Community choice aggregators (CCAs) from Northern California are saying the time has come for Pacific Gas & Electric Co. – which filed for bankruptcy at the end of January – to move out of its retail energy business and be restructured as a “wires-only” company.
In comments submitted to the the California Public Utilities Commission (PUC) on behalf of East Bay Community Energy, Peninsula Clean Energy Authority, Pioneer Community Energy, the City of San José (for San José Clean Energy), Silicon Valley Clean Energy, Sonoma Clean Power, and Valley Clean Energy Alliance, the CCAs are urging state regulators to take PG&E out of the retail energy business so that its management can focus on safely managing its transmission and distribution system. According to the CCAs, the system has been the source of billions of dollars in damage to communities across the state.
Importantly, according to the California Community Choice Association (CALCCA), this move would empower the CCAs to continue doing their part to meet California’s clean energy goals by serving all members of their communities. CCAs currently serve 46% of the retail electric customer load in PG&E’s current service area.
“PG&E’s first bankruptcy in 2001 resulted in the creation of community choice aggregation to serve as a tool to maintain the stability, affordability and sustainability of California’s electricity system, and with the utility poised to enter yet another bankruptcy, the time has come to expand this approach,” says Beth Vaughan, executive director of CalCCA. “The joint CCAs strongly endorse a restructuring that allows PG&E to focus where safety improvements are needed most – delivering electricity across the energy grid – while allowing locally controlled public agencies to safely, reliably and cost-effectively purchase the energy Californians rely on.”
The CCAs’ recommendations come on the heels of an announcement by California Gov. Gavin Newsom on Jan. 12 that he had created a team to develop a “comprehensive strategy” for updating California’s utility system to better adapt to the rapidly evolving energy market that includes community choice providers.
“More and more of our electricity now is procured outside of investor-owned utilities,” the governor said in his State of the State address. “Regulations and insurance practices created decades ago didn’t anticipate these changes. We must map out a longer-term framework, not just for the utilities’ future, but for California’s energy future, to ensure that the cost of climate change doesn’t fall on those least able to afford it.”
The group of CCAs provided a set of detailed recommendations for how the state can build a stronger, greener and more reliable electric system in their proposals to the California Public Utilities Commission, which has been leading an investigation since 2015 into whether PG&E’s organizational culture and governance adequately prioritize safety.
According to CALCCA, the commission’s investigation recently expanded to include consideration of the future of PG&E, in light of PG&E’s bankruptcy and the need to improve the safety of its operations after state investigators found PG&E to be responsible for some of California’s worst wildfires. (On Jan. 24, however, CAL FIRE released the results of an investigation of the 2017 Tubbs Fire, which concluded that PG&E equipment did not cause this fire, the utility maintains.)
In their comments to the commission, the CCAs highlight four goals for the PUC as it considers opportunities for restructuring PG&E:
- Improve PG&E’s electric infrastructure safety outcomes by removing PG&E from the retail generation business and concentrating PG&E’s attention and investments on its electric transmission and distribution businesses.
- Put financial stewardship, responsibility and control over programs such as demand response, energy efficiency and transportation electrification under local control.
- Provide communities the opportunity and authority to take affordable clean energy action by ensuring communities have the unhindered ability to proactively pursue full community control of retail generation services through a variety of local governance models. The commission should work collaboratively with local governments to remove barriers to pursuing full municipalization of the electric system in communities where there is interest.
- Transform California’s regulatory and legislative framework to concentrate on safety while using existing locally governed, state or nonprofit platforms whenever possible, or new state or nonprofit entities, if necessary, to enhance transparency, accountability and reliability.
“CalCCA and the joint CCAs look forward to working with the commission and other parties to identify the best path forward for providing Northern California with safe and reliable electric and gas service – at just and reasonable rates,” Vaughan adds.
On Jan. 29, PG&E and its primary operating subsidiary, Pacific Gas and Electric Co., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of California.
“Through this process, we will prioritize what matters most to our customers and the communities we serve – safety and reliability,” said John R. Simon, PG&E’s interim CEO, at the time of the filing. “We believe that this process will make sure that we have sufficient liquidity to serve our customers and support our operations and obligations.”
