BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 976 - Hall Hearing
Date: May 15, 2012 A
As Amended: April 25, 2011 FISCAL B
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DESCRIPTION
Current law authorizes the non-residential, retail end-use
customers of an electric corporation (IOU) to purchase
electric service directly from non-utility providers (electric
service providers or ESPs), a program commonly referred to as
Direct Access. Participation is capped as a percentage of the
IOUs total electric load based on a specified formula.
Current law establishes a general exception to the cap on
direct access for community choice aggregation (CCA)
undertaken by cities and counties serving their own residents
and businesses.
Current law prohibits a person or firm that has been awarded a
consulting services contract by a state agency from being
awarded a contract for the provision of services or
procurement of goods or supplies that are the end product of
the consulting services contract.
This bill would prohibit an entity that has been awarded a
consulting services contract for the formation of a CCA to be
awarded a contract for any work which is the end product of
that consulting services contract.
BACKGROUND
CCAs are governmental entities formed by cities and counties
to serve the energy requirements of their local residents and
businesses. The formation of CCAs was authorized by AB 117
(Migden, 2001) which also described essential CCA program
elements, required the state's IOUs to provide certain
services, and established methods to protect existing utility
customers from liabilities that they might otherwise incur
when a portion of the IOU's customers transfer their energy
services to a CCA.
Cities and counties have become increasingly involved in
implementing energy efficiency programs, advocating for their
communities in power plant and transmission line siting cases,
and developing distributed generation and renewable resource
energy supplies. The CCA program takes these efforts one step
further by enabling communities to purchase power on behalf of
the community.
Although adopted in 2001, to date only one region has been
successful in implementing a CCA. Several cities joined
together in Marin County and formed, under a joint powers
authority, "Marin Energy Authority" (MEA), which retained the
services of several consultants (Navigant, MRW Associates,
Jody London Consulting) to provide consulting services
regarding CCA formation. In addition, Navigant was under
contract with the California Energy Commission's Public
Interest Energy Research Program to develop a variety of
analytical models, reports, and tools to assist other cities
and counties in understanding and implementing CCA. MEA later
contracted with Shell Energy provide electric service to its
customers and has gone out to bid for additional generation
contracts.
The CCA program is new in California and there is little
experience with such a program anywhere. Nothing in the
statute directs the California Public Utilities Commission
(CPUC) to regulate a CCA's program except to the extent that
its program elements may affect utility operations and the
rates and services to other IOU customers.
COMMENTS
1. Author's Purpose . The author reports that "local
governments exploring the feasibility of forming a CCA
often seek the expertise and advice of third party energy
consultants to assist them in their decision making
process. While these private-sector consulting firms can
provide local governments with important information on
the potential pros and cons of creating a CCA, current
law fails to provide consumers with a number of important
consumer protections. Firms recommending the creation of
a CCA often seek contracts to implement the very project
recommendations that they were initially hired to
provide. This clear conflict of interest generally
benefits only the consulting or energy firm providing the
recommendation and does not protect ratepayers or the
rate-paying public."
2. Follow-on Contracts . For contracts entered into by
a state agency the law is very clear that a contractor
may not be hired to conduct a feasibility study or
produce a plan, and then be awarded a contract to perform
the recommended services. There are no similar
restrictions for contracts by non-state agencies. This
bill intends to fill that gap regarding the formation of
CCAs. The author reports that independent energy
producers are being consulted by cities and counties to
design procurement plans with the likely benefit of then
being the power-producer after the CCA is formed. The
author opines that this is a conflict of interest which
only serves the contractor and does not have sufficient
protections for electric ratepayers.
In its opposition to this bill, the CPUC opines that
restricting qualified companies from providing both
consulting and procurement services would have the
"impact of stymieing the development of CCAs by limiting
the ability of potential CCAs to seek expert advice
and/or operational support." Other opponents argue that
the Brown Act provides sufficient transparency of CCA
actions and that this bill is unnecessary.
3. Existing Law . This bill states that its provisions
are declaratory of existing law. Yes and no. Existing
law does prohibit follow-on state contracts but does not
have similar provisions for local government contracts.
The committee should consider striking this provision for
the purpose of clarity.
4. Ratepayer Impact . No direct allocation of ratepayer
dollars would be needed to implement this bill; nor would
it effectuate a shift of ratepayer funds between
programs.
ASSEMBLY VOTES
Assembly Floor (62-9)
Assembly Appropriations Committee
(17-0)
Assembly Utilities and Commerce Committee
(12-2)
POSITIONS
Sponsor:
Coalition of California Utility Employees
Support:
None on file
Oppose:
California Public Utilities Commission
City of El Cerrito
City of Richmond
City of San Jose
Climate Protection Campaign
Global Exchange
Kings River Conservation District
KyotoUSA
LEAN Energy
Local Clean Energy Alliance
Local Power, Inc.
Marin Energy Authority
San Joaquin Valley Power Authority
Sierra Club California
Table Rock Capital
The Utility Reform Network
An individual
Kellie Smith
AB 976 Analysis
Hearing Date: May 15, 2012