Regulators Reject Power Companies’ Plan to Charge Customers Who Leave

A plan by the state’s three major power companies that would have stifled competition was rejected this week by state utility regulators.

Instead, regulators are considering another plan that could be a major win for cities across California that have started or want to start their own government-run agencies to buy and sell power. The goal of these “community choice” agencies is generally to provide greener and cheaper power. Solana Beach has already started its own power agency and San Diego is among the other cities in the region considering starting one.

Here’s the problem: Existing power companies – San Diego Gas & Electric, Southern California Edison and Pacific Gas & Electric – already built power plants or signed long-term contracts to buy power on the assumption that their existing monopolies would never end.

So, if the city formed an agency and its 1.4 million residents stopped buying power from SDG&E, customers outside of the city could be left holding the bag for that power the company bought but can no longer sell.

For years, companies have been able to charge departing customers an “exit fee” to recoup those costs, but nobody has been able to agree on whether the fee is too high or too low. If it’s too high, few governments would be able to provide cheaper power, destroying the community choice movement. Too low, and customers stuck in places without any choices will be paying too much.

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