As consumers, we all want choice: the freedom to decide our own best interests and where our dollars go. In the energy sector, however, there are not always options to choose from. Community Choice Aggregation (CCA) frees communities to collectively choose their energy supplier. In Ohio, one city is stretching its freedom to choose even further.
Residents of Athens, Ohio, just passed a carbon fee ballot initiative that will add 0.2 cents per kilowatt hour to electricity costs for CCA members. This first-of-its-kind carbon fee proposal, drafted by the non-profit UpGrade Ohio, will support installation of solar on public buildings and provide more resources for public investment.
In 2017, the city of Athens published the Athens Sustainability Action Plan. It includes concrete and immediate goals for sustainability, such as reducing residential/municipal energy use 20% by the year 2020. Supporters believe the carbon fee will contribute to this goal, as well as driving investment in renewables.
On this episode of Local Energy Rules, Director of the Energy Democracy Initiative John Farrell speaks with UpGrade Ohio’s information and outreach director Mathew Roberts. As part of the group that designed the carbon fee initiative, Roberts was eager to talk about this and other community-led energy initiatives in Athens.
Again, using solar in this context to help create new opportunities for the entity that’s receiving it. The goal with that is we have created an investment package for traditional investors and we’re gonna be moving forward on a project at a local secondary school in Athens County. And with the carbon fee, this is toying into another model that can be replicated. Since we have a good relationship with the Southeast Ohio Public Energy Council or SOPEC, we were able to shift our bid in the solar on your community challenge to highlight this carbon fee program. Essentially saying that because Ohio has this opportunity to use aggregation to create this model for solar development, it’s very much replicable in communities that are served by investor owned utilities. And there’s a few major ones in Ohio. So our goal is to create a list of best practices and a playbook for how to do this so that other communities can enact their own fees for developing solar or whatever their goals are. And that tends to get really difficult when the investor owned utility doesn’t have a mechanism for making that happen or doesn’t have a reason to create that access for folks. And so that is why we created the carbon fee model. Now it does cost a little bit extra for folks to support that carbon fee model by adding that fee in, but again, it creates a net benefit to them as a taxpayer. And the renewable energy credits that are generated from that actually get brought back into the price and electricity secured for everyone in the city of Athens’s electric aggregation program. So that’s the first piece of advice I would offer to communities. But the other thing I would say is don’t be afraid to be real with people. We wanted to call it a carbon fee because we wanted people to recognize that there is economic damages to excess carbon dioxide emissions and that we all are participating in that when we’re using electricity. And so it shows people that, yes, I should be doing a little bit more, but what’s the right price point for me to do that? And less than $2 a month is exactly where we wanted to land. And the vote showed that people are supportive of that. We passed the initiative by 76% and that was a really big milestone for us and legitimizing our work that shows that people are willing to pay a little extra the support clean energy development in their community because they know it’s important. And that kind of solidifies that reason to install solar, which is to kind of mitigate for the effects of climate change. And I think once we get this off the ground and people see that their fees were used for something real and tangible, they will be very excited and proud to be part of this aggregation program. And hopefully it’ll encourage more folks to actually become part of the aggregation program and help more solar get deployed.
People are willing to pay a little extra the support clean energy development in their community because they know it’s important.
Hundreds of cities are part of Community Choice Energy programs, taking charge of their community’s electricity supply to lower costs, and often pursue more renewable energy. The Southeast Ohio Public Energy Council serving several Ohio communities recently stepped out front with a small carbon fee on utility bills to implement more solar on public buildings. Matthew Roberts is information and outreach director at Upgrade Ohio, a nonprofit organization looking to save utility customers money on their bills. Roberts recently spoke with me about the concept of the carbon fee and how it will help decrease costs for all local residents. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast sharing powerful stories about local renewable energy. Matthew, welcome to the program.
Thanks for having me, John. I’m excited to be on.
Well, I wanted to start off with the lay of the land for Athens. So Athens has a sustainability action plan that it’s been focused on and this carbon fee was part of the city’s attempt to reach some of the goals in that. Can you tell me a little bit more about what the city has set for itself in terms of clean energy goals and then we’ll talk a little bit more about how the city’s intended to get there.
Sure. The Athens Sustainability Action Plan, we like to call it ASAP, to create a sense of urgency. They have a multitude of metrics that they’re tracking to achieve what they are deeming sustainable. The portion that is energy is pretty interesting as far as what they want to achieve. We kind of came together with this idea to help achieve that goal. The first piece is that the plan calls for a 20% reduction in residential and municipal energy consumed from the grid by 2020, which is a pretty big leap, but we are thinking about ways to help communities actually take action on reducing that energy usage. The plan also calls for a 20% increase in solar generation capacity in the city of Athens by 2020. Specifically within that is a 20% increase overall of renewable energy resources for the entire electricity load of Athens City. So we came up with this carbon fee model to create the right incentive for people to reduce energy at their home or business, and we initiated a fee proposal to help make that happen. Encouraging energy conservation.
Can we take a quick step back there? I just wanna know in terms of, I’ve been interviewing folks from some cities that are talking about getting to a hundred percent renewable energy. So how does that 20% increase that you are talking about compare to some of those goals that other cities are setting?
I think what we’re trying to do is make incremental progress and show that a 100% clean energy goal if possible. But we need to get to some few benchmarks first, and I think that’s where this 20% comes in, showing that we can make progress incrementally and at a certain date that we’d like to achieve that goal. The Athens Sustainability Action Plan certainly wants to reach a hundred percent clean energy, but it’s all about what makes sense for this community and how we’re gonna do it. I think that’s the biggest piece is it’s easy to say we wanna make a hundred percent clean energy by a certain date, but we’re really trying to focus on how we actually achieve that, knowing the kind of lay of the land here.
I appreciate that. That’s one of the major questions I find comes up in these conversations with cities that are making commitments is how are you gonna get there? And there’s not always a clear answer. So you are already starting to tell me about it, which is great about one of the ways that Athens is going to get there. So there was an overwhelmingly past ballot initiative for this carbon fee on electric bills. Could you tell us about like how much was the fee and then how you it’s gonna be used in order to help the city reach its clean energy goals?
So the fee is 0.20 cents per kilowatt hour and the average assets customer in the southeast Ohio Public Energy Council’s electric aggregation program uses between 800 and 900 kilowatt hours a month. So the fee would add up somewhere between a dollar 60 and a dollar 80 per month per customer. This is for households and small businesses that don’t fit into the larger energy user categories. All of the fees now that it is passed will be collected and used explicitly for solar projects on city owned and public serving buildings in the city of Athens.
Cool. Do you have a sense for how much solar the fee will be able to support? Obviously you’re gonna be collecting it every month, so hopefully it’s gonna be an ongoing program.
Yeah, it’ll take some time for the fund to kind of catch up and have enough money to make a worthwhile project. What we’re doing pretty soon in the next few months is going to the community again and asking what’s the best way to use the fee money? We’ve been playing around with the idea of using the fee money to attract new capital so that way we can leverage our annual fee for bigger and better projects. But as this carbon fee was initiated through a democratic process in voting, we also want to honor that and create public forums for people to contribute how they think this carbon fee should be spent. If they’re interested in simply taking as much that was gathered each year and spending only that for projects, then we will honor that. But we also want to share our, our ideas knowing that we’ve been in this industry space for a little while, showing the value of kind of leveraging that, that money for more capital.
So just to give people a sense of context, you know, how much money are we talking about and you know, how does that compare to the size of the town?
Yeah, we’re anticipating about 80 to $90,000 per year and the aggregation program has about, at any given time, 70 to 80% of the residents of Athens City involved in the aggregation program. The rest of the 20% or more are either in their own supply contract, so they’re not in the aggregation program or they simply opt out of the aggregation program and get the default rate by the utility. And over each year we’re anticipating that we can build a 60 kilowatt installations, you know, saving roughly $10,000 per year throughout the service life of each system and again, each year we have that fee to use from. So the savings will really compound creating a big benefit for the city of Athens. What we like to point to is that because the solar systems will be installed on public serving buildings, this will actually be a net benefit to all taxpayers, whether you’re in the aggregation program or not. And that’s because the city of Athens will be saving on their utility bills, supplying their energy needs with the solar first and then going to the grid to supply the rest of the energy that they may need. And that frees up money within the city’s budget to use on other programs and services that benefit everyone.
Just to clarify then, first of all, it’s terrific that the investment of these funds is gonna go to public installations. We actually wrote a report a few years ago called Public Rooftop Revolution where we talked a lot about the benefits of cities looking at using their public spaces for solar. So it’s exciting to hear about how Athens is attending to use the funds. Are folks who are not part of the aggregation paying part of the fee, or is it really only the participants in the aggregation? And then of course, I’m gonna ask you in a minute here more about what this aggregation is so that people can understand what that’s like if it’s not familiar to them in the state where they live.
So the answer is the only folks that’ll be paying into the carbon fee are the people that are in the electric aggregation program. But we also want to explore the idea of creating an opt-in situation where people can contribute their own money to this fund that is kind of propped up through the carbon fee, and that’s gonna take some time. But what really helps fill the carbon fee is describing the economic damages that come from each ton of carbon emissions caused by everyone in the community using electricity. Using the most recent EPA figure of $36 per ton, that would average out to about 21 to $24 per household per month. So framing it that way really helped us sell the idea of making a partial carbon fee for our community that is significantly less in the dollar 60 to a dollar 80 range per month. Really kind of meeting people where they’re at and telling them there is a way to help make things run smoothly and reach the goals of the sustainability plan. And everyone can have an opportunity if they’re in the aggregation program.
So let’s talk a little bit about the aggregation program so people can understand. Most states have one of two options. One is that you are taking electricity from the utility company and it’s the monopoly and it’s your only choice. So it’s sort of like your cable company being the only service provider that can give you cable television. Your utility is your utility, and then in a few states you could pick your electricity provider and it’s a competitive market and you might have a number of choices, but aggregation is a little different. It’s kind of an in between option. Could you tell folks a little bit more about how aggregation works and why it gives Athens the power to do this innovative carbon fee?
So aggregating is a great tool for creating programs and services that aren’t offered by the monopoly utility or through a supply contract with an energy supplier. That’s the main mission of the aggregation program here in Athens. The program started in late 2014 and was framed as a way to help folks save on their electricity costs because the buying power that is associated with aggregating a large amount of electricity customers and then going to a supplier that can meet that supply need; aggregation really creates an opportunity to negotiate for rates that make sense to the community, but also to create programs such as special financing for energy projects. Or what we have done is add on this carbon fee so that folks can see their money in action locally. That was really a big part of why we started aggregation in the community, is to help local utility dollars stay local, otherwise with going through a supplier, that money will go to wherever that supplier is headquartered or with the monopoly utility, that money will go straight to where that utility is headquartered. And so this is a way to keep more dollars flowing locally and in projects that really matter to the community.
So I just wanna take a second and explain for folks who are in states that don’t have what’s called community choice aggregation or sometimes just community choice energy, there are about seven states that have laws that allow communities to do this to aggregate their residential and small business electric customers and then go out and kind of group purchase, as you said, get that leverage to go out and buy energy from suppliers that they choose, but also to make these really interesting local decisions. There are some aggregations out in California, for example, that are looking at other methods of local procurement. They’re basically saying, We’re gonna go out and buy solar, but we’re gonna buy it from solar producers in our community. Or here in Athens, you’re talking about solar on public buildings as an investment that can be specifically made. So it really does give communities a lot more control, but you do have to have a state law in place that allows you to do it. And so there’s more information at ilsr.com on what states offer community choice aggregation, and we have some podcast interviews with some of the other programs around the country if you’re interested in hearing more about that.
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So one of the other things, Matthew, that I was interested in talking to about is you had mentioned when we talked before the call about this solar in your community challenge. So it’s a national challenge looking at new models for community solar. Can you tell me more about what Athens is doing in terms of community solar, letting people participate in solar even if they don’t have a sunny rooftop, and how that aggregation is helping you do that?
Sure. Originally when we put our bid in for the solar in your community challenge, our model was to attract traditional investors to solar financing projects that serve the low to moderate income population. And that is the main goal of the challenge. The way we saw that was in this community, it’s very hard to convince folks to add extra costs or supply their own extra cost for a solar share. And around the country you usually see you have to buy power output up front or buy some sort of solar subscription. And over time we realized that the best thing to do is to actually have the solar serving the low to moderate income population where they’re at. And so what we’ve explored is talking to investors from around the region and around the state to invest in solar projects, get a good return on their investment, and at the same time support solar development on public schools that would help them immediately see a reduction in their utility costs.
You know, when you were talking about trying to reach customers where they’re at or reaching low and moderate income customers with solar, could you explain how this school project in particular is doing that? Or was that a different kind of example? I’m just trying to make sure I understand.
So the school project was initiated by Upgrade Ohio and our process or our role in that process was to attract the local investors that would make this project possible. And the benefit that we’re pointing to is the usage of solar itself to help reduce the overall costs with running the school. And the school itself kind of acts as a hub for the community for a variety of activities, essentially showing that solar is an investment in the space itself and that it’s here to stay and solar is gonna be serving this building for decades to come. Creating a lasting situation to help grow the community in new ways. The thing that we would like to figure out, but haven’t cracked the nut yet is how to bring actual benefits of solar to folks’ bills, whether that’s the reduction in the price or whatever that may be.
Well, there’s no question that it is tricky business figuring out how to share bill credits. There’s a report that we published a couple years ago called Beyond Sharing that looks at community based renewable energy and without laws or policies that often compel utilities to offer that kind of bill crediting process where a number of people could say, share the solar off of a common rooftop like on a church in their community. It’s really difficult to overcome the barriers to it. We’ve done a number of interviews on Local Energy Rules with folks who have managed to overcome those, and certainly encourage you to listen to those if it’s of interest, but certainly wouldn’t cast any aspersions on you for having trouble with that. It’s a challenge that folks have faced across the country. Matthew, do you have any advice for other communities that are trying to reach sustainability goals, trying to keep more of their energy local or just for other communities that are part of aggregations that maybe haven’t started down this road yet?
I think the first thing to really think about is how you can control the message. One of the problems that we faced right out of the gate was local media calling the carbon fee a tax. And most people are hesitant to the word tax. And so kind of getting ahead of that upfront is really important. And we had to do a lot of education kind of as the program was being brought forth to voters before the vote to ensure them that this is much different than a tax. You can’t opt out of your taxes, but with this carbon fee you can opt out of it. And that’s in line with our mission to still provide people choice. If they don’t wanna support the carbon fee, then they can go back to the utilities default rate and not participate in the aggregation program, or they can find their own supplier and find a contract that works well for them.
Well, Matthew, thanks so much for your work in Athens and also for talking with me today.
Yes, thank you so much for giving me the opportunity to share our story and we hope to keep it growing and share our experience with other communities in Ohio.
This is John Farrell, Director of ILSRs Energy Democracy Initiative. I was speaking with Matthew Roberts of Upgrade Ohio about the move by Athens, Ohio to use a small carbon fee on electricity bills to finance solar on public buildings. For more information on which states offer community choice energy and how it’s done, check out ILSR’S interactive Community Power Map, which is available at ilsr.org. While you’re at our website, you can also find more than 50 past episodes of the Local Energy Rules Podcast. Until next time, keep your energy local and thanks for listening.
Again, using solar in this context to help create new opportunities for the entity that’s receiving it. The goal with that is we have created an investment package for traditional investors and we’re gonna be moving forward on a project at a local secondary school in Athens County. And with the carbon fee, this is toying into another model that can be replicated. Since we have a good relationship with the Southeast Ohio Public Energy Council or SOPEC, we were able to shift our bid in the solar on your community challenge to highlight this carbon fee program. Essentially saying that because Ohio has this opportunity to use aggregation to create this model for solar development, it’s very much replicable in communities that are served by investor owned utilities. And there’s a few major ones in Ohio. So our goal is to create a list of best practices and a playbook for how to do this so that other communities can enact their own fees for developing solar or whatever their goals are.
And that tends to get really difficult when the investor owned utility doesn’t have a mechanism for making that happen or doesn’t have a reason to create that access for folks. And so that is why we created the carbon fee model. Now it does cost a little bit extra for folks to support that carbon fee model by adding that fee in, but again, it creates a net benefit to them as a taxpayer. And the renewable energy credits that are generated from that actually get brought back into the price and electricity secured for everyone in the city of Athens’s electric aggregation program.
So that’s the first piece of advice I would offer to communities. But the other thing I would say is don’t be afraid to be real with people. We wanted to call it a carbon fee because we wanted people to recognize that there is economic damages to excess carbon dioxide emissions and that we all are participating in that when we’re using electricity. And so it shows people that, yes, I should be doing a little bit more, but what’s the right price point for me to do that? And less than $2 a month is exactly where we wanted to land. And the vote showed that people are supportive of that. We passed the initiative by 76% and that was a really big milestone for us and legitimizing our work that shows that people are willing to pay a little extra the support clean energy development in their community because they know it’s important. And that kind of solidifies that reason to install solar, which is to kind of mitigate for the effects of climate change. And I think once we get this off the ground and people see that their fees were used for something real and tangible, they will be very excited and proud to be part of this aggregation program. And hopefully it’ll encourage more folks to actually become part of the aggregation program and help more solar get deployed.
Why a Carbon Fee?
The fee only applies to customers of the local community choice program, Southeast Ohio Public Energy Council (SOPEC). It will cost customers just 0.2 cents per kilowatt-hour of electricity used. Since the average customer uses 800-900 kilowatt hours per month, the fee will add between $1.60 and $1.80 to their monthly bill. Although it may not seem like much, Roberts and UpGrade Ohio hope that the fee incentivizes the reduction of energy use in Athens homes and businesses.
SOPEC will use the revenue, estimated to be $85,000 per year for the city, to put solar on public buildings.
Since SOPEC and other community choice programs (like Marin Clean Energy in California or Westchester Power in New York) are opt-out programs, members can choose not to pay the carbon fee by opting-out and returning to the default electric utility service.
UpGrade Ohio, which used to be a part of SOPEC, is now an independent partner on sustainability initiatives like the carbon fee. Routing the fee through the community choice program was a natural choice for the nonprofit. “Aggregation really creates an opportunity to negotiate for rates that make sense to the community,” Roberts said. “That was really a big part of why we started aggregation in the community, was to help local utility dollars stay local.”
For more about how community choice aggregation programs work, read this report.
It’s a Fee, NOT a Tax
“This is much different than a tax,” Roberts said. “You can’t opt-out of your taxes, but with this carbon fee, you can opt-out of it. And that’s in line with our mission to still provide people choice.”
If anyone does opt-out of the program, they still see its benefits. Public rooftop solar diminishes municipal energy expenses and allows more taxpayer money to fund programs that serve the public.
Roberts had advice for other communities that might use their choice programs to impose fees on carbon and invest in solar on public buildings:
“Don’t be afraid to be real with people,” he said. “We wanted to call it a carbon fee because we wanted people to recognize that there is economic damages to excess carbon dioxide emissions and we are all participating in that when we’re using electricity.”
UpGrade Ohio, whose mission is to create demand for clean energy, got involved in the initiative to help the community act on its sustainability goals. Though UpGrade Ohio helped develop and market the carbon fee initiative, Roberts emphasized how the community is the driving force behind its success:
“People are willing to pay a little extra to support clean energy development in their community, because they know that it’s important.”
The carbon fee initiative had to make sense for the community and be achievable. Approaching the project with this practicality helped UpGrade Ohio pass an initiative that will have real, tangible results.
“Once we get this off the ground and people see that their fees were used for something real and tangible, they will be very excited and proud to be a part of this aggregation program,” Roberts said.
When prompted about other cities that have 100% renewable energy goals, Roberts responded that “it’s easy to say we want to make 100% clean energy by a certain date, but we’re trying to focus on how we actually achieve that.”
The carbon fee will go into effect in 2019.
The Origin of the Focus on Public Solar
Members of UpGrade Ohio wanted solar in Athens to directly serve low to moderate income people, so — prior to the carbon fee initiative — they launched the Solar ACCESS program.
The program became an entry to the U.S. Department of Energy’s Solar in your Community Challenge, which supports “innovative and replicable community-based programs that will bring solar to underserved communities.” For their entry in the challenge, UpGrade Ohio made plans to install rooftop solar at a public secondary school — using affordable power purchase agreements (PPAs). Construction is scheduled to start in August of 2018.
While electricity customers without a PPA may not see any bill credits, rooftop solar on public buildings reduces the cost of running them and so benefits the community. For a public school in Athens County, the county with the highest poverty rate in Ohio, these savings can go far.
In addition to savings, Roberts said that rooftop solar can grow communities because “solar is an investment in the space itself.” UpGrade Ohio is showing Athens residents a willingness to invest in lasting structures in Appalachian Ohio, despite the regional trend of coal boom and bust cycles.
Read more about the difficulties of adopting community renewable energy and how to overcome them in Beyond Sharing – How Communities Can Take Ownership of Renewable Power
UpGrade Ohio is leading the way in finding community-based solutions that work in context. Roberts acknowledged this leadership role as a part of their mission:
“Our goal is to create a list of best practices and a playbook for how to do this, so that other communities can enact their own fees for developing solar, or whatever their goals are.”
Athens provides yet another model of a creative community initiative to foster energy democracy. This plan leads to concrete action, so it won’t be just another empty commitment. With many cities making similar commitments, Athens may provide one model for how to fulfill them.
Stay tuned for an upcoming podcast miniseries, where John Farrell talks to representatives of cities that have committed to 100% renewable energy about both their process of making this commitment and how they plan to achieve it.
For more ILSR podcasts about community choice aggregation, see these:
Episode 19 – The Leading Community Energy Aggregator
Episode 20 – The Power of Collective Energy Purchasing
Photo Credits: skeeze via Pixabay.