Controversial Rate Increase for Community-Based Energy Programs

The Power Charge Indifference Adjustment (PCIA) increase approved last month by the California Public Utilities Commission (CPUC) will raise fees paid by consumers who switch from a legacy utility like Pacific Gas & Electric to a community-based utility program.

Community Choice Aggregators are community-based programs that offer participants an alternative to buying electricity from corporate utilities like PG&E. The power provided by these programs is derived entirely from renewable sources like wind and solar. Photo by Jeanne Menjoulet/Flickr Commons


Published: November, 2018


The Power Charge Indifference Adjustment (PCIA) increase approved last month by the California Public Utilities Commission (CPUC) will raise fees paid by consumers who switch from a legacy utility like Pacific Gas & Electric to a community-based utility program.


Opponents of the increased fees believe the move will derail the efforts of community-based programs to lure Californians away from corporate utilities. Monthly bills from these programs, called Community Choice Aggregators (CCA), already tend to be slightly higher, but such programs are attractive to consumers who want the power they purchase to be derived entirely from renewable sources (mostly wind and solar).


Backers of the increased fees say the move was necessary to keep up with the cost of maintaining the state’s power infrastructure, which CCAs also use to deliver their power into customers’ homes and businesses.


In a joint statement released by San Francisco Mayor London Breed, Oakland Mayor Libby Schaaf and San Jose Mayor Jose Liccardo just days before CPUC was due to vote on increasing the PCIA, the mayors of the Bay Area’s three largest cities said, “Significantly raising exit fees will create price volatility and uncertainty and could threaten the future of clean power programs.”


In that statement, the three mayors—whose cities cover 2.5 million Bay Area residents—said their bigger worry is that the change may slow a statewide effort to meet ambitious climate goals. Further, the mayors called for the vote to be delayed so that a “more transparent public review” of the proposed fee hike could be undertaken. That call fell upon deaf ears, and on October 12 the commission approved a new formula to determine the PCIA fee. That new formula is called the Alternate Proposed Decision.


San Francisco’s two-year-old CleanPowerSF program, which is a CCA, has already enrolled 108,000 customers and hopes to more than triple that number by 2019. East Bay Community Energy, which launched in July, expects to enroll 555,000 Alameda County customers by 2019. San Jose Clean Energy, which just launched in September, expects to be delivering 100-percent renewable energy to South Bay homes and businesses by next spring.


Two sides to every story


CPUC Commissioner Carla J.Peterman said that utility companies are planning—and spending—based on 10- to 20-year projections. That is, they are trying to figure out what customers will want and need 20 years from now, then figure out how to deliver that and how to pay for it.


That’s how the Diablo Canyon Nuclear Power Plant in San Luis Obispo and hydro facilities across the State came to be.  “A utility must make very expensive investments based on that planning,” Peterman said.


When the state mandated several years ago that utility companies expand their portfolios to include renewable energy as part of a larger effort to address climate change, these companies took out long-term loans to make that happen. Since then, customers have been helping the legacy utilities make good on these debts simply by paying their bill each month.


“The obligation to pay and the benefits these projects provide remain, even as customers transition away from bundled service to other providers,” Peterman said.


In other words, CPUC and the legacy utilities are likening the switch to a CCA to buying a hybrid when you still owe money on the pickup you bought with your ex. Just because you found a car that you like better (and that is better for the environment), doesn’t mean you can just stop making payments on the truck and leave your ex footing the bill for a vehicle that you put miles on. In that way, Peterman argued the new formula protects lower-income customers who can’t afford to join CCAs and “ensures a more level playing field between customers.”


On average, CPUC says Bay Area residents who opt to purchase power from a CCA will see their bill go up about 1.68 percent. That’s because PCIA fees account for less than 15 percent of a customer’s monthly bill. While that increase will seem nominal for many, opponents of the fee hike believe it’s enough to dissuade customers who might be on the fence about making the switch to a CCA.


Some budget-conscious CCA customers might even switch back to a legacy utility if it saves them money. An additional concern is that a feeling of cost uncertainty could be enough to slow the expansion of existing CCAs and the formation of new ones. California now boasts nearly 20 CCAs.


Peterman admitted that is a possibility, but she said that CPUC’s role isn’t to promote either CCAs or legacy utilities. Rather, she said, it’s the commission’s role to remain neutral so that it can protect all consumers.


“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,” Peterman said.


Furthermore, Peterman believes the increase is unlikely to slow clean power’s momentum. “The factors that supported recent CCA formation, including low renewable prices and local climate goals, persist.”