Power lines course through the hills east of San Francisco Bay

On October 11, by a 5-0 vote, the California Public Utilities Commission (CPUC) approved Commissioner Peterman’s alternate proposed decision to reform the Power Charge Indifference Adjustment (PCIA). The PCIA fee is comprised of financial obligations the utilities made on behalf of customers to build power plants and, more commonly, enter into long-term power purchase contracts with independent power producers. The PCIA appears as a line item on most Californians utility bills, and is meant to compensate the utilities for electricity generation built or contracted in the past at prices that are now above-market.

The unanimous decision of all five commissioners comes as a bit of a surprise, because this proceeding has been hotly contested and the other proposed decision authored by Administrative Law Judge (ALJ) Roscow was heavily supported by many parties, including Community Choice Aggregators (CCAs). Given that Commissioner Peterman authored the alternate decision and President Picker had been working with her on drafting it, it was much clearer what their final votes would be. But heavy lobbying of the other three commissioners (including by the mayors of San José, Oakland, and San Francisco) to vote in favor of the ALJ’s decision instead of Commissioner Peterman’s alternate decision was apparently unsuccessful.

The CCAs believe the alternate decision will stifle CCA development in California in the short term because the PCIA fee will increase significantly, making it harder for CCAs to offer clean energy to their customers at prices cheaper than the existing utilities. The CPUC estimates that CCA residential customers in PG&E’s territory departing in 2018 will see a 2% increase in their bills as the result of today’s decision (departing customers in Southern California Edison and SDG&E’s service territories will see 2.5% and 5% bill increases, respectively).

A long-term solution to the high-priced renewable contracts that necessitated the PCIA fee (including a possible replacement of the PCIA) remains necessary and will be the subject of a second phase of the proceeding that will commence later this year. Commissioner Peterman will complete her term as a commissioner at the end of the year and speculation is rampant that President Picker may not serve out his term, so the commission’s composition may significantly alter the outcomes of this second phase. Furthermore, given the likelihood that the California legislature will also weigh in on the PCIA during its next session, the PCIA war seems likely to continue for the foreseeable future.

The final decision has not yet been issued, but the most recent version of the Peterman Alternate Proposed Decision that was issued can be found here.