AB 117 establishes a program that permits cities and counties to create organizations called CCAs to provide certain utility services to local residents and businesses. The statute by necessity requires CCAs to rely on regulated electric utilities for a variety of services, such as metering and billing. This ongoing relationship between the CCA and the utility is essential partly because the utility retains the obligation to provide the CCA's energy customers with distribution and transmission services. The statute also specifies other obligations of the serving utility, such as offering customer notification services and customer information to the CCA. AB 117 directs this Commission to develop the rules, rates and policies that are required for the implementation of a successful CCA program, and also to oversee certain aspects of it on a continuing basis. The statute also directs CCAs to submit certain documents and information to the Commission, among other things.
In the process of developing the CCA program in this proceeding, the question has arisen as to whether and the extent to which AB 117 grants this Commission jurisdiction over CCAs and, by implication, the cities and counties that create and oversee them. Indeed, almost every controversy in Phase 2 of this proceeding somehow implicates the extent to which the Commission may or should control CCA activities, whether by way of utility tariffs or independently.
As part of the debate over Commission jurisdiction, the Utilities discuss the many and sometimes complex inter-relationships they will have with CCAs and speculate on some of the consequences of those relationships. For example, they observe that the CCA has no obligation to serve its customers and may abandon its energy service at any time. Utilities argue the CCA need not assure the adequacy of energy resources for its customers although, because of the nature of the electricity system, its customer will always receive power. Utilities argue AB 117 intended for the Commission to have broad authority over CCAs and did not limit the scope of the Commission's authority in this regard. As evidence of this legislative intent, the Utilities site several sections of the statute that refer explicitly to the Commission:
1. The CCA must file an implementation plan and a statement of intent with the Commission;
2. The CCA must register with the Commission;
3. The Commission must adopt rules for CCAs before CCAs may offer services.
The Utilities argue that the Commission has exercised authority over Energy Service Providers (ESP) and utility holding companies and that this "derived authority" extends equally to CCAs.
ORA believes the Commission has "plenary" or "general" jurisdiction over public utilities only and that the Courts have distinguished between broad regulatory oversight on the one hand and more limited authority on the other. ORA observes that portions of AB 117 provide the Commission with certain authority over CCAs and believes that the Commission need not speculate further about the Legislature's intent.
CCAs reply that the Commission's role is primarily to "advise and assist" CCAs, which are entities of local government subject to open meeting laws and established procedures for public participation and information disclosure. As evidence that the Legislature did not intend for the Commission to assume jurisdiction over CCAs, CCAs observe that AB 117 requires an implementation plan in order to develop a cost responsibility surcharge (CRS) and that AB 117 does not require a CCA to submit changes to its implementation plan to the Commission. With regard to authority over CCAs, AB 117, according to CCAs, establishes responsibilities for the Commission that are primarily ministerial, for example requirements to notify the utility of a filed implementation plan, requesting additional information about the plan and requiring the CCA to register with the Commission.
The CEC, TURN and King's River generally share the CCAs' views on the authority AB 117 confers on the Commission over CCAs.
Discussion. In considering this Commission's jurisdiction over CCAs, we rely almost exclusively on the guidance provided by AB 117, which is the only California statute that refers to a CCA program. Our review of AB 117 leads us to the general conclusion that our authority over CCA is narrowly circumscribed. AB 117's provisions are generally either permissive with respect to CCAs or direct us to regulate the utilities that serve them. That is, we interpret AB 117's requirements for the CCA to file an implementation plan, to register with the Commission, and to comply with program rules to be conditions of receiving related utility services. Just as a residential customer may have to submit a deposit as a condition of utility service or an industrial customer may have to install a meter to receive utility service, CCA's must take certain steps to receive the utility services they will require to provide power to their customers. The conditions of service imposed on utility customers do not confer upon this Commission general jurisdiction over customers. In the case of CCAs, the rules and procedures AB 117 requires are for the purpose of assuring the availability of adequate information for the utility to provide service and for the Commission to satisfy itself that the CCAs plans will not compromise the utility's ability to provide services to CCA customers and utility bundled customers. Our authority to establish and order the imposition of a CRS and other rates does not confer jurisdiction over the CCA any more than our approval of a residential rate confers general jurisdiction over a residential customer.
Thus, we interpret AB 117 to define the Commission's role in overseeing a CCA is incidental to its regulation of the utility. The Commission must adopt rules for the utility in order that it may provide adequate service to the CCA and its customers while simultaneously protecting utility bundled customers and the utility's system. Nothing in the statute directs the Commission to regulate the CCA's program except to the extent that its program elements may affect utility operations and the rates and services to other customers. For example, the statute does not authorize the Commission to set CCA rates or regulate the quality of its services. To the contrary, while providing very precise guidelines on a number of issues involving the utilities' services to CCAs and ways to protect utility customers, the statute does not refer to how the Commission might oversee the rates and services CCA's offer to their customers.
Utilities argue that the Commission should retain jurisdiction over the CCAs even if it does not find a need to exercise it. However, the Commission cannot retain what it does not have. Nothing in AB 117 suggests we may regulate a CCA's services except to the extent its programs and services may affect the distribution utility or its bundled customers.
In support of their view that the Commission has jurisdiction over CCAs, utilities cite D.04-07-037 which found that the Commission has authority over ESPs as a result of statutory language authorizing the Commission to suspend or revoke an ESPs's registration if an ESP were not financial capable of providing electric service. In the case of ESPs, the Commission has express statutory authority which AB 117 does not confer with regard to CCAs. In fact, the distinction is significant in that we must assume the Legislature would have explicitly granted us authority over CCAs as it has in the case of ESPs if that is what it had intended. Instead, Section 394, which outlines how the Commission is to process ESP applications, explicitly exempts public agencies from its provisions.
The utilities' also analogize to our authority over utility holding companies, which is also without merit. Our authority over holding companies derives from our authority over their regulated utility subsidiaries. No such circumstance or law exists with regard to CCAs.
Although we lack broad regulatory authority over CCAs, we believe that existing law protects CCA customers. Entities of local government, such as CCAs, are subject to numerous laws that will have the effect of protecting CCA customers and promoting accountability by CCAs. Under existing law, a CCA must conduct public hearings, operate within a budget and disclose most types of information to members of the public. To the extent that a CCA fails to consider the interests of its customers - who are local citizens - there is recourse in subsequent elections, the courts and before local government agencies. We are not convinced that our oversight would necessarily contribute anything in that regard, as long as utility tariffs provide adequate protections for the integrity of the utility system and bundled ratepayers are protected from costs that are attributable to CCA customers, as AB 117 requires.
Although we find that we do not have broad regulatory authority over CCAs, we do have authority to subpoena information and witnesses, to require information from a CCA and to require its involvement in any relevant Commission inquiry, authority we have over any individual or entity whose acts or knowledge are germane to our regulatory obligations. As the utilities argue, we also retain a responsibility to assure that a CCA's policies, practices and operations do not compromise the operations of the utility or services to utility customers. We may affect those protections in the CCA program rules that will be incorporated into utility tariffs. At this time, we have no reason to believe that this approach is inadequate to protect utility customers.
Finally, we address the utilities' complaint that they "should not be forced to adopt the tariff changes drafted by the local governmental agencies" and that they, the utilities, "are the entities responsible for writing and administering their own tariffs." We remind the utilities that every party to our proceedings is entitled to comment on utility tariff proposals and to our full consideration of their views. Local governmental agencies participating in this proceeding have done nothing novel by objecting to utility tariff proposals and proposing their own. More importantly, we most assuredly will order the utilities to modify their tariff language in ways they themselves did not propose if that tariff language is required to conform the tariffs with our view of the public interest, consistent with our statutory obligations and notwithstanding which party proposed them.
We proceed to address the scope our authority to implement each element of AB 117 with these broad principles in mind.