Community Choice Aggregation: the local agencies buying California's power
California's 23 CCA programs let local governments negotiate power prices on behalf of millions of residents. Here's how the system that serves over a third of the state works.
Community Choice Aggregation lets a city or county become the default electricity supplier for its residents and businesses. The CCA buys power on behalf of customers, while the incumbent utility keeps its distribution wires and continues delivering electricity to homes and businesses. Customers are enrolled automatically but can opt out and return to the utility if they choose.
California pioneered CCA and now has the most developed market in the country. The state's 23 programs serve over 10 million customers across 180 cities and counties. This gives California's local governments an alternative path to meeting renewable energy mandates and controlling electricity costs that doesn't require building their own utility from scratch.
Why California created CCAs
California's electricity market was partially deregulated in 1996 to introduce competition and lower prices. Instead, the state experienced severe shortages in 2000 and 2001, with wholesale electricity prices surging 800 percent from April 2000 to December 2000. Energy companies manipulated markets through tactics designed to artificially inflate prices, and two of the state's largest utilities nearly collapsed.
After federal regulators investigated and ordered more than $6.3 billion in refunds by 2005, California restructured its electricity system. The California Independent System Operator (CAISO), a nonprofit agency established in 1998, now manages roughly 80 percent of California's electrical distribution, overseeing the bulk power system and electricity market that delivers approximately 300 million megawatt-hours annually.
The state also set mandatory renewable energy targets that have grown progressively stricter: 33 percent by 2020, then 50 percent by 2030, and 100 percent by 2045. These mandates create incentives for procurement of renewable power. Local governments saw CCA as a way to control their energy mix and costs while meeting state requirements, without waiting for the investor-owned utilities to move at their pace.
How a CCA operates
A CCA is a nonprofit public agency created by local government, typically governed by a board of elected officials. The board makes decisions about which power plants and renewable sources to contract with, what rates to charge customers, and what programs to offer residents and businesses.
When a CCA launches, all customers in the service area are automatically enrolled. They can choose to stay with the program or switch back to the incumbent investor-owned utility, but switching incurs an exit fee called the Power Charge Indifference Adjustment. This fee compensates the utility for costs it incurred based on the assumption that the customer would remain on its system. The PCIA makes switching back expensive and gives CCAs an inherent advantage in customer retention.
The California Public Utilities Commission regulates investor-owned utilities like Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. However, the CPUC does not regulate government-operated utilities or municipal utilities. CCAs, as government entities, operate outside the traditional regulatory framework that governs private utilities, though they must still follow other Public Utilities Code provisions regarding public hearings and rate change notifications.
Purchasing power through long-term contracts
By pooling demand across a city or county, a CCA can negotiate better electricity prices than individual customers could. The CCA uses long-term power purchase agreements, contracts typically lasting 5 to 20 years, to secure electricity from generation sources at pre-negotiated prices. These can be structured with fixed, escalating, or market-based pricing, and they can require the seller to deliver all generated power or guarantee fixed amounts continuously.
This aggregated purchasing power lets a CCA direct its procurement toward specific energy sources. Between 2011 and 2018, California's CCA programs procured 24 terawatt-hours of renewable electricity—enough to power roughly 2.3 million average California homes for a year. This procurement allowed CCAs to exceed California's renewable energy requirements, helping develop additional clean energy capacity beyond what the state mandated.
The largest California programs
California's first CCA, Marin Clean Energy, launched in 2010. Other major programs include Sonoma Clean Power, Silicon Valley Clean Energy, and Clean Power Alliance. Together, the 23 programs serve more than 10 million customers across 180 cities and counties, representing over one-third of California's population.
These programs expanded as cities and counties realized they could use CCA to accelerate renewable energy adoption and control costs without relying on investor-owned utilities. Each CCA operates independently, making its own procurement decisions and setting its own rates, though all must compete within California's deregulated electricity market.
“By pooling demand across a city or county, a CCA can negotiate better electricity prices and contracts than individual customers could.”
Staying, switching, or opting out
Customers automatically enrolled in a CCA remain there unless they opt out. Those who choose to leave and return to the incumbent utility pay the Power Charge Indifference Adjustment exit fee. This makes switching back expensive, even if a customer becomes dissatisfied with CCA rates or service. The PCIA reflects the utility's argument that it made investments based on the customer's expected revenue, and the fee compensates it when that customer departs.
The ability to opt out preserves customer choice in principle, but the exit fee significantly narrows it in practice. Some customers nonetheless choose to pay the fee and switch, typically when they believe the incumbent utility offers lower rates or better service. Others remain with their CCA regardless of rates, valuing the renewable energy focus or local control over governance.
Challenges to fragmentation
California's patchwork of 23 independent CCA programs creates coordination challenges for the CAISO grid operator, which must balance supply and demand across fragmented customer groups. Each CCA makes its own purchasing decisions, procurement timelines, and procurement strategies, which can create inefficiencies in the overall market. Prices are volatile in competitive CCA markets, and some programs have seen rates rise sharply when wholesale power costs spike or renewable sources underperform.
Labor advocates have raised concerns about whether CCA employment practices protect existing utility jobs and create union opportunities comparable to investor-owned utilities. The fragmentation also creates disputes over cost allocation and cost responsibility, since utilities must maintain distribution infrastructure for all customers while some customers' procurement is controlled by their CCA rather than by the utility itself.
