JUICE: The Scales of Politics

Last week, numerous cities and regions with formed and forming community energy programs protested the investor-owned utilities’ plea to the California Public Utilities Commission to let them use ratepayer funds to lobby against public power supply organizations.

The Feb. 1 petition by Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric seeks to modify the California Public Utilities Commission’s six-year old utility Code of Conduct related to community choice program formation. It appears to be too little too late to stop the rising tide of community energy programs across the Golden State.

Thus, the petition begs the question of its real aim.

It appears to be optimal political timing, with the main push coming from the two Southern California utilities.

PG&E is on the opposition sidelines after getting a PR black eye for fighting the formation of the state’s first community energy group, Marin Clean Energy. Its previous tactics, in fact, led to the passage of the 2012 legislation by Sen. Mark Leno (D-San Francisco) that put restrictions on utility anti-community energy marketing and led to the subsequent CPUC Code of Conduct.

Edison has been saying for years it is moving to a wires only business model in response to the changing utility business world. But, it appears to have changed its tune in response to several municipalities in its territory becoming community aggregators, including populous Los Angeles County.

Last September, Edison was accused by one community choice energy authority of apparently using ratepayer funds as part of its “Equitable Energy Choice for Californians” campaign to “actively lobby local government and community leaders, urging these leaders to support regulatory reform needed to address the rise of CCAs.” That is according to a Sept. 27, 2017 letter from the California Choice Energy Authority to Mike Picker, CPUC president and Commissioner Carla Peterman.

Community energy is an even greater threat to SDG&E. The City of San Diego is the utility’s largest and most important customer and it is deciding whether to pursue community aggregation. Also, SDG&E’s parent, Sempra, unlike the other two utility parents that are largely holding companies, sells generation to its utility and it could lose that reliable customer.

Furthermore, the CPUC code allows the utilities to create independent marketing arms to push back against community energy. It can only be funded with shareholder monies.

Of the three utilities, only SDG&E has created an independent marketing arm.

After the governing code of conduct was enacted in 2012 to thwart heavy-handed utility marketing aimed at undermining community energy, these public programs blossomed. Up and running, and in a number of cases expanding, are Sonoma Clean Power, Lancaster Choice Energy, Clean Power San Francisco, Peninsula Clean Power, Yolo County’s Valley Clean Energy, Desert Community Energy in the Coachella Valley and the list goes on.

The utilities assert in their petition that not allowing them to “lobby” local officials and the press about the community energy harms the public interest because of possible “unanticipated costs and outcomes that customers may incur resulting from CCA formations based on incomplete or inaccurate information.”

SDG&E, Edison and PG&E also contend not allowing them to lobby with ratepayer money violates their First Amendment Rights.

Of the numerous protests, the Office of Ratepayer Advocate’s response stands out, particularly because it’s not necessarily pro-CCA. Its March 1 response points out that removing the lobbying restriction from the code of conduct “would effectively require ratepayers to fund the Joint Utilities’ anti-CCA lobbying efforts, which is contrary to the intent of Public Utilities Code §707, and not in the best interests of bundled customers.”

The ratepayer advocate also notes that the code does not prohibit the utilities’ exercise of free speech but, “rather, it limits who pays for the utilities’ speech.” The utilities can and in some cases have, taken a stance and lobbied against CCAs, with the cost borne by shareholders, a group that scrutinizes costs more closely. In addition, ORA and others point out that commercial speech gets limited First Amendment protection.

Regardless of the merits of the arguments, politics will likely drive the outcome. Lawmakers, as well as regulators, want to protect the investor-owned utilities.

CPUC President Mike Picker’s ongoing claims that the state is nearing a new energy crisis due to the proliferation of community energy and a lack of state planning, including for electricity providers of last resort, is gaining traction.

Energy crisis fears are now center stage at the state capitol. Alarm bells are sounding in response to talk of utility bankruptcies because of the significant liability for the huge recent wildfires and recent rating agency credit downgrades.

As the old adage states: timing is everything. — Elizabeth McCarthy

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JUICE: The Scales of Politics

William J. Kelly

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