CA Aggregator Throws in the Towel
One of California's largest retail natural gas aggregators, a
nonprofit coalition of school districts throughout the southern
half of the state, has decided to throw in the towel out of
frustration with Southern California Gas and an inability to
realize 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 gas
load of 17 to 25 MMcf, will phase out of core aggregation by
mid-year, according to Tom Solberg, an executive heading the
REMAC's board met last month and decided to give up its
aggregation program, Solberg said.
"I think it is too bad, but very understandable," said Solberg,
speaking from his northern California office. "Southern California
Gas gets whatever it wants unfortunately. If they don't want this
[aggregation] to fly, it isn't going to fly. So it is [the
utility's] own fault that their largest aggregator and a great
representative group for aggregation throughout the U.S. is
throwing in the towel."
For the past nine years, California has had a limited retail
choice program for residential and small business (core) customers
who pool their loads, but it has never reached the original maximum
of 10% of the total core supplies, hovering instead around the 5%
level. With the advent of Pacific Gas and Electric's Gas Accord
and more recently the two-year effort to further unbundle natural
gas in the state, there have been programs proposed to liberalize
the aggregation program, eliminate any limits on the size of loads
and generally stimulate more participation.
However, state legislation supported by the utilities and their
unions in the past two years has been enacted that specifically
blocks any additional unbundling, including loosening up the core
aggregation program. It is making it very difficult for any of the
approximately dozen aggregators, including REMAC, to make any
money. Margins are razor thin, and the statewide restructuring is
bogged down in complex settlement discussions.
Solberg said that REMAC's school districts do not have to return
to the utility, so with the help of a management consulting firm
that manages the schools' aggregation programs, he is trying to
initiate an RFP to third-party suppliers for a number of the 151
REMAC districts that want to pursue alternatives to SoCalGas.
"Our hope is to do an RFP in April, and have a qualified bid
completed and in place by the end of April and get it out to the
school districts that have expressed interest to sign on to a
revised aggregation effort," Solberg said.
A sister organization, the School Program for Utility Rate
Relief or SPURR, operating in northern California will continue to
operate as an aggregator. It has more school districts and a larger
overall gas load because of the colder climate (180 districts; 40
"Everyone in California has benefited from the schools' effort
[which stimulated California's aggregation program on a pilot basis
in 1991]," Solberg said. "We were saving nearly 20% on our gas bill
in northern California in 1992; last year we were down around
The northern California program "is alive and well," according
to Solberg, because PG&E went through some unbundling before
the legislative freeze was put in place last year. "The mandate
from the PG&E administration to make this program go has
trickled down to the front line operators, the account executives,"
Solberg said. "But in Southern California, the people who
administer the program are sometimes so counterproductive on the
littlest things, such as doing DASRS [direct access service
requests].....it is a complete fiasco with them."
Richard Nemec, Los Angeles