BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 656 - Wright Hearing
Date: September 12, 2013 S
As Amended: September 6, 2013 FISCAL B
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DESCRIPTION
Current law authorizes some retail end-use customers of an
electrical corporation (IOU) to purchase electric service
directly from non-utility providers (electric 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. (PUC �365.1)
Current law requires ESPs to register with the California Public
Utilities Commission (CPUC) which is required to make specified
information regarding DA service available to the public. (PUC
�394)
This bill would require the CPUC to provide information only
during certain periods when enrollment in the program grows by
five percent each month.
Current law requires the CPUC to require gas corporations to
provide basic gas service to all customers within its territory
unless the customer choses to obtain gas service from another
entity. (PUC �328.2)
This bill establishes a regulatory framework for core transport
agents (CTAs) at the CPUC. The bill would extend various consumer
protection provisions currently established for ESP customers to
customers of CTAs.
BACKGROUND
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.
Core Transport Agents - CTAs are analogous to ESPs, but provide
gas for customers instead of electricity. In order to provide gas
through the utility's distribution lines, the CTAs must enter
into a contract with the local utility subject to certain
requirements. Through their own rules, the utilities require the
CTA to be technically capable and financially viable. PG&E
reports that the conditions placed on CTAs include a basic
service agreement, credit worthiness, and the ability to share
data for billing purposes. The utility reserves the right to
terminate service if the CTA is found to be in violation of the
utility's policies. PG&E reports that there are 20 active CTAs
within the PG&E territory, and it has received 1,200 customer
complaints about CTA service between May 2012 and April 2013.
These complaints include requests for cancellation of CTA
service, unauthorized switches by CTAs, and claims of deceptive
and misleading marketing activities. However, the IOUs do not
have the authority to investigate complaints of service on behalf
of the customers. Therefore, the IOUs typically recommend to
customers that they pursue legal action in court.
COMMENTS
1. Concurrence . This bill is back in committee after being
amended in the Assembly to include language that establishes
a regulatory framework for CTAs. The author has identified
that many customers of CTAs are presented with a confusing
array of service options and bills. Customers currently have
no forum to bring complaints against CTAs. CTAs are not
utilities, and are not regulated by the CPUC. Some customers
call the local utilities to complain about their gas
provider, but utilities have no authority to investigate
complaints against the CTAs. The author argues that the CPUC
should have the authority to regulate CTAs in the same way
that they have the authority to regulate ESPs. These
regulations establish basic customer protections against
possible fraud.
2. Direct Access Oversight. While the CPUC regulates IOUs
closely and can investigate customer complaints and fine
IOUs for regulatory violations, it does not currently
provide any oversight on CTA matters. By comparison, it does
provide limited regulation of ESPs. The CPUC does not set
rates for ESPs, but does mandate registration and licensing
of ESPs and maintains certain enforcement authority to
investigate complaints and issue fines. CTAs are very
similar to ESPs, except they provide direct access to gas
instead of direct access to electricity. PG&E reported 1,200
customer complaints against CTAs in a one-year period
spanning 2012-2013. This bill would establish a customer
protection program at the CPUC to which the IOUs could refer
customers who have complaints against CTAs. The CPUC would
have the authority to investigate and resolve complaints on
the customers' behalf.
3. ESPs and CTAs by analogy . The language of this bill is
largely copied from statutes that pertain to ESPs with the
intention that ESPs and CTAs should be treated in the same
manner by the CPUC. The bill outlines a regulatory framework
to guide the CPUC in oversight of CTAs and includes
provisions that:
Mandate that CTAs register with the CPUC for a
license to operate, which may be suspended or revoked
if the CTA makes material misrepresentations in the
course of soliciting customers, commits fraud,
misrepresents a material fact in applying for a
license, or if the CPUC finds there is evidence the CTA
is not financially capable;
Authorize the CPUC to collect a $100
registration fee in order to carry out the consumer
protection program;
Authorize the CPUC to investigate and resolve
customer complaints;
Authorize the CPUC to have its attorney
represent the people of the State of California in
legal action against CTAs;
Establish that CTAs are subject to fines if
found to be in violation of regulations;
Mandate that the CPUC compile names and
contacts of CTAs and direct the DRA to provide
educational materials regarding CTAs for customers;
Outlines minimum standards of operation
including confidentiality, physical disconnects and
reconnects, change in providers, written notices,
billing, meter integrity, customer deposits and
authorizes the CPUC to adopt additional protections;
Mandate CTAs provide potential customers with
written notice of the service describing the price,
terms, and conditions of the service;
Mandate the CPUC maintain a list of customers
who do not wish to be solicited to subscribe to or
change their CTA; and
Identify entitlements of a consumer damaged by
a violation by a CTA to recover actual damages,
attorney fees, court costs, exemplary damages, and
equitable relief.
POSITIONS
Sponsor:
Author
Support:
Division of Ratepayer Advocates
Pacific Gas & Electric
Oppose:
None on file.
Kyle Hiner
SB 656 Analysis
Hearing Date: September 12, 2013