California Retail Choice Lottery to Take Place in June

Legislation that could give business owners more flexibility to choose their energy provider remains pending before the California legislature. Should the legislation pass, taking advantage of it may be linked to the retail choice lottery that will take place in June.

Since 2009, California has offered a direct access program that allows some commercial and industrial energy customers to buy their electricity from an Electric Service Provider (ESP) rather than from the state’s three biggest utility companies, Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric. However, current law caps participation in each of their service territories.

Senate Bill 286 (SB 286), authored by California state senator Bob Hertzberg (D-District 18), would expand that cap, allowing more businesses to take advantage of the program that already benefits many schools, universities, hospitals, government agencies, retail and manufacturing businesses. It remains pending at the state legislature, and we are hoping for its passage this year, although passage is not assured.

Currently, the existing cap is managed through a wait list. The wait list is reset for each calendar year when customers who are interested in direct access submit their requests for service into the lottery, and via a random process, are assigned a position on the wait list that remains in place for the ensuing calendar year. When and if room opens up under the cap, the space is offered to customers on the wait list in the order that resulted from the random position assignments.

While it is not clear yet how or if the wait list will be used if retail choice is expanded via the passage of SB 286 – that determination will be made subsequent to the passage of the bill by the California Public Utilities Commission (CPUC) – it is certainly possible that the wait list will be used to fill the new space. Therefore, we recommend that all companies interested in direct access be on the wait list.

Here are five questions you may have as you consider taking direct access service.

How Does the 2016 Direct Access Lottery Work?

As noted, above, the direct access program is currently capped in each utility service territory, so customers must participate in the annual lottery to become eligible. As a result of the lottery, a wait list is created so when new space becomes available during the following calendar year, it will be allocated to customers based on where they rank on that list. The wait list is reset each year based on the results of that year’s lottery. Therefore, customers must reapply for a place on the wait list each year. The 2016 lottery process will take place from June 13-17 this year.

During this time period, each utility will accept six-month switching notices that tell the utility what accounts the customer wants to put into direct access should there be room under the cap during 2017. After this submission period, all eligible notices will be randomly assigned to the 2017 wait list. On the last business day of each month in 2017, each utility will determine if there is room for additional customers to participate in the program in its service territory, and offer that option to customers on the wait list in the order created by the lottery process.

Why Is Being On the Wait List Important?

Historically, because the caps have been full in each service territory, little room has been opened up; in essence, room under the cap has been available only when an existing direct access customer decides to leave the program. Therefore, not many customers have gotten into direct access through the wait list.

However, if direct access is expanded through SB 286, customers on the 2017 wait list may have first access to the newly allotted space. That’s why it may be more important than ever to sign up this year. Customers should keep in mind, however, that it has not yet been determined if the wait list in existence at the time the space opens up will or will not be used to allocate the space. As noted above, that will be determined by the CPUC.

What If I Sign Up and Decide Not to Switch?

A customer who enters the lottery, and is offered the opportunity to enter the direct access program because space has opened up under the cap, is not obligated to leave utility service and take direct access service. If you receive a notice that you are able to take advantage of direct access but decide remaining with your current utility’s supply tariff is the best option for you at that time, you can decline to participate, and your service from the utility will be unaffected. The utility will then notify the next customer on the list of the opportunity to go into the direct access program.

How Do I Sign Up for Direct Access in the Lottery Process?

The utilities have procedures posted on their websites that outline the lottery sign-up process. Those procedures allow a customer to designate an agent to submit a lottery entry on its behalf. Constellation is happy to submit the paperwork required to enter the direct access lottery on behalf of our current and future customers. If your company is offered space under the cap, you are under no obligation to take direct access service from Constellation – you may choose Constellation or another ESP for your electric needs.

What Are the Advantages of Selecting Constellation As Your Electric Service Provider?

Greater energy choice brings potential advantages for customers, including competitive prices, better customer service, and customized products and services that allow customers to have more control over their energy usage and costs. Constellation offers a comprehensive portfolio of energy management solutions for businesses in California. We offer numerous pricing strategies, including the ability to fix the price you pay for electricity to give you greater budget certainty and the ability to purchase at both fixed and index rates.

Constellation can also offer you flexibility when it comes to taking advantage of renewable energy. All retail suppliers, including ESPs, must meet California’s new mandate to generate 50 percent of their total energy from renewable sources by 2030. Indeed, if SB 286 is enacted as currently written, that new direct access load will have to meet a renewable standard that exceeds the currently mandated levels.

Some customers have environmental and sustainability goals that go beyond the mandated levels. Constellation can help those customers in siting and building new on-site renewable facilities. For other companies, however, the cost of building renewable energy projects can be a deterrent. Constellation can work with these customers to fund a renewable energy project with the money they save over time. This eliminates upfront capital expenses and makes it easier for these companies to achieve budget certainty and meet their goals. If an on-site project isn’t possible, there are other options, including purchasing renewable energy certificates from other solar or wind generating facilities.

Additionally, we strive to provide you with the most up-to-date market and policy information so you can make educated decisions about when and how to buy your electricity.

If you’re a current customer interested in entering the direct access lottery, we encourage you to contact your account manager or attend our 2016 Retail Choice Expansion and Lottery Update Webinar for Energy Buyers on Tuesday, May 17^th from 10:00 a.m. – 11:00 a.m. PDT.

Register for the webinar here.

If you’re new to Constellation, please contact Jay Cattermole at Jay.Cattermole@constellation.com, or call 912-552-9604.