After nearly a year of research, the Coronado City Council is poised to decide whether to switch its energy procurement to a Community Choice Aggregation (CCA) program.
CCAs focus on sustainable energy sources, and under this model, public utilities continue to deliver power and handle billing — SDG&E, in Coronado’s case. Because they are non-profit entities, they must reinvest income after reserves into local energy programs, which is not the case with investor-owned utilities.
Last summer, the council considered joining a CCA in an effort to reduce Coronado’s carbon footprint, but concerns arose about risk, finances, costs to small businesses, and more. The idea was first voiced when Coronado passed its Climate Action Plan (CAP) in 2022, which noted CCAs as a potential carbon reducer.
The council opted instead to form a CCA subcommittee comprised of Councilmembers Carrie Downey and Kelly Purvis to further explore the matter.
Now, the subcommittee is recommending that Coronado move forward with joining a CCA and identified San Diego Community Power (SDCP) as the better of two options. The other option considered was Clean Energy Alliance (CEA), but the subcommittee favored SDCP because it is larger and its member cities are concentrated in the South Bay. The council will discuss the findings and take action at its Feb. 17 meeting.
A staff report estimates that joining a CCA could reduce nearly 10,000 metric tons of carbon dioxide equivalent annually. For context, all the city’s combined local reduction strategies carry a 12,600 metric tons of carbon dioxide equivalent reduction. The electricity rates from CCAs are competitive with traditional energy procurement and are sometimes slightly lower.
Purvis and Downey cited the following reasons for their recommendation in their report:
- Competitive rates with governance from a board of local representatives, rather than investor-driven decision making as with a traditional utility
- Progress toward CAP goals in a capital-light manner
- The ability to foster regional partnerships by working with board members from regional cities
- Potentially faster progress toward 100 percent enrollment in Coronado, since customers are automatically enrolled unless they opt out
An independent, 2025 analysis commissioned by Coronado concluded that the region’s two CCAs were broadly similar and that remaining with SDG&E posed minimal near-term risk. It also noted that differences in greenhouse gas emissions between CCAs and SDG&E are expected to narrow over time as statewide clean-energy mandates take effect and SDG&E invests in grid upgrades and energy storage.
The subcommittee report addressed several concerns about CCAs raised last summer, concluding that most of them were transitional hiccups or not as dire as expected.
Do CCAs provide sustainable energy, or just purchase credits?
One of the most persistent questions raised by residents and leaders is whether CCA programs are actually delivering cleaner electricity, or if they are primarily purchasing renewable credits tied to energy generated elsewhere.
The answer is complicated.
Once electricity enters the grid, it becomes indistinguishable. Power generated by a gas plant, a wind farm, or a hydroelectric dam all flows into the same, shared system.
California does not define clean electricity by where the power physically flows. Instead, it relies on a tracking and certification system overseen by the Western Renewable Energy Generation Information System (WREGIS).
For every megawatt-hour of qualifying renewable energy generated, WREGIS issues a Renewable Energy Certificate (REC). The electricity and the REC can either stay together or be separated and sold independently.
In a bundled REC, the electricity and renewable attribute are sold together, usually through a power purchase agreement (PPA). This is the strongest form of renewable claim under California rules.
However, in an unbundled REC, the renewable attribute is purchased separately from the electricity itself. This is the confusing part: no matter what, electricity is electricity once it enters the grid. But in a bundled arrangement, the same buyer acquires both the power and the REC, while in an unbundled arrangement, the energy is sold to one party, while the REC is sold to another. In both cases, the physical electricity that reaches customers comes from the shared grid.
Back to Coronado and CCAs, then: both CCAs and SDG&E use a combination of bundled and unbundled RECs in their procurement. While these procurement systems do not guarantee that the electricity powering a Coronado home came from a renewable source, the argument is that the RECs cultivate renewable energy.
A renewable generator, such as a wind farm, earns from two revenue streams: It sells the energy itself at market rate, and it sells its REC. A fossil-fuel plant would earn only the market rate for its energy produced.
The argument, then, is that RECs help incentivize green energy — though it doesn’t hurt that the state mandates it.
Resource adequacy violations
The state’s Resource Adequacy (RA) program mandates reliability and capacity minimums for CCAs to ensure reliable electricity supply, and both CEA and SDCP have violated these requirements in recent years.
A 2022Â report from the California Public Utilities Commission listed two citations for CEA, the smaller of the two CCAs, with fines of $616,627. That same year, SDCP received 4 citations for $5 million. The subcommittee report does not list CEA’s fines, and it states that SDCP’s were waived.
In 2024, according to the subcommittee report, SDG&E was fined $1,500, while CEA was fined $2.51 million, and SDCP was fined $8.49 million.
The subcommittee found that RA shortages exist statewide, which makes it difficult for “new market entrants, including CCAs, to meet local RA and system RA requirements.” Reasons cited include more extreme weather, decreasing availability of hydro resources due to drought, power constraints of the entire region, and “unnecessarily restrictive requirements for energy imports,” the subcommittee report says.
Another reason for the constraint, the subcommittee found, is that the California Public Utilities Commission (CPUC) authorized investor-owned utilities to exceed their planning reserve margin targets for summer months, which reduced RA supply for other programs. Also, the report says, the CPUC has reduced the ability to meet RA requirements using wind and solar.
Both CCAs have issued requests for proposals (RFPs) to address their RA deficiencies, and its boards have approved projects to help meet the need, although the specifics have not been made publicly available.
“The remaining issue,” the subcommittee report reads, “is whether the projects can overcome the local San Diego issues for construction, interconnection, and transmission, and (whether they will) come online within the dates required. If still unable, both CCAs and SDG&E can follow all rules to apply for a fee waiver for any shortage. SDCP has already preemptively requested local RA waivers for the years 2025 to 2027. No decision has been made to date.”
Financial risks
Last summer, the council worried that joining a CCA could carry unintended financial risks through liabilities, exit costs, and staff time.
A key concern was that, if Coronado ever opted to leave its CCA, it would incur fines. Conversely, leaders and residents wondered whether another city’s departure could financially impact Coronado or destabilize its energy procurement.
The concern is not without history. In 2021, the board of directors of Western Community Energy (WCE) declared bankruptcy, citing the COVID-19 pandemic and Aug. 2020 heat waves as reasons. Baldwin Park subsequently exited the CCA, and a city staff report lists losses of $9.7 million for the move.
In 2023, Huntington Beach left the Orange County Power Authority (OCPA), and Orange County pulled out of its contract with OCPA in 2022 due to transparency issues, failed audits, and other concerns.
Last summer, Coronado residents and leaders questioned what liability or expenses Huntington Beach incurred for its exit. The CCA subcommittee report pointed to post-withdrawal accounting, which found no remaining net liability attributed to the city.
In Huntington Beach’s case, Orange County Power Authority reported that post-withdrawal accounting resulted in no remaining net liability after standard RA costs were considered. In other words, those costs would have been incurred regardless of whether the city was served by a CCA or an investor-owned utility, the OCPA said. That assessment was prepared by OCPA itself and was not independently audited.
Huntington Beach’s outcome, still, depended on market conditions and contract adjustments specific to that case, but shows that exiting a CCA does not always impact the city leaving or destabilize the CCA and its remaining cities.
The subcommittee report acknowledges that a CCA will always carry some risk, but argues that it is not great enough to outweigh the advantages of joining.
Weighted votes
Beyond questions of cost and clean energy accounting, a chief concern of SDCP specifically is that its joint powers agreement includes an optional weighted vote system.
Under SDCP’s structure, each member agency is ordinarily represented by one vote on the board. However, the agreement allows the board to invoke weighted voting for certain decisions, allocating votes based on each member’s share of electricity load. Because the City of San Diego represents the majority of SDCP’s customer base, weighted voting would give San Diego a substantially larger share of decision-making authority if that mechanism were triggered.
According to the subcommittee report, weighted voting has never been used since SDCP’s formation, and its activation would require procedural steps rather than occurring automatically. The report characterizes the provision as a backstop rather than a routine governance tool.
If Coronado joined, SDCP’s board would grow from seven members to eight, perhaps making a majority decision more difficult. The presence of weighted voting has raised questions locally about how much practical influence smaller jurisdictions like Coronado would retain over long-term policy, procurement decisions, or risk tolerance within the agency.
The subcommittee report acknowledges the concern but concludes that SDCP’s governance model, including weighted voting, does not present a material risk to Coronado. That conclusion rests largely on the fact that weighted voting has not been exercised to date and that major decisions still require supermajority approval under the joint powers agreement.
Three years ago, weighted voting caused a stir at the San Diego Association of Governments (SANDAG). At one point, leaders from smaller cities walked out of a board meeting, saying that small cities did not get fair representation on the board due to the weighted vote system.
In 2022, Coronado and three other one-vote cities lost a lawsuit against SANDAG, alleging that the weighted vote unfairly shouldered them with more of the Regional Housing Needs Allocation (RHNA) than they can handle.
That allocation began a years-long slog to rezone for 912 units of new housing (plus a 15 percent buffer). The plan was ultimately approved by the state in 2023.
Within this context, Coronado’s leaders were critical of weighted votes last summer.
Small business costs
Last summer, a presentation shown to the council suggested that small businesses may incur steep increases to their electrical bills if the city moved to the CCA model, although it was unclear how or if that would happen. The subcommittee was tasked with investigating, and found that most commercial clients receive comparable bills under CCAs as they would under a traditional utility. A comparison of costs is available here.
What about customers with rooftop solar?
Many of Coronado’s customers are on legacy Net Energy Metering (NEM) 1.0 or 2.0 agreements related to solar panels installed on their roofs. Both SDCP and CEA allow customers to carry over existing NEM contract terms if they switch to a CCA.
Would Coronado lose SDG&E support for undergrounding or other projects?
The subcommittee report says that joining a CCA would not affect SDG&E’s role in distribution infrastructure because CCAs replace only energy procurement. SDG&E would still manage infrastructure.
How would Coronado benefit from CCA reinvestment?
As nonprofits, extra funds are reinvested among member cities. The subcommittee report noted that SDCP allocated member agencies $50,000 per city, not tied to population.
The City Council will consider this matter during its meeting at 4 p.m. on Feb. 17. Public comment will be heard.
