Is the Valley Clean Energy on the verge of running out of steam?
It’s a question which consumers will have to start asking after the Public Utilities Commission last week gave its OK to a plan that would ensure those who remain with utility companies done pay the costs when customers switch to “community choice” power providers
The “community choice” agencies, such as Valley Clean Energy — previously known as the Valley Clean Energy Alliance and launched ceremoniously last June in Davis — are now scrambling to figure out what to do.
A number of Yolo County officials, including Supervisor Don Saylor, Woodland City Councilman Tom Stallard and attended the hearing last Thursday.
The Public Utilities Commission voted 5-0 to launch the plan crafted by PUC Commissioner Carla Peterman.
A growing number of alternative energy providers have sprouted in California in recent years, frequently offering consumers electricity derived from green energy sources and tapping into a market for people who want to ditch their current utility company.
Most recently, Yolo County ratepayers who were switched to the Energy Alliance were paying about 2.5 percent less than PG&E ratepayers, the group says. It affects those customers living in Davis, Woodland and rural Yolo County.
However, the amount of savings has dropped considerably over the years since the Energy Alliance was first proposed. Initial projected savings were as high as 11 percent and later lowered to 8 percent, and still later to 5 percent. Now, figuring in the cost of savings —particularly if their is a “drop out” fee to Pacific Gas & Electric Co. attached — it may not be worth the trouble.
At the 2.5 percent rate lower than PG&E, it was estimated that Yolo County Energy Alliance customers would save around $1.8 million during the first year.
The PUC action would put the withdrawal charge at an average of 1.68 percent for residential customers in PG&ES’s service area, however, which would only amount to a savings of 0.82 percent.
“The PUC decision will have the counterproductive effect of forcing San Jose and cities throughout the state to reduce the proportion of greenhouse gas-free electricity in their supply portfolio, undermining the state’s ambitious climate goals,” San Jose Mayor Sam Liccardo said.
“We knew this was going to be controversial,” Commissioner Peterman said just before the PUC voted. “Costs will go up for some customers and costs will go down for others. That couldn’t be avoided.”
During 2019, residential customers living in PG&E’s service territory who are served by a CCA could experience a 1.68 percent increase in their monthly bills compared with 2018, Peterman stated during her comments ahead of the vote.
San Francisco-based PG&E said it was still reviewing the PUC action, but spokeswoman Lynsey Paulo said the utility “is pleased by the decision.”
Several days following the PUC vote, Valley Clean Energy issued a statement noting the decision “drives up rates for California electricity customers by leaving out reasonable cost control measures that would have held the Investor Owned Utilities and their shareholders accountable for their business decisions.”
“This is a set-back to the flourishing CCA movement in California that could deter further creation of new CCA’s in places like the Central Valley,” the statement from Customer Care Director Jim Parks read.
There are currently 19 operational CCAs in California serving 2.6 million accounts. Valley Clean Energy serves approximately 55,000 electricity customers in Woodland, Davis, and the unincorporated areas of Yolo County.
“This decision will have an impact on Valley Clean Energy, but the information is new and the details need to be analyzed before determining our next steps,” said Lucas Frerichs, Davis City councilman and chairman of the Valley Clean Energy board of directors. “We are disappointed in the CPUC decision that we believe hinders competition but remain committed to providing the best rates and services to the residents of Yolo County, Woodland and Davis. We will consider all avenues going forward.”
PUC commissioners considered several options before approving the Alternative Proposed Decision which is most detrimental to CCAs. One option the Commission rejected was by their own administrative law judge who studied the issue for a year and took testimony from all sides. The judge’s proposed decision would have placed shared responsibility on the shareholders of Investor Owned Utilities. Instead, the Commissioners approved a decision supported by the Investor Owned Utilities, including PG&E.
The CPUC’s decision will have negative impacts on both CCA and Investor Owned Utilities ratepayers in California, according to Parks. CCA customers will pay more to the Investor Owned Utilities and the Investor Owned Utilities will have less incentive to efficiently manage their costs that they pass on to their customers. In addition to the financial impacts, the action will impair CCAs’ abilities to accelerate the state’s decarbonization and economic justice policy goals and to better tailor electric service to meet the needs of local communities.
“Community Choice Energy is the future of sustainable energy in California,” said Councilman Stallard, who is vice chairman of the Clean Energy board of directors. “Thursday’s 5-0 decision by the CPUC is a blow to this effort at a time when the impacts of climate change are becoming more obvious. This decision also threatens California’s climate action leadership.”
Valley Clean Energy will be studying the impacts of the PUC decision in the coming months, Parks noted in his statement.
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