Calif. Phase 3 Direct Access Caps Believed to Be Hit

Several market participants believe that the amount of new direct access load available under Phase Three of the limited re-opening of direct access in California was hit essentially upon the Notice of Transfer period opening yesterday morning. Phase Three allotments are for direct access service beginning in 2012

The utilities must confirm the submitted Notices of Transfer, to ensure that they were completed correctly and eliminate any duplicates (which customers send due to the first come, first served nature of the cap), and an official confirmation from the utilities is not expected for about a week.

However, based on the amount of email submissions from several suppliers, market observers are confident that the caps were hit at each utility, despite a relatively more reserved process than the prior two phases.

Additionally, there was much less load available under the cap during this phase. As set forth in the California PUC's original decision on the load caps, the amount of new direct access load that was available during Phase Three was about 789 GWh at Pacific Gas & Electric and also 789 GWh at Southern California Edison. The amount of load available at San Diego Gas & Electric was about 92.4 GWh.

While it's still expected that there will be load which was denied the ability to take direct access due to the cap, some suppliers did report that a few customers which previously expressed interest in competitive supply were a bit more hesitant to submit a Notice to Transfer during this phase, due to a large increase in the Power Charge Indifference Adjustment (PCIA). The PCIA is essentially an exit fee which requires customers to continue paying the utilities on a nonbypassable basis for resource procurements made on the customer's behalf for time during which the customer took bundled service.

Nevertheless, although there was some hesitation by certain customers, suppliers generally reported robust interest in taking direct access, and expect that, upon final confirmation of allotments by the utilities, there will still be load wishing to take direct access that will be denied that opportunity due to the caps.