The California regulators' misleading letter to the State Legislature on grid stability and Community Choice Energy (CCE) agencies

1. January 23, 2018
Senator Ben Allen, SD 26 Assemblymember Marc Berman, AD 24
Senator Glazer, SD 7 Assemblymember Rob Bonta, AD 18
Senator Robert Hertzberg, SD 18 Assemblymember David Chiu, AD 17
Senator Jerry Hill, SD 13 Assemblymember Todd Gloria, AD 78
Senator Mike McGuire, SD 2 Assemblymember Marc Levine, AD
Senator Scott Weiner, SD 11 Assemblymember Kevin Mullin, AD 22
Senator Robert Wieckowski, SD 10 Assemblymember Al Muratsuchi, AD 66
Senator Jim Nielsen SD 4 Assemblymember Mark Stone, AD 24
Assemblymember Phil Ting, AD 19
Dear Senators and Assemblymembers:
Thank you for your letter to the California Public Utilities Commission (CPUC) on Draft
Resolution E-4907, “Registration Process for Community Choice Aggregators.”
To facilitate further involvement by all stakeholders, the comment period for Draft Resolution
E-4907 was extended to January 11, 2018, and reply comments are due January 18, 2018. The
resolution is now scheduled for consideration by the Commission at the February 8, 2018
Commission meeting. E-4907 addresses a gap in the State’s rules to ensure all retail electricity
sellers buy enough electricity to meet their demand.
Currently a Community Choice Aggregator (CCA) can start serving new customers without
complying with all statutory and regulatory requirements, particularly requirements involving
“Resource Adequacy.” Resource Adequacy, established under Public Utilities Code Section 380,
is a program that has become a critical component of the regulatory tools California uses to
prevent a repeat of the energy crisis and avoid the risk of blackouts. The CPUC’s Resource
Adequacy program is closely coordinated with the California Independent System Operator’s
(CAISO) reliability requirement tariff to ensure that enough resources are under contract to
meet forecasted demand and ensure reliability. With multiple entities providing retail power, a
system must be in place that requires all retail sellers of electricity to be able to meet the
demands of their customers.

2. Members of the Legislature; Resolution E-4907
January 23, 2018
Page 2
The intent of the draft resolution is to require that CCAs comply with the same timelines that
existing retail sellers must meet to show that they have sufficient resources under their control
to meet demand. While this timeline could delay the start date for some CCAs if they are trying
to serve customers before they make the regulatory showings, CCAs will be authorized to serve
load once they have participated in the annual Resource Adequacy requirements.
The rapid expansion of CCAs has created new challenges in implementing the CPUC’s Resource
Adequacy program. If the timelines for CCA creation are not coordinated with Resource
Adequacy, there is a significant reliability risk to consumers and the potential for other
unintended consequences, such as inequitable cost shifting, which is prohibited by law, and
excess procurement, which raises rates. If you would like more information about the CPUC’s
draft resolution, please visit the Commission’s website at
http://www.cpuc.ca.gov/cpucblog.aspx?id=6442455641&blogid=1551.
The CPUC provided legislative staff a briefing on the details of E-4907 on December 12, 2017
concurrently with the introduction of the resolution. The CPUC intends to hold another briefing
on the resolution on January 24, 2018 in light of the Legislature’s interest. If you would prefer
to speak directly about this matter, we would gladly schedule a time to speak with you or your
staff.
If you have any additional questions, please feel free contact Grant Mack, Senior Legislative
Liaison, at Grant.Mack@cpuc.ca.gov, Nidhi Thakar, Chief for Strategy and External Affairs for
President Picker at Nidhi.thakar@cpuc.ca.gov, or Rachel Peterson, Chief of Staff to
Commissioner Randolph at Rachel.Peterson@cpuc.ca.gov.
Sincerely,
Michael Picker, President Liane Randolph, Commissioner
California Public Utilities Commission California Public Utilities Commission
Cc: Governor Edmund G. Brown Jr
CPUC Commissioners