III. Implementation of the Suspension of Direct Access
In D.01-09-060 we said:
"Accordingly, we issue this interim order in which we suspend the right to enter into new contracts or agreements for direct access effective today. This decision prohibits the execution of any new contracts for direct access service, or the entering into, or verification of, any new arrangements for direct access service pursuant to Public Utilities Code Sections 366 or 366.5, after the effective date of this order. [Footnote omitted.]..
We direct the utilities not to accept any direct access service requests (DASRs) for any contracts executed or agreements entered into after the effective date of this decision. Steps that the utilities might take to ensure compliance with this order may include obtaining from each energy service provider a list of relevant identifying information for those customers that have entered into timely contracts, but for whom DASRs have not been submitted."
And we emphasized in Ordering Paragraph Number 8:
"8. Within 14 days of the effective date of this order, PG&E, SDG&E and SCE, by letter, shall inform the Director of the Energy Division of the steps they have taken to ensure that no direct access service requests are accepted for any contracts executed or agreements entered into after September 20, 2001." (D.01-09-060 at p. 12.)
In D.01-09-060, we recognized that our order to suspend direct access was not self-executing and would have to be implemented by procedures to be developed by the utilities. On November 7, 2001, at a prehearing conference called to discuss implementation, the presiding ALJ requested the utilities to propose implementation measures. Their joint proposal was filed November 16, 2001, comments on the proposal were filed November 28, 2001,9 and reply comments were filed December 4, 2001.
The method by which a utility distribution company (UDC) is notified that one of its customers desires to be served by an ESP or desires to return to UDC bundled service is when the ESP (usually) or the customer (rarely) files a DASR with the serving utility. Similarly, a DASR is required to inform the utility that a contract has been assigned, or renegotiated, or terminated or extended, or has had additional locations incorporated. Merely suspending direct access on a date certain does not, by itself, notify interested parties how their contracts will be affected.
As mentioned above CMTA/CLECA proposed that the Commission grandfather those customers or their accounts who had signed direct access contracts as of September 20, 2001 and whose names appear on the UDC's direct access DASR lists of October 5. Sempra Energy Solutions supports this proposal as administratively simple, consistent with rules and tariffs in place September 20, 2001, and legally defensible. PG&E argues against one aspect of the proposal stating that direct access customers should not be allowed to enter into new contracts without restriction, as this would be a complete reversal of the direct access suspension in D.01-09-060. Similarly, SCE argues that customers should not be allowed to switch to a new ESP or have their contracts assigned to new ESPs.
Generally, we favor a balanced approach which allows existing direct access customers to continue in the direct access market, but limits additional load moving to direct access to load changes associated with normal usage variations on direct access accounts in effect as of September 20, 2001. This standstill concept is consistent with the provisions of AB 1X and D.01-09-060 that direct access be suspended and there be no new arrangements.
Under the standstill approach described below, we will permit assignments and renewals, but not add-ons of new load. This approach is consistent with our policy reasons for imposing direct access surcharges or exits fees, in lieu of an earlier suspension date, as an appropriate way to alleviate the significant cost-shifting of DWR costs on to bundled service customers.
The utilities shall implement the suspension as set forth below.
1. ESPs shall have provided by October 5, 2001 a list of names of all customers with direct access contracts in place as of September 20, 2001.
At the October 2, 2001 workshop, ESPs (including several AReM members) agreed that the October 5 date was reasonable for ESPs to submit names of eligible direct access customers, but that a longer period, until November 1, would be necessary to submit account specific details. Establishing a list of eligible customers within a reasonable time was suggested as an implementation step by the Commission in D.01-09-060. The October 5 date for customer names, and the November 1 date for account specific details are fair - they are based on what ESPs said they could meet, and each utility notified ESPs in advance in writing that failure to submit names and account specific details as of the deadlines would lead to later DASR rejection. The October 5 and November 1 dates do not require that the utility processed the DASR by those dates.
AReM proposes that an independent third party, such as a CPA, would submit a DASR verification to the UDC only for customers who were not on the October 5th and November 1st lists (but had a valid direct access contract) and for additional sites for customers already on the lists. In turn, the UDC would be required, upon receipt of this verification, to process the associated DASR without delay in accordance with the standard procedures. A UDC would have no ability to delay the processing of a verified DASR.
In the UDCs' view it is simply not credible that any ESP's systems and records are so inadequate that a complete list of those customers who contracted for service prior to September 20, 2001 could not be provided in a timely manner. However, human error is possible. We will allow additions to the October 5th and November 1st lists10 for customers with a valid direct access contract as of September 20, 2001 (but not for additional meters, accounts or sites), using the AReM process, along with an affidavit signed by both the ESP and the customer stating under penalty of perjury that the contract date is correct.
2. To submit an ESP list, or to submit DASRs for its accounts, an ESP must (1) have in effect a valid ESP/UDC service agreement as of September 20, 2001, and (2) ESPs serving small customers must have in effect as of September 20, 2001 valid Commission registration as required by law.
The need for valid service agreements and registration is not disputed.
3. Master agreements between ESPs and certain entities (other than the customers or end users of record) whose terms and conditions allow specific customers to elect direct access in the future (through execution of individual implementing agreements with customers), entered into on or before September 20, 2001 do not qualify as agreements for direct access service with end use customers.
LID/ACWA object strenuously to this rule. LID/ACWA argues for the eligibility of a master agreement executed September 5, 2001 between LID and ACWA-USA (an association of water agencies), under which ACWA-USA members can elect direct access service with LID acting as the ESP. Each member must execute a further participation agreement before taking service under the terms of the master agreement.
Water Code § 80110 provides that "the right of retail end use customers . . . shall be suspended. . . ." The utilities argue that master agreements between ESPs and associations to provide service at the election of member retail end users do not meet the requirements of the statute since such agreements are not with the retail end users. We agree. A master agreement with an association is nothing more than a proposal to provide service to retail end users and is not a valid contract with any end user until the proposal is presented to the end user, and the end user accepts the offer by signing a participation agreement (required under the master agreement.) Any election by a member of an association to acquire direct access service under the master agreement after September 20, 2001, is therefore prohibited.
4. Customers and accounts are allowed to switch from one ESP to another after September 20, 2001.
According to AReM allowing customers unlimited switching between ESPs is consistent with AB 1X since it doesn't increase direct access load. We agree. Changing ESPs would not be inappropriate under the standstill policy because no change in direct access load would occur, thus there would be no cost-shifting of DWR costs. While changing ESPs does require a new contract (absent assignment), prohibited by D.01-09-060 (Ordering Paragraph 7), an exception is appropriate for the reasons stated above. AB 1X can be read to allow ESP switches, and thus this exception, because it requires the suspension of the right to "acquire" direct access. A switch of ESPs is not an acquisition of direct access, but a continuation on direct access for the customer. See Water Code §80110. Customers can also choose a new ESP and continue on direct access if they returned to bundled service after September 20, 2001, except as indicated in Rule 12.
5. No customer is allowed to add a new location to its direct access service after September 20, 2001.
Consistent with the principle of attaining a standstill of direct access service, adding new locations (and thus new load) to direct access service should be prohibited. As discussed above, even if new locations are permitted under a direct access contract, a suspension as of September 20, 2001, is reasonable and appropriate to balance important regulatory goals.
6. No customer is allowed to add a new or additional account to direct access service if that account involves installation of additional meters after September 20, 2001 or would require a new DASR to be submitted after September 20, 2001.
Again, new or additional accounts or meters would violate the standstill principle by adding new load, and a prospective suspension is appropriate. In D.01-10-036, the Commission reaffirmed "unless the Commission states otherwise in a subsequent decision" that utilities must process DASRs relating to pre-September 20, 2001 direct access contracts or agreements. Rules 5 and 6 constitute such statement. However, new DASRs shall be processed by the utilities if necessary to implement another provision herein (e.g., assignment, new customer name).
Rule should not be construed to prevent, after September 20, 2001, the installation of meters or meter-reading equipment as necessary to initiate direct access service for eligible customers, or the replacement or upgrade of existing meters for existing direct access customers. But again: no customer shall be allowed to add any new account that is not on the October 5th or November 1st lists reference above.
7. Direct access residential and small commercial customers may move from one address to another within the UDC service area and continue to be served by the ESP serving them prior to the move.
No party objects to this condition.
8. Direct access contracts may be assigned after September 20, 2001, to either a new ESP, or to a new retail end use customer representing approximately the same load at the same location.
The direct access contracts which we have reviewed have clauses which permit assignment to another ESP or to another retail end use customer. AReM, and others, argue that if the contract permits assignment it must be honored even if the assignment takes place after the suspension date. We will allow assignment of contracts if permitted by the customer-ESP contract because this is consistent with the standstill principle and does not increase direct access load. Ordering Paragraph 7 of D.01-09-060 states:
"PG&E, SCE, and SDG&E shall not accept any direct access service requests for any contracts executed or agreements entered into after September 20, 2001." (D.01-09-060 at p. 12.).
However, as noted above, D.01-10-036 required new DASRs to be processed by the utilities.
Unlike a customer switching from one ESP to another, assignment of a customer from one ESP to another involves a continuation of an existing contract, not a new arrangement or agreement. Therefore, assignment is permitted as allowed by customer-ESP contracts. However, we have already stated that no new locations or additional meters may be added; switching ESPs or customers on a contract does not provide an exception to this provision. Assignment to a new customer is limited to the same load at the same location.
9. A customer who had direct access prior to September 20, 2001, but who became a bundled customer before September 20, 2001 cannot return to direct access after September 20, 2001.
This would require a new contract after September 20, 2001, which is prohibited by D.01-09-060. No exception is warranted here.
10. A direct access customer can change its identity (i.e., Jones Company to Acme Electronics) provided no other implementation restriction applies.
A change in identity, such as a change in ownership or corporate reorganization, is permitted subject to the other restrictions delineated herein. For example, a change in identity may not be used to increase load or locations served.
11. Community Choice Aggregation Programs
Community aggregators shall serve only direct access customers who chose community aggregation prior to September 20, 2001.
Under the Public Utilities Code Section 366(b), community aggregation programs require an "opt-in" by the interested customers. The UDCs believe that the act of opting in after the suspension date constitutes a new arrangement for direct access service prohibited by D.01-09-060, and propose that customers who attempt to opt into a community aggregation program after the suspension date be rejected.
Community aggregators such as the Cities of Cerritos and San Marcos claim that because they had an existing community aggregation program prior to the suspension date, customers should be able to opt-in to direct access service even after the suspension date. Municipalities that are community aggregators assert that because the potential amount of load is small and because they have the legal authority to provide electric service to their inhabitants, they should have the right to switch their inhabitants to direct access after the suspension date.
We disagree. A customer who requests direct access service after September 20, is seeking a new arrangement prohibited by D.01-09-060. Whether the request is made to a community aggregator or directly to an ESP the result is the same: a shift of costs to the remaining bundled customers. The community aggregation program has been in effect since 1997. A community aggregator is part of direct access and should not be permitted to acquire new customers after September 20.
12. Returns to Bundled Service and Backbilling
The rules above may require some customers to move from direct access service to bundled service, specifically:
a) customers or accounts not on an ESP direct access customers list as of October 5, 2001, or account specific list of November 1, 2001. (except as discussed in Rule 1).
b) customers or accounts added to direct access service after September 20, 2001 based on contracts signed after that date.
c) customers or accounts added to a master agreement or community aggregation program after September 20, 2001.
d) new locations, or loads involving installation of additional meters, added after September 20, 2001 under contracts in place as of September 20, 2001 (except as delineated in Rule 6).
In these cases, the customer should not be backbilled by the utility for bundled service not taken by the customer.
