SB 888 Allows Limited DA

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, July 7, 2003 Share this on FacebookTweet thisEmail this to a friend

When it comes to direct access, Senator Joseph Dunn's (D-Santa Ana) electricity "re-regulation" bill keeps getting scaled-back.

SB 888 no longer repeals DA, or existing DA contracts. Recent amendments 'grandfather-in' existing DA load, although with an important caveat: no switching. Under the bill as amended, DA customers are prohibited from switching energy service providers or going back and forth between DA and bundled utility service.

At a legislative informational hearing on Wednesday, July 2nd, Dunn indicated he will further amend SB 888 to allows switching between Energy Service Providers, but said he will not consider adding safe-harbor provisions to allow DA customers to receive bundled service for a temporary period while switching DA providers.

Dunn's concessions on DA, while significant, don't change the fact that the bill would effectively kill DA by eliminating the cap on the DA cost responsibility surcharge (CRS).

The measure requires non-core customers to pay for energy cost obligations "on a schedule comparable" to the recovery of such costs from core customers, thus eliminating the existing cap on the DA CRS. The elimination of the DA CRS cap would have a significant impact on the future viability of DA and current DA contracts.

Additionally, the bill requires the California Public Utilities Commission (CPUC) to develop an implementation plan for a "core-noncore" model for retail electric service but provides no deadline or timeline for either the CPUC plan or the subsequent legislative approval required by the bill. Meanwhile, during the interim period after enactment of the bill and prior to legislative approval of the CPUC plan, assuming the latter occurs, DA would be frozen at current levels and in a generally uncertain state.

Recent amendments strengthen an investor-owned utility's "obligation to serve" and utility cost recovery. Southern California Edison now supports the bill, and Pacific Gas and Electric and Sempra Energy are reconsidering their positions. CMTA and other major business organizations remain strongly opposed, however.

The Assembly Utilities and Commerce Committee, which held the informational hearing on July 2, is now scheduled to hold a bill hearing on Monday, July 7. If the recent informational hearing is any indication, the committee vote is likely to be close. A number of lawmakers expressed concern about the DA provisions of the bill while others noted the need for some form of re-regulation.

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