California’s Energy Future: At the Crossroads

Posted May 11, 2018

By Jon Conway, Ph.D., Greenpower Research Director

From protecting natural gas plants and monopoly utilities to limiting local control, the California Public Utility Commission’s (CPUC) recent white paper on California Customer Choice makes it clear where it thinks our state’s energy future should lie: in the past.

In what the CPUC is calling its “Green Book,” the agency aims to provide a review of Community Choice Energy (CCE) programs from around the country to inform their attempts to create a plan for California’s energy future. The bulk of the 90-page report, however, is occupied by a lengthy — yet selective — history of California’s energy regulatory landscape following deregulation in the late 1990s.

Going so far as to open the detailed appendix on California’s deregulation history with the quote,

"Those who cannot remember the past are condemned to repeat it," George Santayana, Reason in Common Sense, p. 284.

the Commissioners’ heavy emphasis on context made me consider less the events that led to this crossroads and more if they were trying to figure out exactly at what point they dropped the ball. Perhaps they were thinking of another quote about winners and writing history and were simply trying to get ahead of the curve.

There is much more to this story than what is presented in the Green Book. As I and others have discussed before, the CPUC has a less than shining history when it comes to CCE, or public accountability in general. The agency has consistently shown their favor of the state’s three large investor-owned utilities (IOUs) — PG&E, SCE, and SDG&E — while limiting the public’s ability to form or maintain a CCE program. This unfortunately falls in line with current CPUC president Michael Picker’s public declaration that the duty of the CPUC is to protect the IOUs.

The CPUC’s placement of blame on CCE as the problem child of California energy is yet another case of shooting the messenger. Californians are saying that we want clean, affordable energy that helps our communities instead of harming them, and CCE is how we are doing it.

In just the past couple years, the CPUC has launched or participated in several major attacks against CCEs on issues ranging from program registration timings, resource adequacy and planning, rate setting and fees, IOU lobbying, and bond requirements. CCE advocates have worked tirelessly to prevent any of these existential threats from being fully realized, and in the process have essentially shaped CCE policy for the state.

For example, the CPUC is currently deliberating on potentially raising a fee CCE customers pay to the IOU serving their region — a fee that is already one of the largest bill charges and factors in determining CCE viability. The IOUs claim this “PCIA” is set too low. They cite a failure to adequately capture the high costs incurred during their buildout of expensive renewable energy (RE) resources in the early-to-mid 2000s. However, public records show that the IOUs hardly increased their RE content from 2001-2010, after which CCEs began to appear on the scene, offering more RE content for less money.

The California Community Choice Association gave feedback that would benefit all parties — including the IOUs — but the IOUs just keep hiding behind corporate confidentiality to make vague, threatening statements about CCE.

All this is not to say the CPUC is not working toward meeting California’s greenhouse gas goals; I applaud its leadership and vision on many important issues over the years, including its recent decision to require all new homes to include solar starting in 2020. I also agree with the Commission’s assertion that California’s energy future is at a crossroads, and that too much is at stake to leave up to chance.

What I and millions of other Californians disagree with is in the CPUC's repeated attempts to take away our ability to “choose” anything but the state’s investor owned utilities (IOUs) as our electricity providers. The option to choose between, say, an out-of-state natural gas conglomerate concerned with extracting profit from my region and a not-for-profit organization dedicated to clean energy and local benefits run by my community members is not a trivial thing to take away — especially if I am then forced to accept the former.

The CPUC’s report cautions against a return to the “bad old days,” apparently missing the difference between unregulated, exploitative for-profit corporations like Enron and regulated, non-profit, locally-run Community Choice Energy programs. The CPUC, despite its fixation on the past, apparently fails to recognize that deregulation failed because of the willingness of greedy, amoral individuals hiding behind the curtain of the private shareholder model to lie to, steal from, and possibly kill Californians.

The people at Enron and their ilk cared only about money, and their descendants would doubtless repeat their crimes given the chance. The people who fight for, form, join, and run CCEs care about people.

It’s possible we may care even more than the leaders of the CPUC, who seem overly concerned with the profitability of fossil fuel power plants and private monopolies that choose to increase shareholder profits rather than preventing their customers from dying in wildfires.

And unlike Enron, our CCEs are beholden to the same power from which the CPUC ultimately derives its authority: the people of California.

"Community choice aggregation is currently the best policy tool available to cities and counties who want to tailor energy procurement to their community’s preferences." J.R. DeShazo, principal investigator at UCLA's Luskin Center for Public Affairs

In the report’s introduction, CPUC President Michael Picker points out correctly that the CPUC’s previous plan for deregulation leading to was flawed. He then complains that he and his fellow commissioners “have no plan,” a frustrating and concerning confession.

Californians have a plan, Mr. Picker. We call it Community Choice Energy. We’ve been working for decades to make it a choice available to all Californians, and we aren’t going to stop until we do.

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