What is a CCA and Why You Should Be Worried

If you live in California, you need to pay close attention to your utility bills. There’s a movement underway led by local politicians who want to switch you automatically from your private utility company into a government utility company called a “CCA.”

So what is a CCA? A CCA stands for “Community Choice Aggregation” and it is a government agency that takes over your private electric utilities.  

What does it do? Well, actually, not very much. And therein lies the problem.

More specifically, CCAs do absolutely nothing that isn’t already done by current private investor owned utilities (IOU); they add no real value. In fact, the CCA is nothing more than a board of politician-appointed environmental activists.  

The CCA subcontracts to the existing utility to:

1. generate and/or buy enough power to cover 24/7 demand;

2. transport power;

3. deliver power to your home;

4. read meters and send out bills;

5. answer customer service calls; and

6. maintain and operate the physical wires system.

The only real purpose of a CCA is for that politician-appointed board to dictate to your private power company that they want them to stop buying cheap energy and only buy much more expensive “renewable energy.” This includes recent efforts to shift California households and businesses from natural gas appliances to electric systems — even though natural gas is more energy efficient.

You may think that a CCA is needed to protect the environment. Again, no.  

Private utility companies already have onerous renewable energy mandates imposed on them. Given that IOUs and municipally owned utilities (MOUs) in California now both have to buy one-third of their retail power from renewables, which will increase to over 50% by 2027 and 60% by 2030,¹ it appears that the real, hidden function of CCAs is to artificially ramp up demand for renewable energy — and in so doing increase the subsidy for inefficient and costly power, all in pursuit of a mandated “Green New Deal” that has never been voter-approved.

As a result, CCAs can only possibly increase costs to the consumer because they duplicate an energy purchase function that is already done, and with likely stronger economies of scale. In so doing, they necessarily add overhead.  

So, we again ask the question: where is the value-add of these organizations?

The in-state trade organization for CCAs, the California Community Choice Association, reports that there are now 25 operational CCA programs in California serving some 11 million customers. CCA programs also exist in many other states, which have similarly undertaken to mandate “Green New Deal” programs on their own. According to Cal CCA, the purpose of these organizations is:

“To meet climate action goals, provide residents and businesses with more energy options, ensure local transparency and accountability, and drive economic development”

Here’s how one of California’s largest CCAs, East Bay Community Energy (EBCE)² describes itself in its audit:

The EBCE CCA admits it does nothing. It doesn’t deliver the power – it simply contracts with PG&E. That’s why it operates no bucket trucks, owns no power lines or transformers, and employs no electrical workers or linesmen.  

As a consumer you may well be suspicious of the large IOUs, though as we have pointed out in our earlier analysis, IOU rates, operating costs, and rate of return to investors are already scrutinized, approved, and thoroughly controlled by the state through its political CPUC arm.  

As we have demonstrated, Californians pay such high energy bills because the state has larded the IOU budgets with hidden taxes and other costs, most egregious and onerous of which are its renewable energy mandates. If you don’t believe that the state CPUC will adequately ensure “local transparency and accountability,” to quote one of Cal CCA’s core goals, that is not a failure of the IOUs. California’s MOUs such as Anaheim or Lassen, of course, are directly run by their communities, and they are true utilities to boot.³

Let’s examine another Cal CCA goal, which is “to meet climate action goals, [and] provide residents and businesses with more energy options.” It seems clear to us that California’s aggressive renewable mandates have reduced energy options for California, largely with the bans on natural gas use — even though direct gas heating and cooking is much more efficient than electricity. And how do CCA’s further “climate action goals” when the IOUs and the MOUs already have imposed upon them extreme renewable mandates?

Now for the final Cal CCA goal, which is to “drive economic development.” We humbly submit that an electron is an electron; it neither comes with a political label nor cares how it is generated. Neither should you — if you want your lights, internet, Twitter feed, and Tesla recharger to operate smoothly and without interruption. It is electric service reliability that can “drive economic development;” how the electron is sourced matters not in the real world.  

But, when that electron arrives does matter very much — and here’s where the CCA story gets most interesting. The CCAs typically offer their customers the “choice” of 100% renewable or carbon-free energy, and a less-virtuous blend (typically 40-50% renewable) that still meets renewable portfolio standards. Because CCAs don’t actually contract for energy delivery — a real job done by IOUs — CCAs essentially buy paper electricity, in the form of Renewable Energy Certificates, or RECS, which enables them to claim the 100% renewable label. Again, from the EBCA audit:  

The list of “active generators” potentially eligible for RECs shown on the WECC⁴ website comprises nearly 10,000 entries across the Western Interconnection, which range widely by scale. These includes some 8,000 rooftop and other larger solar installations (many in California, which includes school district installations), along with about 400 wind farms, 700 small-scale hydropower installations, 100 geothermal plants, and 300 dairy farm or other biogas producers (which, of course, are not “carbon free”). The solar and wind installations comprise the bulk of the name plate capacity here at 30-32,000 MWs each; the small-scale hydro and geothermal capacity is on the order of 3-400 MW.  

This sounds like a lot of power, but all of the non-carbon generation is intermittent, with the possible exception of the small geothermal component: solar and wind only operate a third of the time or less.⁵ There is a lot of large scale hydropower in WECC that can provide reliable baseload power (e.g., Hoover and Grand Coulee dams), but only small hydro plants under 30 MW qualify as renewable energy under the California’s Renewables Portfolio Standard, and as the California Energy commission notes, “annual hydropower production in California varies yearly and depends on rainfall.”⁶

What does this all mean?

Here is a picture of California’s total daily energy demand for March 9, 2023,⁷ when there is neither much heating nor cooling demand. The state’s total 24-hour energy demand for that day, as represented by the area under the Total Demand curve, is around 572,000 MWHrs; total wind and solar generation, by contrast, was about 118,000 WHhrs, or 21% of total demand.

The chart demonstrates the essential point about electricity — it must be available on demand (or as-needed), but both solar and wind are very variable. The now vast number of solar installations in California do offset midday demand — while wind is essentially dead, and as long as it’s not rainy or cloudy — but because solar power peaks from about 9am to 3pm it doesn’t help the higher early morning and evening demand. Wind is at its highest just as the late evening peak is waning, and it is similarly unreliable and weather dependent. The three hour “energy ramp” from 3-6pm reflects the ramp-up of thermal generating plants — typically natural gas — that is necessary to cover the steep fall-off in solar power as the sun sets.  

Think California can actually ban natural gas? Think again.

But here’s the scam in a nutshell: a CCA can purchase solar power RECs produced from 9am to 3pm that are mathematically equivalent to the megawatt hours needed by its service area across 24 hours, and claim “100% renewable” even though this solar power doesn’t exist for more than six hours. The CCA never sees that power, which it couldn’t possibly use anyway because the MWhrs exceed its demand in that six-hour period. It’s up to the IOU to actually deliver power for 24 hours, and to make sure that the three hour “ramp up” to cover solar’s afternoon decline occurs. The use of RECs is the same definitional grift that enables a European rail company or a US tech firm to claim they are “100% carbon free” when neither would dare try to mass transit or a server farm on energy that is weather-dependent, or which simply disappears in the afternoon.  

The graph below illustrates this reality. Using the same real-time data for March 9, this compares the approximate demand for CCAs across the state⁸— about 143,000 MWhrs — with all state-wide solar and wind generation available that day, which as noted above was about 118,000 WWHrs, or over 80% of the CCA demand. But nearly a third of this renewable generation at midday when it is surplus to CCA demand (about 30,000 MWhrs); this power cannot be used by them either at that time or in the morning and afternoon shoulder periods where demand exceeds renewable production. In other words, even if CCAs could physically access all the solar and wind power produced statewide, they could theoretically claim 80% renewable coverage from these sources, but only 60% in terms of physical reality.

The irony, of course, is that despite the goal “to drive economic development” California is pursuing the opposite, rapidly undermining its electric grid with its radical pursuit of unreliable renewables. We say “radical” because California’s policies exceed that of any of the Paris Accord signatories’ quest to address “climate change.” Meanwhile, of course China and India aggressively pursue thermal generation because they want reliable power and know that there is no climate emergency.

Before we conclude our analysis of the CCA model, let’s look at the East Bay Community Energy Authority CCA’s financial statement for 2022.

After generating $555,332,546 in revenues, and doing absolutely nothing more than writing checks to the private utility company to do all the work, this government CCA declared net operating income — effectively, a profit — of $53,398,572. After collecting taxpayer-funded grants, it posted $60,618,092 in total — for an effective profit margin of more than 10%.  

In the end, when adding the profit margin to the unnecessary CCA overhead costs (i.e., beyond the cost of power itself), ratepayers and taxpayers were overcharged $87,856,210 by the CCA model. In other words, the CCA made an 18.5% margin on the $475 mm electricity (or REC) costs they incurred. Where is the benefit to ratepayers?

So, when you hear about a CCA utility taking over your electric utility service — beware! You are about to pay a lot more and our energy market is about to get a lot less reliable in the process.  

Al Medioli is a Senior Fellow at the Transparency Foundation

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¹ From the CPUC website:

² The various excerpts in these Notes are from the EBCE audit unless otherwise indicated.

³ Lassen was created by its customers in [2001] to achieve local control and was carved out an existing IOU.

⁴ Western Electricity Coordinating Council (WECC) manages bulk electric power supply across the Western Interconnection, which includes California, 13 other US states, and parts of Canada and Mexico. See https://www.wecc.org/WREGIS/Pages/Default.aspx for the WREGIS list of REC eligible generators referenced above.

⁵ A mid-2022 study from the Geological Survey of Finland cites 2018 Global Energy Observatory findings that  

solar PV produced 11.4% of the calendar year, while wind produced 24.9% of the calendar year.

⁶ https://www.energy.ca.gov/data-reports/california-power-generation-and-power-sources/hydroelectric-power

⁷ http://www.caiso.com/TodaysOutlook/Pages/default.aspx

⁸ CCAs reportedly now serve about 28% of the state’s residents, so the CCA demand curve here reflects 25% of total statewide demand