CPUC Issues Proposal That Would Reform Equitability of Charges Community Choice and Direct Access Customers Pay

October 10, 2018 - 

UPDATE Oct. 10, 2018: A second revised Alternate Proposed Decision was issued.

UPDATE Oct. 5, 2018: A revised Alternate Proposed Decision was issued. 

UPDATE: Watch the webcast of the Sept. 7, 2018 All-Party Meeting  

UPDATE Aug. 14, 2018: Commissioner Carla J. Peterman has issued an alternate proposal (called an Alternate Proposed Decision) in this proceeding. The Proposed Decision excludes legacy utility-owned generation from cost recovery from Community Choice Aggregators. It also retains a 10-year limit on PCIA cost recovery for post-2002 utility-owned generation and certain storage costs, and it establishes a PCIA collar, with an upper cap starting at 2.2 cents/kilowatt-hour and a lower floor of 0 cents/kilowatt-hour. The alternate Proposed Decision from Commissioner Peterman differs from the Proposed Decision in four main substantive respects: 1) Finds that legacy utility-owned generation is PCIA-eligible and should be recovered from Community Choice Aggregator customers; 2) Terminates the 10-year limit on PCIA cost recovery for post-2002 utility-owned generation and certain storage costs; 3) Establishes a PCIA collar starting in 2020, with the cap limiting upward or downward changes in the PCIA to 25 percent in either direction from the prior year; 4) for 2019 Energy Resource Recovery Account forecasts only, adopts the Platt’s Portfolio Content Category 1 REC index value for the Market Price Benchmark’s RPS Adder. Information about the original proposal is in the paragraphs below. Both proposals will come before the CPUC’s Commissioners for a vote.    

Blog Posted Aug. 1, 2018: The California Public Utilities Commission (CPUC) today issued a proposal that, if adopted at its September 13, 2018, Voting Meeting, would reform the amount that Community Choice Aggregation and Direct Access customers pay in order to keep remaining utility customers financially unaffected by their departure, which is required by legislation. 

The California Public Utilities Commission (CPUC) today issued a proposal that, if adopted at its September 13, 2018, Voting Meeting, would reform the amount that Community Choice Aggregation and Direct Access customers pay in order to keep remaining utility customers financially unaffected by their departure, which is required by legislation.

The Power Charge Indifference Adjustment (PCIA) ensures that customers who remain with an investor-owned utility such as Pacific Gas and Electric Company, Southern California Edison, or San Diego Gas & Electric, do not end up taking on the long-term financial obligations the utility incurred on behalf of customers who departed the utility to become customers of a Community Choice Aggregator or Direct Access provider-and that departing customers should not take on costs that were not incurred on their behalf. Examples of such financial obligations include utility expenditures to build power plants and, more commonly, long-term power purchase contracts with independent power producers.

The proposal issued today (called a Proposed Decision in proceeding number R.17-06-026) reforms the existing framework to ensure that remaining investor-owned utility customers are neither worse off nor better off as a result of customers departing for alternative providers.

Currently, the PCIA is calculated as the difference between an investor-owned utility's portfolio costs that were executed before its customers left utility service, and the current market value of those contracts.  The market value is measured by a Market Price Benchmark and is based on a CPUC-approved methodology.  If an investor-owned utility's portfolio cost is above market value, the departing customers pay their share of the difference (the PCIA) based on their power consumption.

The proposal issued today would make the following changes to the current PCIA calculation:

  •  Reforms the elements of the Market Price Benchmark to more accurately reflect the current market for renewables and for capacity purchased for reliability.  The existing methodology uses outdated market values that do not reflect the prices observed in the market today.  
  •  Uses an annually updated capacity price developed by CPUC staff.
  •  Values renewables by collecting data about renewables contracts from all electricity providers.
  •  Adds a true-up, which would ensure that any inaccuracies in the portfolio cost and market value forecasts are corrected based upon actual results in the market.
  •  Adopts a cap on the annual change in the PCIA rate to provide greater stability for all customers. Any costs above or below the caps would be tracked for later collection.
  •  Permits Community Choice Aggregators or Direct Access Providers and investor-owned utilities to negotiate a pre-payment of a departing customer's PCIA, which would terminate future PCIA responsibility. The CPUC would have to approve any proposed prepayment.
  •  Opens a further phase in this proceeding to further examine party proposals to reduce the size of utility portfolios, including portfolio auctions and subscription.

The proposal is available at http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M219/K474/219474629.PDF.