In brief, the PUC, "concludes that at this time, expansion of Direct Access to all
non-residential customers would present an unacceptable risk to the state’s long-term reliability goals."
"Further, based on the current procurement practices of
Direct Access providers, we are unable to ensure that expansion of Direct Access
would not result in increased greenhouse gas emissions, criteria air pollutants,
and toxic contaminants when compared to maintaining the current cap on Direct
Access. Therefore, we cannot recommend expanding Direct Access at this time," the PUC stated
In making its determination, the PUC cited recent reliability events in California and Texas, and concerns about load migration and the ability to support new generation investment in a retail choice environment
The PUC stated, "It is essential that the state’s grid be fully prepared and able to avoid
outages resulting from insufficient resources. The February 2021 outages in
Texas, where direct access providers serve all retail customers, further
underscore the dangers of insufficient available generation resources. Texas and
other states experienced a weather-related power crisis that led to extended
power outages and skyrocketing energy prices. Although the root cause of the
Texas outages is still under review, the damage to the health and safety of Texas
residents, as well as the Texas economy, is evident. It is especially concerning
because advocates of direct access in California have cited Texas as an example
of a successful, fully-competitive retail market. We do not attribute these
reliability events to ESPs or any other specific group of retail providers.
However, the events raise concerns about grid reliability in a fragmented retail
market. This decision finds that expansion of Direct Access would further
fragment the market, which in turn could exacerbate the planning and related
activities necessary to ensure grid reliability."
"Currently, IRP forecasts that retirement of
once-through-cooling plants as well as increased electric load from building
electrification and transportation electrification will lead to capacity deficits.
These capacity deficits could be significant and will require new generation
resources to be built. This means that in the coming years load serving entities
will need to invest in these new generation resources through long-term
contracts to ensure grid reliability. Reopening Direct Access would significantly
complicate the state’s near-term and long-term efforts to ensure grid reliability
for all ratepayers if individual load serving entities lose load due to load
migration and are unable to enter into long-term commitments for new
generation," the PUC stated
"Expanded Direct Access would
result in further fragmentation of the market and raises serious electric system
reliability concerns. These reliability concerns, coupled with Direct Access
providers’ primary reliance on unspecified power sources,
form the basis for the
Commission’s recommendation against expansion of Direct Access," the PUC stated
The PUC described "unspecified system power" as, "power purchased by LSEs on
CAISO day ahead or real-time markets that cannot be tied to specific generation source.
Reliance on unspecified system power, which is generally cheaper and requires no long-term
contracting, has been a source of competitive advantage for ESPs by allowing them to avoid
higher costs and commitments of long-term contracts."
The PUC stated, "ESPs’ current procurement practices may indicate that load migration from
IOUs or CCAs to ESPs could lead to a net decline in RPS procurement relative to
the current forecast, which could lead to a net reduction in GHG emission
reductions compared to not reopening Direct Access.
The Staff Report relies on
the ESPs’ 2019 PCL to determine that approximately 70 percent of the ESPs’
energy resource are from unspecified power. California Air Resources Board has
determined that unspecified power has a GHG emissions content that is slightly
higher than natural gas generation."
"The Direct Access Parties state that they intend to comply with the new
RPS obligation to secure at least 65 percent of their RPS resources through long-term contracts by 2024. This is the deadline pursuant to statute. However,
the IOUs and CCAs have consistently procured RPS resources in excess of state
requirements. Thus, allowing additional load to migrate to Direct Access would
likely result in increased GHG emissions compared to the status quo," the PUC stated
"We conclude that we cannot find that reopening Direct Access would be
consistent with the state’s GHG emission reduction goals and therefore cannot
recommend reopening at this time," the PUC said