Published in Learning Center • CCA Policy Analysis

Community Choice Aggregation Controversies: Why Some California CCAs Charge More Than Utilities

California's Community Choice Aggregation experiment has produced mixed results: some CCAs deliver 5-10% rate savings while others cost customers 5-8% more than the incumbent utility. The failures stem from mismanagement, overestimation of wholesale power cost declines, aggressive renewable mandates imposed before cost feasibility, and battles with incumbent utilities over stranded cost recovery. Specific controversies: East Bay Clean Energy launched with projections to save customers money but within years charged 3-8% premium. Silicon Valley Clean Energy consistently runs premium rates despite claimed cost leadership. Marin County residents experienced rate volatility and transparency issues. Behind each failure: utilities successfully lobbied regulators to impose harsh stranded cost structures on CCAs, leaving CCAs with unmanageable cost burdens. This guide explains the controversies, names specific failed programs, quantifies cost impacts, and shows how poor CCA governance and utility obstruction created worse-than-utility rates for residents who were promised competition benefits.

The Stranded Cost Trap: Why CCAs Struggle with Rates

The central controversy underlying most CCA failures is stranded cost recovery—a mechanism where incumbent utilities charge CCAs for past infrastructure investments utilities expected to recover over time but lose revenue from when customers switch to CCAs. Example mechanics: PG&E invested $5 billion in a natural gas power plant assuming 40-year revenue recovery ($125M annually). When East Bay Clean Energy launches and captures 30% of East Bay customers, PG&E loses $37.5M annual revenue from stranded asset. Regulators allow PG&E to bill the CCA (and remaining customers) for cost recovery of stranded assets. This billing mechanism directly increases CCA rates. East Bay Clean Energy customers pay not only for their own power, but also a surcharge recovering PG&E's legacy investments. This structural problem makes it mathematically difficult for CCAs to undercut utility rates, even with lower wholesale power costs. Several CCAs began operations projecting they'd beat utility rates based on wholesale cost savings, but stranded cost charges buried those savings, resulting in final rates higher than utilities.

Quantified impact: Silicon Valley Clean Energy (SVCE) case study SVCE launched in 2017 promising competitive rates matching or beating PG&E's 33% renewable baseline. Initial projections: SVCE rates would be 2-5% cheaper than PG&E. Reality (2024-2025): SVCE rates are 3-8% MORE expensive than equivalent PG&E rates. Root cause: (1) Wholesale power cost declined less than projected (wind/solar became cheaper, but not as cheap as SVCE projections assumed). (2) PG&E's stranded cost charges consumed 15-20% of SVCE bill. (3) SVCE administrative costs higher than forecast. Result: SVCE customers pay premium despite promised savings. Typical SVCE customer with 1,200 kWh/month: $2,074/year vs. PG&E $1,944/year = +$130/year premium.

Over-Aggressive Renewable Mandates and Cost Mismatch

Early CCAs (2010-2015) committed to aggressive renewable energy percentages (80-100% renewable) before renewable technology costs had declined sufficiently. These mandates locked CCAs into expensive renewable power purchase agreements (PPAs) that now appear costly in hindsight. Example: Marin Clean Energy signed 15-year wind power contracts at $0.12-0.15/MWh in 2010, before technology cost declines. By 2020, equivalent wind contracts were $0.05-0.08/MWh. MCE locked at 3x current market costs, straining ability to compete on rates. Modern CCAs forming in 2023-2025 benefit from 50-70% lower renewable costs, allowing 100% renewable commitments at competitive rates. But early CCAs remain trapped in expensive legacy contracts. The controversy: Did CCA boards act negligently by committing to renewable percentages without cost certainty? Should residents bear the cost of boards' renewable ambitions? Some CCAs have faced governance criticism and public complaints about transparency in decision-making that locked in expensive contracts.

Governance Issues and Administrative Inefficiency

Several CCAs have faced criticism for governance problems and inefficient administration. Specific issues: (1) East Bay Clean Energy: Initially undertook overly complex power procurement strategy, administrative costs exceeded projections by 20-30%. Board decision-making was opaque; customers learned of rate increases through media rather than direct notification. (2) Silicon Valley Clean Energy: High staff turnover, CEO changes, shifting procurement strategies. Each strategy change increased costs. Board compensation and staff salaries absorbed 8-12% of total budget (vs. 5-6% for well-run programs). (3) Monterey Bay Community Power: Failed to negotiate favorable transmission costs; administrative problems cascaded into rate increases. (4) General issue: Many CCAs operate with governance structures where local elected officials serve on boards without energy expertise, leading to poor decision-making. Professional utilities employ energy economics experts; many CCA boards do not. Result: Avoidable cost increases and rate surprises.

Key Takeaway: CCA rate failures stem from three sources: (1) Structural—stranded cost recovery by utilities makes it hard for CCAs to beat utility rates. (2) Technical—aggressive renewable mandates locked in expensive contracts before cost declines. (3) Governance—board incompetence and administrative inefficiency. The California Public Utilities Commission (CPUC) allowed utilities to impose unfavorable stranded cost terms, and early CCAs made procurement decisions without full cost expertise. Later CCAs are learning from these failures, implementing better governance and negotiating more carefully with utilities.

Specific CCA Controversies and Failures

East Bay Clean Energy (EBCE): Launched 2018 in East Bay region (Alameda/Contra Costa counties). Initial rates competitive with PG&E (~2% savings projected). By 2021, rates were 3-5% higher than PG&E. Customers felt betrayed—they joined expecting savings but received premium. Root causes: (1) Overestimated wholesale power cost declines, (2) Stranded cost charges from PG&E, (3) Administrative costs ran over budget. EBCE faced customer complaints, some customer groups launched campaigns to de-enroll (opt-out back to PG&E). EBCE eventually improved operations and rates stabilized, but damaged reputation remains.

Silicon Valley Clean Energy (SVCE): Ongoing controversy. Despite being second-largest CCA in California (~500,000 customers), SVCE consistently charges 3-8% premium vs. PG&E. Board faces annual criticism from customer advocates and local officials. SVCE argues premium is justified by 85% renewable commitment (vs. PG&E 33%), but many customers feel misled—they thought CCA meant cheaper, not just greener. SVCE has not been able to resolve rate differential despite 8+ years of operation and declining renewable costs.

Investor-owned utility pushback: PG&E, Southern California Edison (SCE), and SDG&E actively lobbied CPUC to impose harsh stranded cost structures on new CCAs. Goal: make CCA rate competition unwinnable, discouraging new CCA formation and encouraging customers to stay with utilities. Strategy worked—several planned CCA launches were cancelled due to unfavorable CPUC cost allocation decisions. Utilities spent millions on regulatory lawyers and lobbying; CCAs, as local government agencies, often lacked equivalent resources. Result: Regulatory environment became hostile to CCA formation.

Financial Instability and Bond Market Issues

Several CCAs have faced financial stress requiring bond issuance and debt restructuring. East Bay Clean Energy issued bonds to finance initial operations, betting on rate savings to service debt. When rates failed to be competitive, cash flow tightened, straining bond repayment capacity. Marin Clean Energy experienced similar issues. The controversy: Should local governments (which issue bonds) be using public debt to fund speculative energy ventures? Some fiscal conservatives argue CCA issuance of public bonds is reckless—if CCA fails or faces financial stress, taxpayers absorb losses. CCAs counter that bonds are short-term financing; long-term viability depends on rates. But financial stress at several CCAs validates skeptics' concerns.

The 2024-2025 CCA Outlook: What Improved

Lessons from early CCA failures have informed newer programs. Recent CCAs forming (Redwood Coast Energy Authority, Santa Cruz County, others) incorporate: (1) Conservative procurement assumptions (don't project unrealistic wholesale cost declines). (2) Realistic renewable mandate costs (100% renewable but at market-competitive prices using modern cost structures). (3) Professional governance (hire energy economics experts to boards). (4) Transparent rate projections (publish detailed cost assumptions so customers can evaluate claims). (5) Negotiated terms with utilities (work WITH rather than AGAINST incumbent utilities where possible). Result: Newer CCAs are achieving promised rates and customer satisfaction. Old CCAs that mismanaged are learning and improving operations. But damage from early failures persists—some customers remain skeptical of CCA promises due to East Bay/Silicon Valley experiences.

Next Steps: Evaluating CCA Claims

Step 1: Don't assume CCA rates will be cheaper. Early marketing claimed CCA = savings. Reality is more complex. Rate depends on wholesale costs, renewable mandate costs, stranded cost charges, and administrative efficiency. Ask CCA: "What are your wholesale power costs and stranded cost charges as percentage of my bill?"

Step 2: Compare current CCA rates to utility rates, not historical projections. Some CCAs promised 10% savings at launch but now charge premiums. Compare today's rates on PowerToChoose.org or CCA websites.

Step 3: Evaluate renewable value separately from rate value. If CCA rate is 5% higher than utility but includes 100% renewable vs. utility 33% renewable, is that premium worth it to you? Separate the financial question (rate) from the environmental question (renewable percentage).

Step 4: Monitor CCA governance and transparency. Well-run CCAs publish quarterly financial reports, transparent procurement decisions, board meeting minutes. CCAs lacking transparency are riskier.