California raises costs for defectors from power utilities

Bloomberg

A growing number of California communities are opting to ditch big utilities in favour of alternative programs run by local governments. The state just made it more expensive.
The California Public Utilities Commission voted to change the formula that determines how much utilities charge customers who switch to these so-called community choice aggregators, or CCAs.
PG&E Corp. and the state’s other big utilities say the revision is needed to protect against rising costs as their customer base shrinks. Advocates for CCAs counter that the decision will sharply increase rates for people who have already switched and may undermine the business case for communities considering forming new ones. The debate shines a light on these increasingly popular programs that threaten the century-old utility business model.
The new fee structure “would shift past and future utility costs upon CCAs in an onerous, destructive manner and hamstring CCA planning,” said Paul Fenn, founder of Local Power Inc., a consulting company that works with community choice programs in California and other states.
Exit Fee
Under state law, departing customers must pay an exit fee to cover the cost of electricity utilities have already committed to buy on their behalf. The companies signed many of the power-purchase deals with renewable-energy providers several years ago, at prices that now seem expensive since the costs of wind and solar energy have been steadily falling. The idea behind revising the power charge indifference adjustment or PCIA, as the fee is called, is to protect utilities’ remaining customers from getting stuck with higher bills as some ratepayers leave.
Under the CCA model, towns band together to buy power from a variety of sources, including wind and solar farms, and set the rates residents pay. Local utilities continue to deliver the energy, and also send customers their monthly bills. There are 19 operating community choice programs in California that serve an estimated 2.5 million customers, according to the California Community Choice Association, an advocacy group.