CPUC Approves Power Charge Indifference Adjustment (PCIA) Charge

At its October 11, 2018 business meeting, the California Public Utilities Commission (CPUC) unanimously adopted a controversial decision (D.18-10-019) in the Power Charge Indifference Adjustment (PCIA) proceeding, Rulemaking 17-06-026. The PCIA is the amount that “departing customers” such as ratepayers in Community Choice Aggregator (CCA) service territories pay to the local investor owned utilities (IOUs). The PCIA was created to protect the ratepayers that opt to remain exclusive customers of the IOU when their local municipality or county votes to form a CCA. The PCIA is billed as a monthly charge by the IOU that appears on the CCA customers’ bills. The intent of the PCIA is to ensure that all customers (IOU and CCA) pay a fair share of the IOU’s power cost obligations, and avoid inequitable cost shifting when CCAs begin providing power to local residents. The question the Commission grappled with between the original proposed decision and Commissioner Peterman's alternate proposed decision is what is a fair share of the IOUs’ generation procurement costs?

Utilities, CCAs and energy service providers (ESPs) have taken conflicting positions on how the PCIA is calculated. D.18-10-019 clarifies the CPUC’s reading of the PCIA-related statutes in the California Public Utilities Code. The decision updates the existing benchmarks and clarifies which IOU generation costs are subject to inclusion in the PCIA charges. While the decision does not adopt the IOUs’ preferred “Green Allocation Mechanism” proposal, the decision ordered the inclusion of utility-owned generation in the PCIA, resolving a major point of contention in the IOUs’ favor. The decision further orders that PCIA benchmarks will be updated to more accurately reflect the value of various resources and product types in the IOU’s portfolios (e.g., renewables, local resource adequacy (RA), etc.) This means the benchmarks will be based on contract data, which raises significant questions concerning confidentiality of contracts executed by IOUs, CCAs and ESPs. The revised benchmarks will take effect starting in January 2019, making resolution of this question a near-term priority.

D.18-10-019 also directs a follow-on phase of this rulemaking proceeding, in which working groups will further refine the pre-payment provisions of the decision. In this phase, there may be rulings with updated benchmarks for RA and renewable portfolio standard (RPS) values, as well as new PCIA prepayment rules. Phase two may result in changes to the portfolio optimization and allocation / auction proposals of IOUs, CCAs and ESPs. These issues will be analyzed in a highly dynamic working group process that will be of continuing interest to all parties involved in the development and operations of CCAs and ESPs.

If you have questions about this development, please contact Brian Biering at bsb(at)eslawfirm.com or Lynn Haug at lmh(at)eslawfirm.com.