One of California’s largest retail natural gas aggregators, anonprofit coalition of school districts throughout the southernhalf of the state, has decided to throw in the towel out offrustration with Southern California Gas and an inability torealize savings generated in the earlier years of the program,which dates back to 1991. The Retail Energy Management Association(REMAC), representing 151 school districts with a total annual gasload of 17 to 25 MMcf, will phase out of core aggregation bymid-year, according to Tom Solberg, an executive heading thecoalition.

REMAC’s board met last month and decided to give up itsaggregation program, Solberg said.

“I think it is too bad, but very understandable,” said Solberg,speaking from his northern California office. “Southern CaliforniaGas gets whatever it wants unfortunately. If they don’t want this[aggregation] to fly, it isn’t going to fly. So it is [theutility’s] own fault that their largest aggregator and a greatrepresentative group for aggregation throughout the U.S. isthrowing in the towel.”

For the past nine years, California has had a limited retailchoice program for residential and small business (core) customerswho pool their loads, but it has never reached the original maximumof 10% of the total core supplies, hovering instead around the 5%level.With the advent of Pacific Gas and Electric’s Gas Accordand more recently the two-year effort to further unbundle naturalgas in the state, there have been programs proposed to liberalizethe aggregation program, eliminate any limits on the size of loadsand generally stimulate more participation.

However, state legislation supported by the utilities and theirunions in the past two years has been enacted that specificallyblocks any additional unbundling, including loosening up the coreaggregation program. It is making it very difficult for any of theapproximately dozen aggregators, including REMAC, to make anymoney. Margins are razor thin, and the statewide restructuring isbogged down in complex settlement discussions.

Solberg said that REMAC’s school districts do not have to returnto the utility, so with the help of a management consulting firmthat manages the schools’ aggregation programs, he is trying toinitiate an RFP to third-party suppliers for a number of the 151REMAC districts that want to pursue alternatives to SoCalGas.

“Our hope is to do an RFP in April, and have a qualified bidcompleted and in place by the end of April and get it out to theschool districts that have expressed interest to sign on to arevised aggregation effort,” Solberg said.

A sister organization, the School Program for Utility RateRelief or SPURR, operating in northern California will continue tooperate as an aggregator. It has more school districts and a largeroverall gas load because of the colder climate (180 districts; 40MMcf annually).

“Everyone in California has benefited from the schools’ effort[which stimulated California’s aggregation program on a pilot basisin 1991],” Solberg said. “We were saving nearly 20% on our gas billin northern California in 1992; last year we were down around2-3%.”

The northern California program “is alive and well,” accordingto Solberg, because PG&E went through some unbundling beforethe legislative freeze was put in place last year. “The mandatefrom the PG&E administration to make this program go hastrickled down to the front line operators, the account executives,”Solberg said. “But in Southern California, the people whoadminister the program are sometimes so counterproductive on thelittlest things, such as doing DASRS [direct access servicerequests]…..it is a complete fiasco with them.”

Richard Nemec, Los Angeles

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