Time to Stop the CPUC’s Antagonism Toward Community Choice

October 11 decision on exit fees is the last straw

The California Public Utilities Commission on October 11 voted to change the methodology for calculating the exit fee charged to Community Choice Energy customers. Because of this change, Community Choice agencies (CCAs) will be weakened relative to investor-owned utilities such as PG&E. For me, this is the last straw. It’s time for a change.

The vote didn’t have to go this way. The Commission had another option for the exit fee (aka Power Charge Indifference Adjustment or PCIA).  An Administrative Law Judge had proposed a more balanced approach based on two years of evidentiary hearings on the matter. The California Public Utilities Commission (CPUC) chose to set aside the judge’s proposal in voting as they did on the PCIA.

This vote continues the CPUC’s history of antagonism toward Community Choice.

  • In a  2016 interview, President Picker said that CCAs impose “forced collectivization” on customers, an inaccurate and inappropriate statement.
  • In early 2017 the CPUC initiated the “Green Book” Customer Choice project which implies that CCAs are somehow leading toward a new energy crisis (they are not).
  • In late 2017 the CPUC unexpectedly issued Resolution E-4907 that would have imposed a de facto freeze on all new CCA service launches. Following the uproar that ensued, the CPUC amended the resolution significantly.
  • The CPUC allows investor-owned utilities to lobby against CCAs in violation of the code of conduct established by SB 790.

This antagonism matters because when the CPUC weakens CCAs, they weaken California’s strongest leader and champion for achieving its 100 percent clean energy goal, for creating the twenty-first-century energy system, and for climate protection. Rather than compete in the market that the CPUC and investor-owned utilities (IOUs) have defined, CCAs are redefining the market, accelerating distributed energy resources, democratization, and decarbonization.

California’s new CCA players are not only providing greener power at lower rates, they are innovating. Among their new offerings are dynamic and customized retail rates for key accounts, targeting for distribution grid services, planning based on advanced metering infrastructure and smart meter data, collaborations with the distribution utilities to build microgrids, and distributed energy resources (DERs) to reduce the need for peaker plants. 

More broadly, the CCAs are becoming transformative DER market makers. They are deploying open access technology platforms and a set of business processes that 1) engage the vast ecosystem of local DER developers, financiers and contractors, 2) facilitate customer targeting, acquisition, project development and 3) systematically integrate and monetize DER into distribution grid planning and services, energy portfolio risk optimization, California Independent System Operator (CAISO) markets, long-term planning, and capacity procurement.

Given the clear benefits of CCA, why would the CPUC want to hinder it? The CPUC is encircled by armies of attorneys protecting the interests of their IOU clients. Rather than accelerating the energy system of the future, these attorneys fight to maintain the status quo and preserve profits for their clients.

Not only is the CPUC hindering CCAs, it is allowing IOUs to slow or block distribution resource planning and integrated distributed energy resource proceedings. IOU business models still directly conflict with DER, and their processes are often byzantine, non-functional, and varied from one IOU territory to the next. They restrict CCAs and DER developers from accessing the data they need.

The CPUC’s integrated resources planning process is fundamentally flawed owing to over-simplified, top-down models that don’t integrate DER or account for geographic differentiation. It has overseen a decade in which large amounts of DER has been built without systematic tracking much less integration into planning or operations.

Time to Unite for Community Choice Energy

I call on proponents of Community Choice:

Grow the list of elected officials willing to advocate for CCA. Already, more than 120 mayors, city council members, and county supervisors went on record in opposition to the CPUC’s October 11 decision on the PCIA, including mayors of Northern California’s three largest cities, and many state lawmakers. These elected leaders represent a powerful, growing force. As many as half of all California counties will soon be served by CCA.

Ask the new governor and his team to 1) replace CPUC President Michael Picker, and 2) appoint unbiased commissioners on the CPUC as vacancies arise.

Advocate for new legislation that limits CCA exposure to utility procurement, reduces the CPUC’s PCIA charge, limits CPUC approval of utility procurement/retained generation and/or reestablish real regulation of the utilities from the current system in which CPUC commissioners do not actually review utility procurement contracts.

Consider going even further with legislation that overhauls California’s obsolete 20th century regulated monopoly system and replaces it with a clean, decentralized, 21st-century structure:

  1. Recognize the superior oversight and legitimacy of CCAs
  2. Dispose of IOU generation portfolios and remove IOUs from the generation and capacity planning business (finish restructuring)
  3. Implement an “open architecture” participation platform that operationally integrates DER into network, wholesale and retail, standardized statewide 
  4. Sensibly define the role of IOUs as transmission, distribution, and grid services companies
  5. Define the roles of CCAs, energy service providers, retailers and DER companies in the new market construct.

Spread the positive narrative about CCAs. They benefit their local communities and all Californians by ushering in a clean, smart, distributed, open choice future. CCAs are get-it-done start-ups with their growing, experienced teams running competitive, innovative power agencies. CCAs understand both the energy business and local government’s role and accountability. CCAs are a new, unique, and powerful institution in California. This story needs to be told repeatedly. 

Address as soon as possible any CCA that continues to build stranded cost assets, creates cybersecurity and network stability concerns, or fails to use DER adequately. CCAs are uniquely positioned to monitor and address such problems.

The CPUC’s antagonism is hurting Community Choice customers by undercutting the most powerful tool cities and counties have to reduce their greenhouse gas emissions, scale up clean renewable power, and ensure that energy decisions rest primarily and democratically in the hands of local communities and their elected representatives. It is time to rise up and put a stop to this antagonism.

 

Edward Mainland served ten years as Co-Chair, Energy-Climate Committee, Sierra Club California. He is a Sierra Club Senior Conservation Fellow, co-founder of Sustainable Novato, director of Sustainable Marin, and a public advocate for Community Choice in Marin and throughout California

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