Community Energy Authority:
Vehicle for Local Energy Programs
The restructuring of the electricity industry has rendered many
previous utility energy structures and programs obsolete. However,
a state program established for local governments but never used,
actually increases in relevance in a competitive electricity market.
Legislation signed into law in 1984 authorizes local governments
to create "Community Energy Authorities" (CEA). What are CEAs, and
how can they serve as vehicles for local governments to develop
comprehensive energy management programs?
Background:
Sponsored by the Local Government Commission and carried by former
California Assemblymember Sam Farr, AB 1659 was modeled after housing
authorities which some local governments have established to manage
low-income and public housing programs. The bill authorizes every
city and county in California to establish CEAs. Although the legislation
has not yet been used, the CEA remains a viable structure through
which local governments, working alone or in concert with other
local governments, can access tax-exempt financing for energy efficiency
or renewable energy projects.
Initially designed to take advantage of energy conservation programs
launched in response to the energy crisis of the 1970s, CEAs can
now be tapped to put local governments in the driver's seat when
engaged in aggregation of its electricity accounts or those of its
constituents, as well as low-income, energy efficiency or renewable
energy development programs. According to the legislation, CEAs
are empowered to not only plan and construct new energy projects,
but float tax-exempt bonds to finance them. CEAs also are authorized
to take advantage of federal and state sources of funding.
Opportunities:
Local governments seeking to take advantage of programs may want
to consider establishing a CEA since it is tailor-made for communities
wishing to take the lead in planning and developing more sustainable
cities.
The CEA can serve as a vehicle for local governments to develop
community energy programs. Previously the domain of electric utility
monopolies, energy efficiency programs can now be designed by local
governments to meet their own specific community needs. Through
control of land use planning and zoning, local governments can shape
residential and commercial development to reduce overall energy
consumption and thereby improve the environment.
Among the programs that could be facilitated through a CEA are:
energy elements in a city or county general plan; solar rights ordinance
and energy conservation retrofit ordinances; and local building
standards that exceed the state's Title 24 standards.
CEAs can also serve as vehicles to plan, develop and finance on-site
renewable energy projects. They can also serve as the structure
through which local governments aggregate their own, or their constituents',
electricity loads in order to purchase renewable energy through
a power marketer or other purveyor of green power.
Challenges:
The biggest challenge to local governments using CEAs is getting
them to focus on the issues involved in the complicated business
of producing, transmitting and distributing electricity. Many local
governments are pre-occupied with other pressing policy concerns,
and the electricity business may seem to be a daunting challenge
which will only divert precious staff time.
While some local governments have energy manager positions and
staff, most do not. Under the former utility monopoly-based system,
the role local governments could play in delivering electricity
services was limited. Now, in a world of consumer choices and competing
private and public sector, local governments have more options.
They may be hampered, however, from responding appropriately because
of a lack of credible, unbiased information, lack of organizational
structures to address new energy program opportunities, and/or a
lack of the technical assistance they need to sort through the dizzying
array of choices now available to them. Often, energy programs have
been addressed in a piecemeal fashion, making the development of
comprehensive management of electricity services at the local level
difficult.
Environmentalists and consumer advocates are concerned that in
the current rush by most consumers to get the best prices for electricity,
community concerns such as cleaner air or assistance to low-income
residents will get overlooked.
Proposed Solutions:
The CEA offers local governments the structure and tools to participate
in California's new marketplace for energy products and services.
The Local Government Commis-sion (LGC) plans to assist local governments
in establishing CEAs and direct them to funding sources at federal,
state and local level that can help them carry out comprehensive
energy management programs. Among the types of programs California
local governments can pursue are incentive-based green building
guidelines for local builders.
Austin, Texas, launched a similar program under its Sustainable
Communities Initiative in 1990. Under the program, buildings are
rated according to their sustainability. Some 160 builders now participate
and integrate energy efficiency into building designs. CEAs could
develop similar programs in California, placing a greater emphasis
on integrating renewable energy technologies into building designs.
A CEA can be a vehicle to put all of a local government's energy-related
efforts under a single umbrella. CEAs can also serve local governments
wishing to develop regional approaches to energy problems. For example,
several cities or counties may want to pool their purchasing power
in order to get better discounts on electricity generated from a
nearby renewable energy facility. A CEA which serves more than one
local governmentcan be established.
The LGC has already submitted proposals to establish CEAs to access
the California Board for Energy Efficiency's funding opportunities.
The long-term goal is to establish CEAs throughout the state to
pursue community-based energy efficiency market transformation activities.
For More Information:
Local Government Commission
Pat Stoner
1414 K St., Suite 250, Sacramento, CA 95814-3929
(916) 448-1198 • FAX (916) 448-8246
e-mail: pstoner@lgc.org
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