CPUC Hits Community Choice with Higher Costs

11 Oct 2018

Facing significant opposition in a shifting energy world, the California Public Utilities Commission Oct. 11 unanimously approved a decision that will raise the bills of community energy and direct access customers by shifting more private utility portfolio costs onto them.

In voting this week, commissioners backed revisions to the controversial Power Charge Indifference Adjustment methodology developed by Commissioner Carla Peterman instead of a more modest cost shift proposed by a commission administrative law judge. The commission’s action is destined to be challenged in the courts and in the Legislature.

“We will fight it with all the means we have,” Al Wienrub, head of the California Alliance for Community Choice, told the commission before the vote.

“Yes, there are impacts but we think they are reasonable,” Peterman said in defense of her plan. She insisted the cost increase for choice program customers will be just a small part of their electricity bills.

However, Commissioner Cliff Rechtschaffen, who plans to file a concurring opinion, said the revision is expected to raise community choice rates by up to 15 percent.

He noted that will require some community aggregators to rework their budgets because of higher costs. It also will impact new energy choice programs, inhibiting them from being able to get credit, he added.

He took issue with the decision’s launch of an annual increase of 0.5 cents per kWh beginning in 2020. Rechtschaffen said he would have preferred a lower increase starting next year “to guard against rate shock.”

Before the vote, community energy supporters insisted the new law setting a 100 percent renewable standard in the state, plus the recent Intergovernmental Panel on Climate Change calling for radical action to thwart global warming, were strong reasons to not increase costs for community aggregators, which provide higher levels of renewable resources.

“It throws sand in the gears to reach those goals,” said a Davis City Council member.

The decision comes as community choice aggregation is rapidly growing in California. About 160 communities are participating in community choice aggregation programs, with more expected to join in the years ahead.

Peterman’s decision allows investor-owned utility contracts that are 10 or more years old to be included in costs partly shifted to community choice and direct access customers. The administrative law judge’s proposal would have limited the recovery period to no more than 10 years.

Peterman’s approved plan also calls for choice program customers to pick up the cost of 8,000 MW of utility-owned generation units, such as Pacific Gas & Electric’s Diablo Canyon nuclear plant, which is slated for closure in 2025. It allows utilities to recover the cost of their hydropower dams and some gas plants too.

The competing proposal would have excluded recovering those costs from choice customers.

Moreover, Peterman’s ruling sets no end date for costs under the revised PCIA, unlike the unsuccessful one by administrative law judge Stephen Roscow.

Community energy representatives claimed that the lack of time limits will impose an added cost for them of some $49.68 billion dollars between 2018 and 2041.

The CPUC, however, insisted this week’s action seeks to avoid cost shifting to the shrinking number of private utility customers.  It was supported by some of the Hispanic and African American Chambers of Commerce.

Commissioners took issue with claims that the approved decision would be a boon for utility shareholders. “Neither proposal increases utility profits or helps utility shareholders,” Peterman insisted.

Residential customers leaving utility service this year are expected to face bill increases next year of 1.68 percent over 2018 bills in PG&E’s territory. In Southern California Edison’s territory, the increase will be 2.5 percent and in San Diego Gas & Electric’s area the boost will be 5.24 percent.

The newly approved alternate also allows alternative energy providers to buy out utility contract obligations. It includes resource adequacy and renewable energy adders too, as well as annual cost true-ups.

Peterman’s alternate opens the door to a second phase in the proceeding focused on minimizing PG&E’s, Edison’s, and SDG&E’s customer costs and exposure to higher-priced contracts.

Peterman and other commissioners insisted that another main goal of this week’s decision was transparency. However, last minute changes were made but the revised decision was not available online until just before the meeting.

Elizabeth McCarthy

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