BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 656|
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THIRD READING
Bill No: SB 656
Author: Wright (D)
Amended: 4/22/13
Vote: 21
SENATE ENERGY, UTILITIES & COMMUNICATIONS COM. : 11-0, 4/30/13
AYES: Padilla, Fuller, Cannella, Corbett, De Le�n, DeSaulnier,
Hill, Knight, Pavley, Wolk, Wright
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Electrical restructuring: information practices
SOURCE : Author
DIGEST : This bill requires the Public Utilities Commission
(PUC) to compile and to update, every six months, information
regarding registered electric service providers, as specified.
This bill also strikes the requirement that the Office of
Ratepayer Advocate within the PUC prepare information guides and
tools to help customer evaluate competing service options.
ANALYSIS : Existing law authorizes some retail end-use
customers of an electrical corporation (IOU) to purchase
electric service directly from non-utility providers (energy
service providers or ESPs), a program commonly referred to as
Direct Access (DA). Participation is capped as a percentage of
total electric load based on a specified formula.
Existing law requires ESPs to register with the PUC which is
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required to make specified information regarding DA service
available to the public.
This bill requires the PUC to update information on DA every six
months.
This bill strikes the requirement that the Office of Ratepayer
Advocate (now Division of Ratepayer Advocates, DRA) within the
PUC prepare information guides and tools to help customers
evaluate competing service options under DA.
Comments
Deregulation . In 1996 the California State Legislature led the
nation by deregulating the sale of electricity to
non-residential customers and a few residential customers
through a program commonly referred to as DA. The reform was
historic and intended to transition the state to a more
competitive electricity market structure that allowed its
citizens and businesses to achieve the economic benefits of
industry restructuring, create a new market structure that
provided competitive, low cost and reliable electric service,
provide assurances that electricity customers in the new market
would have sufficient information and protection, and preserve
California's commitment to developing diverse, environmentally
sensitive electricity resources. Those goals were not achieved.
The practical effect of the program was that non-residential
customers could buy electricity direct from private sector
wholesale sellers and use the IOU only for distribution and
transmission services. As consequence the vertical monopoly of
electricity delivery provided by heavily regulated electric
utilities was upended and those utilities were largely required
to sell off power plants and transfer management of their
transmission systems to the newly created California Independent
System Operator. Within a few years the state suffered
electricity shortages which resulted in rolling blackouts,
skyrocketing prices, and bankrupt or nearly bankrupt utilities.
The electricity crisis of 2001 resulted in a suspension of the
program but any customer enrolled at the time was permitted to
remain with their ESP. In 2009, the cap on DA enrollment was
increased but only for non-residential customers.
The author's office reports that the requirement for the DRA to
assist customers in evaluating DA options was created in 1997 as
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part of legislation that deregulated California's retail
electric market. At the time, policymakers were hoping that
market competition would bring in multiple market players and
dramatically reduce electric generation prices. The cornerstone
of this policy was the creation of DA, which would be available
to all customer classes, including small commercial and
residential. Some policymakers were concerned that the smaller
consumers would need some help in navigating the multiple
providers competing to provide them with service. The
experiment in DA and wholesale electric deregulation was a
disaster, and completely unraveled in the energy crisis of 2001,
when AB 1X1 (Keeley, Chapter 4, Statutes of 2001) was enacted
which froze DA enrollment.
The specified requirements are no longer required. DA firms are
not competing to sign up residential accounts, and therefore,
there is no need for the DRA to "help [customers] make informed
choices."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/14/13)
Division of Ratepayer Advocates
JG:nk 5/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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