In the wake of a summer-long lamenting of the dysfunction, ifnot outright death, of California’s attempt at creating competitiveretail electricity markets, the state’s small remaining band ofnonutility retailers, or “energy service providers” (ESPs), isweighing in with state officials and utilities trying to breathenew life into the state’s once-optimistic drive for moremarket-based energy solutions.
In addition to using a retailers’ alliance, ARM (Alliance forRetail Markets), to have their voices heard in the ongoingregulatory investigations and political debates, some of the ESPsare working with San Diego Gas and Electric Co. on a jointpromotion program to educate utility customers about their optionsfor switching to a third-party power supplier. It is calledSDG&E’s “customer facilitation program” and it is tentativelyscheduled to roll out next month with a bill insert to allSDG&E customers jointly sponsored by the utility and some ofthe state’s 10 ESPs still operating.
Rebecca Schlanert, governmental/regulatory affairs director forthe state’s largest ESP, Commonwealth Energy, Tustin, CA, said theprogram with SDG&E has great potential for customers of allsizes.
“Actually, it is a well-thought-out program to make points toutility customers that: (a) they are not being disloyal if theytake a look at a marketer, (b) there are some really big advantagesto it, and (c) SDG&E will be there to offer them reliabilityand if they have a problem, be able to back them up,” Schlanertsaid. “It is a proactive stance telling customers they are notbeing disloyal and their reliability is not going to change.”
Commonwealth is still attempting to come up with somefixed-price electricity deals for San Diego customers still reelingfrom the price spikes this summer, even though several refunds,credits and legislative retail price caps have returned to mostcustomers most of the excess charges they were hit with in Maythrough August. Commonwealth recently expanded a deal with SanJose, CA-based Calpine Corp. to buy 125 MW of geothermal power fromthe merchant generator that can be attractively priced as aso-called “green” or environmentally benign source of power.
“If we do market in SDG&E’s territory, which we areseriously considering, we would market Calpine’s power and when wereached that (125-MW) quota, we would probably quit marketingagain,” said Commonwealth’s Jay Goth, marketing vice president.”We’ve been working on a deal for SDG&E. We have a great dealwith Calpine and look like geniuses now, but last year when wesigned the contract, it was a real risk. We’re still trying to staygreen.”
In the meantime, both Goth and Schlanert said Commonwealth hasnot individually been contacted by state or federal investigatorstrying to piece together what went wrong this summer and whatshould be done longer-term to correct the problems. Other ESPs,however, have been contacted, they said.
A few retail marketers received subpoenas from the CaliforniaPublic Utilities Commission last week, Schlanert said, althoughCommonwealth was not among them. When federal regulators heldhearings in San Diego early last month, Commonwealth volunteered tobe part of a panel, but another ESP was picked to testify.
“We are certainly involved in offering suggestions,” Schlanertsaid, noting that they are seeking audiences with CPUCcommissioners and their chief aides and are working through ARM tocommunicate their suggestions, which are basically to cut theregulations and let the market work.
“I would say that some form of retail market reform is needed aspart of any long-term solutions. There are a lot of things that canbe done (correcting the market) if retail providers are allowed tooperate freely.”
The “reforms” Commonwealth has in mind involve creating moretransparency in the market; and eliminating transaction costs andcredit costs assessed to ESPs that the competing utilities don’tpay. “It makes competition very difficult,” she said.
But the major change, according to ESPs, would be to get theutilities out of the merchant function all together and letnonutility firms compete to be so-called “default providers.”
“We certainly think the CPUC needs to take a more detailedlooked at the role of the default provider,” Schlanert said. “Theycan determine whether that really lies with the utilities or itmight be better served contracted out — bid out by the CPUC (notutilities).
“They (SDG&E) really don’t want to be involved in thedefault provider role, and certainly they are not interested indoing that forever.
“Overall, at Commonwealth we want to see a robust retail marketbecause that is where the consumers are going to benefit the most.We want to see reasonably priced default services to consumers.Reliability is, of course, critical, as is the adequacy ofgeneration. But we need to encourage and nurture the environmentinstead of regulating it to death.”
©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.
© 2022 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |