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California Sets New Customer Choice Project, Roadmap For Consideration

Schedules New Workshop on Customer Choice

October 9, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The California PUC will hold an informal workshop on customer choice (An Evaluation of Regulatory Framework Options for an Evolving Electric Market) on October 31 in Sacramento

Earlier this year, the California Public Utilities Commission commenced an inquiry into the many changes occurring in California's electric sector. A May 19, 2017 en banc hearing, "identified risks and opportunities for California moving toward policies allowing more choices for electric service customers," the PUC said in a notice regarding the workshop

"As the electric sector experiences rapid changes, the Commission formed the California Customer Choice Project (Project) to examine the issues and produce a report evaluating regulatory framework options in early 2018. To this end, the Commission will hold an informal public workshop to gather stakeholder input on global and national electric market choice models, including California's 2020 market. Speakers will include California stakeholders and representatives from out-of-state electric markets who will present key insights to help guide the evolution of the regulatory framework for customer choice in California," the PUC said in the notice

The PUC also set forth a path to consider customer choice under a Customer Choice Project

Per the PUC, the mission of the California Customer Choice Project is to aid the Commission in making strategic, timely, and informed decisions by:

a. Evaluating representative national and global models for customer choice in the electric market

b. Assessing whether the trajectory of the state’s regulatory framework for customer choice in 2020 will allow California to meet fundamental principles of affordability, decarbonization, and reliability; and

c. Conducting comparative analysis to identify trade-offs between the regulatory framework options.

The short term goal of the Project is to produce a White Paper that will help the Commission and other decision makers determine the appropriate next steps to take during the transition of the electric market in California. The Project will conduct stakeholder outreach to obtain input on the domestic and international customer choice models in the electric markets, including what stakeholders deem essential. A draft White Paper will be released in early 2018 for public comment before a final report will be issued

The Project will evaluate the models against three main principles:

a. Affordability: are the rates and charges designed to ensure affordability?

b. Decarbonization: does the model meet California’s environmental and climate goals?

c. Reliability: how does the model maintain safe, reliable, and resilient electricity service?

The PUC stressed that the principles are listed alphabetically. "There is no preference or priority to the listing of the principles because they’re equally important," the PUC said in an FAQ

In conjunction with the three main principles, the Project will also examine key issues/matters in its comparative analysis, which includes, but is not limited to, the following:

• How does this choice model ensure consumer protections?

• How does this choice model support development and incorporation of innovations driven by customer demand?

• Does this choice model ensure universal electric service?

• How does the choice model leverage investment necessary to finance the evolution of the electric grid?

• How does this choice model consider the transition/transfer of utility obligations?

• Does this choice model have competitively neutral rules among market participants?

• Can customers determine their level of participation and are they informed to participate at their desired level?

• How does this choice model impact and benefit local communities?

A second public workshop is planned after the release of the draft White Paper in early 2018.

"The aim of the White Paper is to set the table for a constructive conversation among decision makers about the next steps to take in managing California’s transition in an evolving electric market by providing a holistic (and strategically agnostic) view of the interdependent attributes related to customer choice in the electric market. The White Paper will provide an unbiased Evaluation Framework to assess various market structures for customer choice. It will examine key questions and issues including consumer protection, technological innovation, access to capital for investments to meet California’s decarbonization goals, reliability and affordability," the PUC said

The White Paper will not present recommendations for a customer choice model/structure for California. Instead, the intent is for the Commission to use the information provided in the White Paper to decide on appropriate next steps for effective management of this evolving market. Decision makers may use lessons learned from the different electric markets presented in the White Paper to ensure key goals are met and/or avoid pitfalls when deliberating policy and regulatory changes, the PUC said

"A key feature in the White Paper will be the Evaluation Framework, a methodology to assess specific customer choice models in electric markets. The models will be analyzed against the key principles (alphabetically listed) of affordability, decarbonization, and reliability. Questions will be designed to not bias the analysis towards a favorable view of markets with more or less choice for customers. Rather, it will be used to consider the various options for customer choice demonstrated by the different electric markets evaluated in the study in an agnostic way.," the PUC said

The PUC set forth the timeline of the choice Project as follows:

• Fall 2017: Gather stakeholder input and assess international and domestic market structures, including holding an informal public workshop

• Early 2018: Issue draft White paper for public comment

• Spring 2018 Issue final White Paper

The PUC said that there will not be an Order Instituting Rulemaking (OIR) after the release of the White Paper

"The intent of the White Paper is to provide information to the Commission and other decision makers about various existing customer choice models. The report will assist in guiding their next steps on this issue. The White Paper is not intended to provide the basis or reason to institute an order for rulemaking. California law provides the Commission, at any time, authority to institute rulemaking proceedings to adopt, repeal, or amend rules, regulations, and guidelines for a class of public utilities or of other regulated entities. The Commission has, in the past, embarked on studies prior to issuance of the OIR. However, that is not the intent and/or immediate goal of the Project," the PUC said

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