BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 656
                                                                  Page  1

          Date of Hearing:   July 1, 2013

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                               Steven Bradford, Chair
                     SB 656 (Wright) - As Amended:  June 26, 2013

           SENATE VOTE  :   37-0
           
          SUBJECT  :   Direct Transactions: information reports

           SUMMARY  :   This bill will suspend a requirement for the  
          California Public Utilities Commission (PUC) to maintain  
          consumer information program regarding choosing an electricity  
          provider and establish requirements for core transport agents.   
          Specifically,  this bill  :   

          a)Makes inoperative, until competitive residential electricity  
            service is made available,  a requirement for the California  
            Public Utilities Commission (PUC) compile, update, and  
            maintain the names of registered electricity service  
            providers, require entities to file their standard service  
            plans with the PUC, and for the PUC to issue public alerts  
            about entities providing electrical service in an unauthorized  
            or fraudulent manner.

          b)Repeals a requirement for the PUC to direct the Division of  
            Ratepayer Advocates (DRA) to publish informational guides or  
            other tools to help residential and small commercial customers  
            evaluate competing electric service options.

          c)Establishes a requirement applicable to competitive natural  
            gas service providers who market to residential and small  
            commercial customers, to register with the PUC, meet specified  
            registration requirements, and specify a requirement that the  
            PUC act on consumer complaints. 

          d)Provides gas customers may seek remedies through the PUC or  
            the judicial system to resolve complaints.

          e)Requires the PUC to issue public alerts about entities  
            providing natural gas service in an unauthorized or fraudulent  
            manner.

           EXISTING LAW:  









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          1)Requires the PUC to require gas corporations to provide  
            service to natural gas customers unless the customer chooses  
            or contracts to have natural gas purchased and supplied by  
            another entity.(Public Utilities Code (PUC) 382.2)

          2)Suspends direct access transactions for all customers of an  
            electrical corporation except for a specified amount according  
            to a specified schedule for nonresidential customers. (Public  
            Utilities Code (PUC) 365.1)

          3)Requires the PUC to compile and update the names of registered  
            electricity service providers and the number of complaints  
            against those providers in relation to the number of customers  
            served. (Public Utilities Code (PUC) 392.1(a))

          4)Requires registered entities to file the terms and conditions  
            of their service plans for residential and small commercial  
            customers in a standard format. (Public Utilities Code (PUC)  
            392.1(a))

          5)Requires the PUC to make a list available of registered  
            providers and providers who are not required to be registered  
            available at no charge. (Public Utilities Code (PUC) 392.1(a))

          6)Requires the PUC to issue public alerts about companies  
            attempting to provide electric service in an unauthorized or  
            fraudulent manner. (Public Utilities Code (PUC) 392.1(b))

          7)Requires the PUC to direct the Division of Ratepayer Advocates  
            to publish informational guides or other tools to help  
            residential and small commercial customers evaluate competing  
            electric service options. (Public Utilities Code (PUC)  
            392.1(c))

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           1)Author's Statement  . "SB 656 is a simple bill that deletes a  
            requirement that the Public Utilities Commission compile data  
            on Direct Access and the Office of Ratepayer Advocates use  
            that information to prepare informational guides for  
            residential and small commercial customers. The Direct Access  
            (DA) program was suspended as a result of the energy crisis in  
            2001. 








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            "The data collection and informational guide the PUC and DRA  
            are required to provide is unnecessary. Utilities are not  
            competing for DA customers. Currently less than 0.1% of  
            residential customers are DA and that number is decreasing. 

            "This bill simply removes unnecessary work from the PUC and  
            DRA workload."
             
            2)What are Direct Access and Core Aggregation Service?  

            Electricity: Direct access refers to a system that allows  
            customers of an electrical corporation to purchase electricity  
            directly from wholesale sellers and use the electrical  
            corporation only for distribution and transmission services.  
            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 electricity provider.  In 2009, the cap on  
            enrollment in Direct Access was increased for non-residential  
            customers. Direct access customers are obligated to pay all  
            nonbypassable charges (public purpose programs and electricity  
            restructuring charges, etc.)
             
             Natural gas: Core Gas Aggregation Service is an optional  
            program that allows residential or business customers to  
            purchase gas from third-party gas suppliers, also known as  
            Core Transport Agents (CTAs). Through this program, the gas  
            corporation continues to read the meter and deliver gas to the  
            customer.

            Since the 1970s a number of steps were taken by the Federal  
            government to create competition in natural gas markets. The  
            Federal Energy Regulatory Commission (FERC) adopted Rule 636  
            in 1992, which created rules that allow increased access to  
            the natural gas pipeline system for sellers and buyers.

            According to the Department of Energy's Energy Information  
            Administration, California has had a customer choice program  
            for all residential and small commercial natural gas customers  
            since 1995 through its core aggregation transportation program  
            (CAT). 

            In 1999, AB 1421 (Wright, Chapter 909, Statutes of 2000)  
            authorized customers to choose to have their natural gas  
            supplied by an entity other than a gas corporation.








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            Non-utility natural gas suppliers are not regulated by the  
            PUC, and the PUC does not in any way approve, license, or  
            endorse any natural gas suppliers.  The PUC does not approve  
            the gas prices that a non-utility supplier offers.  If a  
            customer has a complaint against a non-utility natural gas  
            supplier, it may not be possible for the PUC to resolve the  
            complaint with the non-utility supplier.

            The PUC requires, but does not enforce, core gas aggregators  
            to follow utility gas rules, available in the tariff book of  
            the utilities.

           3)Residential and Small Commercial Customers using Direct Access  
            and Core Aggregation Service  . 

            As of March 15, 2013 utility reports indicate that statewide  
            there are currently 11,120 residential and 17,307 small  
            commercial (non-residential) customers subscribed to direct  
            access electricity contracts. 

            According to the most recent Energy Information Administration  
            data, 34,391 residential customers in California purchase gas  
            from marketers, representing about 0.7 percent of deliveries  
            to residential consumers statewide in 2008.

           4)Core Transport Agents Actively Selling in California.  PG&E  
            reports that it has investigated approximately 1,200 Core  
            Transport Agents (CTA) related complaints from customers in  
            the last 15 months, an average of 99 per month. The majority  
            of the cases were received from November 2012 to April 2013  
            (157 per month on average. PGE provided a summary of the  
            nature of the complaints:

                 Customer Requests Cancellation of CTA service = 720  
               cases;
                 Customer Complaints re. Unauthorized Switches by CTA =  
               240 cases; and
                 Customer Complaints re. CTAs' Deceptive and Misleading  
               Marketing Activities = 240 cases

            In some cases customers have received calls from telemarketers  
            who use a script that is confusing and does not provide a  
            clear statement that the gas provider is not associated with  
            the gas corporation.








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            This bill proposes that the PUC, instead of gas corporations,  
            be responsible for investigating and resolving these types of  
            complaints.

              1)   Proposed amendments.  Technical amendments will address  
               the following issues:
             a)   Clarify the definition of a small commercial customer  
               and provide flexibility to the PUC to update this  
               definition in the future, as necessary.
             b)   Provide a 90-day opportunity, after the commission  
               approves the program, for core transportation agents to  
               register.
             c)   Remove reference to registrations filings that occur  
               prior to January 1, 2014 because registrations will not  
               occur until sometime after June 30, 2014.
             d)   Allows the commission to adjust the registration fee as  
               it deems necessary to recover the cost of administering the  
               program.

            980. (c) "Small commercial customer" means a customer that has  
            a maximum peak demand of less than  20,800  therms.



            981. (a) A core transport agent shall register with the  
            commission  within 90 days after the commission has adopted  
            standards for financial viability, technical, and operational  
            capacity.  As a precondition to registration, the core  
            transport agent shall provide, under oath, declaration, or  
            affidavit, all of the following information to the commission:



            981.   (b) A registration filing approved by the commission  
            prior to January 1, 2014, that does not comply in all respects  
            with the requirements of subdivision (a) shall nevertheless  
            continue in force and effect as long as before July 1, 2014,  
            the core transport agent undertakes to supplement its  
            registration filing to the satisfaction of the commission. A  
            registration that is not supplemented by the required  
            information within the time set forth in this subdivision  
            shall be suspended by the commission and shall not be  
            reinstated until the commission has found the registration to  
            be in full compliance with subdivision (a).








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            (a) A registration fee of one hundred dollars ($100) shall be  
            collected from a core transport agent required to register  
            under this chapter and the fee proceeds shall be deposited in  
            the Public Utilities Reimbursement Account established under  
            Section 402.  The commission may adjust the fee as necessary to  
            recover the cost of administering the program.  

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Division of Ratepayer Advocates (DRA)
           
            Opposition 
           
          None on file

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