Talking Points

California Public Utilities Commission (CPUC)Draft Resolution E-4907:

“Registration Process for Community Choice Aggregators”

Reference for comments: DRAFT RESOLUTION E-4907 – February 8, 2018

  • [I am/we are] requesting that agenda item Energy Division Resolution E-4907 scheduled to be heard at your voting meeting on February 8, 2018 be referred to an appropriate formal proceeding where all stakeholders in addition to parties to a proceeding where the issues referenced in the Resolution are relevant will have ample time to review and comment on the concerns raised.
  • If the Resolution does come to a vote on February 8, Commissioners should vote no on the proposed resolution. If the Commission wants to address the issues encompassed in this resolution, it should open a rulemaking where all parties can engage effectively, examine the evidence, and make their legal arguments. At the very least, the Commission should utilize an existing proceeding to examine the issues raised in the Draft Resolution.
  • The CPUC should provide a list of Community Choice Agency (CCA)Governing Board Directors with whom it consulted in developing this proposal. By law, the governing boards make the decisions regarding Implementation Plans and roll out to new communities.

Additional Talking Points:

Process Issues

  • Changes of the magnitude proposed in the Draft Resolution should be raised in an open proceeding at the Commission with due process and the opportunity for all interested parties to weigh in, not just parties to the proceedings and those who are extremely familiar with CPUC processes.There is an open rulemaking on resource adequacy procurement that would be appropriate for this proposal;
  • The Commission used to have regular meetings to address issues like resource adequacy—the Commission in 2016 canceled those meetings. One simple step that could help resolve any real problems would be to reinstitute these meetings.

Inconsistency with CPUC precedent: the Commission’s unequal treatment of for-profit power marketers versus not-for-profit Community Choice Agencies

  • The central problem under debate is that the CPUC’s existing process that determinesResource Adequacy (RA)procurement obligations each year did not anticipate how to flexibly transition obligations between the utilities and CCAs during the CCA’s first year. During this first year, consequently, the utility may have to buy more RA than it will actually need after a CCA launches, while the CCA separately has to purchase its own RA. This “double-procurement” is caused by the CPUC’s own lack of foresight in designing these rules. In subsequent years, the CCA is included in the normal planning process and there are no further double-procurement problems.
  • The CPUC has previously dealt with a similar problem for private sector Energy Service Providers in a more equitable and streamlined fashion, in Decision 10-03-022 (Rulemaking 07-05-025).When Retail Direct Access was partially re-opened, the Commission required the utilities to share the costs and benefits of their existing RA contracts with Energy Service Providers for a one-year transitional period, after whichthe normal planning process would take over. It would be easy for the CPUC to create a similar arrangement for new CCAs — and this would avoid the need to delay further CCA formation.
  • The proposed one- to two-year delay in CCA formation statewide— when more streamlined solutions exist and have previously been used —would thereforebe contrary to CPUC precedent, unfairly and unequally disadvantage CCAs, and violate the CPUC's legal requirement to “designate the earliest possible effective date for implementation of a community choice aggregation program” in accordance with Public Utility Code Section 366.2(c)(8) and the explicit instructions of the California Legislature.

Inconsistency with current law and stifling of CCAs

  • AB117 establishes the right of local governments and the communities they serve to form CCAs, and does not give CPUC approval powers over Implementation Plans, nor does it give the CPUC the power to withhold approval, but requires the CPUC to certify that any given Implementation Plan is in compliance with the relevant code sections within 90days, or otherwise explain noncompliance.
  • The resolution is a significant departure from CPUC’s existing statutory oversight of CCAs. The proposal circumvents standard public input processes at the CPUC and will delay new communities from joining or forming CCAs, increase exit fees on customers, and could drive local government programs into debt.
  • The proposed outcome of the resolution is a “registration process” for CCAs. There is already a longstanding and very rigorous registration process for CCAs established in statute.
  • Community Choice is operational in over ten counties in California without this delay from the CPUC, showing that adding years to the process is clearly not the earliest possible date.
  • In “Estimated Costs” on page 1 of the proposal notes unsubstantiated cost shift savings for IOU bundled customers, but fails to note prospective cost savings to customers of emerging CCAs that would now be delayed by the resolution.
  • It appears that the Commission is attempting to slow down CCA growth in California
  • The proposed process requires CCAs to begin service on a Commission-defined timeline, not the timeline that is decided to be the best for the community by locally elected leaders.
  • CCAs have many compliance, regulatory, outreach, and staffing obligations that they must complete before they begin serving customers. By delaying service dates, the Commission is preventing CCAs from collecting revenue that could be used for these efforts. This could drive new CCAs into significant debt.
  • Incumbent IOUs will continue to procure power on an emerging CCA’s behalf until service is launched to customers, increasing the exit fees for those customers when they do begin CCA service.
  • The CPUC is looking to expand its input over communications materials within local cities and counties.
  • The proposal contained in the Resolution is a solution in search of a problem in that there are no instances where a CCA has failed to comply with Resource Adequacy requirements. If there are, CPUC staff should provide these instances in a clear problem statement.
  • Resource Adequacy affects only a very small fraction of the total utility bill, and there are alternative ways to handle concerns about cost-shifting other than imposing a delay measured in years.

Cost-Shifting

The utilities have not provided any evidence that there is cost-shifting. If the Commission is relying on the utilities’ information for this resolution, stakeholders should have the opportunity to rebut factual assertions made in the draft resolution.

Background

A Summary of the Draft Resolution:

Resolution E-4907 proposes a new registration process for emerging Community Choice Agencies (CCAs) and a new process of review of CCA Implementation Plans pursuant to the requirements and directives of Public Utilities Code Section 366.21 and Decision (D.) 05-12-041.

This process of review will coordinate with the timeline of the mandatory forecast filings of the Commission’s Resource Adequacy program to ensure that newly launched and expanding CCAs comply with Resource Adequacy requirements, as established by Section 380, before they serve customers.

The Resolution will:

  • Require CCAs to submit to a process that includes a timeline for submission of Implementation Plans;
  • Require a “meet and confer” between the CCA and the incumbent utility that can be triggered by either the CCA or the utility;
  • Require a registration packet including a CCA’s service agreement and bond;
  • Impose a Commission authorized date to begin service.

The Resolution, in part, is responsive to the directive of D.05-12-041 (2005) instructing the Executive Director to publish steps for the submission of Implementation Plans, and addresses the current rapid growth of CCA programs. The filing deadlines in this Resolution are intended to coordinate with the timeline for mandatory forecast filings in the Resource Adequacy program.

What is Resource Adequacy?

Much of this Resolution pertains to Resource Adequacy or RA. RA is a requirement that load-serving entities (LSEs) such as IOUs and CCAs demonstrate in monthly and annual filings that they have procured capacity of no less than 115% of their peak loads. These procurement requirements are intended to ensure that sufficient commitments of real-world (no unbundled RECs!)resources are available to ensure system reliability. Learn more here.

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Revised 1/2/18