PCIA Alternate Rejects Cost Limits on Utility Deals

Proposed restrictions on how much, and for how long, community aggregators and direct access customers are on the hook for their estimated share of private utility energy contracts would be tossed out under an alternate proposal released last week.

California Public Utilities Commission member Carla Peterman’s alternate decision to reform the controversial Power Charge Indifference Adjustment mechanism strikes the 10-year limit on recovery of investor-owned utility long-term resource contracts outlined by Administrative Law Judge Stephen Roscow ’s decision. In addition and unlike his decision, Peterman’s plan would allow continued recovery of pre-2002 contracts assigned to the investor-owned utilities.

Another significant difference between the two proposals is that Peterman calls for a significantly higher annual cost cap on IOU costs imposed on customers of alternate power providers. She proposes allowing the yearly price to rise up to 25 percent, compared to Roscow’s proposed 2.2 cents a kilowatt hour ceiling.

Peterman concludes there should not be time restrictions on recovery of costs arising from pre-and post-2002 utility energy contracts. That is in spite of community energy’s claim that a lack of time limits will impose an estimated cost of $49.68 billion dollars between 2018, when the upcoming decision would take effect, and 2041.

She insists that spreading out the costs is to “equitably distribute stranded costs among customers for whom those costs were incurred.” She also notes that in spite of energy crisis deals exceeding market costs, they still are “recoverable costs.”

She rejects Roscow’s rationale to limit cost recovery. Roscow contends that since “utilities are accustomed to using available information to forecast customer demand” they should have incorporated “CCA load losses into their planning efforts.”

Like the competing proposal, the commissioner also proposes a second phase in the proceeding to focus on minimizing Pacific Gas & Electric’s, San Diego Gas & Electric’s and Southern California Edison’s customer costs and exposure to higher-priced contracts.

The California Community Choice Association asserts active cost reductions could curb portfolio costs by $496 million for PG&E and $131 million for Edison over 20 years.

Peterman, like Roscow, also would allow alternative energy providers to buy out utility contract obligations. Her proposal includes resource adequacy and greenhouse gas adders, as well as annual cost true-ups.

The competing PCIA reforms could be before the CPUC for action as early as Sept. 13. — Elizabeth McCarthy

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PCIA Alternate Rejects Cost Limits on Utility Deals

William J. Kelly

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