San Diego Union Tribune
November 19, 2018
By: Rob Nikolewski
Backers of community choice energy programs want the California Public Utilities Commission to take another look at a recent decision that supporters say is tilted too much in favor of traditional power companies and will discourage potential customers from switching to CCAs.
Last month, the commission voted 5-0 to increase the exit fees that Community Choice Aggregation, or CCA, customers must pay to utility companies in their respective service territories, effective next year.
Late Monday afternoon, the state’s CCA trade association and a pair of San Diego-based groups filed paperwork calling on the commission to hear the case again.
“This is an added fee that will increase the cost for customers to move over” to CCAs, said April Maurath Sommer, executive director and lead counsel for the Protect Our Communities Foundation, an environmental group based in San Diego County. The Utility Consumers’ Action Network joined Protect Our Communities in its filing.
The CalCCA trade group submitted its own application, saying the state’s decision “artificially inflates” the exit fees.
The utilities commission did not respond to a request for comment on the filings.
Largely formed as a way to offer customers power from cleaner energy sources, CCAs have grown rapidly across the state. The first CCA was established in 2010 in Marin County and since then 18 others have sprung up.
San Diego mayor Kevin Faulconer last month announced his support for creating a CCA that, under a joint powers authority, could also include multiple cities around the county.
Under the CCA model, utilities like San Diego Gas & Electric still maintain transmission and distribution lines (such as poles and wires) and handle customer billing. But decisions regarding what kind of power is purchased in a given community are made by government officials.
Once a CCA is formed, its customers must pay an exit fee — called a Power Charge Indifference Adjustment — to the legacy utility serving that particular region. The fee is included in customers’ monthly bills.
The fee is required to offset the costs of investments utilities have made over the years for things like natural gas power plants, renewable energy facilities and other infrastructure.
Utilities argue if the exit fee is set too low, it does not fairly compensate them for their investments; if it’s too high, CCAs complain it reduces the financial incentive for their potential customers.
In October, state commissioners unanimously voted for an adjusted exit fee backed by commissioner Carla Peterman. While expressing support for CCAs, Peterman said the commission had a “legal obligation” to make sure increased costs are not shouldered by “customers who do not, or cannot, join a CCA” and said the adjustment “ensures a more level playing field between customers.”
The fees vary, depending on the service territories of the three investor-owned utilities across the state (SDG&E, Southern California Edison and Pacific Gas & Electric). According to estimates from the commission, the new exit fee in San Diego will be raised from 2.5 cents per kilowatt-hour to about 4.25 cents.
For a prospective CCA residential customer who uses 500 kilowatt-hours per month, that works out to about $21.25 per month.
The groups filing for a re-hearing said the state ruling contained legal errors. Among them:
- allowing utilities to pass along the costs of generation the power companies themselves own onto the exit fees
- not properly taking into account the value of cleaner energy sources, and
- saying there is “substantial evidence” that utilities executed contracts for renewable energy at inflated prices.
Protect Our Communities also called on the commission to issue an immediate stay on its decision because it will go into effect in little more than six weeks — Jan. 1, 2019. The group projected the new exit fees would be 50 percent higher than the existing fee.
“If this decision is allowed to stand there’s going to be huge numbers of San Diegans who will be getting their electricity from a (CCA) at rates that are unfairly high,” Maurath Sommer said. “This is a gift to the utilities … and does not encourage good management because they can turn those costs over to the new (CCA) customers.”
A spokeswoman for SDG&E said the utility had no comment because it had not yet had a chance to review the filings.
The commission has scheduled a second phase of discussions to fine-tune the exit fees.
Maurath Sommer said the commission is under no specific deadline to announce whether it will rehear its decision. In addition, plaintiffs cannot lodge an appeal in court until the commission issues a decision on a rehearing.
“In an ideal world the commission would expediently respond to all applications for rehearing and unfortunately the commission has a long history and a continuing history of electing to ignore applications for rehearing, in some cases up to two or three years,” she said.
The only existing CCA in San Diego County, the Solana Energy Alliance out of Solana Beach, joined Cal CCA in its request. Voicemail messages left to the mayor and deputy mayor at the Solana Beach City Council by the Union-Tribune went unreturned.