 a.Mail As customer DER engagement requires regular communication, use of scheduled mailing inserts are key to eliminating or minimizing the cost of such communication. b.Finance CCAs comprised of multiple municipalities may need them to participate as counterparties to residents and businesses receiving DER ﬁnancing. c.Billing CCAs need member municipalities to provide access to ongoing billing platforms, such as water bills, sewer bills or tax bills, as a secure platform for ﬁnancing. d.Data CCAs will need member municipalities to share available data, such as land use, zoning and permitting data, for planning, customer targeting and tailoring purposes. e.Power/gas CCAs need member municipalities to participate as customers in aggregated services as well as DER products in order to grow and balance community- wide loads. 7. Data use in CCA 3.0 launch sequence CCA utility bill data is a critical dimension of all forms of CCA, particularly 3.0, being required for multiple stages of program launch, including: a.Program goals and policies; b.Implementation plan preparation and negotiation with suppliers; c.Opt-out notiﬁcations and service launch; d.Billing; e.Targeting DERs for each customer; f.DER ﬁnancial analysis; Local Power LLC57 g.DER dispatch and account management; h.Customer service and call center. 8. Datasets to design and target products The following data sets are generally available for analysis and operation of a 3.0 program launch and operation, in order of importance: a.CCA customer meter data This is available from utility CCA information tariffs during launch. b.CCA aggregate data analysis This is available from utilities during the planning phase. c.Utility rates by customer class for forecasting This data is available from published utility tariffs. d.Land use, infrastructure, planning data This is available from municipalities and or state governments. e.Local and regional renewable resource data This is available from state and/or federal governments. f.Customer credit data This is available from commercial providers. 9. Data for DER site/customer selection criteria Below is a list of typical meter attributes and building types that ﬁgure high on the list of selection criteria for major integrated DER developments and shared solar sites: a.Meter attributes high priorities i.High coincident use ii.High tariff iii.Microgrid suitable iv.Schedulable load onsite b.Building type short list i.Government energy critical ii.Commercial energy critical iii.Multi-residential iv.Farms and home businesses 10. Targeting and demand integration of microgrids Targeting and design of a non-exporting system involves a combination of site selection based on building usage, and technology selections based upon physical sharing. Below is a list of land use and energy usage criteria for optimal DER integration opportunities: a.Integrated demand: i.Live and work These sites have balanced usage patterns. ii.Workday and weekend energy load These sites have balanced usage patterns. b.Integrated capacity: i.Power and heat/hot water These technologies avoid need for batteries. ii.EV and home These technologies share storage and onsite capacity. Local Power LLC58 iii.Onsite renewables and appliance automation These technologies manage intermittency. Local Power LLC59 H. 3.0 DER integration technologies As an energy business model, CCA 3.0 is a strategy of replacing large power plants with many small local iDERs located on blocks of energy-intensive, aggregate load-coincident buildings. Taking advantage of unprecedented access to end-use meter data and energy modeling, 3.0 targets DERs according to the diversity of demand pattern by customer and community, season, and day. Generation technology needs to be assessed and selected according to local conditions, whereas technology sub-platforms that facilitate the integration of DER resources are the key commercialization pathways for those particular technologies, under the robust umbrella of CCA. 1. Energy technology model 3.0 technologies are deﬁned broadly in displacement - serving conventional plug power, electric vehicles, and heating and hot water - but are speciﬁc in footprint, location and functionality, following the “loading order” principle of procurement planning, adopted by environmentally-minded state regulators such as California’s. The order prioritizes energy efficiency as the highest value, followed by conservation measures (such as scheduling, physical sharing and storage), then by onsite generation, then by local generation, then by regional generation, and ﬁnally, in-state generation. 2. Functionality: Non-exporting DER model A conventional utility DER model employs a generic NEM or VNM-based power export model. under which the owner’s return on investment is forecasted based on compensation by the utility, which is based on the terms of a regulated export tariff. A 3.0 design employs a non- exporting model, targeting DERs to reduce onsite demand for power and help reform aggregate CCA load requirements, while integrating generation, storage, and automation among multiple customers, in order to eliminate the need for export tariff payments from the utility for a forecasted return-on-investment. Sub-components: a.Onsite renewables with battery or heat/hot water storage One, or both enable dispatchable capacity to supplement intermittent renewable onsite generation; b.Internet Protocol (IP) appliances IP adds demand control to supplement intermittent renewable capacity; c.EVs with Vehicle-to-Building (V2B) reverse ﬂow ports These add additional ﬂexible, shared capacity to supplement intermittent renewable onsite generation. 3. Communication, enrollment and administrative platforms An effective CCA 3.0 program will seek to establish trust with residents and businesses, by accessing all available low-cost communication infrastructure to distinguish and reinforce the program’s community-centered purpose, speciﬁcally regular communications with all residents and businesses in CCA-, member municipality-, utility bill- and local institutional communication platforms, in a manner designed to establish the CCA program’s local, public, Local Power LLC60 community purpose.An example of a public, community purpose would be a municipal recycling programs. Trust is established by representing the program as acommunity-centered initiative centered around program goals, rather than merely a marketing program to consumers. Recommended mechanisms to establish trust include the following: a.CCA opt-out notiﬁcation message This follows state-deﬁned protocol. b.Monthly utility bill CCA charge identiﬁcation and information This follows a state- deﬁned, utility-administered protocol c.Web-based account management This is CCA-administered and should include shares and cooperative registers. d.Customer call center This should be run by CCA staff or a dedicated contractor. e.Municipal member direct mail insert These would be prepared by CCA staff and administered by CCA member municipalities f.Municipal member public email distribution lists These would be prepared by CCA staff and administered by CCA member municipalities g.Offers at participating local banks These would be negotiated by CCA staff with local banks, which would make them available to customers. 4. Operational integration: Virtual Power Plants, DER Management Systems (DERMS) and microgrids a.Overview of dynamic energy management Whereas virtual power plants (VPPs) optimize disparate DER resources to capture/monetize savings at the aggregate cost of service level, microgrids add resiliency for DER installation sites in cases of grid failures. Both are critical commercialization pathways for CCAs, VPPs ubiquitously and in the immediate term, and microgrids at key campus sites today, and ubiquitously for all customers in the near future. VPPs rely upon software and smart grid technology to remotely and automatically dispatch and optimize DERs. This is accomplished via an aggregation and optimization platform linking retail to wholesale markets, dispatched and optimized distributed generation, appliance automation and onsite storage resources such as electric vehicles, batteries or heat and hot water systems, all in relation to central generation systems over large geographic regions in the wholesale market. VPPs are in this sense part of the “Internet of Things” (IoT), accessing existing grid networks to optimize electricity services for energy procurement entities, customers, and grid operators. VPPs are adaptable to different market participants, from CCAs to utilities to DER providers, operating with or without central generation sources, monetizing demand response and critical peak pricing opportunities to replace the energy performance of conventional peaking power plants, energy supply and voltage regulation services. Microgrids are retail distribution-level grid-tied or off-grid remote systems that can ‘‘island’’ their DER resources from the distribution grid using hardware such as inverters and high-speed switches, energy storage and load management systems, in order to operate speciﬁc energy resources in a speciﬁc location. Distributed Energy Resource Management Systems (DERMS), administer services that are highly dependent on the speciﬁc location (grid connection) of each asset, by manipulating power ﬂows along individual feeders, including voltage management, optimal power ﬂow, Local Power LLC61 and locational capacity relief. Managing real power (watts) and reactive power, DERMS can increase load on one part of a feeder, while decreasing load, and ramping up generation at another part of the same feeder. DERMS typically require more back-end system integrations than VPPs due to the requirement of locational grid and asset state information. In general, whereas VPPs are market-ready, DERMS require integration with the utility through Supervisory Control and Data Acquisition (SCADA)-type systems, and VPP platforms can be developed over time to DERMS, shifting from DER revenue optimization and wholesale transaction integration into real time energy management and voltage regulation toward the end points of the distribution grid. While microgrids face some regulatory and political hurdles, they remain a strategic opportunity for local resilience and energy security: a.Island re-connect While islanding from the grid in the event of power outages is not a problem, re-connection protocols must be established with utilities to avoid the voltage ﬂuctuation impacts. b.Footprint restrictions Some state rules, such as California’s Rule 21, limit the size of microgrids to three adjacent buildings. c.Rights-of-way restrictions All states prohibit microgrids from crossing public rights of way. As many public rights of way are municipally owned and controlled under utility franchise agreements, however, CCA member municipalities do exercise important leverage over this question. Otherwise, microgrid site selection criteria should focus on single owner “campus”-type sites such as municipal government complexes, universities, hospitals, multi-residential buildings, and commercial complexes. Microgrids are Low-Voltage (LV) distribution systems with interoperable DERs that provide power to onsite users either connected or disconnected from the distribution grid, including onsite renewable power, heating systems, storage devices (e.g. batteries, EVs) energy storage systems (e.g. hot water) and controlled loads (e.g., pumps, HVAC, appliances). In addition to onsite customer beneﬁts, “microsources” in the microgrid can provide beneﬁts to overall CCA performance. WIth the restrictions mentioned, microgrids are present-, not future- prospect, taking time and effort to develop, but once achieved, offering signiﬁcant resiliency and other beneﬁts to CCAs and their customers. Microgrids have been online and proven throughout the U.S. for many years, with a signiﬁcant wave of microgrid development already underway across the U.S. in recent years, driven by rapidly dropping solar panel and battery costs, leveraged players in the battery storage and control systems software space, state funding, as well CCAs responding to urgent calls for enhanced local energy resilience in an age of extreme weather, by including microgrids in their solicitations to energy providers and developers. Moreover, CCAs are natural microgrid enablers, as CCA member municipalities: a.often have mandates and resources to strengthen local extreme weather resilience; b.typically own microgrid-ready energy-critical campus properties; c.own public rights-of-way under utility franchise agreements; d.have a special planning relationship with other local energy-critical public agencies such as school districts, and; e.have unique leverage to command cooperation of distribution utilities, such that CCAs are natural pioneers in this important frontier of DER-based community resiliency. Virtual Power Plants (VPPs) are an energy management system that implements real-time control of available energy DER and grid resources to offset supply and demand variability and Local Power LLC62 peaking. This in turn dramatically increases the cost effectiveness of DER technologies like photovoltaics. Operated as a single system, dispatchable supply and demand from a multitude of customer DER sites are balanced by a single peer-to-peer energy trading system to allocate energy beneﬁts and costs among local customers, reduce aggregate CCA demand requirements, and to reduce grid exposure and cost, lowering peaking and congestion. Ratepayers beneﬁt from a reformed delta between base and peak loads, increasing capacity factors based on more differentiated characteristics of DERs. Flexible participation in VPPs leaves customers in control of their DERs and limits demand adjustments with barely noticeable frequency between load controls, storage and generation capacity. VPP management systems appeared nearly a decade ago, but have entered a mature stage of development with the advent of cheaper batteries. In 2018, (company) Tesla began deployment of solar plus battery storage on 50,000 homes in South Australia, and its customers project participants claim a 70% reduction in grid consumption, with bills cut by up to 30%. (Company) Sunrun is currently building a VPP in Hawaii. VPPs are particularly well adapted to CCAs because of their ability to capture savings not only at the customer level and grid level, but also at among all customer accounts and the aggregate load duration curve level. Unlike most VPPs, which must transact among customers separately and market demand response products to third parties, CCAs can integrate VPPs as a CCA-speciﬁc energy management resource. As such, a VPP is one of the core operational models for CCA 3.0, in addition to “virtual” and/or “real” microgrids. VPPs can be standardized for all participating DER customers. Microgrids may be enrolled through the following protocols: a.CCA administered web database While dedicated blockchain-based transactional platforms for microgrids and virtual microgrids are commercially available, CCA energy management systems, can and should include microgrid (and VPP) capabilities. Annual or bi-annual snail mail reports are recommended. b.Building-level and block-level cooperatives Microgrids are an important customer engagement and sharing platform, and will provide important long-term bulwarks to test and modify extant regulatory/utility barriers. c.Public building and business microgrids d.Co-op reporting protocol e.Ownership by co-op or municipality, according to commercial pathway f.Resiliency: i.Storage EVs represent a massive opportunity for DERs and 3.0 (see the section below). ii.Islanding This temporary limitation is described above. 5. Sharing through transactive energy platforms Apart from the municipal customer DER loan account approach recommended for CCA 3.0 programs, dynamic energy management systems, DER sharing and cooperative equity both require participant account management software not provided on utility billing systems. Transactive energy platforms can be provided as subcomponents of VPP-type software, or else by niche players in the “blockchain” space. Local Power LLC63 CCAs pursuing 3.0 may consider a range of software or service providers to employ and tailor commercially available back office software or software-as-a-service for CCA energy procurement and administration of customer DER sharing and cooperative membership. Transactive energy systems are distributed ledgers of coordinated energy devices and equipment, including generators, energy storage resources such as EVs, stationary batteries or heating systems and other appliances, which use automation tools to communicate and exchange energy based on the value of energy and capacity, and grid reliability constraints, in accordance with DER contracts that deﬁne the terms of consumer energy sharing and ancillary services. In recent years, the power industry has witnessed the piloting of numerous transactive platforms designed for anonymous, location-neutral, private sector trading, often through self- monitoring distributed ledger systems, using web-based blockchain technologies, whether administered by or un-administered. Because un-administered blockchain systems must self- monitor among anonymous parties with no trusted administrator, many existing platforms are notoriously energy-intensive, and thus potentially polluting. For this reason, some market participants are now turning to less energy-intensive trusted third party-administered ledger systems to overcome this problem. Moreover, anonymous platforms are somewhat redundant for CCAs, which have all the opposite counterparty attributes, being locally-based and municipally administered with a public mission (rather than market participant) programs. The primary appeal of microgrid blockchains is a participation platform independent of utilities, which CCAs can already provide. Moreover, as CCA DERs primarily support aggregate community-wide energy and capacity requirements under CCA-controlled rate design and billing structures, their transactive energy requirements involve accounting mechanisms rather than market mechanisms, and are thus relatively simple in architecture. That being said, a distributed ledger of some kind is a necessary addition to traditional utility supply billing as platforms for shared DERs, making them an appropriate part of a CCA’s 3.0 program planning process. In general CCA should follow basic principles in developing 3.0 DER ledgers, such as “Common Pool Resource (CPR)” institutions articulated by Nobel Prize winning Elinor Ostrom, who identiﬁed "design principles" of stable local common pool resource management in a "Social-Ecological Systems (SES) framework:" a.Clear deﬁnition of the contents of the common pool resource and effective exclusion of external un-entitled parties; b.The appropriation and provision of common resources that are adapted to local conditions; c.Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process; d.Effective monitoring by monitors who are part of or accountable to the appropriators; e.A scale of graduated sanctions for resource appropriators who violate community rules; f.Mechanisms of conﬂict resolution that are cheap and of easy access; g.Self-determination of the community recognized by higher-level authorities; and h.In the case of larger common-pool resources, organization in the form of multiple layers of nested enterprises, with small local CPRs at the base level’ i.Effective communication; j.Internal trust and reciprocity. Local Power LLC64 6. Electric Vehicles as storage The market for plug-in EVs grew by approximately 70% between 2017 and 2018, and is expected to accelerate in the immediate future due to the declining cost of both the batteries and cars. EVs with Vehicle-to-Building (V2B)-ready reverse ﬂow ports, accompanied with V2B chargers, represent a strategic DER opportunity because, being voluntarily ﬁnanced by customers when they purchase EVs, can substantially lower the cost of dispatchable DER storage, the expense of which can otherwise be prohibitive. Ancillary services from EVs apart from DER storage include frequency regulation, reactive power and voltage balancing service to the utility grid, “last resort” stationary storage and Demand Response services. “V2B,” however, is distinguishable from Vehicle-to-Grid (V2G) charging in that control of battery charging and discharging is not placed under utility control, which has been a major sticking point for the EV industry, as it does not want overuse of its car batteries to shorten battery life. Customer control of charging is maintained by V2B to support in-building renewables within the limits of the daily charge and recharge cycle determining battery life, thus EV battery warranty terms. That being said, progress is being made in V2G in Massachusetts, where Tesla has partnered on a VP with National Grid, under which National Grid will “request” power from a customer’s Tesla Powerwall home wall mounted battery system (the hardware system is explained https:// www.tesla.com/powerwall) for a few hours up to 75 days per year (roughly 60 summer days and 15 winter days), with a request event “almost every weekday” during the hottest part of summer. Tesla will charge the battery for best event performance and control battery discharge during the event. Otherwise, customers can choose how the battery behaves through a Tesla app to maintain onsite power in outages or other uses. Powerwall owners get compensated for sharing their power. In Rhode Island, if a Powerwall is combined with a solar generation system, Tesla predicts the revenue can reach $1,000 per year, which can accelerate the payback time of a home battery pack (a Powerwall costs over $8,000 installed). Tesla’s product, ConnectedSolutions, is a performance-based program under which a customer’s revenue will be based on average power contribution during peak events. Tesla will manage the system “but does not guarantee any dollar value.” The highest-earning Powerwall systems are paired with enough solar generation to completely recharge the battery every day and discharge the most capacity during events, in which case a Powerwall could earn as much as $700 a year in Massachusetts, and $1,000 a year in Rhode Island. Powerwall systems not paired with solar generation will not be allowed to export power to the grid, but will still be able to discharge to serve home load. Similar arrangements integrating services from batteries may be anticipated in the near future, and are thus within the immediate planning horizon of a CCA 3.0 program. Unless a similar battery-warranty guarantor offers a similar service, Electric Vehicle to Building arrangements, which are currently being piloted by Nissan and on a signiﬁcant scale in the United Kingdom, will likely follow an automated protocol to avoid increased cycling of batteries: a.Customer consents to pay for variation; b.CCA default with customer over-ride in building or EV; Local Power LLC65 c.Software limit to single battery discharge per day. 7. Heating and hot water DER in a carbon-free gas service Apart from onsite DER-integrated battery storage, various forms of building heating and hot water integration into DERs represent the major and easiest to implement critical cost- effective DER energy “storage” platform. As mentioned above, Ohio and New Jersey CCA laws allow opt-out-based automatic enrollment of natural gas customers, which provides a major decarbonization and equity opportunity with potentially equal impactfulness to electricity CCA. a.Aggregation of regionally injected biogas Deregulated gas markets allow for customer carbon-free gas swapping transactions that consist of contracting with agricultural biogas suppliers in order to inject carbon free gas remotely into gas transportation pipelines. This “swapping” gas qualiﬁes as renewable due to the physical decarbonization of gas in the pipeline. b.Fuel switching to geothermal (cold zone) and PV-powered air source heat pumps Onsite renewable electrically-powered geothermal heat pumps are a proven technology for decarbonizing home heat, and air source heat pumps have proven effective in moderate weather zones, though air source heat pumps have demonstrated some performance issues that are still being ironed out. c.IP thermostats and heating efficiency IP thermostats are an extremely low cost measure to improve the efficiency of both electric and natural gas or heating oil building heating systems, and ought to be standard products of any CCA service. d.Heat/hot H20 loops and micro-districts Physical sharing of heating and hot water systems in densely populated areas are an increasingly popular and cost-effective method of heat conservation. Local Power LLC66 I. 3.0 Governance, agency structure & program funding 1. A CCA 3.0 has four operational counter-party types a.Electricity/gas suppliers b.DER contractors c.Individual Customers d.Customer DER cooperatives 2. JPE Agencies A CCA 3.0 agency structure involves a greater coordination of CCA staff with member municipal government resources, whether (1) singly by one municipality, (2) jointly in a formal partnership as a Joint Powers Entity (JPE), or in an arms-length partnership with a hermetic CCA agency. 3. Joint Powers Entity charter authority and program scope a.A 3.0 JPE charter may include include language addressing the following program purposes: i.CCA ii.EVs and charger infrastructure iii.Natural gas aggregation (opt-out OH/NJ/NY, opt-in MA/IL/CA) iv.Speciﬁcation of a lead municipal agency v.DER ﬁnancing authorization Scope of services b.For CCAs covering multiple utility control areas: i.Same/similar implementation plans ii.Joint, combined or separate contracts 4. Inter-municipal agreement division of CCA vs. municipal roles a.CCA broad purposes, goals and criteria: i.Power ii.EVs/chargers iii.Heating/hot water installations in homes, businesses and institutions iv.Universal shares offering v.Customer-ﬁnanced iDERs vi.DER microgrids vii.Billing support for customer cooperatives in a climate equity program that offers service to all customer classes: 1.electricity customers 2.natural gas customers b.CCA member municipality roles: i.Municipal loads and accounts ii.Municipal buildings iii.Municipal EV ﬂeets iv.Municipal hot water and heating systems Local Power LLC67 v.Water/sewer or other service bills for on-bill ﬁnancing vi.Tax and scheduled mail inserts vii.Local bank engagement viii.iDER permitting, rights of way access, and staff participation in CCA product planning, installation and operation. 5. New CCA and member municipality and JPE roles in “separate” administrative approach a.The CCA: i.Could provide back office services to the co-op, and; ii.Could act as the acceptor and guarantor of the allocation of equity beneﬁts agreed to within a co-operative, based on a percentage of the savings generated; iii.Could offer co-ops incentives for avoided peaking and capacity requirements. b.Member municipality: i.May offer scheduled and energy intensive municipal buildings or buildings adjacent to energy intensive private sector buildings as accounts and development sites to serve daily onsite load; ii.Partial or whole sharing offering for municipal sites could be committed to confer equity beneﬁts on share participants who have no available sites for renewable generation in their neighborhood. c.Joint Powers entity: i.Financing 6. Focus internal capacity on DER, not power sales A 3.0 agency will focus staff resources on development rather than power procurement: a.Programmatic focus on in-town DER development, customer equity engagement, and ﬁnance; b.Prioritize development and product offerings according to cost/beneﬁt analysis, responsiveness of vendors and customer demand. 7. CCA 3.0 agency tasks under any model The 3.0 consultant will implement the following duties: a.Procure Wholesale Power; b.Co-draft implementation Plan either alone or with Conventional CCA Consultant; c.Meet with City Council and Staff; d.Pursue funding from available ratepayer-funded programs such as Energy Efficiency program administration funds, and state or federal grant or other funding programs; e.Draft 3.0 elements of implementation plan and engagement of state energy and regulatory agencies; f.Direct call center, customer service and customer engagement - complaint resolution with Broker, Retailer or Utility, and communication of programs to consumers; g.Direct data collection and management: customer, regulatory, building permit databases, grid, utility rates for all customer classes; h.Direct Account Management and Modeling; billing for iDER, billing for conventional CCA, customized web account and marketing platform Local Power LLC68 i.Participate in member municipality planning; site evaluation, permitting j.Pursue ﬁnance - local cooperative lenders and small local bank lenders, regional project ﬁnance, work with Financial Advisor on ﬁnancing diverse iDER products and services k.Engage Labor - engagement of unions for job training, engagement of educational institutions to prepare jobs and existing local workforce training programs; l.Engage Electric Vehicles and Chargers; engagement of EV companies for two way ports, engagement of charger companies for scheduled EV sharing at multi-site locations, engagement of customers for programmed EV sharing at microgrid sites, EV co-ops and personally owned individual or business EV buyers; m.Engage local microgrid developers; n.Engage Natural Gas Aggregation (opt-in or -out based on state law); o.Engage Distributed Heat ; p.Engage Distributed Hot Water; q.Engage Thermal Energy Efficiency Programs/IP Thermostats. 8. Legal and ﬁnance a.Financial advice may be provided by bond counsel or a ﬁnancial advisor. b.Legal counsel may be provided by member municipal attorneys. c.Legal counsel is required for a variety of activities, including: i.Required CCA implementation plan; ii.Energy efficiency funds administration; iii.State regulatory agency engagement. d.Creditworthiness Local Power LLC69 i.Joint Powers Entity-run CCA. Depending on state law, some Joint Powers Entities (JPE) have revenue bond-issuing authority much the same as each member municipality possesses, except that, being a new agency with no ﬁnancial history, a JPE must establish a credit rating with a rating agency. Thus, JPE Green Bonds will require that a JPE set aside surplus revenues to establish a reserve at an adequate level to receive a sufficiently favorable bond rating from a rating service such as Fitch, Moody’s or Standard & Poors (S&P) to offer a sufficiently low interest rate on borrowing, and attract Green Bond buyers. ii.A key element of JPEs not ﬁnancially supported by the municipalities in which they are located, means that accessing capital for projects depends upon business models and “ﬁnanceability." While the assessment of the long-term power purchase agreements (PPAs) value from CCAs with limited histories can be challenging, ﬁnanciers are getting increasingly comfortable with discerning credit behind CCA business models which provide data, engage the ﬁnancing community, and obtain external credit ratings. Securing public credit ratings is one avenue, but banks and other ﬁnanciers can also establish “shadow ratings” for the larger CCAs. For unrated agencies, wishing to provide needed credit support on projects, extended contract timelines (e.g. 2022, 2023) allow the development of a little bit more operating history. Rating agencies have designed special criteria for rating CCAs to evaluate metrics and develop credit policies to align and further produce quarterly unaudited ﬁnancials that can be sent out to the ﬁnancing institutions to demonstrate progress. iii.Municipally-run CCA. Municipal credit ratings enable municipally-run CCAs to issue Green Bonds. In 2018 municipal credit ratings for Northampton was AAA, Amherst Aa2, and Pelham A2. e. Municipal-Customer Loan Finance. Green Bonds are a key resource for offering customer loans to all customers, including low income residents and small businesses, primarily because Green Bonds provide CCAs with considerable ﬂexibility, without excluding private or available state ﬁnancing when available on better terms. Green Bonds create a stable structure for a multi-year energy transition build-out plan. Green Bonds can be used to ﬁnance renewable energy generating units and other revenue producing elements of CCA. They can be supported by existing municipal assets and enterprises, such as a water and sewer system, municipal gas service, public ﬂeet infrastructure, or by new assets or enterprises such as renewable energy generating units or revenues from a contract with an energy supplier. Green Bonds and CCA are extremely synergistic. Together, they (a) provide the means to develop renewable energy and energy efficiency resources and the market to utilize and pay for those resources and (b) provide the CCA with a secure base of resources with which to serve its customers and, thus, avoid excessive dependence on a volatile energy market. Whether the bonds will qualify for tax-exempt status and other factors affecting their marketability are dependent on the structure of the transaction being ﬁnanced. Generally, in order to qualify for tax exemption, the facilities which are ﬁnanced must be owned by the JPE or municipality (or other governmental entity) or operated by the JPE or municipality (or other governmental entity) or by a nongovernmental entity on behalf of the JPE or municipality pursuant to a contract that meets certain requirements prescribed by the Internal Revenue Service. Even if not tax-exempt, Green Bonds could still be issued to ﬁnance facilities which further a CCA, albeit at a slightly higher interest cost. Without CCA, the renewable energy and energy efficiency projects would have to search for a market for the output. Without resources of Green Bonds, the CCA Local Power LLC70 program could ensure the conditions of developing local renewables and energy efficiency across the whole community. Without a secure base of resources, a CCA remains extremely dependent on the energy market to serve its customers, including a majority currently under-served by private ﬁnance. Apart from ensuring the timeliness and robustness of an energy transition buildout, the speciﬁcs of how Green Bonds are used in connection with CCA depends on what types of projects are to be ﬁnanced. Three of the threshold questions that must be addressed are •what assets or programs would best assist with the implementation of CCA •what revenue source will secure repayment of the Green Bonds •whether the Green Bonds are tax-exempt or taxable The ﬁrst two are somewhat related in that if the items ﬁnanced do not have an independent or sufficient revenue stream to support the bonds to be issued, a separate revenue stream for the Green Bonds must be identiﬁed. The question of tax exemption will turn generally on the speciﬁc facts relating to ownership and use of the ﬁnanced items. (i) Items ﬁnanced: A local buildout plan will contemplate a number of elements to be ﬁnanced. These include renewable energy generation, distributed generation utilizing photovoltaic technology and energy efficiency measures. This also includes the developmental costs such as preparation of solicitations/requests for proposals, environmental studies, and permitting, accounting and legal expenses, in addition to “hard-costs” of construction. (ii) Sources of repayment: CCA Green Bonds are “revenue bonds” which are to be secured by the revenues derived from fees and charges associated with the operation of an enterprise, including both automatically enrolled revenue and revenue from voluntary customer ﬁnancing agreements for shares, cooperatives and direct ownership. Otherwise, municipalities may issue revenue bonds based on an inter-agency agreement with a CCA and a loan agreement with a resident or business owner who is a CCA customer. In the long term, an established CCA with reserves and a credit rating may itself issue Green Bonds. Under CCA 3.0 municipal bonds are recommended based in the ﬁrst phase development of municipal government for shares program. Revenue bonds are commonly issued by state or local governmental entities and secured by the revenues of electricity or water enterprises or other revenue producing enterprises. The major point is that revenue bonds may not be secured by or payable from a municipality’s general funds. Rather, revenues from an operating enterprise must be the source of security or repayment. This includes the potential use of revenues produced by a facility to be built with proceeds of Green Bonds to secure and repay those bonds, but revenues from other revenue producing enterprises may also be used as security in lieu of or in connection with revenues from a Green Bond ﬁnanced facility. In order to constitute permitted “revenue bonds,” a municipality will need to identify a dedicated revenue source by which Green Bonds are to be secured and repaid, whether revenues of a new source or an existing source. As noted, a municipality can structure Green Bonds to be secured by the revenues from an existing revenue producing entity. Green Bonds can be secured by revenues from a new enterprise such as the CCA or facility such as a renewable energy source which has not yet commenced producing revenues. For example, a municipality may issue Green Bonds Local Power LLC71 for private or public sector ownership under voluntary agreements with a customer to pay a CCA rate premium to his/her CCA to the Green Bond loan account, as articulated in the 3.0 model. Either way, identifying the revenue source to repay the Green Bonds has the advantage of a logical nexus between the bonds’ purpose and source of repayment. A disadvantage is the need to borrow additional moneys to pay interest on Green Bonds during the construction period until such time as the facilities can produce revenues to pay the bonds. Such a structure also has “construction” or “completion” risk which may result in a slightly higher interest rate on the bonds. In addition, the revenue production of a new facility to be built is uncertain which may also affect the interest costs which are attainable. Securing the Green Bonds with the revenues of an existing revenue producing entity avoids the disadvantages discussed above. However, such a structure does “tie up” a revenue producing enterprise of a revenue producing agency, speciﬁcally likely covenants required with respect to the enterprise securing Green Bonds. Municipal investment and voluntary customer investment provides additional revenue above CCA opt-out enrolled energy sales volumes, supplementing any direct investment or Green Bond participation by municipal governments themselves, whether alone as large energy users, or in renewable shares facilities as co-owners and users. A potential “hybrid” structure is to use a combination of the foregoing structures. Under this alternative structure the Green Bonds could be secured by both a pledge of revenues from an existing enterprise and from any new enterprise. The pledge on the existing enterprise could be limited to the construction period during which the new facilities are not producing revenues or could be for the life of the Green Bonds. A variation of this alternative structure would be to create a single “enterprise” of the combined existing enterprise and the new facilities. Another possibility would be to secure Green Bonds with revenues available from a contract with an energy supplier providing CCA services. Such revenues could be structured to constitute revenues of the enterprise(s) which would be the security for the Green Bonds. For example, lease payments received from an energy supplier would constitute revenues that could be pledged as security. Ultimately, the projects the municipality desires to ﬁnance with Green Bonds will have a strong bearing on the security structure chosen. For example, if a signiﬁcant portion of the proceeds of Green Bonds will be used to acquire or implement non-revenue producing programs, the use of an existing revenue producing enterprise will be required. On the other hand, if a signiﬁcant portion of the proceeds are used to acquire revenue producing facilities, such facilities or related activities could serve as the security and source of repayment for the Green Bonds. In any event, a bond rating will be required for Green Bonds secured by new or existing enterprises that do not already have a rating. The credit quality analysis conducted by the rating agency will, among other things, focus on the “coverage” provided by the pledged revenues. Depending on conditions, the rating agencies prefer pledged revenues which are 125% or more of the scheduled debt service on the bonds. (iii) Tax Exemption: Municipalities have a wide degree of discretion regarding the use of Green Bond proceeds broadly for public and/or private sector renewable energy and conservation projects, including customer-owned DER such as energy efficiency, onsite Local Power LLC72 renewable storage, HVAC, and hot water. However, the particular programs and users of facilities ﬁnanced with the proceeds of Green Bonds will impact whether the interest on such bonds will be tax-exempt under the provisions of the IRS. In general, the “use” of facilities or items ﬁnanced with the proceeds of Green Bonds by an entity other than a state or local government could result in such bonds constituting “private activity bonds.” In that case, under Section 141 of the Code, the interest is not tax-exempt. Such use is often referred to as “private use”. Private use is present where there is any type of privately held “legal entitlements” with respect to the ﬁnanced facility. Nongovernmental ownership constitutes private use as does long term contracts regarding the output to be produced by the facility. For example, a long term contract with a nongovernmental entity in which that entity agrees to purchase the energy output of a facility will generally constitute private use. In addition, contractual arrangements with nongovernmental entities regarding the operations and maintenance of a ﬁnanced facility will constitute private use, unless such contractual arrangement is consistent with certain contract parameters approved by the IRS.Bonds constitute private activity bonds if they meet either of the following tests: •Both the private business use test (“Private Use Test”) AND the private security or payment test (“Private Payment Test” and together with the Private Use Test, the “Private Business Tests”); or •The private loan ﬁnancing test “(“Private Loan Test”). A bond issue meets the Private Use Test if more than 10 percent of the proceeds of the issue are to be used for any private business use. A bond issue meets the Private payment Test if the payment of the Implementation Plan of, or the interest on, more than 10 percent of the proceeds of such issue is (under the terms of such issue or any underlying arrangement) directly or indirectly -- •Secured by any interest in property used or to be used for a private business use, or payments in respect of such property, or •To be derived from payments (whether or not to the issuer) in respect of property, or borrowed money, used or to be used for a private business use. For purposes of these tests, the term “private business use” means use (directly or indirectly) in a trade or business carried on by any person other than a governmental unit. Use as a member of the general public shall not be taken into account. A bond issue meets the Private Loan Test if the amount of the proceeds of the issue which are to be used (directly or indirectly) to make or ﬁnance loans to persons other than governmental units exceeds the lesser of 5 percent of such proceeds, or $5,000,000. It should be noted that loans of the proceeds of Green Bonds to a non-governmental person or entity will generally cause the Green Bonds to fail to qualify for tax exemption. While these ﬁnancing options will thus have a higher interest rate, their availability to all customers will guarantee eligibility irrespective of credit rating.  Therefore, the facts regarding the ownership and operational structure of the ﬁnanced facility will determine whether the bonds may be issued as taxable or tax-exempt. If a municipality (or agency of a municipality with its own bond rating) owns and operates the facility, and if the power is delivered to customers of the municipality, then the facility will probably qualify for tax-exempt ﬁnancing. It will also be possible to qualify for tax-exemption if the municipality contracts the management of that facility to a private party. On the other hand, if an energy supplier or other nongovernmental entity Local Power LLC73 owns the ﬁnanced facility or operates it pursuant to an arrangement that does not meet IRS requirements, it will probably not qualify for tax-exempt ﬁnancing. Green Bond proceeds can be used to fund energy conservation programs. However, to the extent such purpose is accomplished through a loan program wherein residential and business customers can make use of low interest loans in a CAA program to make energy conservation and efficiency improvements, the loans of bond proceeds will cause the program to not qualify for tax exempt ﬁnancing. Grants of bond proceeds could be made to individuals and businesses for conservation and other expenditures so long as an adequate project revenue stream is identiﬁed to secure and pay the bonds. The purpose of using Green Bonds is not merely to save on interest, but to guarantee a universal offering of shares to all customers, irrespective of their credit rating. The advantage of shared renewables facilities ﬁnance on municipal and public institutional buildings is to reduce costs through a lower interest rate for municipally owned or tax exempt projects, and to avoid dependence on continued availability of outside sources for the full term of a community energy transition, speciﬁcally to ensure that ﬁnancing is consistently made available to all customers throughout the multi-year term of energy transition. Green Bonds are not tax-exempt where customers take title to and legally own installed systems, however that does not in and of itself make such a program/products nonviable. Taxable rates on such Green Bonds could potentially still be substantially less that the rate of interest otherwise available on loans to the majority of residential customers who are low, ﬁxed and middle income and/or small businesses. Finally, there are a number of ways Green Bonds could be used to ﬁnance renewable energyfacilities. This can be accomplished either in a structure wherein the municipality (or other local government) undertakes acquisition, construction, ownership and management of the facilities or through structures wherein an energy supplier undertakes some or all of the activities. As noted, the tax-exempt status of Green Bonds varies depending on the structure. Structures wherein an energy supplier takes on one or more of the roles present issues under the Private Business Tests discussed above. Any lease or other similar arrangement with an energy supplier would likely result in the Green Bonds being categorized as taxable “private activity bonds.” Again, such a result would not prohibit the structure but rather would result in a higher cost for the program. 9. Staff funding from startup to full scale Initial startup staff require an executive with a data assistant. An operational CCA will require one engineer, and CCA buildout will require a project manager. Full scale will add three or more project managers, as well as legal counsel. 10. 3.0 administrative funding sources Funding sources for the 3.0 Office and Consultant will start small and grow according to the following estimated schedule of tasks: a.Funding should be provided as a loan from general funds of one or more participating member municipalities or local lender to the CCA; Local Power LLC74 b.The timeline for funding should be two years for implementation, and cover policy and regulatory staff and consultants; c.Funding should cover two years for ﬁnancial and legal advisor; d.The administrative adder at commencement of services can support two or more additional full time staff members; e.A percentage of annual surplus revenue to grow into a full time staff of ten or twenty depending on size. 11. Uses of CCA adder CCA bill adders have been authorized for multiple purposes, and no regulatory ceiling has been established, leaving only limits of remaining competitive electricity bills. Adders must be authorized by state regulatory commissions, but are otherwise available to fund a wide variety of activities: a.CCA Program Administration; b.Customer equity share credits; c.Operational sharing (EVs, microgrids, onsite renewables, heat); d.Ownership/possession (energy efficiency measures, individual customer ownership. 12. Administration of ratepayer energy efficiency surcharge payment funds (MA, CA only) Energy efficiency surcharge administration funds represent ten times the funding volume of any other source: a.Cape Light Compact collects more than $40M per year in energy efficiency funds revenue, resulting in a highly innovative, model program. b.Marin Clean Energy has control of a $6-9M per year EE funds revenue, lesser compared to Cape Light Compact considering CLC has a smaller Cape population than that of the ﬁve Bay Area counties MCE covers. c.Surcharge payment funds are a strategic path to funding CCA 3.0 staff. d.To secure tens of millions of dollars per year in existing ratepayer funds dedicated to local installation into the future, CCA must provide funding of legal counsel and an energy engineer for two years of application to state agencies before funding arrives. 13. Ways to avoid energy efficiency funding requirement constraints a.California i.CCAs can “elect” to administer a small portion of Public Goods Charge (PGC) funds collected in their jurisdictions or “apply” to administer them. Functionally, to elect means that a small portion of those funds passes through to the CCA. To apply means potentially claiming a much larger amount of funding, but requires a cost-tested fully developed EE plan to be ﬁled and approved by the CPUC. b. Massachusetts i.Coordinated, co-funded applications to DPU for funding with a common legal and engineering team ii.CCA administrator participation in State Energy Advisory Board c.Everywhere else Local Power LLC75 i.EE operational adder or rate Local Power LLC76 J. 3.0 CCA management and internal capacity 1. Going wholesale: CCAs as certiﬁed retail certiﬁed suppliers/Load Serving Entities The success of California’s 2.0 model in delivering major investments in local and in-state generation lay primarily in developing the required internal public staff, knowledge and planning capacity to drive innovative DER technologies. CCA programs that depend upon outsourced procurement services do not learn or develop their own capacity. Suffering limited knowledge and control over their portfolio strategy and energy services, outsourced programs simply have not achieved anything close to the green investment and decarbonization results by CCAs that perform program functions in-house. 2. Advantages of CCA accessing wholesale supply directly There is an old saying that you will not get different results from doing the same thing. Market design is the key to market transformation, not a mere detail that can be left alone. While outsourcing has been successful in propagating hundreds of CCA programs relatively effortlessly during the early development phase of CCA, this method has delivered theoretical “incentives” for investment in renewables, but very little actual investment. Instead, CCAs in Massachusetts, Ohio and Illinois have generally remained ﬁxed within a limited paradigm of system power with Renewable Energy Credit mitigation, and are only now awakening to new opportunities years after the truly exponential leaps have been made in California. There a new method was devised, based on the lessons learned 20 years ago: CCA 2.0. The key change under 2.0 was that CCA outsourcing to brokers and retailers was eliminated. By hiring staff to launch their programs and learning as organizations to break down and manage energy program components into integrated and interoperable parts, California CCAs have proven able to accelerate the pace of energy localization, investment and decarbonization at an exponentially higher level in just a few years than CCAs with brokers and retailers have done in a quarter century. CCAs enjoy the following advantages by bypassing the energy retailer as well as the broker, and going straight to wholesale suppliers: a.Gaining internal staff knowledge and capacity to drive program development, and conveying this effectively to decision-makers for necessary approvals; b.Gaining control of communications with customers, a key element in gaining their trust for engagement in DER investment and services; c.Capturing direct savings from avoided demand in the form of avoided peaking and reduced capacity costs; d.Ability to target and use iDERs to reduce aggregate cost of service, and share the savings between participating customers and co-ops and integrated DER (iDER) users; e.Using all of these advantages to achieve a lower cost of service for much greener programs, resulting in far higher greenhouse gas reductions. From 2011 to 2018, California’s CCAs directly procured 24 terawatt-hours of RPS-eligible electricity, nearly half of which (11 TWh) is “voluntary,” or in excess of California RPS compliance requirements. Local Power LLC77 Communities are very unlikely to achieve the levels of decarbonization and local green investment that is being achieved by California’s CCA 2.0 model if they continue to employ California’s exponential leap in green investment is the result of CCAs planning and negotiating directly with renewable generators and renewable developers, rather than following the 1.0 model of procuring ﬁnancial products from retailers and REC marketers. Energy retailers, which purchase wholesale supply and sell it to the end user, provide the following core functions (and complexity level) for CCA programs: a.Provide credit/collateral - high complexity b.Procure wholesale power - high complexity c.Supply electricity to end users - medium complexity d.Meet grid operator (ISO) requirements for load proﬁling and delivery - high complexity e.Process customer enrollments - high complexity f.Send opt-out notice and manage replies - high complexity g.Utility data exchanges (e.g. Electronic Business Transactions, Meter Data Management System,) and CCA customer data management (in most cases) - high complexity Wholesale supply opens up a whole new universe to CCAs. By going directly to wholesale supply, CCAs have a choice of physical suppliers rather than the generic “system power,” that all CCAs otherwise receive. System power is mitigated by varying qualities of RECs, while a typical California CCA has not one but dozens of suppliers, and can choose which to sign into longer-term contracts (such as new renewable facilities they wish to develop), and which to limit to shorter-terms (such as conventional generators). Whereas CCA 1.0 governing boards typically learn little from the process, CCA 2.0 and 3.0 programs are hands-on with a steep learning curve for staff and decision-makers. CCAs don’t just shop for the cheapest power they can ﬁnd at undisclosed locations, mitigated by credits to “green” them: they tailor portfolios of speciﬁc renewable facilities, based on generation type, location and community impacts. The 19 micro-agencies serving the 10 million residents and businesses of 161 California municipalities today employ mission-driven staff and development- focused consultants to analyze data, implement, plan and manage scalable projects. For this reason, the transition to new local renewable resources can be undertaken by CCA governing boards in an accelerated manner, through an informed and diligent integrated process. The main ingredient to this transformation is a new level of internal administrative know-how to directly manage both grid power supply contracts and local DER projects/ products under a single plan. By taking aggregation plans and other broker functions in house, and negotiating directly with wholesale suppliers, California CCAs gained the ability to capture savings from reduced grid power (such as the “load reform” strategies described in this report) that are otherwise lost to the retailer under conventional retail supply contracts “Going wholesale” open up strategic opportunities to recapture savings from DER-reduced grid load that are otherwise taken by energy retailers, making higher levels of green power investment possible while maintaining competitive rates. Thus, the horizon of economically feasible greenhouse gas reductions is vastly expanded. 3. Disadvantages/risks of becoming a retail supplier in a “heavy wholesale” approach California’s model creates something closer to a wireless utility than a community-wide aggregate purchasing program. This “heavy wholesale” approach involves a greater degree of commitment from political decision-makers to create such an agency, which can be a disadvantage for winning their approval. A “heavy wholesale” approach requires several steps. Local Power LLC78 •First, CCAs that elect to perform the function of a retail supplier, procuring electricity directly from a wholesaler, must provide substantial funding for numerous staff involved in energy procurement. •Second, the need to support 30-50 staff performing virtually all the functions of a utility except transmission, distribution and customer billing, caused most California CCAs to form large county-wide aggregations to achieve an adequate scale of revenue to cover administrative costs. •Third, the resulting increase in CCA agency scale can present potential obstacles for CCA DER deployment, because regional agencies tend to favor development of larger, centralized, agency-owned renewable energy facilities, a disadvantage in engaging customer investment of members of the community in smaller, onsite DER technologies, a key goal of CCA 3.0. •A ﬁnal challenge of becoming a certiﬁed supplier or Load Serving Entity is the ﬁnancial requirement for participating in wholesale markets. California CCAs that enjoy a fully integrated procurement enterprise by purchasing energy directly from wholesale suppliers, must provide their own credit and collateral to provide security on structured pricing commitments from wholesalers: a role otherwise performed by the retailer. While they are committed but not spent, this process requires a threshold level of political support by local leaders, often working with limited funds, to win the votes necessary for approval. 4. Legislative/regulatory/utility tule/market changes required for CCAs to become certiﬁed retail suppliers. There are no statutory prohibitions against CCAs becoming retail suppliers or Load Serving Entities within extant CCA laws. While it is possible for state regulators to raise issues, there are no known legislative or regulatory changes required for a CCA to elect this method. 5. Compromise: a “light wholesale” approach Apart from the choice between these options, prevailing market practices present a third option for large energy users that CCAs could also use, namely to retain an already existing certiﬁed retail supplier to provide a wholesale-to-retail energy service. This approach would be an open-book procurement method in which the CCA administrators/managers are fully stewarding energy procurement on a subscription/services basis. In the “light wholesale” approach the CCAs maintain a smaller core staff and contract with ﬁrms to transparently access the wholesale market without actually becoming a certiﬁed retailer. This would involve selecting among ﬁrms that provide this service to municipal utilities, large commercial and institutional energy buyers, as well as energy brokers and retailers. Under this compromise approach, grid operator (Independent System Operator, or ISO) scheduling, Federal Energy Regulatory Commission (FERC) and U.S. Energy Information Administration (EIA) reporting, billing, settlements, cost allocation, reporting for load and generation, peak load forecasting and renewable facilities integration would be undertaken by staff through the same entities that advise municipal utilities, brokers, energy retailers and generators. Local Power LLC79 While retail electric suppliers typically buy power from the wholesale market and then sell it with a premium to the end-use customer, ﬁrms are available to allow CCAs and other large consumers to purchase directly from the wholesale power markets. Wholesale electricity management services provide more direct access to the wholesale electric markets, essentially enabling them to act as their own electric supplier and capture the savings of doing so for ratepayers and reinvestment rather than to the retailer. This approach presents a less disadvantageous method of gaining the control and knowledge that comes with becoming a retailer, though it will require CCA member municipalities to pay a fee to the wholesale services company to provide the credit/collateral and take title to the power. For example, one company queried gave an estimated buyer’s fee for contracts in excess of $100,000, at 0.75 percent, or about one half (1/2) of one mil per kilowatt hour. This method presents a “lighter” load for the CCA by engaging a qualiﬁed market participant to provide the collateral to procure wholesale power without having to fund a 30-50 employee micro-agency. This method, which is a not uncommon practice among large energy buyers in Massachusetts, (e.g. Harvard University) will enable a CCA to maintain smaller staffing budgets, while empowering those staff to achieve the level of control and transparency in grid power procurement, in order to augment the kind of scaled deployments of DER in the early years of a program equivalent to those in California, as compared to a conventional retail supplier. How “light wholesale” works Because CCA 3.0 (and 2.0) is less focused on obtaining short-term rate reductions, and more on maintaining competitive rates while delivering savings through renewable investment- and energy efficiency-based customer and aggregate bill reductions), a lower-risk approach to procurement is more feasible, as outlined below. An “Index Plus Block” approach to power procurement contracting, and/or pass-through charge provisions on capacity and RECs, are bid speciﬁcations that would apply in a wholesale CCA 3.0 program. It would do so by enabling the CCA and its customers (including reduced cost of service and accompanying rates and bills from avoided load), to beneﬁt starting day one. The beneﬁt would come from reduced ongoing supply-side energy, and capacity requirements replaced by local DER, whether in microgrids, VPPs, or DERMs as well as individual customer-owned demand response, energy storage and renewable systems. To hedge against escalations in the price of the electricity supply offered to 3.0 program participants, a "heavy wholesale” approach would include an ISO sub-account structure to allow the CCA to buy directly from the wholesale market and hedge against escalations. Competitive block purchases can signiﬁcantly reduce the overall $/kWh rate in a “light wholesale” approach. Competitive block purchases would employ the method of ﬁxing blocks of the aggregated load at various times based on wholesale market opportunities, and to ﬂoat a small portion of the aggregated purchases to monetize load reductions in the day-ahead market. To the extent possible, this approach will use real-time analytics from meters and energy management systems to limit the risk of $/kWh increases. Whereas “collars,” or volumetric thresholds, are expensive ways for CCAs to hedge the risk of price increases, this approach will minimize the per kilowatt hour price ($/kWh) of electricity through a targeted program. This program is based upon a cost of service analysis of customer-speciﬁc end-use meter data, in order to achieve aggregate load reform in the Local Power LLC80 seasonal aggregate load duration curve, customer grid load reduction at the building level, and overall average energy demand reduction. This is accomplished through an aggressive regime of energy efficiency measures based upon energy efficiency funds administration, as well as various forms of energy efficiency ﬁnance and DER ﬁnance. Grid power procurement-speciﬁc strategies such as the ones described should not be made in a vacuum without load data collection and basic analysis as well as consideration of basic CCA program design principles. A low-risk approach to power procurement is advisable. In procuring renewable energy for a CCA’s “default portfolio,” procurement will focus on long- term contracts with local (within-CCA) projects, ensuring stable premiums and promoting local renewable energy projects. These contracts are generally unit-contingent. The CCA’s approach will be to sign contracts projected (as in the California CCA market) to generate more RECs than is required for the CCA program under state law, with the knowledge that the town or city can retire RECs not needed for the program to other entities. 6. “Transition” strategy to either wholesale model by in-sourcing broker functions California’s leap into renewable investment resulted in part from accessing wholesale markets, but also from funding and engaging staff rather than hiring brokers to manage procurement. CCAs that wish to launch using a certiﬁed retail supplier but change over to one of the two wholesale CCA service models above may employ a “transitional” launch strategy. The transition strategy is one in which broker functions are performed in-house by the CCA Director, who negotiates the retail supply agreement, hires and contracts for expertise to implement 3.0, selects the wholesale strategy, and undertakes measures to launch at the expiration of the initial retail supply agreement. A good example of this approach is Massachusetts’ ﬁrst CCA program, the Cape Light Compact, which is served by retail suppliers but not brokers. By its own admission, itgained a number of advantages from dispensing with an energy broker, and in-sourcing broker functions and negotiating directly with retailers. a. Broker roles In Massachusetts, the broker’s responsibilities typically include the following tasks and assessment of complexity: i.Develop a CCA Implementation/Aggregation Plan - medium complexity ii.Secure necessary regulatory approvals - medium complexity iii.Manage negotiation with retail energy suppliers - higher complexity iv.Conduct customer education - low complexity v.Oversee supplier performance - low complexity vi.Data management (in some cases) - higher complexity b. CCA insourcing changes Under a Massachusetts direct retail 3.0 model, insourcing would involve what have been broker functions and optionally, some functions that retail suppliers typically handle, although this is not necessarily needed: i.Broker roles listed above replaced by CCA staff ii.Broker fee adder remains in the CCA budget Local Power LLC81 iii.Data management and billing under CCA staff iv.Portfolio/DER investment strategy under CCA staff v.Direct negotiations with retailer under CCA staff vi.Retailer provides collateral and captures capacity savings vii.Implementation plan ﬁling, state engagement under CCA staff viii.Renewable energy development under CCA staff ix.Energy efficiency program administration under CCA staff Grid power procurement and distributed energy resource development and operation need to be an integrated single process, not a separate outsourced function. Apart from the governance beneﬁts and avoided cost of brokers fees and retail capture of margins, there is the critical operational business model beneﬁt from developing a staff capacity to manage and plan, identify, contact, offer, and enroll customers in on- site, block, neighborhood, and in-town renewables. Customer investment depends on the use of rate design and operational account integration, not siloing, to facilitate a CCA-based loan facility between a CCA and its member municipality. Speciﬁcally, soloing of data and procurement decisions between DERs and grid supply is not possible for the following reasons: •Operational integration is key to this design. This is not a smattering of solar panels but a real-time integrated resource whose value to wholesale level procurement is to monetize a reformed aggregated load and capacity requirement, the key actions for rapid and sustained physical decarbonization, rather than incentivizing. •Microgrids, virtual power plants, and Distributed Energy Resource Management Systems (DERMS) generally involve operational integration of behind-the-meter resources with conventional grid power procurement. A single database is employed to monitor generation, storage levels, and dispatch. Moreover, customer usage data bridging grid demand and locational conditions is essential for developing distributed energy resources, particularly calculating and presenting a CCA rate packages based on forecasted loan repayments. To each and every customer, therefore, a functional separation of grid power procurement from DER development and operation is quite unworkable. •Apart from hobbling targeting and acquisition, billing systems serving both power bills and loan payments must be employed by trusted local agencies. The integrated database is the enterprise operating system with a protocol for loan accounts by municipal governments. This describes a database Internet Protocol backbone using enterprise software. It is the central, internal planning and management resource to establish under CCA storage and use to coordinate and perform back office functions of the program. Municipal loan systems will be relatively simple and a subset of existing utility charges or water, sewer, garbage, property taxes, as available, with terms populated by a loan agreement under an Inter-Municipal Agreement or joint Powers Entity Charter. The administrator will be managing a diversity of activities among many separate companies according to local policy goals and targets. An integrated business model with an equally integrated administrative system are required for CCAs to achieve the kinds of leaps in local development that CCA 2.0 in California produced in centralized renewable development: an essential infrastructure of CCA 3.0 to shift ﬁrmly from the a ﬁnancialized model of 1.0 (based on outsourced ﬁnancial services and power contracts, not local redevelopment activities or customer investment) to an Local Power LLC82 interoperable distributed renewable power, heat, and transportation model, which will target and coordinate on-site generated energy and storage. An integrated business model (cost model and ﬁnancial model resulting in a proﬁts and loss sheet) is imperative. Under the CCA 3.0 model, the 30 to 50 employees of CCA 2.0 in California are not required, but the outsourced zero to two staff model of CCA 1.0 through outsourcing is untenable. CCA 3.0 occupies the mid range requirement of 8 to 20 staff, by focusing not on ﬁnancing, not ﬁnancialization, and creating and administering local customer products and projects, not building large centralized renewable projects. In terms of imagining what this looks like, planning, establishing procedures and contracts, engaging in governance for guidance, and managing contractors for a dozen or more parallel products and redevelopment project silos are the main activity of this micro- agency’s employees and consultants. Apart from data, communication, and power procurement, staff resources are focused on managing a speciﬁc community energy transition process. Key to this model is the member municipality side, with a simpler program design limited to two counterparties: (1) the resident or business customer, for loans; and (2) lenders and bond buyers.c. Advantages of in-sourcing the broker role i. Elected officials typically lack technical energy knowledge: a successful, impactful 3.0 buildout beneﬁts from from having an empowered locally-based public servant reporting and making recommendations to the CCA governing board, rather than a year-to-year contractor, who is otherwise the only informed advisor to elected officials. ii.No ongoing broker fee: as the rate increment otherwise paid indeﬁnitely to a broker funds staff, CCA startups will enjoy a needed increment of revenue upon which to build capacity, and develop programs that will provide additional sources of revenue to further expand programs. iii.Energy democracy: CCA 3.0 depends speciﬁcally upon customer and citizen engagement, which outsourcing serves poorly and insourcing speciﬁcally empowers. d. Disadvantages of in-sourcing broker functions i.If start-up commences without a broker, it creates the need for startup funding to cover staff and consultant expenses during the ﬁrst year, before customers are enrolled and monthly revenues begin to ﬂow. As mentioned elsewhere, this may be provided by a loan to the CCA, recoverable within the ﬁrst few years of the program. Moreover, this inconvenience is counterbalanced by energy democracy and governance beneﬁts of committing funds to the program during the formation period, as discussed elsewhere in this report, when decision-makers, member of the community, and the press are focused on policy decisions. 7. 3.0 technical lead qualiﬁcations CCA 3.0 agencies depend upon interdisciplinary policy/CCA speciﬁc/DER market/public education leadership and highly focused DER-only support staff to implement programs: not utility experts, energy brokers, traders, or merchant generators. The boss is focused on DER work done primarily by a consultant, government planning work, and lastly, dealing with the retailer, with back office functions handled by a dedicated customer service department run by Local Power LLC83 the CCA manager and staff.  Outside California, CCA 1.0 outsourcing has been the rule, with brokers setting up programs in return for short contracts, collecting an increment on the energy sold. The Cape Light Compact (NY), Southeast Ohio Public Energy Council (OH), Westchester Power (NY), Sustainable New Jersey (NY) are examples of insourcing, and are not coincidentally some of the more 3.0- oriented CCAs in their respective states. Insourcing does not mean that CCAs don’t employ consultants, but rather that they serve program development functions for, rather than dominate, program management. In contrast to a broker, a CCA 3.0 consultant is principal of a technical project to set up a mini-agency and training CCA-hired staff as program elements are established. As launch activities become operational, staff are trained by the consultant in the management of established functions, and take over responsibility for those functions. Consultant resources are thus focused on designing and implementing innovative suites of 3.0 components, including setting up a customer engagement and account management platform, as well as a data collection, management and billing system. A good CCA manager will be capable of negotiating supply with retailers and wholesalers, but this will be the simpler part of the job, with some experience or familiarity with many facets of 3.0 necessary for a robust and successful launch of CCA 3.0. The managers behind 3.0 are generalists who know enough to enlist the help of competent experts. A major responsibility of the CCA manager will be to hire staff specializing and focusing on implementing groupings of these skill sets, and having enough of a grip on the nature of iDER integration coordination, under a well-baked program design, to be capable of evaluating and selecting the right skill sets, a multi-tasker who can cover several different bases, power/gas, data/DER, and municipal agency partner agency coordination, while also launching the program under state regulatory protocols centered around an implementation plan, in parallel. The ﬁrst year is ramping up DER contractors to start installing, soliciting information, qualiﬁcations and proposals, and perfecting customer engagement platforms. CCA programs should seek an interdisciplinary and program design/setup-oriented chief. While a chief may not directly have experience with every skill set, they must know enough of each of the following qualiﬁcations to be able to build the team that does: a.Generic familiarity with CCA rules; b.Generic familiarity with CCA supply cost models; c.Generic familiarity with local government processes, governance, and protocols at public meetings; d.Generic experience in state regulatory commissions and legislatures; e.Experience in CCA rate design, business model drafting, ﬁnancial models and Proﬁt- and-Loss sheets; f.Experience with RFPs and negotiation with energy suppliers; g.Experience analyzing performance, risks and costs of iDER technology types; h.Experience in customer bill analysis and cost forecasting, tariff analysis, load analysis wholesale cost of service forecasting; i.Municipal, commercial RE/EE ﬁnance and familiarity with conventional iDER loan and co-operative structures; j.Experience collaborating with municipal water agencies and public works departments k.Direct mail, materials design, graphics and web design experience; l.Site acquisition, type approval and logistics; m.Experience with municipal planning, municipal permitting; n.Experience with state regulatory, policy and funding agencies; Local Power LLC84 o.Knowledge of municipal operations, procedural norms, and forms of intergovernmental cooperation; p.Experience guiding municipal public meeting processes and community educational event organization; q.Experience in energy efficiency program design and funding; r.Knowledge of issues related to microgrid design, permitting and transacting; s.Experience collecting, managing, and analyzing utility customer billing data, aggregate load duration curve data, and peaking and capacity factor data, as well as available municipal list and GIS databases, and experience working with database engineers to assimilate and geocode different formats, nomenclatures and protocols. Local Power LLC85 K. 3.0 Next Steps These vary slightly by state, but the following is an approach to 3.0 outside California’s unique wholesale structure. Full wholesale 3.0 will add steps, again according to retail energy rules, which differ accordingly in both nomenclature and protocol: 1. Local next steps a.Launch planning i. Set a date for approving an implementation plan, choose staff point person; ii. Schedule a monthly hearing schedule for two years, and request CCA member municipality agency heads to participate as expert witnesses at regular meetings; iii. Governing board adopt a letter requesting partnership with member municipalities, and solemnized in a letter of intent, request planning director to write a memo outlining required permits with estimated months from permit application submission to permit received, including the local distribution company’s anticipated interconnect timeline on non-exporting systems; iv. Request bond counsel from legal counsel, to provide a letter describing and attaching the latest franchise agreements with the distribution utility; to initiate legal measures to request aggregate date on the CCA ﬁrst, followed by conﬁdential data for billing purposes; v. Create schedule for requested CCA member city departments to provide any requested databases or analysis of databases to the designated CCA manager; vi. Authorize creation of a dedicated, secure computer system for the program, and schedule authorization to CCA member municipality telecommunications staff to assist with microgrid design, permit applications, and public presentations; vii. Authorize CCA manager to license a DER billing system, and create an opt-in account structure for voluntary, active enrollment; and direct the water and/or sewer department or otherwise named agency to provide monthly billing insert to be provided by the agency to the CCA at no cost except electronic transfer to one side of one page of each bill; viii. Establish schedule for planning departments in member municipalities to collaborate on a buildout permit schedule. ix. Launch funding: propose a budget and management approach to be taken from among those identiﬁed in this report, for example the allocation of funds for one Full- Time Equivalent staff person, dividable between four staff, for the ﬁrst year, added by another (two staff) to help data, analysis, program preparation, citizen/customer education and opt-out enrollment. Authorize a point person to evaluate and recommend existing employees to devote their divided time to the chief CCA manager, interview and recommend a consultant to the designated CCA municipal government, at public hearings. Formalize a decision-making process and participants. Authorize staff to evaluate and recommend a lead consultant for approval. b.General funds Decide whether to invest general funds in startup costs and/or direct investment on municipal properties to be employed as equity DER share “colonies”. c.Loan Decide whether to commit to repay general funds disbursement, as required, within a ten-year time frame. d.Intermunicipal agreement Establish a one year schedule to invite municipal governments to join the process of doing all these things and making all the decisions that the CCA 3.0 has to make. Local Power LLC86 2. State next steps a.CCA association The only CCA association is in California. While the only model, it is not ideal for 3.0 approach, because it is dominated by long standing opponents of localization. It is important for the association to be focused on DERs if they are to navigate utility politics effectively. Otherwise like CalCCA they are committed to RECs and nonlocal resources, and will ﬁght those ﬁghts instead. b.Jointly fund lobbying of regulators, legislators, governor Establish a fund and ask other CCAs to subscribe to the fund. Hire independent staff not from CCAs or member municipalities, and let them run the association, enrolling residents and local business owners, followed by NGOs and activist volunteers, to set the agenda and provide background context for focusing on and coordinating on key campaigns; c.Opt in natural gas Hold hearing on high level initial “yes or no” to include fuel switching of hot water and heat. If no, hold another hearing on the consequences of excluding hot water and heat in terms of impactfulness, then a third meeting to make a ﬁnal decision. If no, schedule an update with option to proceed in another year; d.Remove or invent work-arounds to identiﬁed barriers to microgrids Set up pilot project in municipal buildings, and seek private sector partners to go through the local government and utility permitting processes in parallel; e.Identify and apply for available RE and DER funding CCA board should authorize CCA manager to apply for funding from state governments, foundations, individual donors or fundraising campaign. Local Power LLC87 L. CCA 4.0: future expansion and integration In many ways, CCA 3.0 is the ﬁnal and complete version, to the extent that it successfully shifts to a behind-meter resource strategy and signiﬁcantly enrolls customers in energy equity sharing and cooperative enterprises. However, future CCAs will achieve full scaled operational integration of microgrids to allow ﬂexible grid connect and disconnect, creating a new in-building, on-block and perhaps some day city- and CCA-level resilience for energy critical buildings in weather emergencies. CCAs will expand equity participation models to an opt-out basis, creating equity for every customer regardless of customer engagement level. Finally, future CCAs will discover their power to improve a variety of needed services not provided by monopolies or retail market providers: 1. Energy islands Energy islands are CCAs that ﬂoat on DERs and reduce the grid to a backup service function. A full integration of islands is implementable today, and microgrids, VPPs and DERMS software and hardware speciﬁcations should include islanding functionality from day one, with hardware purchase delayed until approval is received, to avoid obsolescence. 2 . Automatic all-in equity Future CCAs will offer a universal opt-out enrollment of aggregate DER equity. Under this approach, the CCA program becomes one giant customer negawatt- hour equity bank, conferring equity to all customers based on monthly bill payments and voluntary sharing and cooperative projects. 3. Community Choice Everything In many ways, CCA is really inventing a new modus operandi for local governments in their relationship to citizens, in which they become active organizers of local solutions and agents of citizen equity. As they are moving beyond traditional electricity plug loads to serve thermal and transportation consumers, CCAs can go beyond this to organize other needed community services and beneﬁts, such as improved health insurance and medical treatment, scaling up Community Supported Agricultural-type programs to organize competitive food markets and public procurement from local organic farms to preserve regional agricultural resources and prevent sprawl. With many of America’s Main Streets now long dead in the wake of strip malls and Amazon.com, municipalities will ﬁnd ways to navigate increasingly centralized, globalized markets in ways that serve local needs better, reduce dependency on imported resources, and support local business participation in those initiatives. Given the deconstructed state of the U.S. domestic economy, the potential list of demand-aggregated projects is quite extensive, from initiatives to replacing disappearing the nation’s local newspapers television stations, to technology initiatives stimulating local manufacturing, assembly and value added businesses. Rather than just follow the traditional tax and spend approach to local governance, CCAs can engage with the people as citizens and consumers to help organize local economic cooperation a spirit of mutual self-interest. Local Power LLC88 Appendix A: case studies and stories 1. East Bay Community Energy, California (https://ebce.org/) Launched in 2018, one of California’s largest CCAs serving all of Alameda County, was initiated by local climate justice activists, and was formed with robust public input, citizen advocacy, volunteer committees assisting with policy and technical research, active participation in selecting consultants for potential studies, and continuing high levels of participation after the launch of services, including criticism of inadequate measures. Because of a fundamental commitment to non-incremental, transformational policy goals that remain consistent with social equity, EBCE has avoided is a typical pattern of deﬂation among activists, when staff take over. Guided in part by veterans of the CCA wars in San Francisco over the preceding decade, the EBCE activists anticipated failures and made sure that the CCA formation process stayed on the front-page of local newspapers. They were major factor in early customer engagement, educating community groups and the public about the very big deal that is EBCE. Today, a formal Citizens Advisory Committee, and strong ongoing activist participation at a variety of governing board, committee and community meetings ensures that ECBE is something of a “permanent campaign.” The relationship between pushing the goals of the public and the practical realities that staff encounter have a much healthier balance than elsewhere. T EBCE’s CEO, tech-savvy and focused on a disruption model, has the greatest focus on data and DER integration, focusing resources on analytics, and planning for microgrids. On how to confer equity to customers, he is less certain, but no doubt he and the volunteers will work something out, because they will have a lot to work with. 2. Monterey Bay Community Power, California (https://www.mbcommunitypower.org/) Unlike other most other CCAs in California that have a board of one member per participating municipality (e.g. Sonoma Clean Power’s board has over 20 members), MBCP has a Policy Board of elected officials, limited to 15 members with a provision that a city or county with a population of over 50,000 has a permanent seat, while those under 50k have to share a representative on a rotating basis. This board sets the rates and the budget. They hire and manage the CEO, and set strategic goals. The board meets four times a year. A second Operations Board is made up of city managers and county administrators. They report to their home government. They meet once a month and implement the budget and the strategic vision of the Policy Board. This two tier board is seen locally as a success (It was adopted from the model used by the local library system). In addition, there is a Community Advisory Committee. They are drawn from the local populace based on interest and expertise. They are working on innovation, including pilots for EVs and microgrids. In terms of chronology, the process of forming MBCP began with the formation of that same Community Advisory Committee that was brought together by staff of local elected bodies and agencies to investigate a “wish list” for CCA and DER innovation. EVs were a ﬁrst priority, and now microgrids are the central focus, but these are just two items of a long list of goals. Local Power LLC89 This broad group of individuals have been able to ﬁnd multiple strategies to develop a successful CCA, including extensive grant funding from state and regional agencies. They have also developed a buying cooperative with Silicon Valley Clean Power, a neighboring CCA. 3. Westchester County, Sustainable Westchester, New York State (https:// www.westchesterpower.org/) The ﬁrst CCA in New York grew out of a consortium of towns organizing to advance climate and DER goals. CCA became one of those strategies, ﬁrst as proposed legislation. Once the governor ordered CCA, the state’s ﬁrst adopter turned its focus to enrolling customers, including large C&I accounts, and developing DER. One early DER example was a solar array on public land in which customers could become shares owners, as well as including EVs and heat. Westchester County’s CCA has successfully offered shares in a solar array on a local landﬁll, along with support from the New York Green Bank, to improve the ﬁnancing conditions for that project, with enrollment in that program beginning in 2019. Westchester Power is governed by a board including public officials, local elected official, and experts in ﬁnance and the environment, and run by a nonproﬁt organization, Westchester Power, “to give Westchester County consumers better energy choices through collective action that create stable future prices, access clean power at more competitive rates, and opportunities for developing local, sustainable energy systems and programs.” 4. Athens, Ohio - Southeast Ohio Public Energy Council (https://www.sopec-oh.gov/) Starting in 2008, local activists engaged Athens’ city council and mayor to begin an ongoing community discussion about CCA, starting with televised council/town meetings, framing goals around decarbonization and green power development, and adopting a CCA ordinance after which a council of governments was formed in 2014. Their town hall meetings took a high level approach to how CCA could not only lower rates but localize, become customer-owned, and improve local resilience and economic vitality. Their ﬁrst contract began in March 2015, followed immediately by their ﬁrst energy efficiency program (Community Energy Savers) offerings the same year, including the distribution of 50,000 LED light bulbs and home energy audits throughout the SOPEC communities, which resulted in community savings of more than $5 million in energy bills that year. SOPEC and Athens successfully created a CCA customer rate adder to fund local solar installations on public buildings in 2018. Under the umbrella of the Southeast Ohio Public Energy Council (SOPEC) and with a very small budget (mailers for $0.29 per piece), Athens is actively looking to CCA to be a channel for PACE, state EE funding, and prospectively, DER and community shares investment. In lieu of a ﬁnancing authority, SOPEC sponsored a “carbon fee” and though not required to do so put it before voters, who approved it. In so doing SOPEC paved the way for any CCA in Ohio to fund solar and potentially energy efficiency. Today SOPEC is interested in developing DERs in homes and businesses, too. The mission of SOPEC is “to provide simple, valuable, and reliable public energy programs that help our communities achieve their local energy goals. The primary programs provided by SOPEC are to support Community and Customer Choice through governmental energy aggregation and mercantile customer aggregation, energy efficiency development through ﬁnancing programs, and renewable energy development through technical assistance programs.” In 2015, SOPEC launched a local community energy savers program to reduce energy usage within the City of Athens, Athens County, and the Village of Amesville In 2016 neighboring City of Logan and the Villages of Somerset, Shawnee, New Straitsville, Chauncey, Local Power LLC90 Trimble, and Buchtel joined the CCA to receive both energy and SOPEC-led local renewable development in their communities. 5. Maplewood, New Jersey (https://sustainableessex.wordpress.com/about/) One day, a local activist from Maplewood read the state’s CCA statute and realized that groups of municipalities could form CCAs. While Maplewood took the lead on drafting and vetting RFPs, a group of ﬁve towns joined to form their CCA. They created a mil adder to their rate to ﬁnance energy efficiency - the ﬁrst to do so - and are in the process of developing their local programs. Member municipality, Montclair, has also used state funds to explore and plan a local microgrid. The investigation of the potential intersection of CCA and new local DER development is ongoing. In March 2018, the Township passed Ordinance # 2899-19, authorizing a Government Energy Aggregation (“GEA”) program in Maplewood. To create even greater purchasing power in the marketplace, the Township also formed the Sustainable Essex Alliance Energy Procurement Cooperative (“SEAEPC”) in conjunction with several other Essex County municipalities, with the aim of using joint purchasing to obtain the best possible price for renewable energy supply, in furtherance of sustainability goals and the commitment to reduce the Township’s carbon footprint. The participating Essex County municipalities, which include Maplewood, Glen Ridge, Montclair, South Orange and Verona, jointly named the program the Sustainable Essex Alliance Renewable Government Energy Aggregation, or ‘SEA R-GEA.’ While its REC strategy is a distinctly 1.0 model, the SEARGE is a CCA 3.0 leader as the ﬁrst to win New Jersey Board of Public Utilities authorization of an operational adder to fund energy efficiency measures in homes and businesses: a ﬁrst in the U.S. among hundreds of very green CCAs whose energy efficiency programs are nonexistent. Given the fact that states outside Massachusetts and California, which have established utility-collected non-bypassable fees for energy efficiency which CCAs there are entitled to administer, do not have any funds whatsoever for energy efficiency, SEARGE represents an important model for CCAs to do so autonomously. 6. The Cape Light Compact, Massachusetts (https://www.capelightcompact.org/) The nation’s ﬁrst CCA led the way in the state of Massachusetts showing, particularly with regard to energy efficiency, what can be accomplished through local control. The fact that the Cape Light Compact is well established means that it has surmounted many obstacles for prospective CCAs already and laid out paths that are easier, not more difficult, to follow because this working example exists. On the Cape, a selectman from Falmouth joined with a Barnstable County commissioner to address high energy costs in the region through a CCA strategy, developing the Barnstable County Energy Management Plan in 1993-94. As part of that plan, reﬂecting legislation they supported in the state senate in 1994 and 1995 (Senate Bill 447, Montigny-New Bedford), Barnstable County began to look into the idea of coordinating the towns to combine their buying power for the purchase of electricity. CLC’s detailed history spans nearly a quarter century, as described on its web site. In spring of1995, the County obtained US Department of Energy funding for the partnership to study local government options in competitive electric markets. The resulting report found that consumers needed to aggregate to gain the beneﬁts of competitive electric markets; local governments were natural aggregators, providing non-discriminatory access, and established competitive bidding procedures; local governments had franchise powers; and the goals of Local Power LLC91 environmental protection and energy efficiency could be advanced through what were then termed “Consumer Service Districts in the legislation. In December 1995, the Massachusetts Department of Public Utilities issued an order on retail competition (D.T.E. 95-30) which included the concept of using local government franchises to aggregate consumers. The following year the DPU conducted another round of hearings and formulated rules and draft legislation for retail electric competition. This resulting order (D.T.E. 96-100) included the option for municipalities to aggregate consumers. Throughout 1996, the County held educational meetings with Boards of Selectmen, town managers, and local ﬁnance committees. In February 1997, the County formed the Cape Light Compact planning committee made up of representatives appointed by Cape towns. In November 1997, the Massachusetts Electric Industry Restructuring Act was passed by the legislature and signed into law, including provisions for Community Choice Aggregation, then referred to as Municipal Aggregation. For the Compact, an Intergovernmental Agreement was drafted through a process of review and comment by county and town legal counsel. The proposed agreement was taken to Boards of Selectmen and Town Meetings. Twelve Cape towns joined in 1997 and the three remaining towns in 1998. In 1998, the six Vineyard towns also voted to join the Compact. Given obvious cost efficiencies and the central role it had played in developing the concept, Barnstable County was selected to provide a variety of administrative and ﬁnancial services for the Compact. The Compact developed detailed plans for its Power Supply Program and Energy Efficiency Program and embarked on consumer protection efforts. The ﬁrst successful joint action of the Compact was to intervene in a DPU case concerning disbursement of funds from Commonwealth Electric’s sale of the Canal Electric Plant. Cambridge Electric and Harvard/MIT were looking to gain the value of all the proﬁts. This type of intervention had not been undertaken by Barnstable County or the towns in the past. The DPU’s ﬁnal decision included $25 million out of a total of $52 million coming back to Cape Cod and Martha’s Vineyard consumers. The Compact’s Aggregation Plan was approved by the DPU in 2000, spurring similar municipal aggregation efforts in other states. The new competitive market was volatile in pricing and slow to develop for small retail consumers. As expected, most power suppliers were interested in serving large industrial and commercial customers. However, in March 2000, the Compact reached an agreement with Select Energy, Inc. on a power supply contract to serve all customers. Continuing volatility in the market delayed startup of service, but having the power supply contract in place satisﬁed a state pre-condition that allowed the Compact to move ahead with an Energy Efficiency Program. The DPU approved a ﬁve-year plan prepared for the Energy Efficiency Program, and services previously provided by Commonwealth Electric (now Eversource) were transferred to the Compact and began operation in July 2001. This was the ﬁrst time in the nation that a group of municipalities which did not have a municipal electric utility, that also owned the poles and wires, took over an energy efficiency program. The purpose of the program was to ensure that the $5 million that Cape and Vineyard electric consumers paid into energy efficiency funds on their bills each year, under a state-mandated charge, would be utilized on the Cape and Martha’s Vineyard. The program would also eliminate shareholder incentives from being deducted from energy efficiency funds. The elimination of shareholder incentives put the money back into energy efficiency program services. To make a smooth transition, the Compact hired many of the same vendors who Local Power LLC92 served standard utility programs, but it also included a number of innovative local features and was soon recognized as an award-winning effort. For the ﬁrst nine years of accomplishments, the Compact states that their program: 1) conducted more than 15,500 free energy assessments for residential, business and government consumers on the Cape and Vineyard; 2) saved an estimated 18 megawatts in peak electric generation, offsetting 1.6 percent of the Canal Plant’s rated capacity; 3) saved more than 103,600 megawatt hours of energy use and associated air pollution; 4) saved consumers more than $20.7 million annually on electric bills. In 2002-04 the Compact developed a pilot program and negotiated a Power Supply contract for 53,000 default service customers paying higher prices to NSTAR. It resulted in an estimated savings of more than $4.75 million. While this gave a start to the supply program, the Compact continued to face volatility in power pricing. When a window in the market opened, the Compact shifted its Power Supply contract to ConEdison Solutions which agreed to serve all 200,000 customers starting in 2004. Following its goals to encourage the development of renewable energy and gain access to the beneﬁts of wholesale markets, in September 2007, the Cape Light Compact helped to establish the Cape and Vineyard Electric Cooperative (CVEC). Nearly all of the towns on the Cape and Vineyard have joined CVEC as members, and their representative makes up the board of directors. The strategy initially pursued was to build local renewable energy supplies to help stabilize and reduce power prices. In 2011, CVEC managed a procurement process for construction of 16 megawatts of solar photovoltaic (PV) capacity in its member towns. In contrast to the wind project, this effort gained broad support. The second round of procurement for additional PV capacity was conducted in 2012. Another 12 megawatts was contracted for development. “At that time municipalities were not allowed to generate RE with enabling legislation,” said Compact Administrator Maggie Downey. "Cooperatives could do renewables -- so we formed CVEC. We are up to 33MW of installed power -- under PPAs with an option for the municipality to buy after a set period. When we had accelerated depreciation and the PTC it was a rich environment for public private partnerships." The Compact supported CVEC’s start-up with $3.7 million in funding provided over a seven- year period. The return on this investment over a twenty year period is estimated at $60 million. This is the largest amount of solar being developed by a small group of municipalities anywhere in the United States. Massachusetts officials regard the CVEC PV program as a model for communities in the rest of the state. In July 2017, the Compact reorganized as a Joint Powers Entity, under the Act Modernizing Municipal Finance and Government, allowing for it to be its own separate legal entity. This protects the members from liability exposure and enhances ﬁnancial accountability. In November 2019 CVEC released an RFP for 25 new potential solar PV development sites to be developed. CVEC has installed 33MW of solar PV since its formation in 2007, but this RFP was distinct. Because CVEC has reached or is fast approaching the caps for NEM across its territory covered by two distribution utilities, it asked bidders to look at Behind-the-Meter conﬁgurations for these new PV arrays. It addition, it asked bidders to consider on-site storage to maximize the usefulness of the generation. Rather than relying on artiﬁcial utility incentives. Offsetting distribution, transmission and generation charges will be key to the economics of these new developments. Negotiations are ongoing, with announcements expected in December 2019. Local Power LLC93 There will undoubtedly be many challenges ahead in the energy ﬁeld as markets and technologies and state and federal policies continue to evolve. The Compact member towns and counties have an opportunity to advance the energy sustainability of the Cape and Vineyard through energy efficiency, power supply, and renewable energy programs. The Compact will continue to participate in the development of SmartGrid and microgrid technologies. Local Power LLC94 Appendix B: Glossary of Terms 8760 -- the electricity usage pattern over every hour in a year. AMI -- Advanced Metering Infrastructure -- sometimes called Smart Meters -- meters that facilitate realtime collection of customer energy usage for the purpose of analysis and DER integration. BES-DR -- Battery Energy Storage Demand Response -- a program being used by EBCE to pay customers with battery storage to discharge that power when the price of electricity rises above a particular threshold. CCA -- Community Choice Aggregation -- the statutory mandate that allows municipalities, solely or in groups, to become the buyer of electricity for customers within its jurisdiction on an opt-out basis. The details and powers of a CCAs statutory authority vary slightly by state. CEC -- California Energy Commission -- a funding and research body similar to DOER and NYSERDA CPUC -- California Public Utilities Commission -- the regulatory agency that governs electric utilities and others in California. DER -- Distributed Energy Resources -- renewable and efficient technologies that provide energy at or near the point of consumption. DERMS -- Distributed Energy Resource Management System -- the software and hardware that allows DERs to be integrated DOER -- Massachusetts Department of Energy Resources -- a research body similar to NYSERDA and the CEC DPU -- Massachusetts Department of Public Utilities -- the state utility regulator. DR - Demand Response -- the ability to curtail loads and dispatch power in response to specific conditions and needs, enabled by smart technologies like AMI meters and IP thermostats. EE -- Energy Efficiency EIA — U.S. Energy Information Administration ESCO -- an energy services company, in many states the third party suppliers of electricity to CCAs FERC — Federal Energy Regulatory Commission FiT -- Feed-in-Tariff -- a fixed price by kWh paid for all the power produced by a renewable energy installation. GW -- Gigawatts IoT -- internet of things IP -- Internet Protocol -- a technology that can communicate with and be controlled remotely via the internet. ISO -- Independent System Operator -- regional electricity market clearing entities. They are non-profit organizations that facilitate bulk electricity transactions, among other related activities. California is served by CAISO, New England by ISO-NE, or frequently “NEISO” kWh -- Kilowatt hour, or 1000 watts, is the unit that is used to price the sale of electricity. Load Duration Curve -- 8,760 hour per year demand pattern, in this case defined by eligible accounts in a CCA service territory, and differentiated by commercial and residential sources, representing actual recorded load and billed purchased energy, and representable in a 365 leaf fluctuating sine curve. MW -- Megawatt Microgrid -- the integration of DERs to provide on-site as opposed to remotely sourced electricity. NEM -- Net Energy Metering -- a tariff that pays a set rate for the generation of electricity from a renewable source while providing electricity to a meter at all times. Production and consumption are netting against each other. On-bill ﬁnancing/repayment -- the ability to ﬁnance DER, traditionally EE, measures over a period of time, often years, embedded within the bill or rate that a customer pays on a monthly Local Power LLC95 basis for electricity, heating fuel or water -- a way of minimizing or eliminating upfront costs to adopters. PACE -- Property Assessed Clean Energy -- the use of a lien on private property, business or residence, to finance DER. PCIA -- Power Charge Indifference Adjustment -- a charge assessed by California investor- owned utilities to cover generation costs acquired prior to a customer's change in service provider - an “exit fee” assessed to customers which receive their generation services from another provider. PGC -- Public Goods Charge -- a fee assessed on customer bills to fund DER, most commonly EE, programs and initiatives. It exists under many different names. PPA -- Power Purchase Agreement -- a popular contractual mechanism to finance renewable energy installations by setting a price for the energy generated and a duration of years over which the buyer will agree to pay it. RE -- Renewable Energy REC -- Renewable Energy Credit -- a virtual attribute of renewable energy sold to encourage investment in renewables. RFP -- Request for Proposals SCADA -- Supervisory Control and Data Acquisition SREC -- Solar Renewable Energy Certificates -- a solar incentive that allows homeowners to sell certificates for energy to their utility. Many renewable portfolio standards have a solar carve- out requiring that a minimum percentage of electricity sales in that state come specifically from solar power, and SRECs are used as tradable RPS compliance credits. For every megawatt hour (MWh) of electricity that a solar energy system produces, a corresponding SREC is created. A homeowner earns one SREC for every 1000 kilowatt hours (kWhs) produced by their solar panel system. An SREC can be worth as over $300 in certain states. SMART -- Solar Massachusetts Renewable Target --The SMART incentive, which replaced SREC II in 2017, is set through an auction, in which residential programs will receive 2 times (or 2.3 times, for low-income households) the incentive established by an auction to large commercial project developers, who bid the lowest incentive amount rather than the cost of building project, and the lowest bid wins. This incentive is low compared to the previous SREC SREC-II program, under which the average customer received $0.25 per kWh above the net metering benefit 2016.So the SMART solar incentive is worth less than half the value of SREC II. V2B -- Vehicle-to-building V2G -- Vehicle-to-grid VNEM -- Virtual Net Energy Metering -- the ability of customers with meters not directly linked to a renewable energy installation to participate in a NEM arrangement. VPP -- Virtual Power Plant -- the configuration of DER resources such that they are able to provide electricity as a simple fossil fuel plant would have in the past.