Some of California’s Major Utilities Are Trying to Block the Growth of Government-Owned Electricity Programs

Some of California’s big shareholder-owned utilities are working to thwart the expansion of government-owned electricity programs, including Los Angeles County’s proposed end run on traditional power providers.

San Diego Gas & Electric Co. and Pacific Gas & Electric Co. are seeking amendments to state legislation or even a separate bill before the session ends Sept. 15 that will impose a moratorium on the so-called community choice aggregation programs operated by local governments as alternatives to existing power companies. Southern California Edison so far has taken a wait-and-see stance.

The legislative effort has been dubbed the Freeze Bill for proposing to put the choice program expansion on hold, at least until the state develops what the utilities believe are appropriate fees to be paid by customers who leave for government-run providers. Some discussions have included language applying the moratorium to any community choice program not delivering electricity as of Sept. 1.

The community choice aggregation movement, which now includes Los Angeles County, is the latest potential blow to the shareholder-owned utilities, which have endured a dramatic shift in their industry with the proliferation of rooftop solar, improved energy efficiency, use of smart technology and the advent of battery storage that enables consumers to store electricity in their garages.

The technological advances have led to declining or flat usage in recent years of electricity produced by the utility companies. An industry report referred to these advances as “disruptive” technologies.

Although the shareholder-owned utilities say they support consumer choice, they insist that the current regulatory framework creates inequities for those who want to stay with their existing power provider.

“A diverse range of organizations, including seniors, small business, labor and consumer groups believes the current [system], which is supposed to ensure equity, is broken,” said Helen Gao, an SDG&E spokeswoman. “SDG&E agrees with these organizations, and believes we are headed for a major problem if regulators don’t fix the … issue soon.”

Southern California Edison said there is concern about how costs are managed and has communicated with lawmakers about the issue.

“SCE is not actively supporting a specific bill at this time on CCA-related matters, but continues to monitor bills and proposed legislation with a focus on protecting its customers,” Edison said in a statement.

At issue are obligations the utilities already have that need payment — in particular, contracts for energy that the power providers secured years ago at prices that are higher than what the government-run programs are able to secure today.

If customers fleeing the shareholder utilities for the government-run providers don’t help cover the costs, those who remain with Edison, SDG&E or PG&E could face higher bills, the utilities argue.

Proponents of the government-run choice programs say they believe some reasonable compensation for the utilities to cover their costs is fine. But the utilities already receive adequate compensation, said Shalini Swaroop, deputy general counsel for the state’s oldest choice program in Marin County, called MCE.

“Traditionally, MCE has argued that the fee is too high and it affects our customers disproportionately,” Swaroop said. “MCE does not believe a freeze is needed. The Public Utilities Commission is currently examining the power charge indifference adjustment fee.”

MCE customers currently pay about $160 a year to PG&E in compensation after having left the utility.

Swaroop said MCE has been raising the issue of the exit fees for the last five years with no resolution, so the move for a moratorium now doesn’t make much sense.

A moratorium would affect MCE, as it is planning to add as many as nine cities, which have some 1 million people.

Perhaps the biggest concern for the utilities is the decision by Los Angeles County to create a community choice aggregation program. It has the potential to be the state’s largest.

Right now, four areas have signed up for the county program — West Hollywood, Calabasas, South Pasadena and Rolling Hills Estates, representing 1.2 million residents, or more than 250,000 residential and commercial accounts. The county intends to phase in the program in 2018.

The change in provider isn’t overwhelmingly apparent to consumers, other than the size of the bill.

In the case of Los Angeles County customers, electricity will still be delivered by Edison over its existing power lines. Edison will also continue to read the meters and send the bills.

But the county utility will buy the electricity from the market or under contract. The county can choose as much green energy as it wants and even build solar projects in the future.

Los Angeles County Supervisor Sheila Kuehl, who helped lead the effort to establish a choice program in the county, said the shareholder-owned utilities are simply “freaked out” at the idea of competition.

“When you’re used to having a monopoly, competition is a very scary thing,” Kuehl said. She said the effort to seek the moratorium in the waning days of the legislative session was troubling.

“They decided to take what I think is a fairly sneaky tack,” Kuehl said.

Some of California’s Major Utilities Are Trying to Block the Growth of Government-Owned Electricity Programs, by Ivan Penn, The Los Angeles Times, September 8, 2017.

1 reply
  1. Diana E.
    Diana E. says:

    As a resident of unincorporated Los Angeles County, competition can’t come soon enough. I am particularly passionate about competition within the major utilities because I’m living through an ordeal right now for which SoCal Edison has been of no help whatsoever. Thanks to sky-high electric bills for a house that is as-of-yet lived in only during weekends, my spouse and I reached out for Energy Assistance help and Energy Audit program assistance, only to find no on-site help options to troubleshoot our sky-high electric bills. Two months and 2 billing cycles in with no resolution, SoCal Edison has officially ruined my first-time home ownership experience. Why? Because in response to multiple calls by myself and my spouse, various SoCal Edison customer service agents have offered what has turned out to be entirely disconnected toll-free telephone numbers for Energy Audit programs that no longer exist, after which they have offered only a generic website resource for one-size-fits-all “consumer education” on home energy efficiency. In a word? Runaround.

    We were finally told that the only “energy assistance” is on the web because there are no more in-home energy audits of any kind (this after being told that a private contractor would contact us for an appointment — Edison reps made up every single excuse before admitting that such programs no longer exist in any form for residential customers). Now here’s the kicker: We paid over $800 in home inspections, including a dedicated electrical inspection and a dedicated HVAC inspection. Our efforts to do due diligence even included attempts to contact Edison and the homeowner before and during escrow to inquire about a typical electric bill for the home/area. Predictably, Edison cited customer privacy — even though the former owner was deceased! — but what’s worse is that Edison refused to even provide an average for the area or zip code, saying such information was *also* private (really, an average of what our neighbors are paying to live in a community we are about to buy into is proprietary information?)!

    By our calculations once we live in our new home full-time after renovations are complete we will be paying an electric bill of $500-$700 a month! This is clearly evidence of something terribly wrong — either with the meter or the house — and yet our pleas with SoCal Edison have fallen on deaf ears. As a result, my spouse and I are back to hiring electrical inspectors, HVAC inspectors — a repeat of steps we already took during escrow!

    Remember how the Big Bells were broken up into “Baby Bells” during the ’80s? Does anybody care about antitrust law anymore? Apparently not, otherwise a big utility like SoCal Edison would not be dismantling programs that allow customers to pare down energy consumption. It is hardly Green when a major utility strings a customer along about Energy Assistance and Energy Audit programs that, in reality, do not offer residential customers any form of on-site assistance. Electricity is an inherently physical infrastructure, but SoCal Edison’s efforts in recent years is to push self-serve web-driven resources that do not in any way address problems that may reside on the customer’s property (or even, for that matter, with the meter). There is nothing but misdirection and misinformation available at the hands of SoCal Edison agents by phone, no help at one’s home and no way to stop the hemorrhaging electric bills. If my spouse and I cannot find a solution we will be forced to sell the house because a $600+ monthly electric bill will consume our entire grocery budget.

    I am sharing my experience in the hope that the State of California and/or federal regulators will topple the SoCal Edison monopoly once and for all. One can only conclude that SoCal Edison has no real desire to help California residents meet State-mandated energy efficiency goals given that their policy is to deny any and all forms of in-home help, including a flat-out refusal to verify that their own equipment (e.g. the smart meter) is working correctly. These corporate fat cats have been unchallenged for long enough. I hope that government-run utility options will become widespread throughout the State and the nation because short of antitrust enforcement of the kind we saw in the ’80s, there is no other way to realistically force a monopoly like Edison to rethink their customer-indifferent business model.

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