Fair ‘exit fee’ critical to renewable energy future

While utility responsibility related to California’s devastating wildfires is dominating headlines and the agendas of policymakers, flying below the radar is a pending decision from the California Public Utilities Commission to change the formula for a fee charged to energy consumers who leave the power supply of investor-owned utilities (IOUs) like PG&E and instead get power from local community choice aggregation programs, also known as CCAs. The new formula could radically alter consumers’ energy choices.

CCAs are increasing in popularity in California and for good reason. Authorized by the Legislature to help prevent another energy crisis, CCAs are created and run by local governments to provide clean, affordable energy that meets specific community needs. Unlike the IOUs, CCAs are transparent entities accountable to local policymakers and community members, and available funds are reinvested in local projects, rather than filling the pockets of shareholders.

The PCIA, or Power Charge Indifference Adjustment, is an “exit fee” charged by IOUs to customers that switch to another provider of electricity like community choice aggregation. The charge compensates the utilities for electricity they bought in the past at prices that are now above-market.

How the CPUC designs the new PCIA fee will greatly impact the CCAs’ ability to compete on a level playing field against these titans of energy. For months, key stakeholders have weighed in with their own proposals. The California Community Choice Association, which represents CCA programs in California, designed a win-win proposal that would lower costs for both IOU and CCA electricity customers by $2 billion through smarter, and more accountable portfolio management.

Consumers benefit when they have alternatives and a fair and balanced PCIA assures those options across California. The state should adapt its regulatory structure to encourage investments in clean energy, support local governance (that is people, not profits, focused) and foster competition to keep costs down. A reasonable PCIA is an essential component to a fair and balanced energy market.

Beth Vaughan is the executive director of the California Community Choice Association.

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