BILL ANALYSIS �
SB 790
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Date of Hearing: July 5, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 790 (Leno) - As Amended: June 22, 2011
SENATE VOTE : 24-12
SUBJECT : Electricity: Community Choice Aggregation
SUMMARY : This bill will revise and expand the definition of
Community Choice Aggregation (CCA), require the PUC to initiate
a Code of Conduct rulemaking, and allow CCAs to receive Public
Purpose funds to administer energy efficiency programs.
Specifically, this bill :
1)Expands the entities defined as CCAs to include the Kings
River Conservation District, the Sonoma County Water Agency,
and any California public agency possessing statutory
authority to generate and deliver electricity at retail within
its designated jurisdiction.
2)Require that utilities provide electrical load data to a CCA.
3)Require the California Public Utilities Commission (PUC)
commission to consider the impact if it finds that an
electrical corporation has violated the requirement to
cooperate fully with a community choice aggregator
4)Revise resource adequacy and cost responsibility requirements
as they relate to community choice aggregators.
5)Require the commission to authorize a CCA to be a 3rd-party
administrator for energy efficiency programs financed through
nonbypassable system benefits charges for its electric service
customers of cost-effective energy efficiency and conservation
programs or to direct a proportional share of energy
efficiency activities to the CCA customers if the CCA is not
the 3rd party administrator.
6)Clarify customer disclosure requirements regarding electing to
participate in a CCA.
7)Requires customers who revert from a CCA back to the electric
utility to have no more than a 12 month service requirement.
8)Modifies customer data transfers to clarify that an electrical
utility is not required to obtain a customer's consent before
providing electricity needs, patterns of usage, and other data
if the CCA will agree to reasonable safeguards.
9)Requires the PUC, by March 2012 to establish a code of conduct
to ensure that an electrical corporation does not market
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against a CCA except through an independent marketing division
that is funded exclusively by the electrical corporation's
shareholders and that is functionally and physically separate
from the electrical corporation's ratepayer-funded divisions;
limit the electrical corporation's independent marketing
division's use of support services from the electrical
corporation's ratepayer-funded divisions, and ensure that the
electrical corporation's independent marketing division has
allocated costs of any permissible support services from the
electrical corporation's ratepayer-funded divisions on a fully
allocated embedded cost basis; and ensure that the electrical
corporation's independent marketing division does not have
access to competitively sensitive information; and incorporate
rules to facilitate the development of CCAs, to foster fair
competition or to protect against cross-subsidization paid by
ratepayers.
EXISTING LAW
Allows cities and counties to procure and sell electricity
within their community via a direct access arrangement called
for community choice aggregation (CCA).
Requires electric utilities to cooperate fully with CCAs that
investigate, pursue, or implement CCA programs.
FISCAL EFFECT : Unknown
COMMENTS :
According to the author SB 790 affirms CCA procurement autonomy,
protects both bundled service and CCA ratepayers, and corrects
abuses of market power by IOUs regarding the launch and
operation of CCA programs. SB 790 would help level the playing
field for local governments seeking to establish a CCA program.
1)Background : In 2002, AB 117 established a local government's
right to implement Community Choice Aggregation (CCA), a
program that allows communities to pool, or aggregate, the
electric load of their residents, businesses and other
institutions in order to procure and generate electricity on
their behalf. In the nine years since local governments were
given the right to establish CCAs, only one CCA program has
been successfully launched despite numerous community efforts
to do so.
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The CCA mechanism allows local governments to procure
electricity on behalf of their residents and businesses, while
the existing utility provides distribution, transmission and
billing services. Often described as a hybrid model, CCA
focuses on the procurement and generation side of the energy
business, partnering with existing electrical corporations
such as PG&E for power transmission and distribution, line
maintenance, and customer billing.
2)Consent to access private customer data. Current law allows
transfer of customer data from a utility to a CCA but is
currently silent on whether a customer's consent is needed in
order to provide private customer data to a CCA. This bill
would clarify provisions regarding transferring individual
customer data to a CCA so that consent is not required by the
customer. The language of this provision allows billing data
as well as energy data to be provided without consent. Billing
data is unclear and could include name of account holder,
address of account holder, account number, taxpayer
identification number, bank account number (if on automatic
bill paying systems), payment history, or other information
that may have been provided to a utility when establishing
service. This section should more clearly specify which
information is to be provided without the customer's consent
to address consumer privacy concerns. In order to address the
energy specific data, this committee recommends deleting the
word 'billing' to address this ambiguity or amending this
provision to make it specific about which billing data would
be provided without consent.
3)Special Treatment for Switching back-and-forth . Under current
law and PUC policies, CCA as well as Direct Access (DA)
customers are subject to a 3-year minimum stay requirement to
prevent customers from going back and forth between the
utility and non-utility providers and taking advantage of
short term variations in rates between utilities. Frequent
shifting of customers makes it difficult to procure the power
and can result in cost shifts from the switching-customers to
customers that do not have the ability to change providers.
According to the PUC, this bill would grant preferential
treatment to CCA customers by reducing the current 3 year stay
to 12 months and make it difficult for the utilities to plan
their systems.
4)Administration of Energy Efficiency Programs. This bill would
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allow a CCA may administer its own energy efficiency programs
and establish its measurement and verification protocols. The
State's energy efficiency programs are developed and approved
by the PUC with close involvement and participation with the
California Energy Commission and the California Air Resources
Board as well as members of the public. Allocation a portion
of the energy efficiency program to an independent entity,
without oversight, could lead to more requests that diminish
the funds available for the PUC to allocate to the areas in
most need and potentially diminish efforts to achieve
statewide energy efficiency goals. The PUC has a process
where organizations may intervene in the energy efficiency
proceedings. In addition, community-based organizations are
currently delivering energy efficiency assistance in
communities. CCAs should participate in the PUC proceedings
so that the priorities of the CCA can be considered along with
statewide priorities.
It is further troubling that if this provision is approved,
the allocation of funds according to the presence of a CCA
would not necessarily be based on climatic or socioeconomic
considerations. For example, the PUC has approved many
programs to provide assistance to low-income households and
programs to address reducing cooling costs in regions where
air conditioning is a health and safety requirement.
5)Cost shifting between CCA customers and bundled utility
customers. According to the author, "the status quo has CCA
customers subsidizing for-profit IOUs," The PUC does not agree
with this assertion. According to the PUC the Commission has
imposed charges on CCA customers for costs "incurred to serve
utility customers that are now CCA customers. In addition,
CCAs are required to pay for some generation costs related to
local and system resource adequacy. The Resource Adequacy
charges include charges such as the reserve margin. Left to
themselves, the CCAs preference would be to contract for just
enough capacity to serve their load and to depend on the
utilities for any unforeseen variations in their load or
disruptions in their supply. If the CCA generation is short
of load, the utility still has to supply the power to their
customers. Again, the CCAs preference would be to pay charges
for the power as and if a shortage occurred. However, the
nature of electric business is such that you have to have
reserve margins and contingency plans for those situations.
The Commission imposes such contingency planning through
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system and local RA. CCAs insist that unless they benefit
directly from those resources they should not have to pay or
should get a proportional benefit. It is not a reasonable
argument."
Resource Adequacy (RA) describes the policy used to ensure
safe and reliable operation of the electricity grid at all
times. This means that if a power plant must be built in
order to meet the needs of a safe and reliable grid, then that
expenditure to build that plant must occur. All load serving
entities have RA obligations to ensure that there is
sufficient capacity to supply customers when and where needed.
This bill would provide that CCA receive credits or
allocation of benefits to the extent that the CCA paid
estimated net unavoidable electricity costs paid a utility for
compliance costs or the CCA provided compliance benefits to a
utility for the RPS or the California Greenhouse Gas Solutions
Act Regulations. This provision should also state that when
implemented there cannot be a cost shift between CCA and
bundled utility customers.
The CCAs should be exempt from paying the charges only if they
are self-sufficient in every aspect of serving their load and
if their inadequacy did not impact bundled ratepayers in cost
or reliability of service.
The author may wish to consider the following amendments:
1.Remove the provision which would not require customer consent
of customer information by a utility on Page 11, line 12 - 16:
"Those procedures shall not require electrical corporations to
obtain a customer's consent for the provision of billing and
electrical load data if the community choice aggregator agrees
to reasonable safeguards appropriate to the nature of the data
to prevent the disclosure of the data to third parties."
2.Modify language in several locations that could enable
Resource Adequacy cost shifting between CCA customers and
bundled utility customers.
"366.2 (k) Except for nonbypassable charges imposed by the
commission pursuant to subdivisions (d), (e), (f), and (h),
and programs authorized by the commission to provide broader
statewide or regional benefits to all customers, electric
service customers of a community choice aggregator shall not
be required to pay nonbypassable charges for goods, services,
or programs that do not directly benefit either, or where
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applicable, both, the customer and the community choice
aggregator serving the customer. The commission, Energy
Commission, electrical corporation, or third-party
administrator shall administer any program funded through a
nonbypassable charge on a nondiscriminatory basis so that the
electric service customers of a community choice aggregator
may participate in the program on an equal basis with the
customers of an electrical corporation. The implementation of
a community choice aggregation program shall not result in a
shifting of costs between the customers of the community
choice aggregator and the customers of an electrical
corporation."
3.Add a provision that the governing body of a community choice
aggregator adopt a policy that expressly prohibits the
dissemination by the community choice aggregator of any
statement relating to the community choice aggregator's rates
or terms and conditions of service that is untrue or
misleading, and which is known, or which by the exercise of
reasonable care should be known, to be untrue or misleading.
4.Modify energy efficiency programs by a CCA.
"381.1(f) A community choice aggregator electing to become an
administrator shall submit a plan approved by the aggregator's
governing board to the commission for the administration of
cost-effective energy efficiency and conservation programs for
the aggregator's electric service customers that includes
funding requirements, a program description, and the duration
of the program. The program shall do commission shall certify
that the plan submitted complies with all of the following:
(1) Be consistent with the goals of programs established in
Sections 381.1 and 399.4.
(2) Advance the public interest in maximizing cost-effective
electricity savings and related benefits.
(3) Accommodate the need for broader statewide or regional
programs.
(4) Include audit and reporting requirements consistent with
the audit and reporting requirements established by the
commission pursuant to Section 381.1.
(5) Include evaluation, measurement, and verification
protocols established by the community choice aggregator.
(6) Includes performance metrics regarding the community
choice aggregator's administration of energy efficiency
programs to demonstrate the aggregator's achievement of the
objectives above and in any previous plan."
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REGISTERED SUPPORT / OPPOSITION :
Support
AARP California
Arcata City Council
California State Association of Counties (CSAC)
City & County of San Francisco
City of El Cerrito
City of Petaluma
City of San Jose
Climate Protection Campaign
Environment California
Graton Community Services District
Kings River Conservation District ("KRCD")
League of California Cities
Local Clean Energy Alliance
Marin Clean Energy
Marin County Board of Supervisors
Marin County Council of Mayors and Council Members (MCCMC)
Marin Energy Authority
Mayor Gayle McLaughlin, City of Richmond
San Anselmo Town Council
San Francisco Local Agency Formation Commission
San Francisco Public Utilities Commission (SFPUC) (Co-sponsor)
Santa Clara County Board of Supervisors
Sierra Club California (Co-sponsor)
Sonoma County Conservation Action
Sonoma County Regional Climate Protection Authority (RCPA)
Sonoma County Water Agency
Sustainable Mill Valley
The Utility Reform Network (TURN)
Town of San Anselmo
Town of Windsor
Opposition
California Public Utilities Commission (CPUC) (unless amended)
San Diego Gas & Electric (SDG&E) (unless amended)
Southern California Edison (SCE) (unless amended)
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
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