Legislation Expanding Direct Access Advances

The Assembly Utilities & Commerce Committee early this week approved on a 10-1 vote, legislation expanding direct access for commercial and industrial customers.

SB 286 by Sen. Bob Hertzberg (D-Van Nuys) puts an 8,000 GWh cap over three years on the amount of new supplies that nonresidential ratepayers can buy from energy providers in place of the utility serving in the territory.

“We need to move California to a dynamic new system of lower carbon and improve the lives of Californians,” said Hertzberg. He insisted SB 286 would allow the state to reach an electricity portfolio that is 100 percent renewable by lowering costs. His bill, however, only allows a limited number of businesses to buy from nonutility power suppliers.

The current cap on direct access transactions is 28,000 GWh.

About 600 companies are waiting in line to sign up for direct access, representing about 6,100 GWh of need. Of that amount, 4,200 GWh is in Pacific Gas & Electric’s territory, according to the bill analysis.

The private utilities and The Utility Reform Network opposed the bill on grounds that it could result in the remaining utility ratepayers having costs shifted and added to their utility bills. The opponents also said the measure gives direct access providers a leg up for not requiring that they enter into long-term renewable deals, which utilities must do.

“When customers depart, we are left holding the bag and costs,” said DeVina Flemming, PG&E lobbyist. Matt Friedman, TURN attorney, said direct access power sales lacked transparency and focus on the lowest cost, not cleanest resources.

Hertzberg noted that in the quickly evolving power industry, utilities’ roles will shrink to “wires and pipes” businesses, no longer including generation services. He added that if the bill opponents were truly concerned about an expansion of direct access tilting the playing field in favor of non-utility providers, then direct access providers should be able to reap rates of return, like the utilities.

The bill was supported by utility worker lobbyists, largely because the amount of direct access was capped and it includes utility worker protections for five years.

At the height of the 2000-01 energy crisis, direct access sales were severely restricted to protect the private utilities, which suffered from constrained cash flows because of volatile deregulated wholesale power costs. —Elizabeth McCarthy

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Legislation Expanding Direct Access Advances

William J. Kelly

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