Saving the planet and acting environmentally ethical is good. But there is a truth that human behavior is unpredictable. Even in the face of the speculative disastrous effects of climate change, consumer demand for housing in affected areas is resilient. Rapti Gupta pointed this out when raising the alarm in his RealtyToday article (The Looming Global Warming Catastrophe and its Effect on Real Estate; realtytoday.com; November 11, 2013).
Making your home “green” seems to be going to another level. And although it’s not the first time, there is a nationwide and local push for climate related legislation that is likely to impact your housing costs.
It’s been almost ten years, but you may have probably forgotten about the American Clean Energy and Security Act of 2009. The bill, also referred to as the “cap and trade” bill, not only focused on commercial properties but residential properties as well. The bill would have established National Energy Efficiency Building Codes for commercial and residential buildings. Additionally, it intended to retrofit all existing buildings to meet new standards. Enforcement would have been through regular government inspections.
Since the bill (and others like it) was not enacted, local communities have picked up the ball to make their communities “greener” through Community Choice Aggregation (CCA) programs. Although CCA’s have been implemented in some states since the 1990s, the idea is gaining steam in others. Montgomery County Executive Marc Elrich recently testified in support of CCA’s and the legislation (HB0730/SB0660) that is making its way through the Maryland General Assembly.
What is Community Choice Aggregation? According to the EPA (epa.gov), “Community choice aggregation (CCA), also known as municipal aggregation, are programs that allow local governments to procure power on behalf of their residents, businesses,and municipal accounts from an alternative supplier while still receiving transmission and distribution service from their existing utility provider. CCAs are an attractive option for communities that want more local control over their electricity sources, more green power than is offered by the default utility, and/or lower electricity prices. By aggregating demand, communities gain leverage to negotiate better rates with competitive suppliers and choose greener power sources.”
However, Severin Borenstein’s blog post for the Energy Institute at Haas (haas.berkeley.edu) points out the pros and cons of CCA’s (Is “Community Choice” Electric Supply a Solution or a Problem?). Borenstein points out the local utility still does all the work of supplying and metering customers, and bills customers for their services.
However, the CCA is contracting to purchase electricity on your behalf (supposedly from renewable sources), promising a better price. But Borenstein points out that policy makers learned that “electricity is not always like other markets,” pricing and fees can be complicated. He also pointed out that because of regulatory standards, the CCA buying of energy contracts from renewable sources doesn’t mean that the grid’s “total” green energy increases or that it will decrease greenhouse gases. He states, “green energy claims deserve close scrutiny.”
Borenstein concludes by saying that “Regulated investor-owned utilities are flawed organizations that operate under a distorted set of incentives. But local governments are also flawed organizations subject to their own set of distortions, a fact that is often less appreciated by the local government leaders who are promoting the CCA. If your community is considering a CCA, you need to think about which organizational structure is most likely to have the sophistication and the incentives to serve you best.”
Dan Krell is a Realtor® with RE/MAX Success in Potomac, MD. You can access more information at DanKrell.com