Electric Retail Choice legislation reintroduced

By CMTA Staff

Capitol Update, March 3, 2006 Share this on FacebookTweet thisEmail this to a friend

Direct access (DA), or customer choice, was the centerpiece of California’s landmark electric restructuring in 1996.  Five years later, it was suspended by the Legislature, with current DA customers allowed to continue on DA with a hefty surcharge added to pay for crisis-related costs, the DA Cost Responsibility Surcharge (CRS), which is presently capped at 2.7 cents per kilowatt hour.

Since 2001, there have been numerous legislative proposals to lift the suspension of DA and establish a "core-noncore" market, but none have reached the Governor’s desk.
Last year, the Schwarzenegger Administration-sponsored "core-noncore" bill barely made it out of the first policy committee.  Later in the session, the Assembly Appropriations Committee voted to keep the bill and not send it to the Assembly floor.
Since then, Southern California Edison, Pacific Gas & Electric and a number of other stakeholders, including some independent power producers, have been working on a consensus "roadmap" plan that would, among other things, put off reintroduction of retail competition for at least several years while new generation is built.

The author of last year’s bill, Assemblymember Keith Richman (R-Northridge) has introduced a new "core-noncore" bill in the 2006 legislative session.  AB 2062, introduced on February 15th, requires the California Public Utilities Commission (CPUC), on or before February 1, 2007, to adopt rules under which noncore customers (defined as customers with a maximum peak demand of 500 kilowatts or more), on or before June 30, 2007, must elect whether to procure the electricity they consume (commodity service) from an electric service provider, elect to receive commodity service from the utility for a minimum period of three years, or receive default commodity service from the utility.  Default commodity service would be provided at the higher of the utility's costs of spot electricity purchases, or the tariff rate for core-elect customers purchasing commodity service pursuant to the utility's procurement plan.  

CMTA appreciates Assemblymember Richman’s intent to set up a workable market and supports the eventual lifting of the suspension of DA, but believes that there are important milestones that must be accomplished first.  CMTA recommends that California policymakers not lift the suspension of DA or impose a "core-noncore" market until the wholesale market is competitive and the DA CRS methodology is reviewed and changed.

Since the 2000-2001 electricity crisis, California has taken an important step to establish a robust and competitive wholesale market.  AB 57, Chapter 835, Statutes of 2002, (Roderick Wright, D-So. Central Los Angeles) created competitive and transparent electricity procurement rules to spur investment in new generation.  While progress has been made, the wholesale market remains extremely thin and not sufficiently competitive.  Long-term power is not available for current DA customers at cost-effective price levels.  It would be unfair to customers and damaging to the state’s economy to require customers to make one-time decisions on participation in a noncore market before DA is a competitive and viable option.

Additionally, the methodology for determining the DA CRS adopted by the CPUC overstates the CRS and causes significant delays in providing the CRS figures to DA customers.  Expanding DA to more customers should follow the establishment of a fairer and less costly and uncertain CRS methodology.
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