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KRCD Power Connections / March - April 2008 / Volume 6, No. 2
In This Issue:

Community Choice SJVPA Negotiates Settlement with PG&E

On April 10, the San Joaquin Valley Power Authority (SJVPA) and Pacific Gas and Electric Company (PG&E) jointly filed a settlement agreement with the California Public Utilities Commission (CPUC). The agreement represents a proposed settlement of the complaint filed by the SJVPA in June 2007 regarding PG&E's marketing conduct against SJVPA's community choice aggregation program.

"The settlement agreement is in the best interest for the customers that we seek to serve and the communities that we represent," stated SJVPA Chair Tom Haglund. "It acknowledges that PG&E has changed its position from neutrality to one of opposition and therefore establishes rules of conduct that must be followed as we move forward."

Key features of the settlement include:

  • PG&E agrees that it will provide functional separation between its marketing activities and its utility activities. Separation of activities addresses a key concern raised by SJVPA, namely, that PG&E's use of its status as the incumbent, monopoly utility has caused customer confusion and unfairly thwarted competition. PG&E will provide an explicit disclaimer stating, among other things, that PG&E's shareholders are paying for its marketing activities and that such activities reflect the views of PG&E's shareholders, not PG&E's customers. SJVPA also agreed to provide a disclaimer noting that the services provided by SJVPA are provided by SJVPA, not its participating cities and counties.
  • PG&E acknowledges that participating cities and counties have transferred to SJVPA their respective rights to serve customers and that SJVPA's board of directors is responsible for governing the Community Choice program. PG&E agrees to make good faith efforts to address concerns regarding the Community Choice program directly with SJVPA's board of directors, instead of indirectly with the councils and boards of participating cities and counties.
  • "Without the interim code of conduct that the settlement provides, PG&E would be able to use its inherent advantages as a monopoly utility to unfairly market against the SJVPA without properly identifying that its strategy is one of serving its shareholders," stated Haglund. "Without the agreement, PG&E's activities would continue to disrupt the implementation of the SJVPA program. It gives the SJVPA the ability to move forward with bringing the benefits of Community Choice to customers and other cities and counties."

    The agreement between SJVPA and PG&E will likely have carryover effect to other cities and counties that are working on implementing community choice aggregation. The SJVPA is aware of efforts by PG&E to market against other programs like those in Marin County and the City and County of San Francisco.

    It is expected to be a 75- to 120-day process at the CPUC before the agreement becomes effective.

    This is an interim settlement. The CPUC may develop overall marketing standards for community choice aggregation at a later rulemaking procedure, and neither SJVPA nor PG&E is precluded from participating in the development of those marketing standards.

    Proposed Decision Orders PG&E and SCE to Remove Joint & Several Liability Clause from Community Choice Aggregation Tariffs

    On March 26, 2008, the California Public Utilities Commission (CPUC) Administrative Law Judge Malcolm released a proposed decision granting the application of the San Joaquin Valley Power Authority (SJVPA) requesting the utilities remove from their tariffs and service agreements any requirement or condition of service that imposes joint and several liability on the members of a community choice aggregation joint powers agency for the debts and obligations of that joint powers agency.

    "Removing joint and several liability from the utility tariffs has been a key factor for moving forward with our program," stated SJVPA General Manager David Orth.

    The SJVPA requested the removal of this condition because it is fundamentally contrary to California law and precedent. As noted in the SJVPA's petition for modification to the CPUC "with respect to the liability of members of a joint powers agency, the utilities should not be allowed to fundamentally and unilaterally alter rights under California law."

    In the proposed decision it states that "utility tariffs may not impede the intent of the legislature with regard to the rights and authority of local governments."

    The CPUC commissioners are expected to vote on the proposed decision at its April 24 meeting.

    Public Is Invited to Review Electric Supply Agreement

    Transparency and accessibility are two key principals guiding the development and implementation of Community Choice. That is why the San Joaquin Valley Power Authority has held two public hearings and is scheduling a third to allow members of the public to review and provide input on a key agreement for the program.

    The purpose of the hearings is to provide an overview of the Electric Supply Agreement and receive any comments from the public. "This program brings for the first time to this region a chance for the public to come to a public meeting where energy issues are discussed that directly affect them," said Tom Haglund, chair of the San Joaquin Valley Power Authority at the public hearing in Clovis. "The public has a chance to register their voice and their choice regarding electric generation procurement."

    Earlier this year, the draft Electric Supply Agreement was released by the Kings River Conservation District to the San Joaquin Valley Power Authority for review. As the local governing body for Community Choice, the San Joaquin Valley Power Authority has held two public hearings, one located in the City of Kingsburg in February and the seconded located in the City of Clovis in March. A third hearing is scheduled on April 24 in Hanford.

    The Kings River Conservation District successfully negotiated the Electric Supply Agreement with Citigroup Energy, Inc. to supply and manage energy delivery to the San Joaquin Valley Power Authority's Community Choice customers. The Electric Supply Agreement fully meets the criteria established by the San Joaquin Valley Power Authority to provide discounted, stable generation rates. The agreement provides additional benefits including:

    • Support of investment in local generation projects – fossil fuel and renewable;
    • Strict application to greenhouse gas regulations;
    • Faster compliance with the spirit and intent of the state’s renewable energy requirements;
    • Full backing and credit strength of Citigroup Inc., the largest financial institution in the world; and
    • Local control, voice, and choice in energy matters.

    The next step, once the SJVPA board completes its review of the agreement and public meetings are held, is to authorize KRCD to proceed with signing the agreement. This authorization will require a finding by the board’s executive committee that the agreement meets the financial objectives of the Community Choice program.

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