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SB 612: A Ratepayer Equity Bill


CalCCA is sponsoring new legislation, SB 612, which aims to ensure all California ratepayers have fair and equal access to benefits associated with investor-owned utility (IOU) legacy energy resources and that the resources are actively managed to maximize their value. The bill is authored by State Sen. Anthony Portantino (D-La Cañada Flintridge) and has 20 co-authors and counting. SB 612 stems from a consensus proposal that was developed in the California Public Utilities Commission’s Working Group 3 phase of the Power Charge Indifference Adjustment (PCIA) proceeding. Background on the WG3 consensus proposal can be found here.

What Problem is SB 612 Addressing?

Over the last decade, more than 11 million utility customers have transitioned from IOU electric service to Community Choice Aggregators (CCAs), local publicly-owned energy providers that purchase electricity for their communities. As part of this transition, CCA customers continue to share with IOU customers cost responsibility for power supply commitments entered into by IOUs prior to their departure for CCA service. These include expensive long-term renewable energy contracts with third parties and capital-intensive utility-owned generation facilities (e.g. nuclear, natural gas, hydroelectric plants). These so-called “legacy” resources account for billions of dollars in above-market costs in IOU energy portfolios, and IOUs rely on California ratepayers to pay the costs. CCA customers continue to pay for legacy resources through the PCIA fee.

Legacy resources are a burden because the electricity they generate is very expensive compared to today’s market prices, resulting in billions of dollars in above-market costs that accrue to all ratepayers. However, there are also valuable products associated with the electricity produced by legacy resources – such as resource adequacy, RPS attributes, and GHG-free attributes – that can be used by energy providers to meet their clean energy goals and reliability requirements. But under the current structure, these products are retained by IOUs. So, while CCA customers must pay their fair share for legacy resources, CCA customers do not have access to all of the beneficial products they are paying for. There is no good policy rationale for this inequitable treatment of CCA customers versus their IOU counterparts. 

How is SB 612 a Solution?

SB 612 resolves the inequities by ensuring all customers have access to the benefits of the resources they are paying for, and that the costs to all ratepayers are minimized. The bill does this by:

  • Providing IOU, CCA, and direct access customers equal right to receive, on a voluntary basis, legacy resource products that were procured on their behalf in proportion to their load share if they pay the full cost of those products
  • Requiring the CPUC to recognize the value of GHG-free energy and any new products in assigning cost responsibility for above-market legacy resources, in the same way value is recognized for renewable energy and other products
  • Requiring IOUs to offer any remaining excess legacy resource products not taken by IOU, CCA, or direct access customers to the wholesale market in an annual solicitation

Check back soon for more on SB 612!

New! SB 612 frequently asked questions (FAQ) here.

SB 612 stems from a consensus proposal that was developed by CalCCA, Southern California Edison, and Commercial Energy in the CPUC’s PCIA proceeding.

What is the PCIA? The Power Charge Indifference Adjustment (PCIA) is a fee charged by investor-owned utilities (IOUs) in California to customers that switch to another provider of electricity generation service through direct access or community choice aggregation. The fee is designed to recover above-market costs from power supply commitments that the IOUs made in the past.  The impact of the PCIA on ratepayers is a major concern because it has increased by hundreds of millions of dollars in recent years.

State legislators urge CPUC to take action to address rising PCIA costs and lack of transparency

Local elected leaders call on CPUC to reduce the PCIA for all customers and smooth PCIA volatility

About CalCCA

The California Community Choice Association’s mission is to create a legislative and regulatory environment that supports the development and long-term sustainability of locally-run Community Choice Aggregation (CCA) electricity providers in California. We serve our members and strengthen our collective voice through education, technical guidance and regulatory and legislative advocacy. 

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