Energy Policy

Decrease Expected for Purchased Cost Indifference Amount (PCIA) on California Direct Access Electric Customer Bills

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Direct Access customers in California should take note of a change in non-bypassable charges as it directly impacts their electricity costs.

What are Non-Bypassable Charges?
Non-bypassable charges include utility charges that all customers must pay, including transmission and distribution charges. Direct Access customers must also pay a non-bypassable charge referred to as the Purchased Cost Indifference Amount (PCIA), that is the Direct Access customer’s share of “stranded costs” associated with purchases made by the utility before the customer left utility service.

The PCIA rate paid by customers varies depending on when the customer leaves utility service, referred to as the “vintage.” Customers who leave in the first half of a year belong to the prior year vintage, while customers who leave in the second half of a year belong to that year’s vintage.

Expected PCIA Increases
Significant increases in PCIA that began in 2010/2011 are due partially because of an increasing renewable component in the utility contracts.

The following outlines the current status of the PCIA increase:

Petition for Changes in PCIA Calculation Methodology: Constellation, along with other competitive suppliers, customer coalitions, and municipals petitioned in 2010 for changes in the calculation methodology. As a result of that petition, renewable energy in the utility portfolio will now be assessed a premium value over non-renewable power. Increasing the value of renewable power in the utility portfolio will reduce the stranded cost. The new calculation methodology will be applied retroactively:
o April 14, 2010: PG&E
o June 1, 2010: SCE
o Sept. 1, 2010: SD&E

The impact of this new methodology on the PCIA is not yet certain, as the staff of the California Public Utilities Commission must process the modifications to calculate the revised PCIAs; this will likely be finished in the first quarter of 2012.

PG&E Customers: PG&E will implement its new PCIA rates on Jan. 1, 2012. A petition has been filed at the California Public Utilities Commission to keep PG&E’s PCIA 2012 rates at 2011 levels until the new methodology is integrated into the utility calculations.

Impact on Decision to Participate in Phase 4 of Direct Access Enrollment: Uncertainties about the calculation mean that 2012 PCIAs for each vintage will not be certain when enrollment decisions must be made. Constellation will provide Direct Access customers with updated information as it becomes available.

Stay tuned for more updates as we continue to closely follow developments.

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