BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 790
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          Date of Hearing:   July 5, 2011

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                               Steven Bradford, Chair
                      SB 790 (Leno) - As Amended:  June 22, 2011

           SENATE VOTE  :   24-12
           
          SUBJECT  :   Electricity: Community Choice Aggregation

           SUMMARY  :   This bill will revise and expand the definition of 
          Community Choice Aggregation (CCA), require the PUC to initiate 
          a Code of Conduct rulemaking, and allow CCAs to receive Public 
          Purpose funds to administer energy efficiency programs. 
          Specifically,  this bill  :   

          1)Expands the entities defined as CCAs to include the Kings 
            River Conservation District, the Sonoma County Water Agency, 
            and any California public agency possessing statutory 
            authority to generate and deliver electricity at retail within 
            its designated jurisdiction.
          2)Require that utilities provide electrical load data to a CCA.
          3)Require the California Public Utilities Commission (PUC) 
            commission to consider the impact if it finds that an 
            electrical corporation has violated the requirement to 
            cooperate fully with a community choice aggregator
          4)Revise resource adequacy and cost responsibility requirements 
            as they relate to community choice aggregators.
          5)Require the commission to authorize a CCA to be a 3rd-party 
            administrator for energy efficiency programs financed through 
            nonbypassable system benefits charges for its electric service 
            customers of cost-effective energy efficiency and conservation 
            programs or to direct a proportional share of energy 
            efficiency activities to the CCA customers if the CCA is not 
            the 3rd party administrator.
          6)Clarify customer disclosure requirements regarding electing to 
            participate in a CCA.
          7)Requires customers who revert from a CCA back to the electric 
            utility to have no more than a 12 month service requirement.
          8)Modifies customer data transfers to clarify that an electrical 
            utility is not required to obtain a customer's consent before 
            providing electricity needs, patterns of usage, and other data 
            if the CCA will agree to reasonable safeguards.
          9)Requires the PUC, by March 2012 to establish a code of conduct 
            to ensure that an electrical corporation does not market 








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            against a CCA except through an independent marketing division 
            that is funded exclusively by the electrical corporation's 
            shareholders and that is functionally and physically separate 
            from the electrical corporation's ratepayer-funded divisions; 
            limit the electrical corporation's independent marketing 
            division's use of support services from the electrical 
            corporation's ratepayer-funded divisions, and ensure that the 
            electrical corporation's independent marketing division has 
            allocated costs of any permissible support services from the 
            electrical corporation's ratepayer-funded divisions on a fully 
            allocated embedded cost basis; and ensure that the electrical 
            corporation's independent marketing division does not have 
            access to competitively sensitive information; and incorporate 
            rules to facilitate the development of CCAs, to foster fair 
            competition or to protect against cross-subsidization paid by 
            ratepayers.

           EXISTING LAW  

           Allows cities and counties to procure and sell electricity 
            within their community via a direct access arrangement called 
            for community choice aggregation (CCA).
           Requires electric utilities to cooperate fully with CCAs that 
            investigate, pursue, or implement CCA programs.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

          According to the author SB 790 affirms CCA procurement autonomy, 
          protects both bundled service and CCA ratepayers, and corrects 
          abuses of market power by IOUs regarding the launch and 
          operation of CCA programs.  SB 790 would help level the playing 
          field for local governments seeking to establish a CCA program. 

           1)Background  : In 2002, AB 117 established a local government's 
            right to implement Community Choice Aggregation (CCA), a 
            program that allows communities to pool, or aggregate, the 
            electric load of their residents, businesses and other 
            institutions in order to procure and generate electricity on 
            their behalf.  In the nine years since local governments were 
            given the right to establish CCAs, only one CCA program has 
            been successfully launched despite numerous community efforts 
            to do so.









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            The CCA mechanism allows local governments to procure 
            electricity on behalf of their residents and businesses, while 
            the existing utility provides distribution, transmission and 
            billing services.  Often described as a hybrid model, CCA 
            focuses on the procurement and generation side of the energy 
            business, partnering with existing electrical corporations 
            such as PG&E for power transmission and distribution, line 
            maintenance, and customer billing.

           2)Consent to access private customer data.   Current law allows 
            transfer of customer data from a utility to a CCA but is 
            currently silent on whether a customer's consent is needed in 
            order to provide private customer data to a CCA.  This bill 
            would clarify provisions regarding transferring individual 
            customer data to a CCA so that consent is not required by the 
            customer. The language of this provision allows billing data 
            as well as energy data to be provided without consent. Billing 
            data is unclear and could include name of account holder, 
            address of account holder, account number, taxpayer 
            identification number, bank account number (if on automatic 
            bill paying systems), payment history, or other information 
            that may have been provided to a utility when establishing 
            service. This section should more clearly specify which 
            information is to be provided without the customer's consent 
            to address consumer privacy concerns. In order to address the 
            energy specific data, this committee recommends deleting the 
            word 'billing' to address this ambiguity or amending this 
            provision to make it specific about which billing data would 
            be provided without consent.

           3)Special Treatment for Switching back-and-forth  . Under current 
            law and PUC policies, CCA as well as Direct Access (DA) 
            customers are subject to a 3-year minimum stay requirement to 
            prevent customers from going back and forth between the 
            utility and non-utility providers and taking advantage of 
            short term variations in rates between utilities.  Frequent 
            shifting of customers makes it difficult to procure the power 
            and can result in cost shifts from the switching-customers to 
            customers that do not have the ability to change providers.  
            According to the PUC, this bill would grant preferential 
            treatment to CCA customers by reducing the current 3 year stay 
            to 12 months and make it difficult for the utilities to plan 
            their systems.

           4)Administration of Energy Efficiency Programs.  This bill would 








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            allow a CCA may administer its own energy efficiency programs 
            and establish its measurement and verification protocols.  The 
            State's energy efficiency programs are developed and approved 
            by the PUC with close involvement and participation with the 
            California Energy Commission and the California Air Resources 
            Board as well as members of the public.  Allocation a portion 
            of the energy efficiency program to an independent entity, 
            without oversight, could lead to more requests that diminish 
            the funds available for the PUC to allocate to the areas in 
            most need and potentially diminish efforts to achieve 
            statewide energy efficiency goals.  The PUC has a process 
            where organizations may intervene in the energy efficiency 
            proceedings.  In addition, community-based organizations are 
            currently delivering energy efficiency assistance in 
            communities.  CCAs should participate in the PUC proceedings 
            so that the priorities of the CCA can be considered along with 
            statewide priorities.

            It is further troubling that if this provision is approved, 
            the allocation of funds according to the presence of a CCA 
            would not necessarily be based on climatic or socioeconomic 
            considerations. For example, the PUC has approved many 
            programs to provide assistance to low-income households and 
            programs to address reducing cooling costs in regions where 
            air conditioning is a health and safety requirement.

           5)Cost shifting between CCA customers and bundled utility 
            customers.   According to the author, "the status quo has CCA 
            customers subsidizing for-profit IOUs," The PUC does not agree 
            with this assertion.  According to the PUC the Commission has 
            imposed charges on CCA customers for costs "incurred to serve 
            utility customers that are now CCA customers.  In addition, 
            CCAs are required to pay for some generation costs related to 
            local and system resource adequacy.  The Resource Adequacy 
            charges include charges such as the reserve margin.  Left to 
            themselves, the CCAs preference would be to contract for just 
            enough capacity to serve their load and to depend on the 
            utilities for any unforeseen variations in their load or 
            disruptions in their supply.  If the CCA generation is short 
            of load, the utility still has to supply the power to their 
            customers.  Again, the CCAs preference would be to pay charges 
            for the power as and if a shortage occurred.  However, the 
            nature of electric business is such that you have to have 
            reserve margins and contingency plans for those situations.  
            The Commission imposes such contingency planning through 








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            system and local RA.  CCAs insist that unless they benefit 
            directly from those resources they should not have to pay or 
            should get a proportional benefit. It is not a reasonable 
            argument."

            Resource Adequacy (RA) describes the policy used to ensure 
            safe and reliable operation of the electricity grid at all 
            times.  This means that if a power plant must be built in 
            order to meet the needs of a safe and reliable grid, then that 
            expenditure to build that plant must occur.  All load serving 
            entities have RA obligations to ensure that there is 
            sufficient capacity to supply customers when and where needed. 
             This bill would provide that CCA receive credits or 
            allocation of benefits to the extent that the CCA paid 
            estimated net unavoidable electricity costs paid a utility for 
            compliance costs or the CCA provided compliance benefits to a 
            utility for the RPS or the California Greenhouse Gas Solutions 
            Act Regulations.  This provision should also state that when 
            implemented there cannot be a cost shift between CCA and 
            bundled utility customers.

            The CCAs should be exempt from paying the charges only if they 
            are self-sufficient in every aspect of serving their load and 
            if their inadequacy did not impact bundled ratepayers in cost 
            or reliability of service.

          The author may wish to consider the following amendments:

           1.Remove the provision which would not require customer consent 
            of customer information by a utility on Page 11, line 12 - 16:
             "Those procedures shall not require electrical corporations to 
            obtain a customer's consent for the provision of billing and 
            electrical load data if the community choice aggregator agrees 
            to reasonable safeguards appropriate to the nature of the data 
            to prevent the disclosure of the data to third parties."  
          2.Modify language in several locations that could enable 
            Resource Adequacy cost shifting between CCA customers and 
            bundled utility customers.
             "366.2 (k)  Except for nonbypassable charges imposed by the 
            commission pursuant to subdivisions (d), (e), (f), and (h), 
            and   programs authorized by the commission to provide broader 
            statewide or regional benefits to all customers, electric 
            service customers of a community choice aggregator shall not 
            be required   to pay nonbypassable charges for goods, services, 
            or programs that do not  directly  benefit either, or where 








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            applicable, both, the   customer and the community choice 
            aggregator serving the   customer. The commission, Energy 
            Commission, electrical corporation, or third-party 
            administrator shall administer any program funded through a 
            nonbypassable charge on a   nondiscriminatory basis so that the 
            electric service customers of   a community choice aggregator 
            may participate in the program on   an equal basis with the 
            customers of an electrical corporation.  The implementation of 
            a community choice aggregation program shall not result in a 
            shifting of costs between the customers of the community 
            choice aggregator and the customers of an electrical 
            corporation."
          3.Add a provision that the governing body of a community choice 
            aggregator adopt a policy that expressly prohibits the 
            dissemination by the community choice aggregator of any 
            statement relating to the community choice aggregator's rates 
            or terms and conditions of service that is untrue or 
            misleading, and which is known, or which by the exercise of 
            reasonable care should be known, to be untrue or misleading.
          4.Modify energy efficiency programs by a CCA.
             "381.1(f)  A community choice aggregator electing to become an 
            administrator shall submit a plan  approved by the aggregator's 
            governing board  to the commission for the administration of 
            cost-effective energy efficiency and conservation programs for 
            the aggregator's electric service customers that includes 
            funding requirements, a program description, and the duration 
            of the program. The  program shall do   commission shall certify 
            that the plan submitted complies with  all of the following:
            (1)  Be consistent with the goals of programs established in 
            Sections 381.1 and 399.4.
            (2)  Advance the public interest in maximizing cost-effective 
            electricity savings and related benefits.
            (3)  Accommodate the need for broader statewide or regional 
            programs.
            (4)  Include audit and reporting requirements consistent with 
            the audit and reporting requirements established by the 
            commission pursuant to Section 381.1.
            (5)  Include evaluation, measurement, and verification 
            protocols established by the community choice aggregator.
             (6) Includes performance metrics regarding the community 
            choice aggregator's administration of energy efficiency 
            programs to demonstrate the aggregator's achievement of the 
            objectives above and in any previous plan."

           








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           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           

          AARP California
          Arcata City Council
          California State Association of Counties (CSAC)
          City & County of San Francisco
            City of El Cerrito
          City of Petaluma
          City of San Jose
          Climate Protection Campaign
          Environment California
          Graton Community Services District
          Kings River Conservation District ("KRCD")
          League of California Cities
          Local Clean Energy Alliance
          Marin Clean Energy
          Marin County Board of Supervisors
          Marin County Council of Mayors and Council Members (MCCMC)
          Marin Energy Authority
          Mayor Gayle McLaughlin, City of Richmond
          San Anselmo Town Council
          San Francisco Local Agency Formation Commission
          San Francisco Public Utilities Commission (SFPUC) (Co-sponsor)
          Santa Clara County Board of Supervisors
          Sierra Club California (Co-sponsor)
          Sonoma County Conservation Action
          Sonoma County Regional Climate Protection Authority (RCPA)
          Sonoma County Water Agency
          Sustainable Mill Valley
          The Utility Reform Network (TURN)
          Town of San Anselmo
          Town of Windsor

           Opposition 
           
          California Public Utilities Commission (CPUC) (unless amended)
          San Diego Gas & Electric (SDG&E) (unless amended)
          Southern California Edison (SCE) (unless amended)


           Analysis Prepared by  :    Susan Kateley / U. & C. / (916) 
          319-2083 








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