Retail Suppliers Protest PG&E Economic Development Proposal as Anti-Competitive

Retail suppliers and community choice aggregators have, as expected, protested Pacific Gas & Electric's proposed revisions to its electric economic development program due to the disparate treatment afforded to competitively served customers, and the allocation of costs of the program to all distribution customers (A.12-03-001).

The Alliance for Retail Energy Markets notes that PG&E proposes applying the economic development discount to customers' otherwise applicable tariff (OAT), excluding taxes, while explicitly acknowledging that direct access (DA) customers' OAT amounts are much less than that of bundled customers because direct access customers do not pay the utility generation rate.

"This simply means that the EDR [Economic Development Rate] discounts available to DA customers are much less than those available to bundled customers. As a result, the only way a customer can get the full benefit of ED rates is to take bundled utility service. This is a particularly onerous situation for DA customers, because a customer who leaves DA service may well not be able to resume that service at a later time due to the cap that exists on DA service," AReM said.

"DA, and other departing load customers, will have experienced elevated distribution rates (to pay for the discounts), but will not receive the full, let alone, equal benefit of the EDR customer's contribution to margins following the 5-year EDR period," AReM said.

The City and County of San Francisco said that PG&E's proposal, "offers an artificially low generation rate to PG&E's bundled customers, providing a significant and unfair competitive advantage for PG&E relative to generation service from a DA or CCA provider. For this reason, PG&E's EDR can be used as a mechanism for discouraging customers from participating in CCA programs."

The San Joaquin Valley Power Authority issued a data request to PG&E regarding an example of the discount provided to customers under the proposal. For this example, the data response indicated that the calculated economic development discount for bundled service was $43,907, while the discount for the DA/CCA customer was $21,268.