San Francisco joint meeting urges CPUC and Legislature to address CCA barriers, sets staff to draft resolution

LAFCO Chair Ross Mercurimi and SFPUC President Francesca Vietor presided over a joint session where staff and out-of-town CCA officials warned that California Public Utilities Commission rules and utility practices remain major hurdles to creating a municipal CCA for San Francisco.

Why it matters: SFPUC director Mike Campbell told commissioners the CPUCprocess currently favors the incumbent utilities in two ways: an exit-fee calculation method that raises the cost for customers leaving the investor-owned utility and a bond/posting methodology tied to current market prices that, Campbell said, "could be more than $200,000,000" for San Francisco in some market conditions.

Campbell said SFPUC has joined allies in CPUC workshops and contesting pro forma utility filings to seek changes to the exit-fee and bonding approaches. "We are aggressively participating in a number of CPUC proceedings," he said, adding the aim is to get rules that do not systematically disadvantage CCAs.

The meeting also focused on a CPUC tariff known in the discussion as the "three-year switching rule," which prevents customers who opt out during the statutory opt-out period from rejoining a CCA for three years. Commissioners and staff described cases where customers were apparently misinformed during marketing calls and still became subject to the switching restriction.

Theresa Mueller of the City Attorneyoffice said the three-year waiting period is a tariff rule adopted by the CPUC and "they could change it; the legislature could just tell them what the rule is." Nancy Miller (LAFCO staff) said a working group is compiling legislative proposals to amend or clarify AB 117 and related authorities.

RFP status: Campbell reported four firms submitted revised proposals after staff follow-ups: Power Choice, Constellation Energy, Shell Energy North America and Noble Americas. He outlined a selection timeline with written scoring and oral interviews in January and final scores targeted for Jan. 19, followed by SFPUC direction to begin negotiations with the highest-ranked firm.

Budget and risk trade-offs: Campbell reviewed the SFPUC CCA budget history: an initial $5,000,000 budget with $3,200,000 placed on reserve; $1,300,000 had been released previously and the Budget & Finance Committee authorized a $430,000 release to conduct negotiations. He warned that if SFPUC were to provide CCA services directly it would have to assume financial risk, post collateral for long-term supply contracts and expand call-center and trading-desk capacity.

Board action: Commissioner Schmelzer moved, and Commissioner Campos seconded, to give staff authority to work with SFPUC staff to draft a joint resolution urging either the CPUC or the legislature to change the three-year switching tariff and other identified provisions; the motion passed "without objection." Chair Mercurimi said LAFCO and PUC would continue to coordinate and bring any recommended legislative language back to their bodies.

What comes next: Staff will continue the vendor evaluation in January and return with recommendations; LAFCO staff will draft legislative options and the joint resolution language as authorized by the motion.

Quotes: "We are aggressively participating in a number of CPUC proceedings," said Mike Campbell. City Attorney Theresa Mueller said, "They could change it; the legislature could just tell them what the rule is."