PUC must reject flawed proposal for utility customers

Choice for an essential service, like electricity, should not create winners and losers. But the California Public Utilities Commission is poised to do just that unless it rejects a seriously flawed proposal by an administrative judge and supports an alternate proposal when it votes Thursday.

Failure to adopt the Alternate Proposed Decision released and since revised by Commissioner Carla Peterman would mean power-supply customers of investor-owned utilities (PG&E, Southern California Edison and San Diego Gas & Electric) will continue to shoulder an unfair burden for past investments in clean energy and system reliability. At the same time, customers of Community Choice Aggregators and other alternative energy providers will continue to pay less than their equitable share.

A coalition of seniors, small businesses, labor, environmental, veterans and community groups is urging PUC commissioners to support the revised Alternate Proposed Decision.

At issue is a little-known regulatory mechanism called the Power Charge Indifference Adjustment that is intended to protect energy customers from unfair cost-shifts.

Few people are aware of the PCIA, and even fewer realize the potential significance of this proposed decision — not only on their electric bills, but also on the overall reliability and stability of our state’s electric system and the long-term viability of customer choice.

State policymakers anticipated and took steps to prevent these problems. The legislation passed in 2002 authorizing communities to form CCAs and begin purchasing power for their residents prohibited costs being shifted from customers of one provider to customers of another. This mandate was reaffirmed in the landmark SB 350 legislation in 2015.

The Legislature recognized that California’s ambitious clean energy goals required massive investments in solar, wind and other renewables decades ago. These investments required long-term contracts of 10, 20 and 30 years that are still being paid off. These investments jump-started the renewable power industry, drove prices down and made clean energy the mainstream, affordable option it is today.

Because everyone benefits from clean energy policies and system wide reliability, the Legislature required that everyone, regardless of whether they are power supply customers of investor-owned utilities, CCAs or other providers, must contribute their fair share toward the costs. Instead of remedying the problems today that cause bundled customers of investor-owned utilities to subsidize CCA customers, the proposed decision would expand protections to CCA customers at the expense of other electricity customers who will pay higher costs. Commissioners should not expand the cost shift.

But because of flaws in the PCIA, millions of customers of CCAs and other alternative providers are not contributing equitably, and millions of power supply customers served by investor-owned utilities are paying too much. The PUC estimates that as many as 85 percent of electricity customers could be served by CCAs and other energy providers by mid-2020.

More choices in energy providers is a good thing if it results in innovation and lower costs and is accomplished fairly. But if lower costs for some customers are achieved through shifting costs to other customers, that is not a legitimate competitive market. It also raises serious questions about how we continue to equitably fund future clean energy and environmental policies.

It is critical the PUC get this right and take steps to address these issues by voting to support the Alternate Proposed Decision.