State PUC boosts power exit fees

The pay­ments are charged when cus­tomers leave tra­di­tional util­i­ties.

Los Angeles Times - - BUSINESS BEAT - By Rob Nikolewski rob.nikolewski@sdunion­tri­bune.com

The Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion has ap­proved an in­crease in exit fees charged to cus­tomers who buy elec­tric­ity from gov­ern­ment-run com­mu­nity choice pro­grams rather than tra­di­tional util­i­ties such as South­ern Cal­i­for­nia Edi­son and San Diego Gas & Elec­tric.

Af­ter re­view­ing two com­pet­ing exit-fee pro­pos­als, all five com­mis­sion­ers voted Thurs­day in fa­vor of an ad­just­ment that many ad­vo­cates pre­dicted could ham­per the growth of the com­mu­nity choice move­ment, which has be­gun to gain trac­tion with 19 com­mu­nity choice ag­gre­ga­tors op­er­at­ing in Cal­i­for­nia.

In Los An­ge­les and Ven­tura coun­ties, the Clean Power Al­liance CCA hopes to sign up nearly 1 mil­lion cus­tomers by the end of next year. The city of San Diego is weigh­ing two op­tions — one from SDG&E and the other from CCA pro­po­nents — as it moves to­ward a goal of 100% clean power by 2035.

“I sup­port the cre­ation of al­ter­na­tive elec­tric providers to ex­pand cus­tomer choice, and our le­gal obli­ga­tion is to make sure this hap­pens with­out in­creased costs to cus­tomers who do not, or can­not, join a CCA,” said Com­mis­sioner Carla Peter­man, who au­thored the pro­posal that passed. “To­day’s pro­posal en­sures a more level play­ing field be­tween cus­tomers.”

Un­der the CCA model, util­i­ties still han­dle cus­tomer billing and main­tain transmission and dis­tri­bu­tion lines. But of­fi­cials in a given lo­cal gov­ern­ment en­tity make the fi­nal de­ci­sions about what kind of power sources are pur­chased.

Once a CCA is formed, its busi­ness and res­i­den­tial cus­tomers must pay an exit fee — called a power charge in­dif­fer­ence ad­just­ment — to the le­gacy util­ity serv­ing that par­tic­u­lar re­gion. The fee is in­cluded in cus­tomers’ monthly bills.

The fee is re­quired to off­set the costs of the in­vest­ments util­i­ties made over the years for things like longterm power con­tracts, nat­u­ral gas power plants, re­new­able en­ergy fa­cil­i­ties and other in­fras­truc­ture.

Util­i­ties ar­gue that if the exit fee is set too low, it does not fairly com­pen­sate them for their in­vest­ments and gives CCAs too much of a price ad­van­tage; if it’s too high, CCAs say, it re­duces the fi­nan­cial in­cen­tive for their po­ten­tial cus­tomers.

The Pub­lic Util­i­ties Com­mis­sion chose to adopt a pro­posal that some said was more fa­vor­able to util­i­ties, lead­ing to com­plaints from CCA boost­ers.

“We see this will re­ally throw sand in the gears in our abil­ity to do things that can move us to­ward [cli­mate change] goals,” Jim Parks, staff mem­ber of Val­ley Clean En­ergy, a CCA based in Davis, said be­fore the vote.

The com­mis­sion es­ti­mated that be­cause of the fee ad­just­ment, CCA res­i­den­tial cus­tomer bills would in­crease 2.5% in Edi­son ter­ri­tory, 5.24% in SDG&E ter­ri­tory and 1.68% in Pa­cific Gas & Elec­tric Co. ter­ri­tory.

But min­utes af­ter the vote was an­nounced, one of the lead­ing voices in fa­vor of the city of San Diego es­tab­lish­ing its own CCA said the de­ci­sion was good news be­cause it pro­vides some reg­u­la­tory cer­tainty.

“For us in San Diego, it’s a green light to move for­ward with com­mu­nity choice,” said Ni­cole Capretz, ex­ec­u­tive di­rec­tor of the Cli­mate Ac­tion Cam­paign. “For us, it’s, let’s go, let’s launch and let’s give fam­i­lies a choice. We no longer have to wait.”

The Clear the Air Coali­tion, a San Diego County group crit­i­cal of CCAs, said the new exit fee — which goes into ef­fect next year — is “a step in the di­rec­tion.” But the group, which in­cludes the San Diego Re­gional Cham­ber of Com­merce, the San Diego County Tax­pay­ers Assn. and lob­by­ists for Sem­pra En­ergy, the par­ent com­pany of SDG&E, re­peated con­cerns it has brought up be­fore.

“If the city of San Diego de­cides to get into the en­ergy busi­ness, this de­ci­sion means ratepay­ers in Na­tional City, Chula Vista, Carls­bad, Im­pe­rial Beach, La Mesa, El Ca­jon and all other neigh­bor­ing com­mu­ni­ties would see higher en­ergy bills, and San Diego tax­pay­ers would be faced with mount­ing debt,” coali­tion spokesman Tony Manolatos said in an email.

CCA sup­port­ers say com­mu­nity choice is cru­cial to in­creas­ing the use of re­new­able en­ergy while re­duc­ing cus­tomer bills.

A fea­si­bil­ity study re­leased last year pre­dicted a CCA in San Diego has the po­ten­tial to de­liver cheaper rates over time than SDG&E’s cur­rent ser­vice, while pro­vid­ing as much as 50% re­new­able en­ergy by 2023 and 80% by 2027.

“The city has al­ready fig­ured out we are still ca­pa­ble of launch­ing a pro­gram, hav­ing com­pet­i­tive, affordable rates and fi­nally of­fer­ing fam­i­lies a choice as to who their en­ergy provider is,” said Capretz, who helped draft an ini­tial blueprint of San Diego’s cli­mate plan as a city staffer.

SDG&E has come to the city with a coun­ter­pro­posal that of­fers 100% re­new­ables by 2035. Thus far, the util­ity has pro­duced a rough out­line for a “tar­iff” pro­gram that would charge ratepay­ers the cost of de­liv­er­ing more clean sources of en­ergy over time.

Speak­ing in gen­eral about the PUC’s de­ci­sion, SDG&E spokes­woman He­len Gao called it “a vic­tory for our cus­tomers, as it min­i­mizes the cost shifts that they have been bur­dened with un­der the ex­ist­ing fee for­mula.” She said in an email, “As com­mis­sion­ers noted in ren­der­ing their de­ci­sion, re­form­ing the [exit fee] ad­dresses a cus­tomerto-cus­tomer eq­uity is­sue and has noth­ing to do with in­creas­ing prof­its for in­vestor-owned util­i­ties.”

Justin Sul­li­van Getty Im­ages

STATE reg­u­la­tors voted 5 to 0 to ap­prove an in­crease in exit fees charged to cus­tomers who buy elec­tric­ity from gov­ern­ment-run com­mu­nity choice pro­grams rather than tra­di­tional util­i­ties such as Edi­son.

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