CPUC Restricts SDG&E’s New Marketing Arm Formed to Fight Choice

18 Aug 2016

State utility regulators approved a plan by San Diego Gas & Electric to fight community choice aggregation in San Diego by establishing an “arm’s-length” marketing organization.

However, the California Public Utilities Commission decision Aug. 18 found that because the marketing operation may provide information about energy it should be subject of all the commission’s affiliate transaction rules that govern operations providing products and services that use electricity.

The aim of the designation, according to the decision, is to prevent cross-subsidization of the marketing operation by utility ratepayers or any disproportionate influence in debates about choice.

State law and CPUC rules require any such marketing arm to be funded entirely by shareholders, explained Ed Randolph, commission energy division director. He added that marketing arms established to fight community choice must be operated completely separately from the utility.

SDG&E maintained all the affiliate transaction rules should not apply.

However, Sierra Club, Marin Clean Energy, Lancaster, and the Climate Action Campaign, a non-profit promoting choice in San Diego, wanted to see tighter rules on the new marketing arm.

Randolph noted that some stakeholders in the decision wanted the commission to disapprove SDG&E’s plan entirely.

However, Commissioner Mike Florio said that under the nation’s laws corporations are free to speak the same as individuals.

He said the decision sets conditions for the marketing arm to the maximal extent feasible under the law. “It’s a recognition of what the current legal reality is,” he said.

The decision allowing the utility to form the marketing arm comes as the city of San Diego is expected to receive a feasibility study on choice late this year or early next. It also comes as cities and counties up and down the state are weighing whether to set up their own choice programs.

SDG&E’s plan to fight choice marks the first since Pacific Gas & Electric fought it in Marin County late in the last decade.

PG&E’s aggressive tactics prompted the state Legislature and CPUC to limit utilities’ ability to fight choice, which is available to interested communities by state law.

Marin was the first locale in the state to form a community choice aggregation program. It began service in 2010.

—William J. Kelly

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