California

Restructuring Overview  |  Public Benefits  |  Restructuring Resources |  Consumer Protection  |  News and Analysis

Legislation Passed
Electric Y Gas N

1996, AB 1890; Initial Restructuring Bill

Electric
Overview

• 1998. Competition began for all customers of shareholder-owned utilities in April. The 1996 electric restructuring law provided for a 10% rate cut.
• 2000-2001. Price volatility began in the summer of 2000 and continued through the first half of 2001, largely because of huge increases in wholesale energy prices, power shortages during peak demand, and the subsequent financial problems of the state's three major electric utilities. In January 2001, high prices convinced the state to adopt emergency measures that continued regulatory authority over ratemaking for generating facilities by the state's investor-owned utilities. The measure also allowed purchase of additional power through the state. Debts for two of the state's utilities rose to $12 billion because wholesale power prices greatly exceeded capped retail power rates.
• September 2001. The PUC suspends the right of retail customers to acquire service from competitive energy suppliers, effectively ending deregulation for residential consumers.
• 2002. In March 2002, the PUC voted 3-2 to allow large and industrial electricity customers to retain their contracts with independent electric supplies rather than purchasing power from the state's investor-owned utilities. This means that only residential and small commercial customers' rates will reflect the huge bills run up by the IOUs during the state's energy crisis.
• February 2003. El Paso Electric Company agreed to a $15.5 million settlement that resolves allegations the company colluded with Enron during California's energy crisis to manipulate the wholesale market and artificially inflate prices.
• May 2003: The Ninth U.S. Circuit Court of Appeals denies the State of California’s challenge to Pacific Gas & Electric Company’s post-bankruptcy reorganization plan. The state had contended that the Federal Energy Regulatory Commission "provided inadequate notice" of PG&E's restructuring applications, failed to properly conduct a public interest analysis, did not provide sufficient opportunity for a hearing on the matter.
• July 2003: The Federal Energy Regulatory Commission (FERC) upholds long-term power pacts between California and electricity merchants, including Sempra Energy’s $7 billion contract with the state, determining that runaway spot markets do not justify modifying the long-term contracts.

Choice Status

• On January 16, 2003 in a brief order issued by state utility regulators, the five-member California Public Utilities Commission unanimously voted to cancel an order from April 20, 1994, that allowed electric market competition,  letting homeowners and businesses choose their power provider.

Natural Gas
Overview

• California has had a customer choice program for industrial, residential and small commercial customers since 1995. Unlike the state's electricity law, which envisioned a market in which many suppliers would vie for the business of residential and small commercial customers, as well as bigger businesses, natural gas market restructuring has always targeted large, industrial customers of the state's investor-owned utilities. Any supplier that wants to serve residential and small-business customers must pool together enough customers to use 120,000 therms of gas per year, equal to the average use of about 143 homes.

Choice Status

• While specific numbers are not available, small commercial customers appear to represent the majority of participants. The CPUC is currently compiling numbers of the number of residential natural gas consumers enrolled with competitive suppliers.

Choice education
California Public Utilities Commission
www.cpuc.ca.gov/static/industry/electric/index.htm
This state website includes a fairly technical explanation of electric restructuring, with links to monthly utility access (customer enrollment) reports and rulings on distributed generation. Although the site has a link to electric service providers, these companies serve only agricultural and large industrial and commercial customers.

Suppliers
www.cpuc.ca.gov/published/ESP_Lists/esp_udc.htm

Public Benefits

The state’s restructuring legislation requires utilities (investor- and publicly-owned) to assess a non-bypassable charge on electric distribution services to fund low-income programs, energy efficiency, renewables and public interest research. Low-income programs for investor-owned utilities are funded at not less than 1996 levels. Pre-restructuring funding for all programs totaled about $222 million; restructuring legislation and other initiatives more than doubled it to over $500 million. In May 2001, responding to an energy crisis created by volatile energy markets, the legislature allocated an additional $850 million to implement new energy conservation programs and supplement existing ones. A wide range of conservation and renewables programs, as well as energy efficiency education programs, are offered. As of 2001, funding for low-income rate assistance and weatherization totaled about $220 million, not counting one-time increases due to the energy crisis. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation - buying coops

• The Public Utilities Commission can authorize aggregation of customer electrical load for all customer classes, including, but not limited to small commercial or residential customers. Aggregation may be accomplished by private market aggregators, cities, counties, special districts or on any other basis made available by market opportunities and agreeable by positive written declaration by individual consumers.

State Restructuring Resources

Utility Regulatory Commission
California Public Utilities Commission
1-800-649-7570
www.cpuc.ca.gov/

Consumer advocate
California Public Utilities Commission
1-800-649-7570
www.cpuc.ca.gov/static/aboutcpuc/divisions/consumer+services/consumer+affairs/index.htm

Office of Ratepayer Advocates
www.ora.ca.gov/

Department of Consumer Affairs
1-800-952-5210
www.dca.ca.gov/

Grassroots groups
The Foundation for Taxpayer and Consumer Rights
310-392-0522
www.consumerwatchdog.org/
Citizens against Utility Taxes (CUT), part of the Foundation, scrutinizes the deregulation plan of electric utilities. In 1998, CUT sponsored a ballot measure in California to prevent a ratepayer bailout of private utility companies. The website features an energy section that includes energy news articles.

California and Nevada Community Action Association
www.cal-neva.org/
This site is still under construction, but it includes an announcement that it will cover issues concerning energy for low-income people. New rulings from the California Public Utilities Commission, the Low-Income Energy Assistance Program, and other energy-related subjects also will be covered.

The Utility Reform Network (TURN)
415-929-8876
www.turn.org/
TURN has been advocating for California's utility consumers for more than 25 years. Its website is "designed to empower consumers to demand lower rates and quality services."

The Utility Consumers' Action Network
619-696-6966
www.ucan.org
The mission of UCAN, the Utility Consumers’ Action Network, is to protect consumers from utility abuse, poor service, and excessive rate hikes.

ACORN
213-747-4211
www.acorn.org
ACORN, the Association of Community Organizations for Reform Now, is the nation's largest community organization of low- and moderate-income families. Energy issues are among its priorities. The group monitors energy prices and their effects on low-income families in California.

Consumer Protection

Disconnection policy

• There is no weather-related disconnect policy in California, but the state prohibits utilities from disconnecting residential natural gas or electric service for nonpayment if: 1) a licensed physician certifies that the disconnection would be life-threatening to the customer and the customer agrees to a deferred payment agreement; and 2) the customer is granted an extension, or agrees to a deferred payment arrangement not to exceed 12 months, to pay the delinquent balance.
• If service is disconnected for nonpayment of a bill, customers should contact their utility to make the necessary payment to restore service. Customers being threatened with disconnection can call the CPUC Consumer Affairs Branch. If service has been disconnected for non-payment, some companies may require up to two times the highest bill over the past 12 months.
• Customers who share a home with another adult may be held liable for the bill, regardless of whose name the bill is under. If the service is disconnected for nonpayment, the utility may refuse to put service in another resident's name until the bill is paid.

Deferred payments

• Customers unable to pay their bills on time or in full should contact the utility and request an extension or payment arrangements. Under state statutes, the utility is required to consider payment arrangements if none has previously been given. However, if customers fail to keep the agreed-upon arrangements, the utility is not required to consider additional arrangements.

Customer service

• Before commencement of service, electric service providers must provide potential customers with a notice describing the price, terms and conditions of service.

Deposits/fees

• A utility may require a deposit for new customers, or if customer service was disconnected for non-payment, or if the customer continually pays bills after the due date. Usually, a utility will request two times the average monthly bill. However, if service has been disconnected for non-payment, some companies may require up to two times the highest bill over the past 12 months.
• Most utilities hold deposits until customers have established credit by paying bills on time for 12 months. After customers establish credit, their deposit plus any interest earned is applied as a credit to their account, or they may request a refund from the company.

Right to cancel

• Customers have the right to cancel any contract for electric service without fee or penalty until midnight of the third business day after the day they signed the contract. If no contract is signed, customers have the right to cancel any agreement for electric service without fee or penalty until midnight of the third business day after the third party verification, or until midnight of the fifth business day after the mailing or provisioning of the contract notice.

Billing and collections

• There are three billing options: (a) utility consolidated billing, (b) alternative supplier consolidated billing, and (c) separate bills from the distribution utility and from the alternative supplier. The alternative supplier must agree with the distribution utility on one of these methods.
• Energy bills contain a baseline allowance for the amount of energy customers may use at a lower cost. This baseline amount of energy at a reduced cost is meant to encourage conservation. Baseline allowances vary in California based on climate and season. Additional baseline allowances are given to consumers who depend on life-support equipment and others with certain health-related needs.
• Electricity consumers must be given sufficient and reliable information to compare and select among products and services provided in the electricity market.
• Electric suppliers must include the following information on their bills:

1. The total charges associated with transmission and distribution, including the charge for funding research, environmental, and low-income programs.
2. The total charges associated with generation, including the competition transition charge.

• Electric suppliers must provide conspicuous notice that if the customer elects to purchase electricity from another provider, the customer will continue to be liable for payment of the competition transition charge.

Supplier licensing

• An electric supplier must meet any CPUC standards for proof of technical, operational and financial capability. Electric suppliers must provide a $25,000 security deposit or post a financial guarantee bond in favor of the CPUC in that amount.

Slamming

• A residential customer cannot be switched until the change has been confirmed by an independent third party verification company. If a customer initiates the switch by calling the supplier, the independent verification requirement does not apply.23 usage information, will not be released unless a customer consents in writing.

Telemarketing

• Customers can request to be placed on a "no-telemarketer" list.

Dispute resolution

• Customers who believe their bill is incorrect should contact the utility's customer service office immediately at the telephone number printed on the front of the energy bill. Customers who are not satisfied with the company's response may file a complaint with the CPUC Consumer Affairs Branch.

Disclosure

• All registered electric service providers must provide the potential customer with a written notice that describes the price, terms, and conditions of service. Every ESP who offers to sell electricity to end-use customers is required to disclose its electricity sources to those customers.

Privacy

• Customer information obtained by electric suppliers cannot be used for marketing purposes.