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Colorado Legislative Committee Recommends Studies Of "Wholesale" Opt-Out Municipal Aggregation

Bill Says "Retail" Model In Choice States, "Does Not Promote The Conditions Needed For Development Of High Levels Of Renewable Energy"

October 18, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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A Colorado legislative committee has recommended a bill to require the study of the viability of a wholesale, opt-out model of electricity municipal aggregation (called community choice energy, or CCE)

Specifically, the Investor-owned Utility Review Interim Study Committee, which examines programs and practices of electric investor-owned utilities in Colorado with a particular focus on issues involving consumer choice and affordability in electric supply, has recommended to the Legislative Council a bill requiring two studies on municipal aggregation (CCE):

• A feasibility study, conducted by an independent energy expert under the guidance of the public utilities commission (PUC), to examine the financial and technical requirements that would need to be met for CCE to be viable and beneficial; and

• An investigatory proceeding at the PUC, inviting testimony and documentation from persons with firsthand knowledge of utility operations, CCE, or both, including regulators from other states in which CCE has been implemented. The goal of the investigation is to identify best practices and recommend legislative changes that would allow CCE to function well in Colorado if adopted.

The bill describes its model of "community choice energy" (CCE) as a system under which, "communities may choose their wholesale electricity suppliers while continuing to have the electricity delivered by the incumbent utility."

The bill states, "In the wholesale, opt-out model of CCE, individual customers are automatically enrolled and retain the right to opt out of their community's CCE offerings and receive electricity supplied by the utility under its traditional 'bundled service'."

The bill would include a finding that, "the general assembly specifically finds that the opt-in model of CCE, where individual customers are not automatically enrolled in CCE, is a known recipe for failure, and that the retail model of CCE practiced in deregulated retail choice states does not promote the conditions needed for development of high levels of renewable energy."

The feasibility study would include a financial component to assess financial feasibility and risk, including the potential for rate competitiveness and an estimate of the amount and duration of any transition fees, also known as exit fees, that communities forming a CCE authority would pay to offset their fair share of the costs of utility assets and contracts that were procured on their behalf and previously approved.

The feasibility study would also assess the implications of CCEs for resource adequacy and reliability

The investigatory proceeding would include consideration of the following:

• Whether an investor-owned electric utility that remains the sole provider of distribution, transmission, and other services traditionally provided by the utility, such as metering and billing, should also be the provider of last resort for supplying electricity to customers who opt out of CCE

• What regulatory oversight, if any, should apply to resource procurement for CCE authorities

• What minimum requirements should apply to independent power producers and power marketers who wish to supply energy to a CCE authority

The feasibility study would be due by November 30, 2020

A report from the investigatory proceeding would be due by January. 1, 2021.

See the bill here

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