California decides not to void last summer’s direct access electricity contracts

By Sylvie Dale, Online Editor

March 22, 2002 — The California Public Utilities Commission (PUC) has decided not to void existing direct-access contracts with electricity suppliers, it announced recently.

The PUC voted 3-2 not to void the contracts signed during the summer of 2001, at the tail-end of the California energy crisis, the San Diego Daily Transcript reported.

The commission will officially suspend direct with a retroactive date of Sept. 20 of last year, it announced. Any direct access customer who had a contract before that date can renew or switch direct access energy providers, but the PUC said they would not be allowed to add more load.

The PUC said it also intends to charge these customers a fee to get out of direct-access contracts, the Transcript reported. The fee is a solution officials have been discussing after consumer advocates argued that they would be stuck with higher prices if the low-priced energy contracts were not voided, and would provide a contribution to the recovery of California Department of Water Resources (DWR) electricity procurement costs.

The issue of the exit fee would be dealt with in a separate PUC meeting.

“The current Direct Access suspension date of September 20, 2001, should be maintained because major institutions, such as the University of California, the California State University system, and the L.A. Unified School District, would suffer adverse impacts if Direct Access is suspended as of July 1, 2001,” said Commissioner Geoffrey Brown. “Bundled customers will be indifferent to Direct Access when equitable exit fees are imposed.”

Commission President Loretta Lynch and Commissioner Carl Wood dissented. “Direct access is a hidden tax on residential and small business customers to subsidize the electricity bills of the big users. By the vote today, this Commission has failed in its duty to protect the people of California,” Commissioner Wood said.

On September 20, 2001, the Commission suspended Direct Access and announced that it would consider changing the date to July 1, 2001. After receiving comments from utilities and others, the PUC decided against changing the date.

Read more about the decision on the San Diego Daily Transcript web site at

To learn more, visit the California PUC web site at


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