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: SB 656 Page 2 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. SB 656 Page 3 "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. SB 656 Page 4 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. SB 656 Page 5 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). SB 656Page 6 (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