The Honorable President Michael Picker
The Honorable Commissioner Mike Florio
The Honorable Commissioner Catherine Sandoval
The Honorable Commissioner Carla Peterman
The Honorable Commissioner Liane Randolph
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA   94102

RE:  The Power Charge Indifference Adjustment Proposed Increase and Proposed Decision in A.15-06-001, Pacific Gas and Electric (PG&E)'s 2016 ERRA Proceeding

Dear President Picker and Commissioners,

We, the undersigned directors and advisors of the San Diego Energy District (SDED), write in opposition to the proposed 95% increase in the Power Charge Indifference Adjustment (PCIA) that will be charged to customers of Community Choice Aggregation (CCA) programs per the proposed decision in Application 15-06-001.

SDED supports the ability of ratepayers to exercise choice in their selection of electricity provider.  We work to support the creation of CCA programs in municipalities of all sizes. We believe that the proposed decision will without doubt have --and indeed has already had -- a chilling effect on CCA formation efforts in many communities.  While we wouldn't be surprised if that was the intent of PG&E, we are very surprised that the Commission has proposed to enable and enshrine that anti-competitive action. 

We respectfully urge the Commission to reject PG&E's proposed PCIA increase as contained in this Application.  Here are a few of the reasons to reject this flawed Decision, because it:

• Approves PG&E's 2016 PCIA rate hike, independent of impact on CCA customers;
  
• Accepts PCIA methodology prior to a 2016 workshop to examine that methodology;
• Rejects rate stabilization proposals by Marin Clean Energy (MCE) and LEAN Energy US that would impose less harm on CCA customers;
  
• Rejects MCE's proposal to mitigate the PCIA increases with rate savings accrued to other customers exercising electricity choice (the Direct Access customers), rather than considering all customers exercising choice to be in the same category;
• Results in pricing that is anti-competitive in effect, has already begun to stifle CCA development for 2016 and 2017, and may violate legislative intent as expressed in Senate Bill 790, section 2), specifically as: "(a)  It is the policy of the state to provide for the consideration, formation, and implementation of community choice aggregation programs authorized in Section 366.2 of the Public Utilities Code."  and...(g) California has a substantial governmental interest in ensuring that conduct by electrical corporations does not threaten the consideration, development, and implementation of community choice aggregation programs".

We urge the Commission to instead take the following actions:

• Disallow PG&E to "retire" the "negative balancing account", thereby capturing for themselves the nearly $1B in savings accrued as a result of customers exercising choice to depart from IOU service;
  
• Consider means for offsetting PG&E's claimed "above market" contract expenses, to reduce the customer impacts of 2016 PCIA on CCA customers, particularly those who exercised their choice, departed PG&E and therefore required no procurement on their behalf for over six years;
  
• Open a proceeding to examine PCIA calculation methodologies in general, with particular attention to mitigating undue impacts on the following three customer categories:

1. CCA customers multiple years after their CCA election – These customers need better clarity why PCIA charges can double one year to the next, when procurement decisions on their behalf should have ceased years ago.
2. CCA customers with rooftop solar – These customers have required limited procurement since their interconnection date. PCIA fees already represent a disproportionate hit to them, a penalty that continues to increase as PCIA rates jump.
3. CARE customers – At present, only PG&E levies PCIA fees on CARE customers, those by definition already struggling to pay for basic service. Again, the disproportional hit to these customers under current PCIA methodology is aggravated as PCIA fees increase.
   

In the interest of proposing alternatives for Commission consideration, we offer the following two-step strategy, based on the principle that PCIA fees should be based on actual “above market costs”, not hypothetical ones:

• Immediately – Freeze PCIA “exit fees” at 2015 levels, for a minimum of six months. During this period, the IOUs would be instructed to sell any excess power under non-negotiable contracts into the wholesale markets. If necessary, and during this period only, allow an increase of no more than 15%, based on the evidentiary record supporting MCE's position.
• In six months – Review in mid-year the amount of actual losses or gains from the sale of excess energy. Should the actual losses or gains following these sales been seen at mid-year to be significant, then at that time institute a PCIA rate change based on actual costs, not estimates.

Lastly, SDED also submits that it is inappropriate to allow and very appropriate to deny PG&E permission to bank a profit from the sale of electricity for which it has also collected a PCIA Exit Fee. By condoning such double-dipping, the Commission would cast further doubt on the matter of its independence and objectivity vis a vis the IOUs. Rather, all PCIA exit fees, as well as gains and losses from the sale of electricity, should be accounted for in escrow -- with net gains returned to the ratepayers as credits, not to IOU shareholders as proposed by PG&E.

In closing, we respectfully urge the Commission to recognize the singular role CCAs can play in enabling municipalities to meet the Brown Administration's landmark and ambitious climate objectives. CCAs allow jurisdictions to meet those objectives at a pace and for a level of investment that constitutes one of the most economical options available to them.

Surely it is not the Commission's intent to implement additional barriers to CCA formation and continuity through the PCIA mechanism. Rather, we hope and urge the Commission to use this opportunity to thoroughly reevaluate the PCIA methodology.
We appreciate your attention and this opportunity to comment.

Sincerely,

Erika Morgan, Executive Director
Lane Sharman, Board Chair
Michael Hetz, Vice Chair
Van Collinsworth, Director
Jamie Edmonds, Director
Jose Torre-Bueno, Director
David Sean Dufek, Advisor
Diane Lesher, Advisor
Stuart Smits, Advisor
Rick Van Schoik, Advisor
Kurt Yeager, Advisor