FutureStructure

California PUC Allows State's Largest Utility to Charge Customers More for Joining CCAs

The Public Utilities Commission voted 4-1 on Dec. 17 to allow Pacific Gas & Electric to charge its customers more when they leave to form renewable energy-focused electricity procurement plans.

by / December 17, 2015
San Diego voted this week to form a community choice aggregation program, right before the state Public Utilities Commission voted to allow a utility to charge customers more for joining in on such arrangements. Shutterstock/View Apart

The California Public Utilities Commission voted Thursday, Dec. 17, to allow the state’s largest investor-owned utility to raise rates for customers that join community choice aggregation (CCA) programs, which dozens of critics said at a hearing will make it much harder to set CCAs up.

The fee, called a power charge indifference adjustment (PCIA), is a mechanism that allows an investor-owned utility to charge a customer for the cost of buying energy on that customer’s behalf when that customer ends its service. In the case of community choice aggregation, those fees often build up to millions of dollars — Marin Clean Energy, one such program, reported that its customers paid $12.9 million to Pacific Gas & Electric last year through PCIA charges.

That’s because CCA programs are designed to remove most of a utility’s customers in a given community. CCAs set up cities as their own energy procurers, usually putting an emphasis on renewable energy in the process. 

“Marin Clean Energy buys 56 percent of its energy from renewable sources, compared with PG&E’s 27 percent,” Marin Clean Energy customer Mary Morgan told the commission during its Wednesday meeting.

The CCA movement in the U.S. has been somewhat sporadic, consisting mainly of individual cities testing out the programs in individual states. In 2013, according to the U.S. Department of Energy, 2.4 million people participated in CCAs, consuming 9 million megawatt hours of renewable energy.

But the movement has been picking up momentum lately — New York’s pilot test for the CCA concept in Westchester County has led to enrollment of the majority of that county’s customers. In California, San Diego voted this week to form its own CCA. That would likely make San Diego the largest CCA in the state. San Francisco has also been working to set up its own program.

The commission’s 4-1 vote will allow PG&E to nearly double that charge in 2016, which led to outcry among residents and officials in California cities trying to get CCA programs off the ground.

“Can you imagine getting cancer from smoking, and then a cigarette public utilities commission charging you an exit fee because you quit smoking?” asked Gladwyn d’Souza of San Mateo Community Choice during the hearing.

Advocates for CCA programs told the commission that the price increase would make it hard for them to compete with IOUs like PG&E and described the fees as a means of shoring up support for utilities’ mistakes. Others appealed to the commission to heed the overall momentum in the state — and indeed, the world, in the aftermath of the Paris climate agreement — to support any strategy that leads to the growth of clean energy.

“It’s now up to all of us, without exception, to take action to meet those targets [adopted in Paris] and even more,” Morgan told the commission.

A running theme among opponents of the PCIA increase was unfairness.

“Ultimately the PCIA is a transfer of wealth from California ratepayers to the regulated industry,” said Jed Holtzman of the climate-focused organization 350 Bay Area.

On that point, most of the commissioners disagreed with the CCA advocates. In fact, Commissioner Mike Florio argued during the hearing, it would be unfair to let CCA customers pay less for energy while customers who stay with utilities have to pay for the excess energy those utilities bought for the fleeing customers.

“I don’t think it’s fair to let one group of customers escape from paying [higher] costs and simply load those on customers who aren’t able to leave,” Florio said. “And that’s what the PCIA is all about.”

He also contended that, contrary to the notion that the PCIA charges make it hard for CCAs to compete with utilities, the charges actually bring CCA pricing more in line with standard prices.

“Of course CCA looks extremely attractive when you can buy power at 6 and a half cents, and PG&E is charging 9,” he said. “But the PCIA accounts for 2 and a half cents of that difference.”

The commissioners also said the PCIA is, in a way, paying for renewable energy — when the state adopted its renewable portfolio standard, it forced utilities like PG&E to enter into expensive clean energy contracts. In doing so, the state offered to let the utilities recoup those costs later through fees — including PCIA.

By asking the utilities to lead, the commissioners argued that the state effectively created economies of scale for clean energy technology that has brought down the price of rooftop solar and other renewable tech.

“This commission supports clean energy," Commissioner Carla Peterman said during the hearing, "and we have done that by giving direction to some of the investor-owned utilities.”

Ben Miller Staff Writer

Ben Miller is the business beat staff writer for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.