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• • February 2010 CACES

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Status of Retail Choice

The re-opening of the suspended direct access market continues with the recent completion of the July 16th Phase II applications. Phase I was fully subscribed by customers within seconds on April 16th. Those who are accepted in Phase II are on a first-come, first-served basis, being eligible for retail supplier service beginning in January of 2011. According to a recently published commission staff report, Phase I was oversubscribed by nearly 10 times the allowed capped levels. Demand for retail choice at these levels will need to be addressed by the legislature in the 2011 session.

Status of Renewable Energy Credits

The California Public Utilities Commission stayed its recently approved TREC decision. The action was approved by all commissioners except Diane Grueneich. President Peevey said that party dissatisfaction with a decision is not ordinarily cause to stay a decision, but these concerns are raised by the same parties that must comply with the RPS standard. According to Peevey, the stay "puts a moratorium on any contracts signed after the decision that would be defined as REC-only under the rules adopted in the RECs decision," but "the old rules will apply to all contracts signed before the issuance of the stay."

Capacity Markets

The Public Utilities Commission issued rulings against a multi-year capacity market and against creating a central capacity market for its Resource Adequacy program. The Commissioners' decision keeps in place the current resource adequacy process in which load serving entities must show the Commission that they can meet loads for the following month and following year in specific load pockets. The capacity is procured through self-supply or bilateral contracts with capacity suppliers.

Community Choice Aggregation (CCA)

The California Public Utilities Commission issued a letter rebuking PG&E for its marketing and opt-out notices within the Marin Energy Authority. The Community Choice Aggregator has had to contend with PG&E's aggressive marketing attempts to encourage opting out of the CCA. CPUC Executive Director Paul Clanon issued the letter specifying marketing tactics the utility must abandon including:

• initiating phone calls to solicit customers to opt out;
• seeking opt-outs using coupons placed in newspaper ads; and
• sending ads that look like official opt-out notices and confuse customers.

CPUC President Michael Peevey issued a draft decision clarifying that utilities would face penalties for misrepresenting CCAs.

PG&E's Proposition 16 failed, allowing incipient Community Choice Aggregation programs to continue without a municipality two-thirds vote requirement. Despite PG&E spending over $45 million on the Proposition, it failed by a vote of 52.4 percent to 47.6 percent. The measure lost by an even larger margin within its service territory and most where it had previously fought CCA measures.

The loss means many setbacks with the utility including

• Having to prove the tens of millions of dollars spent on the proposition were from shareholder monies.
• Justifying its current rate of return on rate base (currently 8.79 percent) if it has a large enough slush fund for political measures.
• Regaining the CPUC's trust after attempting to rewrite the state's constitution through the proposition process.

Noble Americas Energy Solutions was part of a group of retail providers that helped financially by contributing to the "No on 16" campaign.

Potential Changes to Renewable Energy Law

Senate Bill 722 passed the Assembly Utilities and Commerce Committee with limited opposition. The bill would increase the states renewable portfolio standard to 33 percent by 2020.

The bill was introduced by Sen. Joe Simitian and reintroduces SB 14's 33 percent renewable portfolio standard, but is designed to be more flexible on eligibility of in-state and out-of-state renewable energy sources. Last year's renewables bill was vetoed by Gov. Schwarzeneger due to concerns it favored in-state generation over out-of-state generation that could be cheaper. Sen. Simitian expects the bill to be further refined to meet concerns of energy providers, utilities, and other trade groups.

Noble Americas Energy Solutions is part of the growing opposition to SB 722. Modifications to the compliance provision language that provides for more flexible compliance tools is needed in order to address the one-sided nature of the bill's current in-state renewables requirements.

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