California Energy Markets
California’s investor-owned utilities and community choice aggregators are striving to meet state targets for procuring goods and services from so-called diverse firms, but are hamstrung in procuring energy from these types of businesses because there are so few eligible companies with which state energy providers can contract.
These and other insights into the entities’ procurement practices were included in a newly released California Public Utility Commission report to the Legislature.
Energy utility, water and telecommunications companies overseen by the CPUC are required by General Order 156 to provide an annual report detailing the dollar amounts of contracts awarded to diverse businesses.
The CPUC program also maintains a “clearinghouse” or database of women-; minority-; lesbian, gay, bisexual and/or transgender-; and disabled veteran-owned business enterprises. Collectively, the acronym WMDVLGBTBE or the term “diverse suppliers” is used to refer to these types of businesses. The CPUC clearinghouse operator verifies most businesses; however, disabled veteran-owned businesses are certified by the Office of Small Business and Disabled Veteran Business Enterprise Services.
A total of 30 utilities and 14 CCAs submitted their 2020 procurement reports to the CPUC, which summarized those results in the Sept. 2 report.
On the surface, the numbers in the report show the CCAs to be lagging behind utilities; however, the report only focuses on contracts between the agencies and CPUC-registered suppliers. It also fails to consider that CCAs, which are public agencies, are prohibited by Proposition 209 from contracting based on WMDVLGBTBE status. IOUs can ask for this information before signing a contract.
“The majority of CCA spend (approximately 90-95 percent) is on power procurement,” the report states. “Historically, the electric market has been dominated by larger corporations with the capital to meet the credit and collateral requirements, making it difficult for most small and diverse businesses to be competitive or achieve ownership of energy resources. This ratio of power spend with minimal diverse procurement opportunities has presented a challenge for CCAs looking to increase spend with diverse suppliers,” the CPUC said.