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The National Picture:
Current Legislative Efforts

By Paul Fenn

Stand alone "Community Choice" legislation was recently introduced in Congress by Ohio Representative Sherrod Brown and six House colleagues, mostly from Massachusetts and Ohio, where Community Choice has already passed as part of state restructuring laws. The landmark federal legislation, which would enable towns, cities, and counties nationwide to purchase electricity on behalf of all consumers and businesses within their jurisdictions, was filed just days before the San Francisco Board of Supervisors asked the California legislature for a Community Choice amendment to its deeply flawed 1996 electric restructuring law.

Community Choice gives residents and businesses the buying power to attract competitive suppliers by pooling their energy demand in large volume contracts. Citing dramatic market failures in states such as California, proponents of the federal bill say it is needed because almost no competition exists for residential and small business consumers in those states that have passed electricity deregulation legislation without Community Choice. "Residents and most businesses are simply too small to attract competitive power suppliers who are seeking high volume contracts with large manufacturers and corporate accounts," says Wenonah Hauter of Ratepayers for Affordable Green Electricity (RAGE), a 190-member national coalition of consumer and environmental organizations led by Ralph Nader and David Brower that supports the federal legislation. "The fact that only one percent of Californians are participating in the market a year and a half after deregulation must give pause to proponents of the law that created it."

Proponents of California's 1996 deregulation law — and the model copied by so many other states that have since deregulated — continue to defend the market and the model, saying that deregulation will deliver competition and mainstream green power consumerism after a "transition period" is over. But Community Choice advocates such as California energy economist Eugene Coyle question the very idea of "consumer choice" in the electric industry, predicting "virtual monopoly with price discrimination favoring very large businesses over the rest, and data mining which targets wealthy consumers and heavy electricity users while redlining poorer ones."

Green Power

Proponents of Brown's legislation emphasize potentially dramatic environmental benefits offered by Community Choice, pointing to evidence that communities are far more likely to support renewables and conservation as communities than as isolated consumers. In California, whose 1996 deregulation law forbids Community Choice and restricts local government purchasing to municipal facilities, green power purchases from local governments nevertheless exceed that of any other sector in the market since it was opened to competition in 1998. While California's "Green Power" market remains a minor niche market for consumers willing to pay a premium, municipalities represent more than half of all clean energy purchases made there to date.

Prospects for Community Choice

More than 80 communities in the Community Choice states of Massachusetts and Ohio are holding public meetings about community energy and environmental goals, and will go on to seek power suppliers to serve their entire communities. Meanwhile, federal regulators looking to deregulate must view the increasing media scrutiny of the California model with alarm. "Deregulation doesn't lower rates: Businesses still pay same for electricity" reads the Oakland Tribune's September 1, 1999 Business section headline, reflecting growing mainstream recognition that there are serious problems in the straight "Consumer Choice" model. "As deregulation opens the door for dramatic changes in energy markets, legislation such as this is critical to ensure that the average citizen has a strong voice in advocating for clean and cheap energy," says Massachusetts Representative William Delahunt, a federal bill cosponsor whose district includes the Cape Light Compact, which led the successful fight for Community Choice in that state's 1997 deregulation law. Congressman John Tierney, another Massachusetts legislator who supports the federal legislation, emphasizes that the waiting game should be put to an end. "What I like about this bill is that consumers can take matters into their own hands rather than wait for however long it may take for true competition to emerge in the electricity market."

Wenonah Hauter points out that the Community Choice provisions passed in liberal Massachusetts and Republican Ohio appeal to pro-competition Republicans as well as to environmentalists and consumer advocates. "Community Choice means real competition, not just special deals for large corporations," Hauter says. "Republicans should like that." On the other hand, Community Choice creates an unprecedented environmental opportunity that could put some teeth in the urban sustainability plans proliferating among U.S. cities. Americans are "more likely to support renewables and conservation as communities than they are as isolated consumers," observes Hauter. "By giving communities the opportunity to choose renewables and conservation on a meaningful scale, Community Choice may offer a significant window for environmental activism in an otherwise dismal political landscape of electric industry deregulation."

Paul Fenn works with the American Local Power Project.