California Mayors Slam Increased Fee to Abandon Utilities as Corporate ‘Giveaway’

A power plant in El Segundo, California.

A power plant in El Segundo, California.


Connecting state and local government leaders

Switching to an environmentally friendly community choice energy program will cost customers a bit more every month.

Mayors condemned the California Public Utilities Commission’s unanimous decision this week to increase the exit fees customers are charged for switching from investor-owned utilities to government-run alternatives.

The commissioners voted 5-0 to raise the fee, which is just charged to those consumers who make the switch. The adjustment, included in ratepayers’ monthly bills, is intended to offset the costs of investments legacy utilities have made in energy infrastructure like power plants and deals with independent producers.

But San Francisco, San José and Oakland criticized the fee increase as a corporate “giveaway” and “severe blow” to adoption of their new community choice aggregation, or CCA, programs, which provide electricity from renewable sources.  Under these programs, utilities maintain infrastructure and billing but local officials choose the renewable energy sources purchased.

Local officials have hailed CCAs as key to achieving California’s new 100 percent clean energy policy—as laid out in recently passed legislation.

“Coming just days after [Gov. Jerry] Brown signed Senate Bill 100, this decision flies in the face of California’s new commitment to reach 100 percent renewable energy by 2045,” mayors London Breed, Sam Liccardo and Libby Schaaf said in a statement. “Our community choice aggregation programs are implementing the state’s SB100 goals more aggressively than the utilities, even before the state adopted them, and now this decision undermines rather than supports our efforts.”

Commissioner Carla Peterman proposed the rule, arguing customers opting to remain with the likes of Pacific Gas and Electric Company, Southern California Edison or San Diego Gas & Electric—possibly because they can’t afford more expensive CAA rates—shouldn’t be forced to pay the costs those utilities incur as customers leave.

The rule will not see the multi-billion-dollar utilities increase their profits or compromise state environmental goals, and the resulting rate increase is “modest,” Peterman wrote in a CALmatters commentary ahead of the vote.

“We are updating the PCIA formula now because everyone agrees it is broken,” Peterman said in a statement after the decision. “I support the creation of alternative electric providers to expand customer choice, and our legal obligation is to make sure this happens without increased costs to customers who do not, or cannot, join a CCA.”

San Francisco estimates its 108,000 CleanPowerSF customers will pay an additional $40 million—equal to a quarter of the program’s revenues—because of the exit fee increase. CleanPowerSF anticipates 360,000 customers will be enrolled by 2019.

Sixteen other California jurisdictions offer CCA or direct access programs, and San Diego Mayor Kevin Faulconer is expected to decide on whether to bring a CCA proposal forward now that CPUC has provided regulatory certainty. San Diego’s exit fee would rise from 2.5 cents a kilowatt-hour to 4.25 cents under the new rule, Peterman’s office informed The San Diego Union-Tribune.

But proponents emphasized that even at the higher cost, they still want to offer this option to consumers.

“For us in San Diego, it’s a green light to move forward with community choice,” Nicole Capretz, executive director of the Climate Action Campaign, told the Union-Tribune. “For us, it’s let’s go, let’s launch and let’s give families a choice. We no longer have to wait.”

Dave Nyczepir is a News Editor at Government Executive’s Route Fifty and is based in Washington, D.C.

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