CPUC Public Meeting Results in a Hold on Energy Company Disconnections

On December 16, 2009, the CPUC held a public meeting to discuss customer arrearages and disconnections in light of the current economic crisis. As a result, Pacific Gas and Electric Company, San Diego Gas and Electric Company, Southern California Edison, and Southern California Gas Company agreed to a moratorium on service disconnections beginning December 21, 2009, through January 3, 2010. Edison subsequently extended their moratorium to January 21, 2010. What this means is that during this time, customers will not have their electric or natural gas service disconnected for non-payment.

However, this is not a moratorium on households paying monthly utility bills.  Households having difficulty paying their utility bill should immediately contact their electric or natural gas company to discuss how best to pay an overdue bill and to see whether there are ways to decrease that monthly bill either through assistance programs or energy efficiency programs.

As a result of the December 16th public meeting, the CPUC will convene a public workshop on January 5, 2009, from 10 a.m. - 3 p.m. (CPUC Courtyard Room, 505 Van Ness Ave., San Francisco) to determine ways to improve customer notification and education resulting in a lower number of households experiencing a disruption in electric and/or natural gas service.

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Changes to Residential Rates Under New Legislation

On October 11, 2009, Governor Schwarzenegger signed Senate Bill (SB) 695, the Ratepayer Protection Act, into law. The bill, authored by Senator Kehoe, allowed the CPUC to change the rates for residential customers and also allow more choices for nonresidential customers.

Since 2001 the rates and baseline quantities for residential electric usage up to 130 percent of baseline have been capped.  (The baseline quantity of electricity is the amount needed to meet roughly 60 percent of the typical residential customer's usage, adjusted for climate and season.)  This provision shielded some usage of all residential customers from the worst effects of the electricity crisis.  But it led to large rate differences within the residential class because while overall costs have increased, much of the residential usage is within 130 percent of baseline rates (i.e., Tiers 1 and 2), leaving those costs to be recovered only from the upper tiers (the residential rate structure has five tiers; each tier has a set amount for usage and once a customer exceeds that level of consumption the customer moves into the next tier, which has a higher price).  This is a rate design that encourages conservation, as the Legislature intended.  But during a heat wave when usage spikes, customer bills go up very quickly as customers get into the tier 4 and 5 rates.  For example, PG&E’s tier 1 charges a customer about 11 cents per kilowatt-hour (KWh) used whereas tier 5 charges that same customer 44 cents per KWh used.

This bill replaces the existing rate cap with flexible rate caps based upon indexes.  For non-CARE (low income program) residential customers, the bill authorizes the CPUC to adjust rates for usage up to 130 percent of baseline by a minimum of 3 percent or a maximum of 5 percent.  On December 17, 2009, the CPUC authorized the utilities to increase Tier 1 and 2 rates by 3 percent, while concurrently offsetting that increase with corresponding rate reductions for Tiers 3, 4, and 5. The rate adjustments will have no effect on the overall level of revenues collected by each of the utilities, but will result in either increases or decreases in the monthly bill to individual residential customers depending upon the amount of electricity they consume.

SB 695 was supported by a broad coalition of industry stakeholders including the CPUC's Division of Ratepayer Advocates, The Utility Reform Network, and each of the State's major electric utilities.

SB 695 also allows a phase-in for nonresidential end-use customers to purchase electricity directly from non-utility sources. The phased-in restoration of so-called “Direct Access” electricity purchasing offers the potential for industrial and commercial customers to secure an important business advantage by locking in favorable electricity rates from non-utility suppliers. Importantly, the Ratepayer Protection Act does not eliminate the existing prohibition on Direct Access; it merely directs the CPUC to consider and develop limited Direct Access rules in the coming months.

On January 11, 2010, at 9:30 a.m., the CPUC will hold a workshop to seek consensus among parties regarding the issues necessary to implement the phase-in of new maximum levels of Direct Access transactions pursuant to Senate Bill 695. The workshop will take place in the CPUC's Hearing Room A at 505 Van Ness Ave., San Francisco.

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CPUC Approves Edison's Tehachapi Transmission Line To Support Renewable Energy

The CPUC has approved Southern California Edison’s request to construct Segments 4-11 of the Tehachapi Renewable Transmission Project (TRTP) in order to increase access to new renewable energy. This brings the total of new transmission approved by the CPUC for the state’s investor-owned utilities to more than 500 miles, primarily in five major lines carrying 9,000 megawatts (MW), in the past three years with an infrastructure investment of more than $4.5 billion.

The project approved is the main portion of the 11 segment TRTP, which will provide access for up to 4,500 MW of renewable energy generation, primarily wind from the Tehachapi Wind Resource Area in Kern County, and deliver it to Los Angeles and San Bernardino counties.

Previously, the CPUC approved Segments 1-3 of the TRTP, which will deliver approximately 700 MW of the total TRTP carrying capacity.

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CPUC Approves Funding for Study to Reduce Greenhouse Gases

The CPUC authorized Southern California Edison to co-fund feasibility studies of a California integrated gasification combined cycle (IGCC) plant with carbon capture and storage.

Edison will commit up to $17 million to the Phase I feasibility studies associated with a facility known as the Hydrogen Energy California (HECA) project. Edison is also allowed to fund up to $13 million in Phase II studies to further examine the permitting, engineering, and economics associated with this project, if the Phase I feasibility studies demonstrate that further studies are warranted.

The HECA facility would provide low-carbon electricity within California by gasifying non-conventional fuel resources (primarily petroleum coke from California's oil refineries or, as needed, blends of petroleum coke and other solid fuels) to produce hydrogen for electricity generation through an IGCC plant and capture the CO2 for Enhanced Oil Recovery.

HECA would be a 250 megawatt facility in Kern County and would be a first-of-a-kind project designed with technology elements that are unlike any project under development.

The U.S. Department of Energy has awarded $308 million to support the HECA project.

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CPUC Continues to Bridge Digital Divide with Broadband Grants

The CPUC, in its ongoing efforts to bridge the digital divide and boost economic development, conditionally approved two grants in December from the California Advanced Services Fund (CASF).

A grant of $19,294,717 was approved for the Digital 395 Middle Mile Project of the California Broadband Cooperative (CBC). The amount granted represents 19 percent of the total project costs of $101,494,218 and is contingent on approval for an 80 percent matching grant from the federal Broadband Technology Opportunities Program stimulus portion of the American Recovery and Reinvestment Act (ARRA). The CBC will not be reimbursed by the CASF until the CPUC reviews the expenses associated with the project.

The CBC Digital 395 project would consist of a 448 mile, 10 gigabit high-capacity fiber optic middle mile/backhaul route along U.S. Highway 395 from Barstow to Topaz Lake at the Nevada state line to bring high-speed Internet broadband to underserved communities and anchor institutions in Mono, Inyo, eastern Kern, and northwest San Bernardino Counties of California's eastern Sierra region.

The CPUC also approved a $166,911 grant from the CASF to bring high-speed Internet broadband services to underserved areas of south eastern Lassen County through the Plumas-Sierra Telecommunications (PST) Last Mile project. This grant, which represents 10 percent of the total cost of the project, is also contingent upon approval for 80 percent matching grants from the federal broadband stimulus portion ($7.2 billion) of the ARRA.

The PST Last Mile project would deploy fixed wireless networks using a combination of licensed 2.5 GHz and 3.65 GHz WiMAX frequencies and 700 MHz and 900 MHz frequencies to deliver high-speed broadband services to 3,994 households and 453 businesses in underserved communities surrounding Doyle, Herlong, Janesville, Milford, the Sierra Army Depot in Lassen County, and Susanville. PST would use 700 Mghz spectrum, which is particularly effective at penetrating densely wooded areas and concrete structures and buildings.

On December 20, 2007, the CPUC established the two-year, $100 million CASF to provide 40 percent matching infrastructure grants to broadband providers willing to put up the matching 60 percent of funds and to serve the nearly 2,000 California communities that are currently unserved and underserved by broadband.

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