Regulators Illuminate Utilities’ Free Speech Limits

By Published On: May 21, 2010

Energy regulators this week clarified that investor-owned utilities are subject to California legal requirements governing false claims and misleading statements in advertising and publicity when they fight formation of community choice aggregation programs. The California Public Utilities Commission also voted to provide rate relief to Pacific Gas & Electric customers in hot areas that pay the top tier electricity rates during summer due to air conditioning use. In amending community choice aggregation rules May 20, the commission referenced state business and professions code limits on commercial speech. The commission also amended its rules to clarify that utilities cannot run their own community choice aggregation opt-out programs. If utilities violate the rules, noted commissioners, they are subject to penalties. “Without some clear checks on utility behavior they will simply stream-roll CCAs” due to their superior resources, said commission president Mike Peevey. The CPUC passed the clarifications item against the backdrop of Pacific Gas & Electric’s opposition to Marin County’s recent launch of a community choice program. County residents criticized PG&E for aggressively fighting the program and making misleading claims in phone calls and mailers seeking them to opt out of community choice aggregation (Current, May 14, 2010). The commission vote was not unanimous. Commissioner Tim Simon strenuously objected, claiming the clarifications stacked the deck in favor of municipal governments. Those municipalities, at least, that pursue aggregation. “If this action was taken by Hugo Chavez or Robert Mugabe it would be viewed as a nationalization, rather a localization, of private assets,” said Simon before casting his vote against clarifying that deceptive commercial speech is prohibited. “What industry will be next?” Commissioner John Bohn said Simon had a point, noting that the commission must be careful not to “constrain” or “chill” free speech by utilities. However, he said he supported the vote because the clarifications were “reasonable.” California law allows municipalities to form community choice aggregation programs, in which they become the purchasers of power on behalf of their residents and utilities simply serve as transmitters of the power. Utilities still get paid for distribution service, but not for the power itself. Some communities are moving to form community choice aggregation programs in order to control power costs and increase the amount of renewable energy they use. To counter the trend, PG&E is sponsoring a ballot measure next month known as Proposition 16 that would require two-thirds approval by the voters of any municipality seeking to form an aggregation program (Current May 7, 2010). The commission approved the modification 4-1. In other action, the commission voted to restructure Pacific Gas & Electric rates beginning this summer. Peevey said the move is set to provide “rate relief for households in the upper tiers” of rates because of “large cooling demands.” Under the changes, the rates for Tier 4 and 5 usage will decline from 42 to 40 cents and 49 to 40 cents, respectively. The Tier 3 rate goes up by about a half cent from 28.5 to 29 cents. The changes are revenue neutral to PG&E. Ratepayer advocates agreed to them in a settlement pact.

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