California's Community Choice Aggregation (CCA): How Local Electricity Programs Save or Cost Money

California's Community Choice Aggregation (CCA) programs allow municipalities to collectively purchase electricity on behalf of residents, bypassing investor-owned utilities (PG&E, SCE, SDG&E). California law permits local governments to aggregate the electricity purchasing power of their communities, theoretically negotiating better rates and renewable energy mandates than the incumbent utility provides. As of 2025, 24+ CCA programs operate across California, serving ~13 million residents. But do CCAs actually save money? The answer is complex: some CCAs achieve 5-10% rate savings vs. the incumbent utility; others cost 2-8% more due to administration overhead and stranded cost recovery charges imposed by utilities. This guide explains how CCAs work, compares rates across major programs, and helps California residents decide whether CCA enrollment makes financial sense.

What is Community Choice Aggregation?

Community Choice Aggregation (CCA) is a mechanism authorized by California law (starting with AB117 in 2002) that allows municipalities or county governments to purchase electricity on behalf of residents and businesses within their jurisdiction. Here's how the structure works: (1) Local government creates a CCA entity: City or county establishes a CCA authority (sometimes called a municipal aggregator) as a government agency or joint power authority (JPA). (2) Default enrollment: Once a CCA is established, all existing electric utility customers within the jurisdiction are automatically enrolled (unless they opt out). Unlike deregulated states (Texas, New York) where consumers must actively choose a retailer, California's CCA model enrolls everyone by default. (3) CCA procures electricity: The CCA purchases wholesale electricity from power plants, renewable projects, and intermediate suppliers to meet community demand. (4) Utility retains distribution: The incumbent utility (PG&E in most northern CA regions, SCE in central/southern CA, SDG&E in San Diego) continues operating poles/wires and handling billing/metering. The utility now operates as a "cost-plus" contractor managing distribution infrastructure; they no longer own generation or sell electricity directly to retail customers.

Example of CCA structure: Marin County residents previously bought all electricity from PG&E at PG&E's prices. In 2010, Marin Clean Energy (MCE) formed as a CCA. Now: (1) Marin residents are automatically MCE customers (unless they opt-out back to PG&E). (2) MCE purchases electricity contracts from wind farms, solar facilities, and hydro sources to meet Marin's demand (~2,500 GWh/year). (3) MCE sets rates to cover: wholesale power purchase (~60% of cost), distribution (PG&E infrastructure ~20%), administration/overhead (~5%), and reserves for future liabilities (~15%). (4) PG&E continues managing poles/lines but receives less revenue (distribution only, not generation sales).

Major California CCAs and Rate Comparisons

Rate variation analysis: The most successful CCAs (Sonoma, Marin at times, SBUA) achieve 5-10% savings through: (1) Aggressive renewable energy procurement at declining costs (solar/wind now cheaper than fossil fuels), (2) Long-term power purchase agreements locked before commodity price spikes, (3) Lower administrative overhead than utilities (CCAs sometimes operate on 2-3% overhead vs. utilities' 5-10%), (4) No shareholder profit requirements. Less successful CCAs (Silicon Valley, East Bay) often charge premiums due to: (1) Higher stranded cost recovery (utilities bill the CCA for legacy liabilities), (2) Aggressive renewable mandates (100% clean energy costs more upfront), (3) Higher administrative costs during launch phase, (4) Smaller scale purchasing power (smaller communities negotiate less advantageous wholesale terms).

Key Takeaway: California CCAs represent a grand experiment in public energy procurement. Best-case CCAs save 5-10% while mandating 80-100% renewable energy. Worst-case CCAs cost 5-8% more than the incumbent utility. The determining factors: (1) When the CCA formed (early entrants negotiated better power purchase agreements before renewable cost declines), (2) Geographic load shape (coastal areas with abundant wind, like Sonoma, get better wholesale rates), (3) CCA management quality and procurement strategy, (4) Stranded cost recovery methodology imposed by utilities. Individual CCA rates fluctuate quarterly; your best bet is comparing your CCA's current rate to PG&E/SCE/SDG&E directly, not relying on historical comparisons.

Real Cost Examples: Typical Household Scenarios

Scenario A: Marin County household, 800 kWh/month PG&E rate (baseline): $0.185/kWh all-in = $1,776/year. Marin Clean Energy rate: $0.182/kWh average = $1,741/year. Savings: $35/year. MCE renewable guarantee: 95-100% (vs. PG&E ~33%). Customer trade-off: Minimal cost savings but significantly more renewable energy.

Scenario B: Silicon Valley household, 900 kWh/month PG&E rate: $0.180/kWh = $1,944/year. SVCE rate: $0.192/kWh = $2,074/year. Cost: +$130/year CCA premium. SVCE renewable: 85%. Customer trade-off: Paying premium for higher renewable percentage (many SVCE customers are willing to pay for 85% renewable vs. PG&E's ~33%, valuing environmental impact).

Scenario C: Sonoma household, 1,000 kWh/month PG&E rate: $0.190/kWh = $2,280/year. Sonoma Clean Power rate: $0.177/kWh = $2,124/year. Savings: $156/year. SCP renewable: 85%+. Customer benefit: Lower cost + higher renewable percentage (optimal CCA outcome).

Renewable Energy and CCA Mandates

Most California CCAs mandate higher renewable energy percentages than investor-owned utilities. Example minimums: Marin Clean Energy (95%), Sonoma Clean Power (85%), SVCE (85%), East Bay Clean Energy (76%). These mandates drive electricity procurement strategy: CCAs must contract with renewable generators and purchase Renewable Energy Credits (RECs) to meet targets. In 2024-2025, renewable energy procurement costs have declined dramatically (wind $20-30/MWh levelized, solar $15-25/MWh), making aggressive renewable mandates economically feasible for the first time. Early CCAs (2010-2015) that locked in high renewable mandates (80-95%) initially faced rate premiums because renewables cost more then. Current CCAs forming (2023-2025) can commit to 100% renewables at competitive rates because underlying costs have collapsed. This explains why older CCAs sometimes cost more (stranded in higher historical renewable costs) while new ones can promise 100% renewable at parity or discount to the utility.

The Opt-Out Process and Staying with the Utility

California law requires CCAs to explicitly notify residents of enrollment and provide opt-out mechanisms. If you prefer the incumbent utility (PG&E, SCE, SDG&E) over your local CCA, you can opt out and remain on utility service. Opt-out mechanics: (1) CCA sends notification letter (required by law) explaining rates, renewable percentage, and opt-out process. (2) Customer can opt-out by calling CCA customer service, visiting CCA website, or returning opt-out card. (3) Opt-out processing takes 1-2 billing cycles. (4) Customer reverts to utility billing. Important: Opting out reverses opt-out status, you're back to utility; opting in to CCA can happen later when competitive rates improve. No fees or early termination charges apply to opt-in/opt-out switches (they're default enrollment mechanisms, not service contracts).

Challenges and Criticisms of California CCAs

Stranded cost recovery: Utilities charge CCAs for "stranded costs"—costs of past investments that the utility expected to recover over time but loses revenue from when customers leave for CCA. Example: PG&E invested $2 billion in a natural gas power plant assuming 40-year revenue recovery. When a CCA launches, 30% of customers switch away, stranding $600M of recovery. PG&E charges the CCA (and remaining customers) stranded cost rates, increasing CCA's all-in costs. This mechanism sometimes makes CCAs more expensive than utilities despite lower wholesale power costs.

Regulatory uncertainties: California Public Utilities Commission (CPUC) oversees CCAs, but rule changes affect CCA viability. For example, CPUC's 2020-2025 decisions on stranded cost allocation have shifted. CCAs face ongoing regulatory risk that may increase costs or reduce procurment flexibility.

Consolidation and scale: Small CCAs (serving 50K-200K customers) have higher administrative costs per customer than large utilities (serving millions). Mergers/consolidations are occurring (example: Marin, Sonoma, and other northern CA CCAs discussed forming a single larger CCA to reduce overhead).

Next Steps: Evaluating Your CCA Option

Step 1: Identify your local CCA (if one exists). Check CPUC's CCA list (cpuc.ca.gov) or search "Community Choice Aggregation [your county]". Not all California counties have CCAs yet; some areas remain utility-only (e.g., parts of Kern County).

Step 2: Compare current rates. Get your CCA's latest rate schedule (check their website) and compare to your utility's current rate. Calculate annual cost at your consumption level. Don't rely on historical data—CCA rates fluctuate with wholesale market and renewable costs.

Step 3: Evaluate renewable percentage value. If CCA offers higher renewable percentage than utility (typical), assess whether you value that. Many California residents prioritize renewable energy enough to accept cost premiums; others prioritize lowest cost regardless of fuel mix.

Step 4: Decide based on rate + renewable preference. If CCA rate is lower or equivalent to utility AND renewable percentage is higher, enrollment is beneficial. If CCA rate is significantly higher (+5%+) and you don't value renewable premium, opt-out back to utility is justified.

Related articles: How to Compare Electricity Rates, Understanding Renewable Energy, California Energy Market Overview