Assignment of Proceeding
Loretta M. Lynch is the Assigned Commissioner, and John S. Wong is the assigned ALJ in this proceeding.
1. Section 394(a), as added by AB 1890, required the registration of each entity offering electric service to residential and small commercial customers within the service territory of an electrical corporation.
2. Section 394(a), as added by AB 1890, was implemented in D.97-05-040.
3. Section 394(a), as added by SB 477, broadened the registration requirement to include ESPs offering electric service to residential and small commercial customers who operate in the service territories of publicly owned electric utilities.
4. D.98-03-072 addressed § 394(a), as added by SB 477, and also implemented the other SB 477 consumer protection safeguards by setting forth proposed permanent standards for proof of financial viability and proof of technical and operational ability.
5. The proposed permanent standards for proof of financial viability and proof of technical and operational ability were adopted in D.99-05-034 as the permanent standards.
6. Section 394, as amended by AB 1658, added wording to define that an ESP means an entity that offers electric service to residential and small commercial customers.
7. AB 1658 also added a fingerprint requirement as part of the registration process.
8. Due to AB 117, our registration procedures need to be expanded to include all ESPs who were not previously required to register with the Commission.
9. The expanded registration requirement will primarily affect those entities who provide electric service to agricultural customers, medium to large commercial customers and/or to industrial customers.
10. Most of the registration procedures and ESP registration form that we adopted in D.97-05-040, as modified by D.98-03-072 and D.99-05-034, will serve as the foundation for the registration of all ESP's who are required to register.
11. One of the requirements of the ESP registration form is that the ESP have an executed Service Agreement with each UDC in whose service territory the ESP plans to do business. The Energy Division can confirm the execution of the ESP's Service Agreement without having copies of executed agreements furnished by each ESP. The related item on the ESP Application form is sufficient.
12. As part of the direct access tariff, all ESPs, regardless of the type of customers they serve, are required to execute a Service Agreement with the UDC.
13. Several revisions have been made to the ESP registration form to reflect the following: AB 117's broadening of the registration requirement; that some code section requirements only apply to ESPs who serve residential and small commercial customers; and that permanent standards were adopted in D.99-05-034 for ESPs who serve residential and small commercial customers, and in this decision for those ESPs who serve agricultural customers, medium to large commercial customers and industrial customers.
14. As part of the expanded registration requirements mandated by AB 117: "each electric service provider shall furnish the commission with fingerprints as specified by any Commission decision applicable (italics added) to all electric service providers".
15. Changes in the electricity market warrant another look at the fingerprinting requirements applicable to all large ESPs. A pragmatic application of this requirement would limit fingerprinting to a designated corporate officer(s) approved by the Energy Division.
16. A statement from a large ESP that discloses whether the company or its officers are currently under investigation for civil and consumer law violations is required.
17. The ESP registration form and procedures satisfy the permanent standards for proof of financial viability and proof of technical and operational ability.
18. Applying the same standards for proof of financial viability to large ESP's that serve agricultural customers, medium to large commercial customers and industrial customers as applicable to small ESP's that serve residential and small commercial customers is inappropriate.
19. Soliciting comments regarding appropriate standards for proof of financial viability for large ESP's is reasonable.
20. The distinction between the generic reference to an ESP, and to an ESP that serves residential and small commercial customers, is important for determining what code sections apply to an entity who provides electric service in California.
21. AB 117 amended § 394.25 by adding subdivision (e).
22. Section 394.25(e) requires that if a customer of an ESP or a community choice aggregator is returned to utility electric service due to the fault of the ESP or community choice aggregator, that the reentry fee imposed by the utility may be paid for by the ESP or community choice aggregator.
23. The ESP security deposit requirement to date has been satisfied by the posting of a bond or cash deposit or demonstrating insurance sufficient to cover the customer in the event of the ESP's fraud or nonperformance.
24. Interested parties are put on notice that the schedule of the deposit amounts adopted in D.99-05-034 and in this decision may be revised.
1. Section 394, as amended by AB 117, expanded the registration of ESPs, with certain exceptions, to include entities that offer electric service to all sizes of customers.
2. The Electric Service Provider Registration Application Form, revised "9/03"and attached to this decision as Appendix A, shall serve as the ESP registration form for all ESPs starting today.
3. Due to the statutes, which existed at the time D.97-05-040, D.98-03-072, and D.99-05-034 were adopted; modification of those decisions to reflect the AB 117 revisions would be inappropriate because AB 117 did not go into effect until January 1, 2003.
4. The interpretation of the proof of financial viability in § 394(b)(9), is affected by AB 117's broadening of which entities must now register with the Commission.
5. except as modified herein, the permanent standards for proof of financial viability that were developed and implemented in D.98-03-072 and D.99-05-034 apply to those ESPs who serve residential and small commercial customers.
6. Even though § 394 was revised by AB 117, the preconditions to registration were not altered in § 394(b).
7. The Legislature's intent is that the proof of financial viability requirement in § 394(b) also applies to ESP's that serve agricultural customers, and the larger commercial customers and industrial customers.
8. Section 391 expresses a concern that the market structure for ESP's that serve larger customers should not be unduly burdensome.
9. Permanent standards labeled (1) and (2), (adopted in D.99-05-034 for ESP's that serve residential and small commercial customers), should be adopted, with modifications (after solicited comments), as the standards for proof of financial viability for ESP's that serve agricultural customers, medium to large commercial customers and industrial customers.
10. The permanent standards for proof of technical and operational ability that were developed and implemented in D.98-03-072 and D.99-05-034, apply to those ESP's that serve residential and small commercial customers.
11. Permanent standards labeled (1), (3) and (5), adopted in D.99-05-034 for ESP's that serve residential and small commercial customers, may be adopted with modifications (after solicited comments) as the standards for proof of technical and operational ability for ESP's that serve agricultural customers, medium to large commercial customers and/or industrial customers.
12. All entities offering electric service to customers within the service territory of an electrical corporation, except as specifically excluded in § 394, should be required to register with the Commission as an ESP within 120 days of today's date unless the ESP is currently registered and in good standing.
13. The electric utilities subject to our jurisdiction should be directed, within 30 days of today's date, to supply the names and addresses of all ESP's that are operating in their service territories or that have signed Service Agreements.
14. Within 40 days of today's date, the Energy Division should notify all the ESP's on the list of their obligation to register pursuant to AB 117 and this decision, monitor their compliance, take all necessary action to prevent unregistered ESP's from engaging in the sale of electricity to California customers, and update its records and documents to reflect the expanded registration requirements.
15. The term "ESP," as used in § 394, has the same meaning as used in other code sections, except when the other code sections specifically refer to an ESP that serves residential and small commercial customers.
16. Comments on whether the current schedule of the deposit amounts are sufficient to cover the reentry fee required under § 394.25(e) should be solicited.
IT IS ORDERED that:
1. Except for those electric service providers (ESPs) that have previously registered with the Commission and are in good standing, and as specified in Public Utilities Code § 394 as amended by Assembly Bill (AB) 117 (Stats. 2002, ch. 838), all entities that offer electric service to customers in California are required to register with the Commission.
a. All such entities that are required to register with the Commission shall do so within 120 days from today's date using the Electric Service Provider Registration Application Form, which is attached to this decision as Appendix A.
b. All entities who are required to register with the Commission shall provide all of the information, documents, fees, and deposits required by Public Utilities Code §§ 394 and 394.3, which requirements have been incorporated into the Electric Service Provider Registration Application Form.
2. The permanent standards for proof of financial viability and proof of technical and operational ability that were adopted in Decision (D.) 99-05-034 shall continue to apply to all ESP's that offer electric service to residential and small commercial customers.
3. The following standards for proof of financial viability and proof of technical and operational ability are adopted as the standards for all ESP's that offer electric service to agricultural customers, medium to large commercial customers and/or to industrial customers unless solicited comments are received and used to develop permanent standards to be issued later:
(1) Before an ESP may apply for an ESP registration number, and for those ESPs that have already received an ESP registration number, the ESPs are required to execute a UDC-ESP service agreements for each UDC in whose service territory the ESP plans to do business.
(2) At the time of registration with the CPUC, an ESP serving agricultural customers, medium to large commercial customers and/or industrial customers shall be required to post a minimum cash security deposit (cashier's check) or financial guarantee bond in the amount of $25,000 with the Commission. In the alternative, the registered ESP may open a customer trust account in that amount which is in a format approved by the Commission's General Counsel, and which ensures that the customers have adequate recourse in the event of the ESP's fraud or non-performance, and to pay any applicable re-entry fee. If the actual number of customers served by the ESP exceeds 250, the ESP shall be required to immediately increase its cash deposit, financial guarantee bond, or trust account in accordance with the following schedule when its number of customers raises the ESP to the different security deposit amount level.
# of Customers Security Deposit Amount
1 - 250 $25,000
251 - 500 $50,000
501 - 1000 $75,000
1001 + $100,000
If a cash security deposit is posted with the Commission, any interest earned on the deposit will be returned to the ESP on an annual basis.
(3) The ESP registration application form shall contain a section which requests the applicant to name one or more key technical and operational personnel, their titles, and a description, including the time period, of each key person's experience in the sale, procurement, metering, and billing of energy services or similar products. If someone other than the ESP will be doing the metering or billing on behalf of the ESP, the names of the companies providing those services and their experience shall be disclosed as well. If the applicant has been authorized by the California ISO to act as an SC [scheduling coordinator], this requirement is waived. The ESP that has been authorized as an SC shall submit a copy of such authorization as part of the ESP registration application form.
(4) Each ESP is required to submit a copy of all of its SC agreements or a signed declaration from each SC with which it has an agreement and which states that the ESP has entered into a SC agreement with the ESP. The copy or declaration shall be submitted to the Energy Division on or before the date when the ESP signs up its first customer. If the ESP is an SC authorized by the California ISO, this requirement is waived.
4. Within 30 days of today's date, PacifiCorp, Pacific Gas and Electric Company, San Diego Gas & Electric Company, Sierra Pacific Power Company, Southern California Edison Company, and Southern California Water Company, shall provide the Director of the Energy Division with the names and addresses of all ESP's providing electric service in their respective service territories, or who have signed an Energy Service Provider Service Agreement.
5. Within 40 days of today's date, the Energy Division, using the names and addresses of the ESP's supplied by the electric utilities, shall notify all ESP's in writing of the expanded registration requirement in Public Utilities Code § 394, as amended by AB 117, and of this decision, the process and deadline for registering with the Commission if they have not already registered, and their opportunity to comment on the current schedule of deposits and its relationship to the reentry fee.
a. The Energy Division shall ensure that all of the ESP's, providing electric service to customers in the applicable utility service territories have registered with the Commission within 120 days.
b. If an ESP fails to register within the time allotted, the Energy Division is directed to take all necessary action to prevent the unregistered ESP from engaging in the sale of electricity to California customers.
c. The Energy Division shall update its registration records in accordance with the provisions of Public Utilities Code § 392.1, and make the necessary changes to all documents to reflect the expanded registration requirements and permanent standards for proof of financial viability and proof of technical and operational ability for ESP's that serve agricultural customers, medium to large commercial customers and/or industrial customers.
6. Interested persons are invited to file written comments on (1) the consumer protection value of the security deposit (as currently designed), (2) Alternate means of proof that could be used in lieu of the current security deposit by large ESP's, (3) is it appropriate to change the fee schedule to reflect the greater exposure of the large ESP customer and (4) could the security deposit be used to cover the reentry fee (if required) in accordance with Pub. Util. Code § 394.25(e).
(1) Opening comments shall be filed with the Commission's Docket Office, and served on the parties to this proceeding, on or before January 4, 2004.
(2) Reply comments shall be filed with the Docket Office on or before January 22, 2004, and served on the parties.
This order is effective today.
Dated December 4, 2004, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
I dissent.
/s/ CARL W. WOOD
Commissioner
I dissent.
/s/ LORETTA M. LYNCH
Commissioner
ATTACHMENT A
