Community Choice Aggregation—An Alternative Way to Providing Electricity Service By Local Government

By Greg Stepanicich*

I. INTRODUCTION

Historically in California, a city could provide electricity to its residents by creating a municipal electricity utility that both purchased and distributed electricity to its resident customers.¹ But in the modern era, due to financial, legal and political constraints, relatively few cities provide electricity to their residents. Instead, most cities are served by private investor-owned utilities. Yet a new trend may bring California back to its municipal utility roots.

In 2002, after the electricity deregulation meltdown in California, the state legislature adopted a statute authorizing cities and counties—either individually or jointly through a joint powers authority—to conduct what is called a community choice aggregation program.² Under community choice aggregation, a local public agency can purchase electricity on behalf of its resident customers and the existing investor-owned utility is required to distribute this electricity from its distribution infrastructure. This program allows local government to control the pricing and carbon content of the electricity provided in its community without the capital costs of building a distribution network. At the time of the electricity deregulation crisis, the investor-owned utilities supported this legislation.