Community Aggregation Gets First CPUC Nod

The California Public Utilities Commission adopted a package of rules that will govern the financial aspects of community choice aggregation, the process under which local governments can start buying and selling electricity within their jurisdictions. The rules package written by administrative law judge Kim Malcolm was adopted in one of the few unanimous decisions made during the commission?s December 16 meeting. ?It?s a big step toward setting parameters? for implementing community aggregation, said Mike Peevey, commission president. Community aggregation allows an entity such as a city or a municipal utility to bundle its customers and then to seek energy delivery for those customers though direct access. However, the set of parameters adopted with this vote remains incomplete. ?Local governments need liability issues to be resolved quickly,? commissioner Loretta Lynch noted, adding that it?s been over a year since enabling legislation AB 117 allowed community aggregation, and this vote just gets the commission over the first hurdle. Using methodology from the Department of Water Resources and Navigant Consulting, Malcolm established an initial customer responsibility surcharge?or exit fee?of 2 cents/kWh for each community aggregation customer. Similar to exit fees for direct-access customers, the fee is designed to let the state?s three investor-owned utilities recover costs for DWR contracts to avoid saddling remaining ratepayers with those liabilities. The 2 cents/kWh figure will be recalibrated on the basis of utility data within 18 months and adjusted yearly thereafter. Malcolm noted that her proposed amount is significantly higher than the 1.5 cents/kWh cost proposed by the city and county of San Francisco. Fledgling community choice aggregators could be misled by ?an artificially low [exit fee] only to later have to make up the difference with a substantially higher charge,? she stated. The fee will apply to new electricity customers as well as existing ones, because they would have assumed the cost liabilities if they?d subscribed to utility service. Other components of the order included principles for determining and allocating implementation and transaction costs. In setting implementation, or start-up, costs, the commission was not swayed by arguments from Southern California Edison and San Diego Gas & Electric that aggregators should bear all expenses. Noting that aggregators were envisioned by the Legislature as being good for the entire state?s energy interests, the commission directed utilities to design tariffs that assign start-up costs to all customers?both aggregators and the utilities. The order also required the utilities to separate costs that are already reimbursed through utility revenue requirements. If community aggregators were charged for the costs of the billing system and customer services, their ?shareholders would receive a windfall,? Malcolm warned. The commission rejected utilities? arguments that customer data are proprietary. The utilities were directed to provide all relevant usage information, load data, and customer information to aggregators, with the latter signing nondisclosure agreements for confidential information. A second phase of the rulemaking, dealing with operational issues, will open soon.

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Community Aggregation Gets First CPUC Nod

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