IV. The CCA Implementation Plan and the Process for CCA Registration (Utility Tariff Section F)

AB 117 sets forth several procedural steps that the CCA must take - and which involve this Commission -- prior to initiation of service by the CCA. Section 366.2(c) (3) requires the CCA to develop an "implementation plan" that provides a variety of information about rates, organizational structure, operations and third party power suppliers. The implementation plan is to be filed with this Commission "(i)n order to determine the cost recovery mechanism." The Commission must "certify" that it has received the implementation plan and other relevant information it has requested and then "provide the community choice aggregator with its findings" regarding cost recovery amounts required by Section 366.2 (d),(e) and (f). In addition, the CCA must "register" with the Commission and provide the Commission with additional information "to ensure compliance with basic consumer protection rules and other procedural matters."

The parties addressed the content of the implementation plan, its use, the Commission's role in reviewing and approving the implementation plan. They also discussed the relevance of the requirement that CCAs register with the Commission.

The utilities view the implementation plan as a commitment by the CCA, and they believe this Commission should exercise its authority over the substance of such plan. They believe the Commission should be able to review the plan, inquire as to its contents, and, if necessary, disapprove the plan. They propose an advice letter process and its associated formal review and approval process. The utilities also believe the Commission has the authority to "decertify" a CCA's authority to provide service and to entertain formal customer complaints against the CCA. As part of the registration process, the utilities and ORA propose each CCA submit a "provider service agreement" with the serving utility and, for those CCAs that are not scheduling coordinators, a signed agreement with an authorized scheduling coordinator.

The utilities argue that a local review and comment process required by AB 117 for a CCA's implementation plan may not achieve the legislature's general objectives of "detailing the process and consequences of aggregation." They also suggest the Commission must oversee the type of information the CCAs provide in the Implementation Plan and to their potential customers. For example, the utilities believe the Commission should determine whether the Implementation Plan provides specific and adequate information about the CCA's program structure and whether the program is adequately funded. They would have it include rates for all customer classes, describe how costs are allocated to different customer groups, and identify which third party suppliers are providing energy services and in what quantities.

CCAs respond that the utilities have interpreted AB 117 erroneously and argue that the Legislature never intended for the Commission to assume close regulatory oversight of CCA operations. They argue that the Legislature has distinguished CCAs from private power sellers, which are subject to more specific regulatory procedures in Section 394. They argue that CCAs are subject to the Brown Act, which provides ample public procedures and consumer protections by requiring open meetings, public notice, and access to decision-makers and information relevant to agency operations. CCAs do not believe the Legislature intended the Commission to substitute its judgment for that of a public agency that is accountable to the community and relevant state and federal law. They also raise concerns that the procedures the utilities advocate would create an expensive and complex regulatory bar to establish community choice aggregation programs. CEC and Local Power make similar comments.

TURN generally shares the CCAs' views on the issue of the Commission's authority over the implementation plan, although it recommends an advice letter process to review an implementation plan, similar to the one the Commission has in place for local providers of 2-1-1 telephone services, as described in D.03-02-029.

Discussion. We begin by addressing the appropriate extent of our oversight of Implementation Plans. Consistent with our discussion on jurisdiction more generally, we defer to the express language of the statute. As a threshold matter, we find nothing in the statute that directs the Commission to approve or disapprove an implementation plan or modifications to it. Nor does the statute provide explicit authority to "decertify" a CCA or its implementation plan. While we agree with the utility that the Legislature could not have intended for the requirements regarding the Implementation Plan and modifications to it to be "a meaningless, perfunctory exercise," we do not agree that the Legislature intended the Commission to treat CCAs like utilities, which is what the utilities suggest.

A general rule of statutory interpretation suggests that where a statute provides specific guidance -- in this case on the Commission's role and authority -- its silence implies a limit on that role and authority. Here, the statute does require the CCA to file the plan here and gives the Commission authority to request information about the plan and to register the CCA. We assume that if the Legislature intended for us to regulate the CCA's implementation plan in other ways, the Legislature would have included explicit language in the statute with regard to its intent.

The Legislature's treatment of private power sellers - ESPs - is also instructive here. Section 394 sets forth an elaborate regulatory process for the registration of ESPs that seek to sell power to individual customers, a business relationship commonly referred to as "direct access." Section 394 requires ESPs to register with the Commission, to be subject to finger printing and a criminal background check, to file formal applications for authority to operate under certain conditions, and to prove technical, financial and operational ability as a precondition to the Commission's issuance of a license to operate. The Commission is explicitly provided authority to deny a license under certain circumstances and to revoke it. Section 394(a) explicitly exempts public agencies, such as CCAs, from its provisions. If the Legislature had intended the Commission to impose these types of procedures on CCAs, as the utilities suggest either directly or by inference, we must presume it would have so stated. Since it did not, we must assume the Legislature intended a much more limited role for the Commission in its oversight of CCAs.

We may agree with the utilities that the implementation plan - or some other document - should disclose relevant information to CCA customers and prospective customers. However, we do not agree it is our job to determine what that information should disclose. Instead, we believe it is up to the CCA to comply with the statute. This view is supported by the Legislature's historical treatment of local governments that operate utilities for such commodities as electricity, sewage treatment and water. We have no evidence to suggest that utility operations performed by local government have failed to operate successfully absent strict state oversight. CCAs are government entities subject to specific statutes with regard to their operations, decision-making procedures and information disclosure. No one has claimed that those statutes are inadequate to protect local citizens and we choose not to second guess them.

Because we do not believe the statute intended to give this Commission broad jurisdiction over CCAs, we reject the utilities' proposal to subject CCAs to the advice letter process, a formal administrative procedure that the Commission employs for the purpose of authorizing changes to the tariffs of regulated utilities. The procedure would require the formal adoption of a CCA's implementation plan at a public meeting following the filing of formal comments by parties, the issuance of a proposed resolution, and the filing of comments on the proposed resolution, a process that would take no less than 60 days and would probably take much longer. Nothing in the statute authorizes the Commission to conduct this elaborate and time-consuming procedure.

While we part company with the utilities on the issue of how much authority we have over CCAs and how much formal Commission process is required or authorized by AB 117, we realize that the Commission has a role in assuring the CCA's operations comport with utility tariff requirements and rules, especially in the early years of the program while the utilities and CCAs are implementing an untested program. We also recognize that CCA operations or implementation plan modifications may not be consistent with the requirements of the utility's tariffs. We therefore adopt certain procedures to promote understanding and cooperative relationships between the utilities and CCAs.

In order to facilitate the smooth operation of the CCA where its policies, practices and decisions may affect the utility and its customers, we will direct the Executive Director to develop and publish the steps of an informal process of review that provides a forum for the CCA and the utility to understand the CCA's implementation plans and assures the CCA is able to comply with utility tariffs. We expect the process to be collaborative and, if required, facilitated by Commission experts. The process would be mandatory only at the request of either the utility or the CCA and where the request is presented in writing with a recitation of disputed items or areas of concern. The process would implicate no approvals, either formal or informal, from the Commission. Where the CCA fails to conform to approved utility tariffs, the utility may, in fact must, decline to provide service to the CCA. If a utility refuses to facilitate the CCA's initiation of service, or declines to provide service to the CCA, it must inform the CCA of its reasons in writing. If the CCA believes it or its customers have been improperly refused utility service, whether before a CCA's service is initiated or in a case where the utility interrupts CCA services, the CCA may file a formal complaint with the Commission, which may be litigated or mediated using our usual procedures. We will direct each utility to include a description of this process in its tariffs but we will not delay implementation of the Phase II tariffs or the CCA program generally while the informal process is being developed.

We will also direct our Executive Director to prepare and publish instructions for CCAs and utilities which would include a timeline and describes the procedures for submitting and certifying receipt of the Implementation Plan, notice to customers, notice to CCAs of the appropriate CRS, and registration of CCAs. Attachment DC provides an illustrative timeline for such activity. The process and the timeline shall be consistent with the statute and with this order. The CCA's registration packet shall include the CCA's service agreement with the underlying utility and evidence of insurance, self-insurance or a bond that will cover such costs as potential re-entry fees, penalties for failing to meet operational deadlines, and errors in forecasting.

The procedures we adopt are designed to comply with AB 117 and facilitate a CCA's program while protecting utility customers. They will require a commitment by each utility and CCA to work cooperatively and in good faith. We are also aware of the particular responsibility of the utilities that is imposed by Section 366.2(c) (9), which requires the utility to "cooperate fully with any community choice aggregators that investigate, pursue, or implement community choice aggregation programs." The failure of a utility to cooperate in good faith with a CCA could cause the CCA or utility bundled customers to incur unnecessary costs and create unnecessary customer confusion. In our role to regulate the utilities that are the subject of this subsection, if we find that a utility has failed to comply with Section 366.2 (c) (9) or relevant Commission orders, we retain authority to impose substantial penalties on the utility and cooperate in any law suit that seeks material damages. Fortunately, at this point, we have no reason to assume that our authority will be required in this regard.