The rise of community choice aggregation and its implications for California’s energy transition: A preliminary assessment

Abstract

Community choice aggregation—an emerging electricity supply model allowing residents and businesses to purchase electricity from local governments instead of utilities—is projected to account for 60% of Californian customers currently served by investor-owned utilities by 2020.Community choice aggregation advocates claim that the model is an effective means of meeting California’s renewable energy policy objectives in a way that is more democratic and socially just than the prevailing utility-based model of electricity governance. We interrogate these claims through a focus on three issues: community choice aggregation governance and access to capital, electricity procurement, and customer rates and retention. We find that community choice aggregators have been able to address concerns regarding access to capital while balancing competing objectives around renewable energy and affordability. However, local benefits—particularly in terms of local economic development driven by the expansion of distributed generation—are yet to be fully realized. In addition, ongoing policy uncertainty regarding cost allocation between utility and community choice aggregation customers may limit the ability of community choice aggregators to offer competitive rates, which may threaten the model’s long-term viability. We conclude by arguing that meeting California’s future renewable energy goals requires a reconfiguration of the regulatory framework that leverages the respective strengths of both community choice aggregators and investor-owned utilities in the context of the state’s energy transition.