It was a long but fascinating day at the State Capitol yesterday as the Senate Utility, Energy and Communications Committee convened to consider AB 2145. This bill was conceived by investor-owned utilities, most specifically PG&E to stop the growth of Consumer Choice Aggregation (CCA) in California. PG&E tried to do this previously with Proposition 16, but failed.

Figure 1-Senator Padilla presides over the Utility, Energy and Communications Committee
The City of Richmond is a member of the first CCA in California, MCE, which has been able to deliver electric power to the approximately 85% of Richmond utility customers who subscribe that is greener and cheaper that electric power generated by PG&E. I represent Richmond on the board of MCE.

The heart of the bill was a provision that would change the current opt-out  arrangement in the CCA enabling legislation, AB 117, to an opt-in requirement. This would essentially destroy the opportunity to start new CCAs in California. The opt-in versus opt-out argument is complicated, but here is why opt-out is essential for CCAs to survive:

·         For most public services, the legislative bodies of public agencies determine who the provider will be based on public policy objective that may include considerations such as price, service, convenience, local job creation, etc. In Richmond, this is true for water, sewer and waste collection services. The City also hires contractors to maintain landscaping in places with landscape districts like Hilltop and Marina Bay. Consumers have no choice in any of these services, but for electricity generation, they now have a choice between PG&E and MCE. Previously, Richmond consumers had no choice at all. The Richmond City Council made a public policy decision to join MCE in order to carry out General Plan provisions to address climate change and reduce air pollution.
·         Ramping up a CCA requires having contracts in place before the startup in order to assure capacity and provide an economy of scale necessary to ensure competitive prices. An opt-in requirement would bring uncertainty that would preclude advance contracting for power at advantageous costs.
·         In Richmond, as in other places where CCAs have started up, about 15% of consumers made a conscious choice to opt-out, for whatever reason, even if it cost them more. You could probably guess that some proportion of consumers was also acutely aware of being switched to MCE and what it means for lower cost, reduction of greenhouse gases and renewable energy. But in the middle are a number of people who just aren’t paying attention, because they are busy with jobs, kids or whatever. They still get a bill from PG&E, even if MCE is providing the energy, and they write a check to PG&E. With opt-in, these people would tend to just keep on doing what they have always done. As the incumbent utility, PG&E would have a huge advantage just because of consumer inertia.
·         Early CCAs proved the importance of opt-out. New Jersey passed its equivalent of CCA, government energy aggregation, as part of electricity deregulation in 1999, followed by a more specific Government Energy Aggregation Act in 2003. But an opt-in customer signature requirement and cost cap stymied CCA efforts. Legislation has since removed these barriers, and the first programs launched in early 2013. New Jersey’s experiment with an opt-in aggregation demonstrated that CCA best operates as an opt-out program. Only with the automatic enrollment of all customers, and a well-publicized opt-out provision, can a CCA reach the critical mass and demand stability necessary to attract suppliers and succeed as a business.
AB 2145 has only a handful of supporters, including PG&E, Southern California Edison, and its in-house union, IBEW 1245, which has been able to strong-arm the  State Building and Construction Trades Council as supporters. In contract, the opposition is huge (click here for a list).

Yesterday, the Senate Utility, Energy and Communications Committee met at about 4:30 PM to hear a presentation from Assemblyman Bradford of Gardena, the author of AB 2145. It was pretty disgusting. He cited as facts a number of assertion about CCAs that were just plain wrong. Then a trio of IBEW representatives got up to complain that CCAs weren’t creating jobs and were actually selling dirty energy, all of which is false.

Figure 2- Assemblyman Bradford confronts his critics
About 40 IBEW members got up to testify briefly in favor. Then about 70 people testified against. An amendment supported by the chair to eliminate the opt-in provision had already been accepted, but the IBEW group continued to argue that expansion of CCAs had to be stopped and suggested that no CCA should be able to expand beyond its original area or perhaps not beyond a county.

Bradford was pacing and looking nervous. The IBEW guys were whispering and passing notes.

Senator Mark Desaulnier asked some tough questions about what basis there was for severely restricting expansion of CCAs. He noted that if the proposed bill had been in effect, Richmond would not have been allowed to join MCE.

Figure 3- 70 speakers line up to oppose AB 2145.
The first vote was taken about 7:00 PM, and there were not enough YES votes to move it, and a second vote would be taken later after some deal making.

Sometime around 9:00 PM the final vote was taken. AB2145 was voted out of the Senate Energy Committee with key amendments:

1.       The ‘opt-in’ provision has been completely removed
2.       New provision: A community choice aggregator joint powers agency shall not exceed the geographic boundaries of three contiguous counties.
3.       New provision: Any City or County in which an ordinance or resolution has been issued pursuant to Section 366.2(c)(12) as of December 31, 2014 shall be grandfathered in, so that provision 2 above does not apply. 

The bill needed 6 votes to get out of committee and the final vote of 6-2 is shown below.  (Note: Some members changed their vote between the beginning of the session and the end).

Padilla - Y
Fuller -Y
Canella - Y
De Leon - Y
Pavley - NV
Hill - Y (was a no)
Corbett - Y (was a no)
Wolk - N
Knight - N
Block - Absent
DeSaulnier - NV

The vote followed an MCE-organized Press Conference held on the capitol steps at 1:00 pm yesterday with excellent speakers representing  interested CCA communities around California, climate protection organizations and environmental justice advocacy groups . There were also 70 speakers, representing a wide range of organizations and parts of California, who spoke in the committee hearing in opposition to the bill. It is clear that AB 2145 has galvanized interest in, and understanding of community choice around the state and the widespread, passionate interest is inspiring to see. 

The removal of the ‘opt-in’ provision is a huge victory for CCA and we are very pleased with that outcome.  The three-county restriction could have some negative impacts including new barriers for  smaller, rural communities.  The bill will be heard next in the Senate Appropriations Committee but the date is not yet established.