BILL ANALYSIS �
AB 976
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 976 (Hall) - As amended: April 25, 2011
SUBJECT : Electricity: Community Choice Aggregation
SUMMARY : Prohibits consultants advising Community Choice
Aggregators (CCA) from bidding on CCA contracts. Specifically,
this bill :
1)Prohibits a CCA from purchasing electricity or energy services
from an entity that provided analysis, advice, consulting, or
other services to the CCA prior to the CCA notifying that CCA
service will commence.
EXISTING LAW
1)Provides that electricity customers may elect to aggregated
their electricity load and receive electricity service through
a local CCA.
2)Provides that a CCA may solicit bids, broker, and contract for
electricity and energy services for those customers. The CCA
may enter into agreements for services to facilitate the sale
and purchase of electricity and other related services.
3)State law currently prohibits an entity from who has been
awarded a consulting services contract, from a State agency,
from submitting a bid for, receiving an award for a contract
for the provision of services, procurement of goods or
supplies, or any other related action which is required,
suggested, or otherwise deemed appropriate in the end product
of the consulting services contract.
FISCAL EFFECT : Unknown
COMMENTS :
According to the author, firms hired by local governments to
make recommendations to local governments on forming a CCA often
seek contracts to implement their project recommendations.
These firms can provide local government information on the
AB 976
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potential costs and benefits of forming a CCA. The author
points out that there is a conflict of interest that generally
would benefit the consulting firm and that current law does not
adequately protect the interests of the taxpayers or ratepayers
affected.
Current law allows communities (cities, counties, special
districts) to voluntarily elect to aggregate their electric
loads and, if approved by those communities, form an arrangement
(known as a CCA) to arrange contracts for electricity service
for those communities.
In the process of developing California's most recent CCA, Marin
County and Pacific Gas & Electric (PG&E) were at odds with
regard to the Marin County's efforts to establish a CCA.
Ultimately, Marin County established the Marin Energy Authority,
which is currently providing electricity service to local Marin
residents. Marin County formed its CCA and selected Shell
Energy North America as its energy provider. There are other
CCAs in varying stages of evaluating and/or forming CCAs,
including but not limited to San Francisco and Sonoma,
Victorville, and Chula Vista.
PG&E received widespread criticism for its role as the major
sole funder of Proposition 16 (June 2010), which would have
required a 2/3 vote of local voters before a local government
could use public funds to establish or expand local electricity
service or implement a plan to become a local electricity
aggregator. California voters rejected Proposition 16 with
52.8% voting against and 47.2% voting in favor.
Marin County retained the services of several consultants
(Navigant, MRW Associates, Jody London Consulting) to provide
consulting services regarding the formation of their CCA. In
addition, Navigant was under contract with the California Energy
Commission's Public Interest Energy Research (PIER) Program to
provide developed a variety of analytical models, reports, and
tools to assist other cities and counties in understanding and
implementing Community Choice Aggregation.
State law currently exempts entities which have received less
than 10% of the full monetary value of a consulting servicing
contract from this prohibition.
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According to the San Francisco Public Utilities Commission AB
976 would effectively ban a consulting services company from
doing further business with the CCA program in perpetuity. They
state that there are few companies with experience in the launch
of CCA programs and this would discourage consultants from
providing any services to a CCA prior to commencement of
service. They state this would greatly curtail a local
government's ability to exercise its right under state law to
establish and operate a CCA program.
REGISTERED SUPPORT / OPPOSITION :
Support
Coalition of California Utility Employees (CUE) (Sponsor)
Opposition
Marin Energy Authority (MEA)
Sierra Club California
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083