BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2145 - Bradford Hearing Date:
June 23, 2014 A
As Amended: June 12, 2014 FISCAL B
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DESCRIPTION
Current law establishes The Franchise Act of 1937 and permits a
municipality to grant a franchise to any entity to use, or to
construct and use, infrastructure within its boundaries for the
transmission of electricity and gas which it deems is in the
public interest. (Public Utilities Code § 6201 et seq.)
Current law permits cities and/or counties to implement a
community choice aggregation (CCA) program under which the
municipality purchases electricity for constituents within their
political boundaries. A municipality may also join any other
existing CCA by adoption of a resolution, without regard to
geography. Two or more municipalities may also form a joint
powers agency (JPA) to act as the CCA with the adoption of an
ordinance by each participating municipality. (Public Utilities
Code §§ 331.1, 366.2)
Current law automatically enrolls all customers of an
investor-owned utilities (IOU) in a newly formed CCA, after
specified notice requirements have been met by the CCA including
two written notices, at least twice within 60 days in advance of
enrollment, which includes the proposed terms and conditions of
service and the customer's right to opt-out and remain a
customer of the IOU. (Public Utilities Code § 366.2)
This bill requires a positive, written declaration from any IOU
customer who desires to switch electricity delivery service to a
newly-formed CCA (opt-in) and from any new customer moving into
the boundaries of the CCA.
This bill requires that every solicitation of customers for a
CCA disclose current electricity rates for the IOU and the CCA
and for the next five years of service.
Current law requires an IOU to cooperate fully with a CCA in its
pursuit and implementation of operation, and to provide billing
and data services, metering, collection, and customer service to
all CCA retail customers. CCAs may file complaints with the
California Public Utilities Commission (CPUC) which can
institute enforcement action against the IOU.
This bill permits an IOU to file a complaint against a CCA for,
and authorizes the CPUC to take, corrective action against the
CCA.
This bill exempts from the new formation requirements for a CCA
as provided for in this bill, any customer already enrolled in a
CCA.
BACKGROUND
Utility Franchise Agreements - Municipal governments grant
franchises to electric and gas utilities to provide services to
residents within their jurisdictions. Franchise agreements are
in essence a permit for a utility to transact and carry on
business in the city or county. In exchange for the privilege
of offering service the utility pays the city or county a
franchise fee based on the gross revenue of the utility. The
municipality makes this decision on behalf of their constituents
which are not required to ratify the action in a public vote or
through any other consent process.
Community Choice Aggregation - CCAs are governmental entities
formed by local governments to serve the electricity
requirements of their local residents and businesses. CCAs were
authorized by the Legislature in AB 117 (Migden, Chapter 838,
Statutes of 2002) which described essential program elements,
required the state's IOUs to provide certain services, and
established methods to protect existing utility customers from
liabilities that they might otherwise incur when a portion of
the IOU's customers transfer their electricity services to a
CCA.
A municipality is required to register and file an
implementation plan with the CPUC, and to comply with program
rules. All customers are automatically enrolled in CCAs after
being provided with specified disclosures indicating that the
municipality will offer electric service in addition to the
incumbent electric corporation. Customers are able to opt-out
of the service upon enrollment and any time thereafter. The IOU
remains responsible for providing electricity to any and all
customers with or without notice and if the CCA service fails in
any way. Nothing in the statute directs the CPUC to regulate
the CCA's program except to the extent that its program elements
may affect utility operations and the rates and services for IOU
customers.
CCAs must comply with the Renewables Portfolio Standard (RPS)
which requires that 20 percent of their electric retail sales be
from renewable resources by December 31, 2013, 25% by 2016 and
33% by 2020. Upon application to and approval by the CPUC, a
CCA may assume responsibility for energy efficiency programs.
No other procurement obligations are required.
CCA Formation & Status - In April 2007, the CPUC authorized its
first CCA application submitted by the Kings River Conservation
District on behalf of San Joaquin Valley Power Authority
(SJVPA). In June, 2009 SJVPA suspended its CCA program
activities.
In 2010, the PUC authorized a CCA application for Marin Energy
Authority operating as Marin Clean Energy (MCE) pursuant to a
service agreement between PG&E and MCE. The aftermath of this
decision was quite contentious. Currently, MCE provides service
to over 124,000 accounts in Marin County and the City of
Richmond located in Contra Costa County.
In October 2013, the PUC authorized a CCA application for Sonoma
Clean Power which commenced service May 1st.
The CPUC also authorized Clean Power S.F. to form a CCA in the
City and County of San Francisco in June 2010. However,
establishing the service and rate structure has been the subject
of great debate between the Board of Supervisors, the San
Francisco Public Utilities Commission and the Mayor's office and
the program lacks the necessary local authority to proceed at
this time.
IOU Responsibility Does Not End - A critical driver of CCA and
direct access policies is that any CCA or DA customer can
terminate service on a moment's notice and return to IOU
service. Should they do so, or should the DA or CCA provider
fail to provide sufficient power, the IOU is always and
ultimately responsible for keeping the lights on.
Cramming & Slamming - In the telephone industry the cramming and
slamming of customers is not uncommon. In response the
Legislature outlawed those activities which were done by
competing telephone carriers without notice to the customer.
The statutes are:
Cramming is the submission or inclusion of unauthorized,
misleading, or deceptive charge for products or services on
a subscriber's local telephone bill. (Public Utilities
Code §§ 2889.9, 2890); and
Slamming is the unauthorized switching of a subscriber's
telephone service to another carrier. (Public Utilities
Code § 2889.5).
COMMENTS
1. Author's Purpose . Community choice aggregation arose
out of the rolling blackouts and huge rate increases caused
by the 2001 energy crisis. As California was grasping for
solutions, the Legislature authorized community choice
aggregation which granted local governments the
extraordinary power to unilaterally switch all customers in
their jurisdiction from the local utility to the community
choice aggregator. CCAs are intended to provide communities
with lower rates, local renewable energy, and jobs. The
author believes it is time for some mid-course corrections
to ensure that communities can know how well the CCA will
meet these goals.
2. Customer Enrollment . Under current law the formation of
a CCA is triggered by the adoption of an ordinance of a
municipality, filings with the CPUC, establishing an
operating agreement with the incumbent IOU, and notice to
customers of automatic enrollment. All IOU customers
within the boundaries of the municipality which establishes
the CCA are automatically enrolled in the CCA but are
informed of their right to opt out of the program. The
primary purpose of this bill is to reverse the enrollment
and require a positive, written declaration of each
customer to enroll in the program - "opt-in."
Proponents of this measure assert that most people are
unaware when a CCA is formed in spite of the mandated
disclosures, and have little understanding of the
implications of a CCA when they receive a form letter in
the mail that says they don't have to do anything. They
point to a recent survey of approximately 400 residents in
the City of Richmond which revealed that nearly 75% of the
customers who were automatically enrolled in the
neighboring CCA are largely unfamiliar with MCE. These
residents reported no knowledge that they were already
enrolled in MCE. A vast majority of the residents believed
PG&E was their utility service provider. CCA customers
continue to receive their monthly utility bill from the
incumbent IOU with a line item that delineates the CCA
provider.
According to MCE, "fewer than 24% of current residents and
businesses opted-out of service - 17% opted out prior to
receiving service from MCE while 6.5% opted out after
service commenced." MCE opposes this bill and claims "the
customer opt-in provision in the bill would limit MCE's
ability to expand to new communities, as it did with the
City of Richmond on July 1, 2013."
3. Not a Referenda on Marin Clean Energy . Although MCE is
the first CCA to become operational for any extended period
of time, the committee may want to be cautious about making
this bill a referenda on its formation or structure. It is
important to consider that this bill applies prospectively,
and consider other impacts of CCAs beyond MCE.
The only CCA procurement requirements in current law are
that the CCA comply with the RPS program and an emissions
performance standard that applies to electric generation
contracts for five years or more. A CCA could form and
meet 80% of its demand for electricity with short-term
contracts for out-of-state system power (most if not all of
which is the dirtiest fossil-fueled based power on the
market, next to coal). There are a few local publicly
owned utilities in California that currently operate under
this model of delivery.
What formation requirements of the CCA would be appropriate
in this instance?
4. Slamming or Municipal Prerogative ? In any other
consumer service area the automatic enrollment of a
consumer for a service to which they did not take a
positive action to subscribe would be considered slamming
and most customers would be appalled at automatic
enrollment. However, it is longstanding state policy and
the fundamental role of local governments is to make
service delivery decisions on behalf of its constituents.
Those include garbage, water, sewer and electric service.
Those municipal decisions do not require ratification of
their constituents. For electric service most
municipalities made the decision decades ago to franchise
for electricity through a regulated utility to provide the
service as a locally owned public utility. Arguably, the
decision of a municipality to form a CCA to modify the
provision of electric service to their constituents by
adoption of an ordinance is consistent with that
longstanding authority.
5. Mc - CCA ? Under current law the eligible public
agencies that can form a CCA include cities, counties, JPAs
of cities and counties, and any public agency that has the
authority to generate or deliver electricity within its
jurisdiction. This authority also permits the CCA to
extend the reach of its service territory to any
municipality in the state that joins the CCA with a
resolution. The reach of municipal services beyond the
boundaries of a city's or county's jurisdiction is unusual
and not necessarily in the spirit of local control. The
service model begins to look like a franchise.
6. Striking a Balance . In order to strike a balance
between the longstanding authority of a decision-making
authority of a municipality to deliver essential services,
local choice in electricity service, and local
accountability for those decisions, but to also ensure
transparency of actions, public accountability, and the
prevention of overlapping customer territories between
multiple CCAs, the author and committee may wish to
consider reinstating the "opt-out" standard for customer
enrollment in a CCA but limiting jurisdiction to the
boundaries of the county in which the CCA is formed.
7. Double Referral . Should this bill be approved by the
committee, it will be re-referred to the Senate Committee
on Environmental Quality for its consideration.
ASSEMBLY VOTES
Assembly Floor (51-15)
Assembly Appropriations Committee (12-1)
Assembly Utilities and Commerce Committee
(9-0)
POSITIONS
Sponsor:
Coalition of California Utility Employees
Support:
California Labor Federation
Encinitas Chamber of Commerce
International Brotherhood of Electrical Workers Local 100
Laguna Niguel Chamber of Commerce
Orange County Taxpayers Association
Pacific Gas and Electric Company
San Diego Gas & Electric Company
San Diego Regional Chamber of Commerce
State Building and Construction Trades Council, AFL-CIO
Oppose:
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|350 Bay Area |Berkeley Community Choice Energy |
|Alameda County Board of |Working Group |
|Supervisors |BoDean Company |
|Alameda County Green Party |Brad Wagenknecht, Napa County |
|Alliance for Retail Energy |Supervisor, |
|Markets | District 1 |
|Asian Pacific Environmental |Bruce Gibson, San Luis Obispo |
|Network |Board of |
|Association of Bay Area | Supervisors, District 2 |
|Governments |California Air Pollution Control |
|Bay Area Air Quality Management |Officers |
|District | Association |
|Bay Localize |California Center for |
|Beach Cities Democratic Club |Sustainable Energy |
|Berkeley Climate Action |California Climate and |
|Coalition |Agriculture Network |
|Oppose: (cont.) | |
| | |
|--------------------------------+---------------------------------|
|California Environmental |Communities for a Better |
|Justice Alliance |Environment |
|California Interfaith Power & |Community Choice Energy Working |
|Light |Group |
|California Manufacturers & |Community Environmental Council |
|Technology |County of Marin |
| Association |County of Santa Barbara |
|California Municipal Utilities |County of Santa Cruz |
|Association |County of Sonoma |
|California State Association of |Dave Roberts, San Diego County |
|Counties |Board of |
|Carbon Free Mountain View | Supervisors, District 3 |
|Center for Biological Diversity |Denise Athas, Novato City |
|Center for Community Action and |Councilmember |
|Environmental |Dianne Jacob, San Diego County |
| Justice |Board of |
|Center for Race, Poverty and | Supervisors, Chairwoman, |
|the Environment |District 2 |
|Center for Sustainable Energy |Electric Auto Association |
|Charles M. Schulz Creative |Energy 2001, Inc. |
|Associates LLC |Energy Solidarity Cooperative |
|Cities Association of Santa |Environment California |
|Clara County |Environmental Health Coalition |
|City of Belvedere |Everybody Solar |
|City of Benicia |Friends of the Earth |
|City of Berkeley |G2 Energy LLC |
|City of Beverly Hills |GenPower, LLC |
|City of Chula Vista |Global Exchange |
|City of Cotati |Global Green USA |
|City of Davis |Green Ideals |
|City of El Cerrito |Green Party of California |
|City of Goleta |GreenTown Los Altos |
|City of Hermosa Beach |Greywater Action |
|City of Hayward |International Longshore & |
|City of Lancaster |Warehouse Union Local 6 |
|City of Manhattan Beach |Institute for Local |
|City of Mill Valley |Self-Reliance |
|City of Oakland |Ironworkers Local 155 |
|City of Plymouth |Joint Venture Monterey Bay |
|City of Richmond |Joint Venture Silicon Valley |
|City of Richmond Department of |Kehilla Community Synagogue |
|Employment and |KyotoUSA |
| Training |Los Angeles County Board of |
|City of San Carlos |Supervisors |
|City of San Diego |League of California Cities |
|City of San Jose |Lean Energy US |
|City of San Leandro |Local Clean Energy Alliance of |
|City of San Luis Obispo |San Francisco |
|City of San Pablo |Local Government Commission |
|City of San Rafael |Lynette McElhaney, Oakland City |
|City of Santa Cruz |Councilmember |
|City of Santa Monica |Mainstreet Moms |
|City of Santa Rosa |Marin Clean Energy |
|City of Sausalito |Marin Conservation League |
|City of Sunnyvale |Marin County Council of Mayors |
|Clean Coalition |and Councilmembers |
|Clean Energy & Jobs Oakland |Marin County Board of |
|Campaign |Supervisors |
|Clean Water Action |Monterey Bay Community Power |
|Climate Protection Campaign |Movement Generation Justice and |
|Coalition for Sustainable |Ecology Project |
|Transportation |New Voices Are Rising |
|Oppose: (cont.) | |
| | |
|--------------------------------+---------------------------------|
|Oakland City Council |Solana Energy |
|Office of Ratepayer Advocates |SolarCity |
|Organizing for Action Members |Solar Energy Industries |
|(thousands) |Association |
|OurEvolution Energy and |SolEd Benefit Corporation |
|Engineering |Sonoma Clean Power Authority |
|Pacific Cookie Company |Sonoma County Democratic Center |
|Pacific Energy Advisors, Inc. |Committee |
|Palos Verdes Democrats |Sonoma County Water Agency |
|People Organizing to Demand |South Bay 350 Climate Action |
|Environmental and |Group |
| Economic Rights |StopWaste |
|People United for a Better Life |Sun Light & Power |
|in Oakland |Sunspeed Enterprises |
|Planting Justice |Sustainable Economies Law Center |
|Prime Mover Technology |Sustainable Marin |
|Re-volv |Tar Sands Action Southern |
|Récolte Energy |California |
|Renewable 100 Policy Institute |The Action Hub, Richmond |
|Renovate America |The Greenlining Institute |
|Resilient Neighborhoods |The Utility Reform Network |
|Retail Energy Supply |Torrance Democratic Club |
|Association |Tosdal Law Firm |
|Richmond Progressive Alliance |Town of Ross |
|Rose Foundation for Communities |Town of Tiburon |
|& the Environment |Transition United States |
|Salinas Valley Solid Waste |USGBC California |
|Authority |Victory Garden Foundation |
|San Diego Energy District |Vote Solar |
|Foundation |Wellstone Democratic Renewal |
|San Francisco Green Party |Club |
|San Lorenzo Valley Water |West Los Angeles Democratic Club |
|District |West Oakland Environmental |
|San Luis Obispo Clean Energy |Indicators Project |
|San Rafael Airport LLC |Western Power Trading Forum |
|SanDiego350 |Wild Heritage Planners |
|School Project for Utility Rate |World Team Now |
|Reduction |World Wildlife Fund |
|SeaWave Battery, Inc. |Xandex Inc. |
|Shell Energy North America |Thousands of Individuals |
|Shute, Mihaly and Weinberger, | |
|LLP | |
|Sierra Club California | |
|Sierra Club, San Francisco Bay | |
|Chapter | |
|SightWorks Architecture + | |
|Interior Design | |
| | |
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Kellie Smith
AB 2145 Analysis
Hearing Date: June 23, 2014