News Article

June 12, 2009
Aggregators Wary of New Initiative, Senate Bill
By Chris Raphael / California Energy Markets

Pacific Gas & Electric has helped to fund a ballot initiative that would make it more difficult for areas to buy their own power as community-choice aggregators. The "Taxpayers Right to Vote Act" would make any aggregation attempt by a local government subject to a two-thirds vote of its citizens. Aggregators are also looking carefully at SB 695, which would phase in more direct access in the state but would place a cap on how much demand could be met through energy service providers.

Pacific Gas & Electric is hoping to use California's ballot-initiative process to make community-choice aggregation attempts subject to local voter approval.

The "Taxpayers Right to Vote Act," filed at the California Attorney General's Office on May 28, would require local governments to obtain a two-thirds vote from their service territories before spending public money on any aggregation attempt—or plan to expand electrical service. PG&E said it is helping to fund the effort with shareholder money.

Aggregators see it as an attempt to derail local power.

"It kind of threw us for a loop," said David Orth, general manager of the Kings River Conservation District, which is leading the effort to create the San Joaquin Valley Power Authority. The initiative "is one more hurdle to prevent us from accomplishing that goal," Orth said.

Kings River is in a marketing battle already with PG&E over aggregation and said the initiative would stack the deck in the utility's favor.

"You know darn well the utility is going to be spending far more money than the community to educate its citizens," Orth said.

PG&E is facing aggregation threats not only from SJVPA but also in Marin and San Francisco. Utility spokesman Andrew Souvall said the initiative would give customers "control" over energy decisions.

"They don't want anybody else to play in their sandbox," Orth said. He noted that the current state regulations for aggregation allow customers to opt out of CCA service if they want, and customers have four chances to do so.

SJVPA is furthest along in California in its attempts to aggregate, having already submitted an implementation plan to the California Public Utilities Commission. The authority is now negotiating with energy service providers to beat PG&E rates by 5 percent and hold rate increases to no more than 2 percent each year. It is planning to present a contract with an ESP at a June 25 board meeting for the first phase of its aggregation plan, which would serve municipal load.

If a contract does not go forward, the authority would likely suspend its aggregation attempts and pursue other options, said Cristel Tufenkjian, public affairs officer with KRCD.

The voter initiative—a request for title and summary filed with the state attorney general—lists as a contact the lobbying firm of Nielsen, Merksamer, Parrinello, Mueller & Naylor, which has lobbied for PG&E, according to state records.

The initiative has an associated committee, Californians to Protect the Right to Vote, and is being promoted by LarsenCazanis LLC, a public affairs firm in Sacramento.

Greg Larsen of the firm said the measure seeks to ensure that "voters have the final say on commitment of public dollars." He added that the two-thirds voting requirement does not apply to investments local governments make in renewable energy for their own use.

The initiative would not likely be on the state ballot until 2010, Larsen said.

Aggregators are also carefully watching SB 695, which has passed the California Senate and is now being taken up in the Assembly. The bill would eliminate AB-1x rate caps for residential customers; prohibit any requirement for time-variant pricing; and adopt a phase-in schedule to allow more direct access.

Paul Fenn of Local Power, an Oakland-based advocacy organization, wrote this week in his blog that the bill would "fundamentally threaten" aggregation in California. For instance, it would allow energy service providers only a 50 percent increase in market share in PG&E's territory. Fenn said if his calculations are correct, the bill would mean the cap on ESPs "would be enough to get San Francisco out the door but no other CCA in PG&E territory."

But Kings River, after talking with bill sponsors—PG&E and The Utility Reform Network—said the bill was not intended to apply to aggregators. While "we're not assuming we won this one," Orth said, "we have been told [that] the parties that developed the bill did not intend for it to impact community choice."