Cleaner, Cheaper Power for Texas Communities

Bulk power can reduce pollution and save residents money
Released by: Environment Texas Research and Policy Center

Texas cities are key players in the drive to cut carbon pollution that causes global warming. Texas is the nation’s biggest carbon polluter, producing almost one-seventh of total U.S. carbon dioxide (CO2) emissions in 2017. Major Texas cities are significant contributors to the problem – Houston and Dallas alone produced nearly 6% of total state CO2 equivalent (CO2e) emissions in 2014 (the latest year for which full data are available).

Now, however Texas cities are emerging as part of the solution. Houston, Dallas, San Antonio and Austin – Texas’ four largest cities, accounting for more than one-fifth of the state’s population – have ambitious climate action plans to reduce their contribution to global warming. These cities are targeting key sectors to reach net-zero carbon emissions by 2050, establishing bold intermediate emission reductions goals along the way.

Texas cities and counties can help reach their climate goals by pooling the electricity purchasing power of their residents and buying renewable electricity. Across the country, such community bulk power programs, including so-called community choice aggregation, have given a boost to clean energy while in many cases saving money for consumers. Texas cities and counties should follow suit.

Texas cities have ambitious clean energy goals but limited tools to meet them. Dallas’ climate plan sets the goal that 50% of residents and businesses be enrolled in renewable electricity plans by 2050. Houston’s Climate Action Plan calls for generating 5 million megawatt hours (MWh) of local solar power per year by 2050.

However, these cities operate in a deregulated market with limited government oversight, so the power of their authorities to drive significant changes in their respective energy mixes is restricted.

Community bulk power programs around the U.S. buy clean, affordable energy. Community bulk power programs known as Community Choice Aggregations (CCAs) appeared in the 1990s and 2000s as states deregulated their electricity markets, and are now authorized in nine states: California, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Virginia.

  • Through CCAs, local governments use their bulk purchasing power to negotiate discounts to purchase electricity on behalf of their residents, often securing more renewable energy than can be achieved via buying power from a utility or individual purchasing decisions.
  • CCAs are effective – in 2017, 750 CCAs secured 42 million MWh of electricity for 5 million consumers, about 1.1% of all U.S. retail power purchases.
  • Bulk purchasing via CCAs can secure electricity rates up to 15-20% below residential retail rates for their participants.
  • In 2017, CCAs procured about 8.9 million MWh of renewable energy – enough to power around 836,000 homes – beyond the amount required by state mandates.
  • Some CCAs also provide other member services and incentives. CCAs in Cleveland, Ohio Carbondale, Illinois, and the Cape Cod/Martha’s Vineyard area of Massachusetts, for example, all have provided members lower electricity rates, substantial amounts of renewable energy and energy efficiency services (see Appendix, page 18).

Community bulk power can help Texas cities and counties achieve climate goals and save residents money.

While CCAs akin to those in other states are not explicitly authorized in Texas, cities and counties can act using other mechanisms in existing Texas law to conduct bulk electricity purchasing, enabling communities to secure lower prices for power and obtaining more renewable energy than they would be able to do otherwise.

Houston and Dallas, as the first- and third-largest Texas cities, are both deregulated markets where consumers choose their own local retail electricity providers (REPs). These, other Texas cities and Texas counties have the potential to establish community bulk power entities that could purchase bulk electricity directly or contract with an REP to do so, to bring residents lower power prices and the chance to secure more renewable electricity. No new legislation or change in regulation at the state level is needed.

To develop a community bulk power program, cities and counties should explore using Texas Public Utility Commission (PUC) rules (§25.111, Registration of Aggregators) that allow for the creation of an aggregation for the purpose of purchasing electricity. A city or county could register as an aggregator itself, or could register another body, such as a non-profit, public corporation owned by the city or county, which would then contract with an REP to administer the program. Under PUC rules any city or county customer could choose to participate in such a program.

While not a CCA, such a community bulk power entity could be set up with the goals of negotiating bulk purchases of electricity at lower costs and of securing higher proportions of renewable energy for its members. This would help Texas cities and counties reduce greenhouse gas (GHG) emissions and benefit consumers. There appear to be neither legal impediments nor market size constraints to establishing such a structure, and PUC rules lay out clearly how such a community bulk power aggregation could be established. Texas cities and counties should examine potential operational or logistical challenges of such structures, including how to acquire and bill customers under a customer choice framework, but could begin with small-scale pilot projects to test effective models for community bulk power.

Houston, Dallas and other Texas cities and counties with deregulated markets and strong climate goals should adopt a community bulk power purchasing approach, similar to that of CCAs, to bolster their purchases of clean energy and help them cut GHG emissions in line with their goals. To do this, they should explore using PUC rules to aggregate their citizens and negotiate for bulk electricity purchases.

Community bulk power purchasing can also help meet other community goals. Cities and counties can use their buying power to negotiate as part of bulk purchasing investments in weatherization, bill assistance, or on-site solar to improve energy reliability.

Creating a community bulk power option for electricity is a versatile tool that Texas cities and counties can use to meet their climate goals and transition to clean power. By bundling together their residents’ power purchases, communities can deliver cleaner, cheaper power for all.