Kathleen Davis, Associate Editor
In late September, the California Public Utilities Commission (CPUC) voted to suspend retail choice for California’s power consumers. According to the CPUC, this cessation will make it easier to pay for the $12.5 billion bond it has in the works for this winter.
The bond will be used to refund the Department of Water Resources (DWR), which has made emergency power purchases for the state since January for both Pacific Gas & Electric (PG&E) and Southern California Edison (SCE). The state treasury and the DWR had been pressuring regulators to bring down the final curtain for awhile. (The DWR believes the state will get better terms if investors have an assured revenue stream to service the bonds.)
Citing that “direct access”-as the CPUC labeled it-was faced with enormous customer apathy, commissioner Carl Wood called it “one half of a failed and collapsed deregulation project.” It is true that-despite a multi-million dollar advertising campaign that approached the budget proportions of a blockbuster film (approximately $80 million), few consumers made the effort to change retailers. According to the CPUC, only five percent of the state’s demand has shifted to alternate retailers, but those businesses currently contracted with alternative providers will be able to honor those contracts.
Atop consumer apathy, a number of retailers fled the partially deregulated California market when costs began to loom large over retail rates, but for those retailers who have chosen to ride out the restructuring coaster, that ride is coming to a premature stop.
Green Mountain Energy, which had been strapped in for the duration, called the CPUC’s action extremely disappointing.
“This action affects more than the business community,” said Rick Counihan, California regional vice president of Green Mountain Energy. “It prevents small customers from choosing cleaner energy products.”
Counihan doesn’t agree with Wood’s assessment of direct access. He stated that “hundreds of thousands of individual Californians have made this choice [to switch to an alternate provider] in the past, and we expect hundreds of thousands more would make this choice, if given the opportunity.”
The Alliance for Retail Energy Markets, a trade organization representing electricity retailers, said they were also “incredibly disappointed” by the suspension of retail energy choice.
“This action guarantees higher costs for California consumers while also preventing them from choosing cleaner electricity products from renewable energy,” the group stated. “While we are aware that the offices of the treasurer and the DWR have put significant pressure on the PUC to act on Section 80110 of AB1X ending retail choice, Alliance members still firmly believe that direct access need not be killed to facilitate the state’s pending bond sale.”