California Assembly Bill 2145 makes various amendments to the rules of forming and running a Community Choice Aggregator (CCA) which is a local, public power utility that serves as an alternative electricity supply to monopoly power companies. AB 2145 was introduced to committee in February but obtained recent infamy after it passed the Assembly floor in late May. While AB 2145 has gone through many modifications some of the proposed amendments include limiting the size of CCAs, increasing their reporting requirements and the most controversial, removing CCA’s status as the default provider for municipality electricity once approved. Proponents of the bill claim that CCA reforms are fair and necessary to ensure transparency while those in opposition say the “reforms” will cripple CCAs in order to protect existing monopolies. Whatever you’re opinion, the bill’s transformation through the legislature is worth a closer look. Its path may have critical implications about where the power truly lies in legislation. Spoiler alert: it might not be where you think!
In my three part piece I will examine what the bill might have done, the factors that effected its creation and how what’s left will affect community choice for years to come. Stay tuned!
Part 3: Amend, End or Send
When the Senate Utilities and Commerce Commission amended Ab 2145, dubbed the Monopoly Protection Bill, removing the CCA kill provision (a change from “opt out” to “opt in”), supporters of community choice everywhere celebrated a battle won. The war, however, is not over.
At least that’s according to the Climate Protection Campaign through no2145.org. The campaign, which was essential in attracting public opposition to the Monopoly Protection Bill, released a position paper following the senate committee vote. It offers 3 reasons to still vote NO on Ab2145.
First is a provision that requires CCA’s to provide NOW their rates for the next 5 years of service. Not project them, but report them NOW with perhaps little chance for future adjustment. This choice of words appears innocuous until compared to the reporting requirements of the utilities, who “shall provide its projected electric supply rate”.
Notice the difference? The CCA is required to know its rates for 5 years in the future while the utility can get away with a rough estimate. In other words, this provision opens up CCAs to lawsuits that it doesn’t for utilities. No2145.org says it’s simply not realistic to know what the energy market will be 5 years into the future and asking CCAs to report them is like requesting a crystal ball. Seems a little unfair to us here at OCR.
Second, when the kill provision was amended out there was an addition to the bill that places a 3 county limit on CCAs. No2145 complains that this designation is arbitrary and may prevent smaller counties from forming a CCA. Even after pooling their populations, smaller counties may not have enough buying power to compete with the utility monopoly due to the arbitrary county partnership limit.
No2145.org mentions 4 counties, Arcata, San Luis Obispo, Santa Barbara and Napa County that say the 3 county limit would interfere with their efforts to form a CCA. On the one hand if you limit expansion you guarantee CCAs will not become what they are designed to challenge: monopolies. Right now, nothing is necessarily stopping Marin Clean Energy or Sonoma Clean Power from becoming the next PG&E. However that logic places a great deal of expectation on the snow balling effect of expansion, especially since instituting a CCA is still a difficult process. Still, it is my opinion that CCA’s maintain a uniquely benevolent and flexible role when they are run locally. I’d hate to see that challenged by the muse of unlimited expansion.
On the county partnership limitation Senator Alex Padilla puts it this way, “when you are establishing a credit union you are asked to define the community of interest, so if community choice aggregation is indeed community aggregation, how do we begin to define the community? Is it small, is it big, is it statewide, [or] is it somewhere in between?”
While Padilla agreed with putting boundaries on CCAs, he also conceded that “not all counties are created equal” but they are instead “varying in terms of population size… geographic area… and rural vs urban.” He supported the bill’s county limit amendment in order to start the conversation on “what ought to be the right number” of counties in a CCA knowing full well that “there is still a lot to be discussed and probably negotiated.”
With the bill set to vote in early August, the time for discussion is now. Is a three county limit reasonable or is it damaging? Is it too arbitrary? Is county the wrong aspect to look at altogether? Should CCAs be limited by something else, for example, population size? Or perhaps the increased utilization of renewable energy worth the eventual loss of small locally governed CCAS?
The final debatable provision in Ab2145 requires the California Public Utilities Commission (CPUC) deal with complaints against CCA’s. According to opposition, this provision interferes with “sound local accountability and management, runs contrary to existing local oversight” and “would add a costly, lengthy, and unnecessary bureaucratic burden.” Opposition foresees utility attorney-armies filing an onslaught of pointless lawsuits, financially crippling CCAs with hostile litigation.
While I can certainly see the danger, I am not convinced of its degree. Just as it’s unlikely that an unchecked CCA will suddenly snowball into a PG&E like monopoly, a new CPU complaint process is unlikely to bury live CCA’s in legal fees. Then again, crazier things have happened.
So what’s the take away from all this debate? This author believes utilities and CCAs should have the same reporting requirements. Concerning CCA expansion limits and CPUC regulations, my jury is still out.
In the end, it will be left to you, the California voter, to decide. What do you think? Comment on our Facebook page
here, write your senator, sign a petition or spread the word on social media by going
here or support the amended bill, but remember, no choice is a choice. Community voice overcame monopoly power once and if we want to see it happen again, we have to act.
One last thing before I leave you all: if this debate seems far away, note that nearby San Diego and Santa Barbara counties already started the CCA implementation process. How these rules play out will soon affect Southern California and likely Orange County. It’s time to decide in what way. This concludes my 3 part exploration of AB2145. Thanks for sticking with me!
We've all heard the saying, "There are three sides to every story; yours, theirs and the truth." When it comes to the relationships between business and government, accounting firms are usually the go-to place for "the truth part" when it comes to the most important medium in the biz-to-gov conversation, financial information. Yes, there have been examples to the contrary (circa 2008 financial crisis and A+ ratings put on unstable credit default swaps), but for the most part these institutions exist to dig into the numbers and draw out what is really going on, independent of the "he said she said."
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